HMDA Public Disclosure Revisions

CUNA
February 1, 2005

EXECUTIVE SUMMARY

· The Federal Reserve Board (Fed) has issued revisions to the Home Mortgage Disclosure Act (HMDA) public disclosure statements to reflect recent changes to HMDA and Regulation C, which require the reporting of additional information and the use of standards for collection of data on race and ethnicity that are used by the Office of Management and Budget (OMB).

· These changes revise a number of disclosure tables, delete certain tables, and add new tables. The revisions to the existing tables primarily reflect the changes to the race and ethnicity categories that are used by OMB and the itemization of data on manufactured housing loans.

· The new tables reflect the new data as to whether the annual percentage rate (APR) of the loans exceeds certain thresholds, whether the loans are subject to the Home Ownership and Equity Protection Act (HOEPA), as well as information regarding lien status, preapproval requests, and manufactured housing.

· These revisions are expected to be used for the first time in the summer or fall of 2005.

If you have any questions or need more information about these revisions, please feel free to contact Senior Vice President and Associate General Counsel Mary Dunn by e-mail at mdunn@cuna.coop or by telephone at (800) 356-9655, extension 6736, or contact Assistant General Counsel Jeff Bloch by e-mail at

jbloch@cuna.coop or by telephone at (800) 356-9655, extension 6732. You may also access the revisions on the Internet at the following address:

http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20041210/attachment2.pdf

BACKGROUND

HMDA requires financial institutions and certain other nondepository institutions to collect, report, and disclose data about originations and purchases of home mortgage and home improvement loans. Data about applications that do not result in originations must also be reported. The Fed’s Regulation C implements HMDA.

Lenders subject to HMDA are required to report data on the HMDA Loan/Application Register (HMDA-LAR). The Federal Financial Institutions Examination Council processes the data to produce public disclosure statements, which are sent back to the lenders to be made available to the public by request. These public disclosure statements are also sent to public depositories, such as public libraries in each metropolitan statistical area (MSA), along with aggregate disclosures covering all lenders within the MSA. The Fed, along with NCUA and the other federal financial institution regulators, are required to develop the format for these public disclosures.

Recent amendments to Regulation C now require lenders to report the following: · The rate spread between the APR on the loan and the yield on Treasury securities of comparable maturity when the spread exceeds three percentage points on first lien mortgages and five percentage points for subordinate lien mortgages. · Whether the loan is subject to the Home Ownership and Equity Protection Act (HOEPA). · Whether the loan involves manufactured housing. · The type of lien on the property. · Certain information about requests for preapproval.

The recent amendments also conform to the standards for collection of data on race and ethnicity that are used by OMB. The first year for which this new data is to be reported will be 2004, and the data will be reflected in the public disclosures that will be released in 2005. Click here (http://www.cuna.org/regadvocacy/member/analysis/hmda021902.html) and click here (http://www.cuna.org/regadvocacy/member/analysis/fed070102.html) for more information about these recent HMDA changes.

DESCRIPTION OF THE REVISIONS

To reflect the recent changes, the Fed has issued revisions to the public disclosure statements. The changes revise a number of disclosure tables, delete certain tables, and add new tables. The revisions to the existing tables primarily reflect the changes to the race and ethnicity categories that are used by OMB and the itemization of data on manufactured housing loans. The deleted tables will be those that show action taken on applications for various types of loans, itemized by income and gender. These tables are being deleted because the information is included in other tables.

The new tables will reflect the new data on the rate spread, HOEPA status, lien status, preapproval requests, and manufactured housing. Click below for a copy of the revised public disclosure tables:

http://www.federalreserve.gov/boarddocs/press/bcreg/2004/20040318/attachment.pdf

With regard to the rate spread data, lenders will have to provide the information by categories. Specifically, lenders will have to reflect the loans that are between 3% and 3.99% above the yield on comparable Treasury securities, those that are between 4% and 4.99% above the yield, and under similar categories up to ten percentage points above the Treasury yield (although such detailed categories will not be required for manufactured housing loans). For these loans, lenders will also have to report the mean and median percentage points above the Treasury yield, as well as the number of first mortgage loans below the 3-percentage-point threshold.

The new tables will be produced in two versions for each institution. One will reflect activity for each MSA in which the institution reports data, and the other will show the institution’s total activity nationwide. One difference between these two versions will be that only the nationwide version will show preapproval requests denied and preapproval requests approved but not accepted. Such information cannot be reflected in the MSA version since the property location is not determined unless the loan application extends beyond the preapproval stage.

The disclosure tables will also be revised to reflect racial and ethnic categories used by OMB. This change will give borrowers more options for describing themselves on applications, specifically the option of using more than one category.