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Compliance Corner: Fourth Quarter 2002

Regulation C and HMDA: What's Changing and When

The Federal Reserve Board published revisions to Regulation C, which implements the Home Mortgage Disclosure Act, on June 21, 2002. As a result of some industry commenters' concerns about the proposed changes, the Board delayed the effective date of some aspects of the final rule to January 1, 2004.

These revisions to Regulation C:

  • Set the thresholds for determining the loans for which financial institutions must report loan pricing data. Institutions will report the rate spread (between the annual percentage rate on a loan and the yield on comparable Treasury securities) if the spread equals or exceeds 3 percentage points for first-lien loans and 5 percentage points for subordinate-lien loans.
  • Require lenders to report the lien status of applications and originated loans.
  • Require lenders to ask applicants their ethnicity, race, and gender in applications taken by telephone.

Compliance with the amendments relating to thresholds and lien status is mandatory on January 1, 2004. The amendment requiring lenders to ask telephone applicants for monitoring information is effective for applications taken on and after January 1, 2003.

In addition, effective on January 1, 2003 financial institutions are required to use 2000 census data for all HMDA reportable loans. Given the many changes that have occurred since the 1990 census, the use of 2000 census tracts and demographics will produce more accurate and useful data in the HMDA disclosure statements and aggregate reports.

The Federal Reserve Bank of Philadelphia will be conducting training on the changes to HMDA as part of its outreach program for 2003. In the interim, if you have any questions about these amendments and the effective dates, please contact Connie Wallgren, Vice President and Chief Examinations Officer at (215) 574-6217.

The views expressed in this article are those of the author and are not necessarily those of this Reserve Bank or the Federal Reserve System.

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