43088 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

1 Dodd-Frank Wall Street Reform and Consumer 

Protection Act, Public Law 111–203, 124 Stat. 1376, 

section 2097–101 (2010). 

2Home Mortgage Disclosure (Regulation C); 80 FR 

66128 (Oct. 28, 2015) (2015 HMDA Final Rule). 

3 Id. at 66129. 

4Technical Corrections and Clarifying 

Amendments to the Home Mortgage Disclosure 

(Regulation C) October 2015 Final Rule; 82 FR 

19142 (Apr. 25, 2017) (April 2017 HMDA Proposal). 

5Home Mortgage Disclosure (Regulation C) 

Temporary Increase in Institutional and 

Transactional Coverage Thresholds for Open-End 

Lines of Credit, 82 FR 33455 (July 20, 2017) (July 

2017 HMDA Proposal). 

BUREAU OF CONSUMER FINANCIAL 

PROTECTION 

12 CFR Part 1003 

[Docket Nos. CFPB–2017–0010; CFPB– 

2017–0021] 

RIN 3170–AA64; 3170–AA76 

Home Mortgage Disclosure 

(Regulation C) 

AGENCY: Bureau of Consumer Financial 

Protection. 

ACTION: Final rule. 

SUMMARY: The Bureau of Consumer 

Financial Protection (Bureau) is 

amending Regulation C to make 

technical corrections to and to clarify 

certain requirements adopted by the 

Bureau’s Home Mortgage Disclosure 

(Regulation C) final rule (2015 HMDA 

Final Rule), which was published in the 

Federal Register on October 28, 2015. 

The Bureau is also amending Regulation 

C to increase the threshold for collecting 

and reporting data about open-end lines 

of credit for a period of two years so that 

financial institutions originating fewer 

than 500 open-end lines of credit in 

either of the preceding two years would 

not be required to begin collecting such 

data until January 1, 2020. The Bureau 

also is adopting a new reporting 

exclusion. 

DATES: This rule is effective on January 

1, 2018, except that the amendments to 

§ 1003.5 in amendatory instruction 8, 

the amendments to § 1003.6 in 

amendatory instruction 9, and the 

amendments to supplement I to part 

1003 in amendatory instruction 10 are 

effective on January 1, 2019; and the 

amendments to § 1003.2 in amendatory 

instruction 11, the amendments to 

§ 1003.3 in amendatory instruction 12, 

the amendments to § 1003.5 in 

amendatory instruction 13, the 

amendments to § 1003.6 in amendatory 

instruction 14, and the amendments to 

supplement I to part 1003 in 

amendatory instruction 15 are effective 

on January 1, 2020. See part VI for more 

information. 

FOR FURTHER INFORMATION CONTACT: 

Shaakira Gold-Ramirez, Paralegal 

Specialist, Joseph Devlin, Angela Fox, 

Kathryn Lazarev, and Alexandra W. 

Reimelt, Counsels; and Terry J. Randall, 

Senior Counsel, Office of Regulations, at 

202–435–7700 or https://

www.consumerfinance.gov/policycompliance/guidance/. 

SUPPLEMENTARY INFORMATION: 

I. Summary of the Final Rule 

Regulation C implements the Home 

Mortgage Disclosure Act (HMDA), 12 

U.S.C. 2801 through 2810. For over four 

decades, HMDA has provided the public 

and public officials with information 

about mortgage lending activity within 

communities by requiring financial 

institutions to collect, report, and 

disclose certain data about their 

mortgage activities. The Dodd-Frank 

Wall Street Reform and Consumer 

Protection Act (Dodd-Frank Act) 

amended HMDA, transferring 

rulewriting authority to the Bureau and 

expanding the scope of information that 

must be collected, reported, and 

disclosed under HMDA, among other 

changes.1 In October 2015, the Bureau 

issued the 2015 HMDA Final Rule 

implementing the Dodd-Frank Act 

amendments to HMDA.2 The 2015 

HMDA Final Rule modified the types of 

institutions and transactions subject to 

Regulation C, the types of data that 

institutions are required to collect, and 

the processes for reporting and 

disclosing the required data.3 In 

addition, the 2015 HMDA Final Rule 

established transactional thresholds that 

determine whether financial institutions 

are required to collect data on open-end 

lines of credit or closed-end mortgage 

loans. The closed-end threshold was set 

at 25 loans in each of the two preceding 

calendar years, and the open-end 

threshold was set at 100 open-end lines 

of credit in each of the two preceding 

calendar years. Most of the 2015 HMDA 

Final Rule takes effect on January 1, 

2018. 

The Bureau has identified a number 

of areas in which implementation of the 

2015 HMDA Final Rule could be 

facilitated through clarifications, 

technical corrections, or minor changes. 

On April 25, 2017, the Bureau 

published a notice of proposed 

rulemaking (April 2017 HMDA 

Proposal) that would make certain 

amendments to Regulation C to address 

those areas.4 Since issuing the 2015 

HMDA Final Rule, the Bureau also has 

heard concerns that the open-end 

threshold at 100 transactions is too low. 

On July 20, 2017, the Bureau published 

a proposal (July 2017 HMDA Proposal) 

to address the threshold for reporting 

open-end lines of credit.5 The Bureau is 

publishing final amendments to 

Regulation C pursuant to the April 2017 

HMDA Proposal and the July 2017 

HMDA Proposal. 

This final rule temporarily increases 

the open-end threshold to 500 or more 

open-end lines of credit for two years 

(calendar years 2018 and 2019). In 

addition, the final rule corrects a 

drafting error by clarifying both the 

open-end and closed-end thresholds so 

that only financial institutions that meet 

the threshold for two years in a row are 

required to collect data in the following 

calendar years. With these amendments, 

financial institutions that originated 

between 100 and 499 open-end lines of 

credit in either of the two preceding 

calendar years will not be required to 

begin collecting data on their open-end 

lending before January 1, 2020. This 

temporary increase in the open-end 

threshold will provide time for the 

Bureau to consider whether to initiate 

another rulemaking to address the 

appropriate level for the open-end 

threshold for data collected beginning 

January 1, 2020. 

The final rule establishes transition 

rules for two data points, loan purpose 

and the unique identifier for the loan 

originator. The transition rules require, 

in the case of loan purpose, or permit, 

in the case of the unique identifier for 

the loan originator, financial institutions 

to report not applicable for these data 

points when reporting certain loans that 

they purchased and that were originated 

before certain regulatory requirements 

took effect. The final rule also makes 

additional amendments to clarify 

certain key terms, such as multifamily 

dwelling, temporary financing, and 

automated underwriting system, and to 

create a new reporting exception for 

certain transactions associated with 

New York State consolidation, 

extension, and modification agreements. 

In addition, the 2017 HMDA Final 

Rule facilitates reporting the census 

tract of the property securing or, in the 

case of an application, proposed to 

secure a covered loan that is required to 

be reported by Regulation C. The Bureau 

plans to make available on its Web site 

a geocoding tool that financial 

institutions may use to identify the 

census tract in which a property is 

located. The final rule establishes that a 

financial institution would not violate 

Regulation C by reporting an incorrect 

census tract for a particular property if 

the financial institution obtained the 

incorrect census tract number from the 

geocoding tool on the Bureau’s Web site, 

provided that the financial institution 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43089 

6HMDA section 302(b), 12 U.S.C. 2801(b); see 

also 12 CFR 1003.1(b)(1)(i) and (ii). 

7Financial Institutions Reform, Recovery, and 

Enforcement Act of 1989, Public Law 101–73, 

section 1211 (‘‘Fair lending oversight and 

enforcement’’ section), 103 Stat. 183, 524–26 (1989). 

8 54 FR 51356, 51357 (Dec. 15, 1989), codified at 

12 CFR 1003.1(b)(1). 

9 Dodd-Frank Wall Street Reform and Consumer 

Protection Act, Public Law 111–203, 124 Stat. 1376, 

sections 1022, 1061, and 1094 (2010). Also, in 2010, 

the Board conducted public hearings on potential 

revisions to Regulation C. 

10 Dodd-Frank Act section 1094(3)(A), amending 

HMDA section 304(b), 12 U.S.C. 2803(b). 

11 Id. 

12 Id. 

13 Dodd-Frank Act section 1094(3)(B), amending 

HMDA section 304(h), 12 U.S.C. 2803(h). 

14 2015 HMDA Final Rule, 80 FR 66128 (Oct. 28, 

2015). 

15 12 CFR 1003.4(c)(3). 

16 2015 HMDA Final Rule, 80 FR 66128, 66160– 

61 (Oct. 28, 2015). 

17 Id. 

18 Id. at 66160. 

entered an accurate property address 

into the tool and the tool returned a 

census tract for the address entered. 

Finally, the final rule also makes 

certain technical corrections. These 

technical corrections include, for 

example, a change to the calculation of 

the check digit under § 1003.4(a)(1)(i) 

and replacement of the word ‘‘income’’ 

with the correct word ‘‘age’’ in comment 

4(a)(10)(ii)–3. 

II. Background 

HMDA requires certain banks, savings 

associations, credit unions, and forprofit nondepository institutions to 

collect, report, and disclose data about 

originations and purchases of mortgage 

loans, as well as mortgage loan 

applications that do not result in 

originations (for example, applications 

that are denied or withdrawn). When 

the statute was originally adopted, 

Congress stated the purposes of HMDA 

as providing the public and public 

officials with information to help 

determine whether financial institutions 

are serving the housing needs of the 

communities in which they are located 

and to assist public officials in their 

determination of the distribution of 

public sector investments in a manner 

designed to improve the private 

investment environment.6 Congress 

later expanded HMDA to require, among 

other things, financial institutions to 

report racial characteristics, gender, and 

income information on applicants and 

borrowers.7 In light of these 

amendments, the Board of Governors of 

the Federal Reserve System (Board) 

subsequently recognized a third HMDA 

purpose of identifying possible 

discriminatory lending patterns and 

enforcing antidiscrimination statutes, 

which now is recited with HMDA’s 

other purposes in Regulation C.8

In 2010, Congress enacted the DoddFrank Act, which amended HMDA and 

also transferred HMDA rulemaking 

authority and other functions from the 

Board to the Bureau.9 Among other 

changes, the Dodd-Frank Act expands 

the scope of information relating to 

mortgage applications and loans that 

must be collected, reported, and 

disclosed under HMDA. New data 

points specified in the Dodd-Frank Act 

include the age of loan applicants and 

mortgagors, information relating to the 

points and fees payable at origination, 

the difference between the annual 

percentage rate (APR) associated with 

the loan and a benchmark rate or rates, 

the term of any prepayment penalty, the 

value of real property to be pledged as 

collateral, the term of the loan and of 

any introductory interest rate for the 

loan, the presence of contract terms 

allowing nonamortizing payments, the 

origination channel, and the credit 

scores of applicants and mortgagors.10

The Dodd-Frank Act also authorizes the 

Bureau to require, ‘‘as [it] may 

determine to be appropriate,’’ a unique 

identifier that identifies the loan 

originator, a universal loan identifier, 

and the parcel number that corresponds 

to the real property pledged or proposed 

to be pledged as collateral for the 

mortgage loan.11 The Dodd-Frank Act 

also provides the Bureau with the 

authority to require ‘‘such other 

information as the Bureau may 

require.’’ 12 In addition, the Dodd-Frank 

Act mandated that the Bureau, in 

consultation with other appropriate 

agencies, develop regulations after 

notice and comment that (1) prescribe 

the format for such disclosures, the 

method for submission of the data to the 

appropriate agency, and the procedures 

for disclosing the information to the 

public; (2) require the collection of data 

required to be disclosed under HMDA 

section 304(b) with respect to loans sold 

by each institution reporting under this 

title; (3) require disclosure of the class 

of the purchaser of such loans; (4) 

permit any reporting institution to 

submit in writing to the Bureau or to the 

appropriate agency such additional data 

or explanations as it deems relevant to 

the decision to originate or purchase 

mortgage loans; and (5) modify or 

require modification of itemized 

information, for the purpose of 

protecting the privacy interests of the 

mortgage applicants or mortgagors that 

is or will be available to the public.13

III. Summary of Rulemaking Process 

In October 2015, the Bureau issued 

the 2015 HMDA Final Rule, which 

implemented the Dodd-Frank Act 

amendments to HMDA.14 The 2015 

HMDA Final Rule modifies the types of 

institutions and transactions subject to 

Regulation C, the types of data that 

institutions are required to collect, and 

the processes for reporting and 

disclosing the required data. Most of the 

provisions of the 2015 HMDA Final 

Rule will become effective on January 1, 

2018. 

The 2015 HMDA Final Rule requires 

some financial institutions to begin 

collecting data on certain dwellingsecured, open-end lines of credit, 

including home-equity lines of credit. 

Current Regulation C allows, but does 

not require, reporting of home-equity 

lines of credit.15 In amending 

Regulation C, the Bureau explained that 

it believed collection of data on these 

products was important because of the 

risks posed by these products to 

consumers and local markets and the 

lack of visibility into these products. 

The Bureau noted in the 2015 HMDA 

Final Rule that overleverage due to 

open-end mortgage lending and defaults 

on open-end lines of credit contributed 

to the foreclosure crises that many 

communities experienced in the late 

2000s.16 More generally, as the Bureau 

also noted in the 2015 HMDA Final 

Rule, open-end lines of credit can 

increase borrowers’ risk of losing their 

homes to foreclosure when property 

values decline.17 The Bureau concluded 

that including data on such lines within 

the HMDA dataset would help the 

public and public officials understand 

how financial institutions are meeting 

the housing needs of communities, 

would inform public officials identify 

areas for targeted investment, and 

would assist the public and public 

officials in identifying potential fair 

lending violations.18 For these and other 

reasons articulated in the 2015 HMDA 

Final Rule, the Bureau decided to 

improve visibility into this key segment 

of the mortgage market by requiring 

reporting of open-end lines of credit. 

As noted in the July 2017 HMDA 

Proposal and in the 2015 HMDA Final 

Rule, in expanding coverage to include 

mandatory reporting of open-end lines 

of credit, the Bureau recognized that 

doing so would impose one-time and 

ongoing operational costs on reporting 

institutions; that the one-time costs of 

modifying processes and systems and 

training staff to begin open-end line of 

credit reporting likely would impose 

significant costs on some institutions; 

and that institutions’ ongoing reporting 

costs would increase as a function of 


sradovich on DSK3GMQ082PROD with RULES2
43090 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

19 Id. at 66161. 20 Id. at 66149. 21 Id. 22 Id. at 66261, 66275 n.477. As the Bureau 

explained, credit union Call Reports provide the 

number of originations of open-end lines of credit 

secured by real estate but exclude lines of credit 

with first-lien status and may include business 

loans that are excluded from reporting under the 

2015 HMDA Final Rule. Id. at 66281 n.489. 

23 Id. at 66281 n.489. The Bureau limited its 

estimate to depositories because it believes that 

most nondepositories do not originate open-end 

lines of credit. Id. at 66281. 

24The first row in the chart, labeled ‘‘Proposed,’’ 

assumed that financial institutions would be 

required to report on their open-end lines of credit 

regardless of the number originated so long as the 

institution originated at least 25 closed-end 

mortgages during each of the prior two calendar 

years. This row reflects the impact of the rule that 

the Bureau had proposed. The remaining rows 

assume that reporting of open-end lines of credit 

would be required without regard to the number of 

closed-end loans originated and, instead, only if the 

financial institution originated the number of openend lines of credit shown in the various rows. Id. 

at 66281. 

25 Id. at 66275 n.477. 

26 Id. at 66261. The seven factors were: the 

reporting system used; the degree of system 

integration; the degree of system automation; the 

compliance program; and the tools for geocoding, 

performing completeness checks, and editing. Id. at 

66269. 

27 Id. at 66285. 

28For purposes of calculating aggregate costs, the 

Bureau assumed that the average tier 1 institution 

received 30,000 applications for open-end lines of 

credit; the average tier 2 institution received 1,000 

such applications; and the average tier 3 institution 

received 150 such applications. Id. at 66286. 

29 Id. at 66264; see also id. at 66284–85. 

30 Id. at 66265; see also id. at 66284. 

31 Id. at 66285. 

32 Id. 

their open-end lending volume.19 The 

Bureau sought to avoid imposing these 

costs on small institutions with limited 

open-end lending, where the benefits of 

reporting the data do not justify the 

costs of reporting.20 In seeking to draw 

such a line, the Bureau acknowledged 

that it was handicapped by the lack of 

available data concerning open-end 

lending.21 This created challenges both 

in estimating the distribution of openend origination volume across financial 

institutions and in estimating the onetime and ongoing costs that would be 

incurred by institutions of various sizes 

in collecting and reporting data on 

open-end lending. 

Concerning open-end origination 

volume, the Bureau used multiple data 

sources, including credit union Call 

Reports, Call Reports for banks and 

thrifts, and data from the Bureau’s 

Consumer Credit Panel to develop 

estimates for different potential 

thresholds in the 2015 HMDA Final 

Rule.22 The Bureau assumed that all of 

the depository institutions that were 

exempted from HMDA reporting under 

Regulation C because of their location or 

asset size would continue to be 

exempt.23 Concerning the remaining 

depositories, the Bureau developed the 

following estimates: 24

TABLE 8—ESTIMATES OF DEPOSITORY INSTITUTION COVERAGE BY OPEN-END LINE OF CREDIT THRESHOLDS

Potential open-end-line-of-credit threshold 

Number of 

reporting 

financial 

institutions 

Number of 

open-end 

lines of credit 

(rounded 

to nearest 

ten thousand) 

Percentage 

of market 

covered 

Number of reporting 

financial institutions 

that also report 

closed-end mortgage loans 

Not a closedend reporter Closed-end 

reporter 

Proposed .......................................................................... 4,146 910,000 94 0 4,146 

25 ..................................................................................... 1,770 900,000 93 103 1,667 

50 ..................................................................................... 1,155 870,000 91 55 1,100 

100 ................................................................................... 749 850,000 88 24 725 

500 ................................................................................... 231 730,000 76 3 228 

1,000 ................................................................................ 123 650,000 68 0 123 

5,000 ................................................................................ 25 440,000 46 0 25 

The Bureau noted that expansions or 

contractions in the number of financial 

institutions, or changes in product 

offerings and demands during 

implementation could alter the 

estimated impacts.25

To estimate the one-time and ongoing 

costs of collecting and reporting data 

under HMDA in the 2015 HMDA Final 

Rule, the Bureau identified seven 

‘‘dimensions’’ of compliance operations 

and used those to define three broadly 

representative financial institutions 

according to the overall level of 

complexity of their compliance 

operations: ‘‘tier 1’’ (high-complexity); 

‘‘tier 2’’ (moderate-complexity); and 

‘‘tier 3’’ (low-complexity).26 In 

estimating costs specific to collecting 

and reporting data for open-end lines of 

credit, the Bureau assumed that tier 1 

institutions each originate more than 

7,000 such lines of credit, that tier 2 

institutions each originate between 200 

and 7,000 such lines of credit, and that 

tier 3 institutions each originate fewer 

than 200 such lines of credit.27 The 

Bureau then sought to estimate one-time 

and ongoing costs for the average-size 

institution in each tier.28

Concerning one-time costs, the 

Bureau recognized in the 2015 HMDA 

Final Rule that the one-time cost of 

reporting open-end lines of credit could 

be substantial because most financial 

institutions do not report open-end lines 

of credit currently and thus would have 

to develop completely new systems to 

begin reporting these data. As a result, 

there would be one-time costs to create 

processes and systems for open-end 

lines of credit.29 However, for tier 3, 

low-complexity institutions, the Bureau 

believed that the additional one-time 

costs of open-end reporting would be 

relatively low because these institutions 

are less reliant on information 

technology systems for HMDA reporting 

and that they may process open-end 

lines of credit on the same system and 

in the same business unit as closed-end 

mortgage loans, so that their one-time 

costs would be derived mostly from new 

training and procedures adopted for the 

overall changes in the final rule, not 

distinct from costs related to changes in 

reporting of closed-end mortgage 

loans.30

Concerning ongoing costs, the Bureau 

acknowledged that costs for open-end 

reporting vary by institutions due to 

many factors, such as size, operational 

structure, and product complexity, and 

that this variance exists on a continuum 

that was impossible to capture fully.31

At the same time, the Bureau stated it 

believed that the HMDA reporting 

process and ongoing operational cost 

structure for open-end reporting would 

be fundamentally similar to closed-end 

reporting.32 Thus, using the ongoing 

cost estimates developed for closed-end 

reporting, the Bureau estimated that for 

the average tier 1 institutions the 

ongoing operational costs would be 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43091 

33 Id. at 66286. 

34 Id. 

35 Id. at 66162. 

36 Id. The estimate of the number of institutions 

that would be excluded by the transaction coverage 

threshold was relative to the number that would 

have been covered under the Bureau’s proposal that 

led to the 2015 HMDA Final Rule. Under that 

proposal, a financial institution would have been 

required to report its open-end lines of credit if it 

had originated at least 25 closed-end mortgage loans 

in each of the preceding two years without regard 

to how many open-end lines of credit the 

institution originated. See Home Mortgage 

Disclosure (Regulation C), 79 FR 51732 (Aug. 29, 

2014). 

37 2015 HMDA Final Rule, 80 FR 66128, 66281 

(Oct. 28, 2015). 

38 Id. at 66162. 

39Revised § 1003.2(g)(1)(v) and (g)(2)(ii). The 

2015 HMDA Final Rule excludes certain 

transactions from the definition of covered loans 

and those excluded transactions do not count 

towards the institutional transaction threshold. 

40Revised § 1003.3(c)(12). As discussed below, 

the exclusion as adopted in the 2015 HMDA Final 

Rule was intended to apply if the financial 

institution originated fewer than 100 open-end lines 

of credit in either of the two preceding calendar 

years; the current text of the rule was a drafting 

error that the Bureau is correcting with this notice. 

The 2015 HMDA Final Rule created a separate 

transactional coverage threshold for closed-end 

mortgages, treating those as excluded transactions 

if an institution originated fewer than 25 closed-end 

mortgage loans in each of the two preceding 

calendar years. Id. at § 1003.3(c)(11). As discussed 

below, the Bureau is adopting a proposal to change 

the ‘‘each’’ in this text to ‘‘either.’’ 

41April 2017 HMDA Proposal, 82 FR 19142 (Apr. 

25, 2017). 

42 July 2017 HMDA Proposal, 82 FR 33455 (July 

20, 2017). 

$273,000 per year; for the average tier 2 

institution $43,400 per year; and for the 

average tier 3 institution $8,600 per 

year.33 These translated into average 

costs per HMDA record of $9, $43, and 

$57 respectively.34 Importantly, the 

Bureau acknowledged that, precisely 

because no good source of publicly 

available data exists concerning openend lines of credit, it was difficult to 

predict the accuracy of the Bureau’s cost 

estimates but also stated its belief that 

they were reasonably reliable.35

Drawing on all of these estimates, the 

Bureau decided to establish an openend threshold that would require 

institutions that originate 100 or more 

open-end lines of credit to collect and 

report data. The Bureau estimated that 

this threshold would avoid imposing 

the burden of establishing open-end 

reporting on approximately 3,000 

predominantly smaller-sized 

institutions with low-volume open-end 

lending 36 and would require reporting 

by only 749 financial institutions, all 

but 24 of which would also report data 

on their closed-end mortgage lending.37

The Bureau explained that it believed 

this threshold appropriately balanced 

the benefits and burdens of covering 

institutions based on their open-end 

mortgage lending.38

To effectuate this decision, the 2015 

HMDA Final Rule amended Regulation 

C to define two discrete thresholds that 

were intended to work in tandem. First, 

the rule established an institutional 

coverage threshold that limits the 

definition of ‘‘financial institution’’ to 

include only those institutions that 

either originated at least 25 covered 

closed-end mortgages in each of the 

preceding years or that originated at 

least 100 covered open-end lines of 

credit in each of the two preceding 

years.39 Second, the rule separately 

established a transactional coverage 

threshold for open-end lines of credit by 

providing that an open-end line of 

credit is an excluded transaction if the 

financial institution originated fewer 

than 100 open-end lines of credit in 

each of the two preceding calendar 

years.40

April 2017 HMDA Proposal 

Since issuing the 2015 HMDA Final 

Rule, the Bureau has conducted 

outreach with financial institutions, 

HMDA vendors, and other interested 

parties. As part of these efforts and 

through its own analysis of the 2015 

HMDA Final Rule, the Bureau identified 

certain technical errors in the Final 

Rule, potential ways to ease burden of 

reporting certain data requirements, and 

clarification of key terms that will 

facilitate compliance with Regulation C. 

On April 13, 2017, the Bureau issued 

the April 2017 HMDA Proposal, which 

was published in the Federal Register 

on April 25, 2017,41 addressing these 

issues. 

The comment period for the April 

2017 HMDA Proposal closed on May 25, 

2017. The Bureau received a total of 51 

comments from financial institutions, 

financial trade associations, compliance 

and software vendors, consumer 

advocacy groups, and individuals. The 

Bureau has considered all the comments 

and discusses the responsive comments 

below and now issues this final rule 

with certain changes and adjustments, 

as described below. As discussed in a 

number of instances below, the Bureau 

received comments on topics related to 

the 2015 HMDA Final Rule, but not 

relevant to those topics the Bureau had 

raised in the April and July 2017 HMDA 

Proposals. The Bureau considered all 

the comments but, as discussed further 

below, in many instances, found that 

these comments did not raise points 

relevant to the Bureau’s decisions raised 

in its proposals. 

July 2017 HMDA Proposal 

Since the Bureau issued the 2015 

HMDA Final Rule, many industry 

stakeholders have expressed concerns 

over the levels for the transactional 

coverage thresholds. Recent credit 

union Call Report data, coupled with 

the evidence as to the number of 

institutions that would be covered by 

the open-end threshold contained in the 

2015 HMDA Final Rule, led the Bureau 

to seek comment to determine whether 

an adjustment to the threshold is 

appropriate. On July 14, 2017, the 

Bureau issued the July 2017 HMDA 

Proposal, which was published in the 

Federal Register on July 20, 2017.42 The 

proposal would have increased 

temporarily the open-end threshold for 

both institutional and transactional 

coverage so that institutions originating 

fewer than 500 open-end lines of credit 

in either of the two preceding calendar 

years would not have been required to 

commence collecting or reporting data 

on their open-end lines of credit until 

January 1, 2020. 

The comment period for the July 2017 

HMDA Proposal closed on July 31, 

2017. The Bureau received 35 

comments, which were from financial 

institutions, financial trade associations, 

consumer advocacy groups, and 

individuals. The Bureau has considered 

all comments and now finalizes the 

amendments as proposed for the reasons 

discussed below. 

The Bureau consulted or offered to 

consult with the appropriate Federal 

agencies concerning both proposals, at 

both the proposed and final rule stages 

of the rulemaking. The Bureau 

consulted or offered to consult with the 

Board, the Federal Deposit Insurance 

Corporation, the Office of the 

Comptroller of the Currency, the 

National Credit Union Administration, 

the Department of Housing and Urban 

Development, the Securities and 

Exchange Commission, the Department 

of Justice, the Department of Veterans 

Affairs, the Federal Housing Finance 

Agency (FHFA), the Department of the 

Treasury, the Department of 

Agriculture, the Federal Trade 

Commission, and the Federal Financial 

Institutions Examination Council 

(FFIEC). 

IV. Legal Authority 

The Bureau is issuing this final rule 

pursuant to its authority under the 

Dodd-Frank Act and HMDA. This final 

rule consists of amendments and 

corrections to the 2015 HMDA Final 

Rule and a temporary change to the 

threshold for reporting open-end lines 

of credit established in the 2015 HMDA 

Final Rule. Section 1061 of the DoddFrank Act transferred to the Bureau the 


sradovich on DSK3GMQ082PROD with RULES2
43092 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

43 12 U.S.C. 5581. Section 1094 of the Dodd-Frank 

Act also replaced the term ‘‘Board’’ with ‘‘Bureau’’ 

in most places in HMDA. 12 U.S.C. 2803 et seq. 

44 12 U.S.C. 5581(a)(1)(A). 

45 12 U.S.C. 5512(b)(1). 

46 Dodd-Frank Act section 1002(14), 12 U.S.C. 

5481(14) (defining ‘‘Federal consumer financial 

law’’ to include the ‘‘enumerated consumer laws’’ 

and the provisions of title X of the Dodd-Frank Act); 

Dodd-Frank Act section 1002(12), 12 U.S.C. 

5481(12) (defining ‘‘enumerated consumer laws’’ to 

include HMDA). 

47 12 U.S.C. 2804(a). 

48 Id. 

49See, e.g., HMDA section 304(a)(1), (j)(2)(A), 

(j)(3), (m)(2), 12 U.S.C. 2803(a)(1), (j)(2)(A), (j)(3), 

(m)(2); see also HMDA section 304(b)(6)(I), 12 

U.S.C. 2803(b)(6)(I) (requiring covered institutions 

to use ‘‘such form as the Bureau may prescribe’’ in 

reporting credit scores of mortgage applicants and 

mortgagors). HMDA section 304(k)(1) also requires 

depository institutions covered by HMDA to make 

disclosure statements available ‘‘[i]n accordance 

with procedures established by the Bureau pursuant 

to this section.’’ 12 U.S.C. 2803(k)(1). 

50 12 U.S.C. 2803(j)(1). 

51 12 U.S.C. 2803(j)(2)(B). 

52 12 U.S.C. 2803(j)(7). 

53 12 U.S.C. 2803(e). 

54 12 U.S.C. 2803(h)(1); see also HMDA section 

304(n), 12 U.S.C. 2803(n) (discussing submission to 

the Bureau or the appropriate agency ‘‘in 

accordance with regulations prescribed by the 

Bureau’’). For purposes of HMDA section 304(h), 

HMDA section 304(h)(2) defines the appropriate 

agencies for different categories of financial 

institutions. The agencies are the Federal banking 

agencies, the FDIC, the NCUA, and HUD. 12 U.S.C. 

2803(h)(2). 

55 12 U.S.C. 2803(h)(1). The Dodd-Frank Act also 

added new HMDA section 304(h)(3), which directs 

the Bureau to prescribe standards for any 

modification pursuant to HMDA section 

304(h)(1)(E), to effectuate HMDA’s purposes, in 

light of the privacy interests of mortgage applicants 

or mortgagors. 12 U.S.C. 2803(h)(1)(E), 2803(h)(3). 

56HMDA section 304(l)(2)(A), 12 U.S.C. 

2803(l)(2)(A) (setting maximum disclosure periods 

except as provided under other HMDA subsections 

and regulations prescribed by the Bureau); HMDA 

section 304(n), 12 U.S.C. 2803(n). 

57HMDA section 304(b)(5)(D), (b)(6)(J), 12 U.S.C. 

2803(b)(5)(D), (b)(6)(J). 

58HMDA section 304(b)(6)(F), (G), (H), 12 U.S.C. 

2803(b)(6)(F), (G), (H). 

59HMDA section 304(h)(3)(A)(ii), 12 U.S.C. 

2803(h)(3)(A)(ii). 

60HMDA section 307(a), 12 U.S.C. 2806(a) 

(authorizing the Bureau’s Director to utilize, 

contract with, act through, or compensate any 

person or agency to carry out this subsection). 

61HMDA section 309(a), 12 U.S.C. 2808(a). 

‘‘consumer financial protection 

functions’’ previously vested in certain 

other Federal agencies, including the 

Board.43 The term ‘‘consumer financial 

protection function’’ is defined to 

include ‘‘all authority to prescribe rules 

or issue orders or guidelines pursuant to 

any Federal consumer financial law, 

including performing appropriate 

functions to promulgate and review 

such rules, orders, and guidelines.’’ 44

Section 1022(b)(1) of the Dodd-Frank 

Act authorizes the Bureau’s Director to 

prescribe rules ‘‘as may be necessary or 

appropriate to enable the Bureau to 

administer and carry out the purposes 

and objectives of the Federal consumer 

financial laws, and to prevent evasions 

thereof.’’ 45 Both HMDA and title X of 

the Dodd-Frank Act are Federal 

consumer financial laws.46 Accordingly, 

the Bureau has authority to issue 

regulations to administer HMDA. 

HMDA section 305(a) broadly 

authorizes the Bureau to prescribe such 

regulations as may be necessary to carry 

out HMDA’s purposes.47 These 

regulations may include 

‘‘classifications, differentiations, or 

other provisions, and may provide for 

such adjustments and exceptions for 

any class of transactions, as in the 

judgment of the Bureau are necessary 

and proper to effectuate the purposes of 

[HMDA], and prevent circumvention or 

evasion thereof, or to facilitate 

compliance therewith.’’ 48

A number of HMDA provisions 

specify that covered institutions must 

compile and make their HMDA data 

publicly available ‘‘in accordance with 

regulations of the Bureau’’ and ‘‘in such 

formats as the Bureau may require.’’ 49

HMDA section 304(j)(1) authorizes the 

Bureau to issue regulations to define the 

loan/application register information 

that HMDA reporters must make 

available to the public upon request and 

to specify the form required for such 

disclosures.50 HMDA section 

304(j)(2)(B) provides that ‘‘[t]he Bureau 

shall require, by regulation, such 

deletions as the Bureau may determine 

to be appropriate to protect—(i) any 

privacy interest of any applicant . . . 

and (ii) a depository institution from 

liability under any Federal or State 

privacy law.’’ 51 HMDA section 304(j)(7) 

also directs the Bureau to make every 

effort in prescribing regulations under 

the section to minimize the costs 

incurred by a depository institution in 

complying with such regulations.52

HMDA section 304(e) directs the 

Bureau to prescribe a standard format 

for HMDA disclosures required under 

HMDA section 304.53 As amended by 

the Dodd-Frank Act, HMDA section 

304(h)(1) requires HMDA data to be 

submitted to the Bureau or to the 

appropriate agency for the reporting 

financial institution ‘‘in accordance 

with rules prescribed by the Bureau.’’ 54

HMDA section 304(h)(1) also directs the 

Bureau, in consultation with other 

appropriate agencies, to develop 

regulations after notice and comment 

that (1) prescribe the format for such 

disclosures, the method for submission 

of the data to the appropriate agency, 

and the procedures for disclosing the 

information to the public; (2) require the 

collection of data required to be 

disclosed under HMDA section 304(b) 

with respect to loans sold by each 

institution reporting under this title; (3) 

require disclosure of the class of the 

purchaser of such loans; (4) permit any 

reporting institution to submit in 

writing to the Bureau or to the 

appropriate agency such additional data 

or explanations as it deems relevant to 

the decision to originate or purchase 

mortgage loans; and (5) modify or 

require modification of itemized 

information, for the purpose of 

protecting the privacy interests of the 

mortgage applicants or mortgagors that 

is or will be available to the public.55

HMDA also authorizes the Bureau to 

issue regulations relating to the timing 

of HMDA disclosures.56

As amended by the Dodd-Frank Act, 

HMDA section 304 requires itemization 

of specified categories of information 

and ‘‘such other information as the 

Bureau may require.’’ 57 Specifically, 

HMDA section 304(b)(5)(D) requires 

reporting of ‘‘such other information as 

the Bureau may require’’ for mortgage 

loans, and section 304(b)(6)(J) requires 

reporting of ‘‘such other information as 

the Bureau may require’’ for mortgage 

loans and applications. HMDA section 

304 also identifies certain data points 

that are to be included in the 

itemization ‘‘as the Bureau may 

determine to be appropriate.’’ 58 It 

provides that age and other categories of 

data shall be modified prior to release 

‘‘as the Bureau determines to be 

necessary’’ to satisfy the statutory 

purpose of protecting the privacy 

interests of the mortgage applicants or 

mortgagors.59

The Dodd-Frank Act amendments to 

HMDA also authorize the Bureau’s 

Director to develop or assist in the 

improvement of methods of matching 

addresses and census tracts to facilitate 

HMDA compliance by depository 

institutions in as economical a manner 

as possible.60 The Bureau, in 

consultation with the Secretary of HUD, 

may also exempt for-profit mortgagelending institutions that are comparable 

within their respective industries to a 

bank, savings association, or credit 

union that has total assets of $10 million 

or less.61

In preparing this final rule, the 

Bureau has considered the changes 

below in light of its legal authority 

under HMDA and the Dodd-Frank Act. 

The Bureau has determined that each of 

the changes addressed below is 

consistent with the purposes of HMDA 

and is authorized by one or more of the 

sources of statutory authority identified 

in this part. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43093 

62Revised comment 2(d)–2.i provides another 

exception, for assumptions, which Regulation C 

historically has covered. The Bureau is not making 

any change to the assumptions exception. 

63As noted below and as explained in the April 

2017 HMDA Proposal, under the institutional 

coverage threshold adopted by the 2015 HMDA 

Final Rule, the definition of financial institution 

included only institutions that originate either 25 

or more closed-end mortgage loans or 100 or more 

open-end lines of credit in each of the two 

preceding calendar years and satisfy the other 

applicable coverage criteria. That threshold and the 

transactional coverage threshold in 12 CFR 

Continued 

V. Section-by-Section Analysis 

The discussion below uses the 

following terminology to refer to 

provisions or proposed provisions of 

Regulation C, as applicable: ‘‘Current 

§ 1003.X’’ refers to the provision 

currently in effect, which does not 

reflect amendments to Regulation C 

made by the 2015 HMDA Final Rule 

that have not yet taken effect; ‘‘Revised 

§ 1003.X’’ refers to the provision as 

revised by the 2015 HMDA Final Rule; 

‘‘§ 1003.X as adopted by the 2015 

HMDA Final Rule,’’ refers to a provision 

newly adopted by the 2015 HMDA Final 

Rule; and ‘‘Proposed § 1003.X’’ refers to 

the proposed amendments from the 

April 2017 HMDA Proposal or the July 

2017 HMDA Proposal, pursuant to 

which this final rule is adopted. 

Section 1003.2 Definitions 

2(d) Closed-End Mortgage Loan 

In the 2015 HMDA Final Rule, the 

Bureau adopted § 1003.2(d) to provide 

that a closed-end mortgage loan is a 

dwelling-secured extension of credit 

that is not an open-end line of credit. 

Comment 2(d)–2, as adopted by the 

2015 HMDA Final Rule, provides 

guidance on what constitutes an 

extension of credit, including an 

example of a transaction that would not 

be a closed-end mortgage loan because 

no credit is extended. Comment 2(d)–2 

also explains that, for purposes of 

Regulation C, an extension of credit 

refers to the granting of credit pursuant 

to a new debt obligation. The comment 

provides that if a transaction modifies, 

renews, extends, or amends the terms of 

an existing debt obligation without 

satisfying and replacing the original 

debt obligation with a new debt 

obligation, the transaction generally is 

not an extension of credit under 

Regulation C. The Bureau proposed 

certain clarifying amendments to 

comment 2(d)–2. 

As adopted by the 2015 HMDA Final 

Rule, the example in comment 2(d)–2 

illustrating a transaction in which there 

is no extension of credit discussed 

installment land sales contracts and 

included a specific description of an 

installment land sales contract that 

would not be considered an extension of 

credit. The Bureau proposed to remove 

this specific description from comment 

2(d)–2, while also providing more 

generally that installment land sales 

contracts, depending on the facts and 

circumstances, may or may not involve 

extensions of credit rendering the 

transactions closed-end mortgage loans. 

Three industry commenters expressed 

support for the proposed change. One 

stated that the new language would add 

clarity by acknowledging the 

complexity of the determination of 

whether the transaction involves an 

extension of credit. Two industry 

commenters expressed opposition to the 

proposal, stating that it would introduce 

additional ambiguity and reporting 

challenges. 

For the reasons discussed below, the 

Bureau is adopting the provision as 

proposed. The Bureau believes that the 

specific description of an installment 

land sales contract that would not be an 

extension of credit, which was included 

in the 2015 HMDA Final Rule, is not 

helpful for illustrating a transaction in 

which there is no extension of credit. 

Whether an installment land sales 

contract is an extension of credit is a 

fact-specific inquiry that depends on the 

particular installment contract’s terms 

and other facts and circumstances. A 

short description without relevant 

details does not accurately illustrate the 

complexity of such a determination. 

Although making this determination 

may be challenging for some financial 

institutions, it is not feasible for the 

Bureau to provide specific examples, 

due to the numerous and complex forms 

of installment land sales contracts and 

situations in which they arise. 

Comment 2(d)–2.ii, as adopted by the 

2015 HMDA Final Rule, also provides a 

narrow exception to revised Regulation 

C’s general rule that an extension of 

credit occurs only when a new debt 

obligation is created. Under that 

exception, a transaction completed 

pursuant to a New York State 

consolidation, extension, and 

modification agreement and classified 

as a supplemental mortgage under New 

York Tax Law section 255, such that the 

borrower owes reduced or no mortgage 

recording taxes (New York CEMA), is 

deemed an extension of credit.62 The 

Bureau proposed no changes to the 

extension of credit exception for New 

York CEMAs in comment 2(d)–2.ii but 

did propose to include in it a clarifying 

reference to the new § 1003.3(c)(13) 

exclusion for preliminary transactions 

consolidated into New York CEMAs, 

discussed below. There were no 

comments on this clarifying reference, 

and the Bureau is adopting it as 

proposed with minor edits for clarity. 

2(f) Dwelling 

The Bureau proposed to revise 

comment 2(f)–2 as adopted by the 2015 

HMDA Final Rule by adding language to 

clarify treatment of multi-location loans. 

The Bureau is revising the proposed 

language, and is incorporating that 

language into new comment 2(n)–3, as 

discussed below. 

In addition to the multi-location loan 

clarification, the Bureau proposed a 

technical correction to comment 2(f)–2. 

The Bureau proposed to change the term 

‘‘complexes’’ to ‘‘housing complexes’’ 

for clarity, with no change in meaning 

intended. The Bureau received only one 

comment on this change, and the 

commenter expressed support for the 

change. The Bureau is now adopting 

this technical correction as proposed. 

2(g) Financial Institution 

Section 1003.2(g) defines financial 

institution for purposes of Regulation C, 

and sets forth Regulation C’s 

institutional coverage for depository 

financial institutions and nondepository 

financial institutions. The Bureau 

proposed amendments to § 1003.2(g) 

and associated commentary to increase 

temporarily the level of open-end 

originations required to trigger 

collection and reporting responsibilities 

and to make conforming changes related 

to a new reporting exclusion for 

preliminary transactions providing new 

funds before consolidation as part of a 

New York CEMA. The Bureau is 

adopting the proposed amendments as 

proposed for the reasons discussed 

below. 

Open-End Line of Credit Threshold 

Section 1003.2(g), as adopted by the 

2015 HMDA Final Rule, conditions 

Regulation C’s institutional coverage, in 

part, on the lender’s volume of 

origination of open-end lines of credit or 

closed-end mortgage loans by 

establishing loan-volume thresholds. 

The threshold for closed-end mortgage 

loans is at least 25 in each of the two 

preceding calendar years, and the 

threshold for open-end lines of credit is 

at least 100 in each of the two preceding 

calendar years. Section 1003.3(c)(11) 

and (12), as adopted by the 2015 HMDA 

Final Rule, includes complementary 

thresholds set at the same levels that 

determine whether a financial 

institution is required to collect and 

report data on closed-end mortgage 

loans or open-end lines of credit, 

respectively.63 In the July 2017 HMDA 


sradovich on DSK3GMQ082PROD with RULES2
43094 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

1003.3(c)(11) and (12) were intended to be 

complementary exclusions. This final rule corrects 

a drafting error. April 2017 HMDA Proposal, 82 FR 

19142, 19149 (Apr. 25, 2017). 

64 2015 HMDA Final Rule, 80 FR 66128, 66160 

(Oct. 28, 2015). 

65 Id. (noting ‘‘HMDA and Regulation C are 

designed to provide citizens and public officials 

sufficient information about mortgage lending to 

ensure that financial institutions are serving the 

housing needs of their communities, to assist public 

officials in distributing public sector investments, 

and to identify possible discriminatory lending 

patterns’’ and that the ‘‘Bureau believes that 

collecting information about all dwelling-secured, 

consumer-purpose open-end lines of credit serves 

these purposes.’’). 

66 Id. at 66162. The Bureau also explained that it 

believed ‘‘that adopting a 100-open-end line of 

credit threshold will avoid imposing the burden of 

establishing open-end reporting on many small 

institutions with low open-end lending volumes.’’ 

Id. at 66149. 

67 July 2017 HMDA Proposal, 82 FR 33455, 33459 

(July 20, 2017). 

68 Id. 

69 Id. 

Proposal, the Bureau proposed to amend 

§ 1003.2(g)(1)(v)(B) and (g)(2)(ii)(B), 

effective January 1, 2018, to increase the 

open-end threshold from 100 to 500 

and, effective January 1, 2020, to amend 

§ 1003.2(g)(1)(v)(B) and (g)(2)(ii)(B) to 

restore the threshold to 100. The Bureau 

proposed conforming amendments to 

comments 2(g)–3 and –5. As discussed 

in the section-by-section analysis of 

§ 1003.3(c)(12), the Bureau also 

proposed conforming amendments to 

the open-end threshold in 

§ 1003.3(c)(12). For the reasons 

discussed below, the Bureau is 

finalizing the amendments as proposed. 

As noted in the 2015 HMDA Final 

Rule, the Bureau believes that including 

dwelling-secured lines of credit within 

the scope of Regulation C is a reasonable 

interpretation of HMDA section 303(2), 

which defines ‘‘mortgage loan’’ as a loan 

secured by residential real property or a 

home improvement loan. In the 2015 

HMDA Final Rule, the Bureau 

interpreted ‘‘mortgage loan’’ to include 

dwelling-secured lines of credit, as they 

are secured by residential real property 

and they may be used for home 

improvement purposes.64 As further 

noted in the 2015 HMDA Final Rule, 

pursuant to section 305(a) of HMDA, the 

Bureau believes that requiring reporting 

of dwelling-secured, consumer purpose 

open-end lines of credit is necessary 

and proper to effectuate the purposes of 

HMDA and prevent evasions thereof.65

In establishing the open-end 

threshold at 100 in the 2015 HMDA 

Final Rule, the Bureau drew on 

estimates of the distribution of open-end 

origination volume across financial 

institutions and estimates of the onetime and ongoing costs that would be 

incurred by institutions of various sizes 

in collecting and reporting data on 

open-end lines of credit. The Bureau 

explained that it believed this threshold 

appropriately balanced the benefits and 

burdens of covering institutions based 

on their open-end mortgage lending.66

In striking this balance, the Bureau 

estimated that, based on 2013 data, 749 

depository institutions would be 

required to report their open-end lines 

of credit under the 100-loan threshold. 

However, as discussed in part III above, 

the Bureau lacked robust data for the 

estimates that were used to establish the 

open-end threshold in the 2015 HMDA 

Final Rule. 

As explained in the July 2017 HMDA 

Proposal, since 2013 the number of 

dwelling-secured open-end lines of 

credit originated has increased by 36 

percent and continues to grow.67 To the 

extent that institutions that had been 

originating fewer than 100 open-end 

lines of credit share in that growth, the 

number of institutions at the margin that 

will be required to report under the 

2015 HMDA Final Rule open-end 

threshold will also increase. In the July 

2017 HMDA Proposal, the Bureau 

explained that its available data 

concerning open-end lines of credit 

extended by banks and thrifts are not 

sufficiently robust to allow the Bureau 

to estimate with any precision the 

number of such institutions that have 

crossed over the open-end threshold 

adopted in the 2015 HMDA Final Rule. 

The Bureau also explained, however, 

that there are reliable data concerning 

credit unions that are required to report 

open-end originations in their Call 

Reports. The Bureau’s review of credit 

union Call Report data for the July 2017 

HMDA Proposal indicates that the 

number of credit unions that originated 

100 or more open-end lines of credit in 

2015 was up 31 percent over 2013,68 the 

most recent data cited by the Bureau for 

its analysis of the 2015 HMDA Final 

Rule. The Bureau explained in the July 

2017 HMDA Proposal that, if there were 

a comparable increase among banks and 

thrifts, the total number of open-end 

reporters exceeding the transactional 

coverage threshold could be estimated 

at 980, as compared to the estimate of 

749 in the 2015 HMDA Final Rule, 

which was based on 2013 data.69

Additionally, in the July 2017 HMDA 

Proposal, the Bureau explained that 

information received by the Bureau 

since issuing the 2015 HMDA Final 

Rule has caused the Bureau to question 

its assumption that tier 3, lowcomplexity institutions process homeequity lines of credit on the same data 

platforms as closed-end mortgages, 

which in turn drove the Bureau’s 

assumption that the one-time costs for 

these institutions would be minimal. 

After issuing the 2015 HMDA Final 

Rule, the Bureau had heard anecdotal 

evidence suggesting that one-time costs 

to begin reporting open-end lines of 

credit could be as high as $100,000 for 

tier 3, low-complexity institutions. The 

Bureau likewise had heard anecdotal 

evidence suggesting that the ongoing 

costs for these institutions to report 

open-end lines of credit, which the 

Bureau estimated would be under 

$10,000 per year and add under $60 per 

line of credit, could be at least three 

times higher. 

Based on this anecdotal evidence 

regarding one-time and ongoing costs 

and new data indicating that more 

institutions would have reporting 

responsibilities under the 100-loan 

open-end threshold than estimated in 

the 2015 HMDA Final Rule, the Bureau 

believed it was appropriate to seek 

comment on whether a temporary 

adjustment to the open-end threshold 

was advisable to allow for additional 

data collection and assessment. The 

temporary increase proposed in the July 

2017 HMDA Proposal would allow the 

Bureau to do such an evaluation 

without requiring financial institutions 

originating fewer than 500 open-end 

lines of credit per year to collect and 

report data concerning open-end lines of 

credit in the meantime. 

The Bureau sought comment on 

whether to increase the open-end 

threshold temporarily and, if so, 

whether to raise the threshold to 500 or 

to a larger or smaller number. The 

Bureau also sought comment on what 

time period to increase the open-end 

threshold, should it do so. 

Comments regarding the proposed 

changes to the open-end threshold in 

both §§ 1003.2(g) and 1003.3(c)(12) are 

discussed below. Industry commenters 

expressed support for increasing the 

threshold, but requested that the Bureau 

further raise the threshold to exclude 

more financial institutions from the 

obligation to report open-end lines of 

credit. Commenters most often 

requested that the Bureau raise the 

open-end threshold to 1,000. Many 

commenters also requested that the 

Bureau make the open-end threshold 

increase permanent instead of 

temporary. Some commenters also 

urged the Bureau to reverse the 2015 

HMDA Final Rule’s decision to require 

some financial institutions to report 

data on open-end lines of credit and, 

instead, to maintain optional reporting. 

Further, many commenters requested 

that the Bureau also increase the closedend threshold. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43095 

70 Id. 

71 Id. In estimating costs specific to collecting and 

reporting data for open-end lines of credit in the 

2015 HMDA Final Rule, the Bureau assumed that 

that tier 2 institutions originate between 200 and 

7,000 such lines of credit and that tier 3 institutions 

originate fewer than 200 such lines of credit. 2015 

HMDA Final Rule, 80 FR 66128, 66285 (Oct. 28, 

2015). 

72 Id. 

73One commenter asserted that a 1,000-loan 

threshold would have relieved significantly more 

institutions from reporting. However, in subsequent 

ex parte communication, the commenter 

determined that its calculations were mistaken. 

74 July 2017 HMDA Proposal, 82 FR 33455, 

33459–60 (July 20, 2017). 

75 Id. at 33460. The July 2017 HMDA Proposal 

explained as an example that it had received 

information from the credit league of one State 

indicating that, of the seven credit unions in that 

State that had originated more than 250 homeequity lines of credit in the first six months of 2016 

(and thus were on track to originate 500 for the 

year), six had assets over $1 billion. 

76 Id. 

77 2015 HMDA Final Rule, 80 FR 66128, 66160– 

61 (Oct. 28, 2015). 

78 July 2017 HMDA Proposal, 82 FR 33460 (July 

20, 2017). 

Consumer advocacy groups opposed 

the Bureau’s proposal. These 

commenters expressed concern about 

the gaps in the HMDA data resulting 

from the proposed increase in the 

threshold. They noted that these gaps in 

the HMDA data would make it harder 

for them and other members of the 

public to understand whether open-end 

credit lending is conducted in a 

responsible and non-discriminatory 

manner, and whether credit needs are 

being met in communities, particularly 

if the major lenders in their areas are 

institutions below the temporarily 

raised threshold. They stated that the 

benefits of reporting were clear and 

based on concrete evidence, but that the 

costs of reporting were not clear, 

arguing that industry cost estimates 

relied on by the Bureau in the proposal 

were based on anecdotal evidence. They 

suggested that only by allowing openend reporting to begin as provided in 

the 2015 HMDA Final Rule would the 

Bureau learn the concrete costs. Further, 

they expressed support for the Bureau’s 

decision not to propose changes to the 

closed-end threshold. 

The Bureau is finalizing the proposed 

temporary increase in the open-end 

threshold to 500 loans. The Bureau is 

amending § 1003.2(g)(1)(v)(B) and 

(g)(2)(ii)(B) and comment 2(g)–3 and –5, 

effective January 1, 2018, to increase the 

open-end threshold from 100 to 500 

and, effective January 1, 2020, to restore 

the threshold to 100. 

The Bureau does not believe that 

increasing the threshold to 1,000 is 

appropriate at this time. The Bureau 

believes that the temporary increase in 

the threshold will avoid imposing the 

costs of reporting on tier 3, lowcomplexity institutions, while the 

Bureau studies the appropriate level of 

the threshold in light of the market 

conditions described in the July 2017 

HMDA Proposal. The Bureau estimates 

that, in 2015, 289 depository 

institutions originated 500 or more 

open-end lines of credit as compared to 

an estimated 980 depository institutions 

that originated at least 100 open-end 

lines of credit.70 On average, the 

institutions that would be excluded by 

increasing the open-end threshold from 

100 to 500 loans originated fewer than 

250 open-end lines of credit per year.71

Under a 500-loan open-end threshold, 

approximately three quarters of the loan 

application volume in the open-end 

market would be reported.72 Increasing 

the open-end threshold to 1,000 would 

reduce the number of institutions 

reporting open-end lines of credit by 90 

in 2016 relative to a 500-loan 

threshold.73 While this represents a 

relatively low number of institutions 

relative to the number under a 500-loan 

open-end threshold, in 2016, those 

institutions originated, on average, close 

to 1,000 open-end lines of credit per 

year.74 The Bureau believes that 

institutions with that level of loan 

volume have moderately-complex 

operations able to collect and report 

data on their open-end lines of credit 

without major disruptions or burdens to 

their existing operations.75 Thus, 

increasing the threshold to 1,000 is not 

needed to achieve the Bureau’s goal of 

avoiding imposing costs on, and only 

on, tier 3, low-complexity institutions 

while the Bureau studies the 

appropriate level of the threshold. None 

of the commenters advocating for a 

higher threshold took issue with the 

Bureau’s estimate as to the number of 

institutions that would be affected by 

increasing the threshold to 1,000 openend lines of credit nor did any of the 

commenters offer evidence inconsistent 

with the Bureau’s estimate of the 

compliance costs for moderately 

complex, tier 2, institutions. 

Additionally, the Bureau agrees 

generally with consumer advocacy 

groups about the importance of 

increasing visibility into the open-end 

line of credit market. Increasing the 

threshold from 100 to 500 will decrease 

visibility into the open-end line of 

credit market. The Bureau believes, 

however, that the limited loss of 

visibility occasioned by increasing the 

threshold from 100 to 500, at least for 

the next two years while the Bureau 

further studies the issue, is justified by 

the uncertainty surrounding the costs of 

reporting borne by tier 3, lowcomplexity institutions and the recent 

trends in the market. However, the 

Bureau is not persuaded that the limited 

benefits of an even higher threshold 

would justify any additional loss of 

data. 

The Bureau is not making the 

threshold increase for open-end lines of 

credit permanent at this time. As 

discussed in the July 2017 HMDA 

Proposal, the Bureau believes it is 

vitally important to begin the collection 

and reporting of data on the growing 

market for open-end lines of credit and 

that the increase in open-end 

origination volume since 2013 further 

demonstrates the importance of these 

data. However, the Bureau recognizes 

that anecdotal evidence and recent 

market trends suggest that costs 

associated with the 100-loan open-end 

threshold may be significantly higher 

and affect more institutions than the 

Bureau estimated in the 2015 HMDA 

Final Rule. The two-year period will 

allow time for the Bureau to decide, 

through an additional rulemaking, 

whether any adjustments to the openend threshold are needed. The Bureau 

intends to make that determination in 

sufficient time so that if institutions are 

covered under any permanent threshold 

set by the Bureau but not under the 

temporary threshold, those institutions 

will be able to resume and complete 

their implementation processes.76

Similarly, the Bureau declines to 

retain optional reporting of open-end 

lines of credit. As discussed in the 2015 

HMDA Final Rule, improved visibility 

into this key segment of the mortgage 

market is critical because of the risks 

posed by these products to consumers 

and local markets and the lack of other 

publicly available data about these 

products.77 However, the Bureau agrees 

that optional reporting should be 

allowed for those financial institutions 

that do not meet the open-end threshold 

and is providing for optional reporting, 

as discussed below in the section-bysection analysis of § 1003.3(c)(12). 

The Bureau, as explained in the July 

2017 HMDA Proposal, does not believe 

increasing the closed-end threshold is 

appropriate.78 Unlike open-end lines of 

credit, when adopting the 2015 HMDA 

Final Rule, the Bureau had robust data 

to make a determination about the 

number of transactions that would be 

reported and the costs, both one-time 

and ongoing, that industry would face. 

Additionally, unlike open-end lines of 

credit, there is no evidence of a similar 

change in market conditions post 

issuance of the 2015 HMDA Final Rule 


sradovich on DSK3GMQ082PROD with RULES2
43096 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

79 2015 HMDA Final Rule, 80 FR 66128, 66150 

(Oct. 28, 2015). 

80 Id. at 66153. 

81As discussed in more detail in the section-bysection analysis of § 1003.3(c)(10), the Bureau 

proposed to revise the example in comment 

3(c)(10)–3.ii to clarify that it applies to dwellings 

other than multifamily dwellings. 

for closed-end mortgage loans. None of 

the commenters advocating a change in 

the closed-end threshold took issue with 

the Bureau’s estimates of costs for 

closed-end reporters or offered any data 

inconsistent with the Bureau’s 

estimates. 

As discussed in the 2015 HMDA Final 

Rule, the Bureau adopted § 1003.2(g)(1) 

pursuant to its authority under section 

305(a) of HMDA to provide for such 

adjustments and exceptions for any 

class of transactions that the Bureau 

judges are necessary and proper to 

effectuate the purposes of HMDA. 

Pursuant to section 305(a) of HMDA, for 

the reasons given in the 2015 HMDA 

Final Rule, the Bureau found that the 

exception in § 1003.2(g)(1) is necessary 

and proper to effectuate the purposes of 

HMDA. By reducing burden on financial 

institutions and establishing a 

consistent loan-volume test applicable 

to all financial institutions, the Bureau 

found that the provision will facilitate 

compliance with HMDA’s 

requirements.79 Similarly, the Bureau 

believes that the temporary change in 

the open-end threshold in § 1003.2(g)(1) 

is necessary and proper to effectuate the 

purposes of HMDA, including to 

facilitate compliance and reduce 

burden. Additionally, as discussed in 

the 2015 HMDA Final Rule, the Bureau 

adopted § 1003.2(g)(2) pursuant to its 

interpretation of HMDA sections 

303(3)(B) and 303(5), which require 

persons other than banks, savings 

associations, and credit unions that are 

‘‘engaged for profit in the business of 

mortgage lending’’ to report HMDA 

data. The Bureau stated that it interprets 

these provisions, as the Board also did, 

to evince the intent to exclude from 

coverage institutions that make a 

relatively small volume of mortgage 

loans.80 Pursuant to its authority under 

section 305(a) of HMDA, and for the 

reasons discussed above, the Bureau 

finds that the temporary change of the 

open end threshold from 100 to 500 for 

two years in both § 1003.2(g)(1) and 

1003.2(g)(2) is necessary and proper to 

facilitate compliance. 

Conforming Amendment Related to 

New York CEMAs 

As discussed below, the Bureau 

proposed an exclusion from reporting, 

in proposed § 1003.3(c)(13), for any 

preliminary transaction providing new 

funds before consolidation as part of a 

New York CEMA. Consistent with that 

proposal, the Bureau proposed a 

conforming change to 

§ 1003.2(g)(1)(v)(A) and (2)(ii)(A), as 

adopted by the 2015 HMDA Final Rule, 

in the definition of ‘‘financial 

institution,’’ which would add the new 

exclusion to a list of exclusions 

referenced in that definition regarding 

closed-end mortgage loans. 

The Bureau received no comments on 

this conforming change, and now adopts 

the provision as proposed. 

2(i) Home Improvement Loan 

HMDA section 303(2) defines a 

mortgage loan as a loan that is secured 

by residential real property or a home 

improvement loan. Regulation C 

currently defines home improvement 

loan and provides guidance in 

commentary about mixed-use property, 

i.e., a dwelling used for both residential 

and commercial purposes. Pursuant to 

the Bureau’s authority under HMDA 

section 305(a), the Bureau revised the 

current definition of home improvement 

loan in § 1003.2(i), as adopted by the 

2015 HMDA Final Rule, and revised the 

accompanying commentary regarding 

mixed-use property. In the April 2017 

HMDA Proposal, the Bureau proposed 

to amend the commentary to § 1003.2(i) 

to clarify further the reporting 

requirements for home improvement 

loans secured by mixed-use property. 

Specifically, the Bureau proposed to 

amend comment 2(i)–4 to clarify that 

the comment applies only to 

multifamily dwellings.81 For the reasons 

discussed below, the Bureau is adopting 

comment 2(i)–4 as proposed, with a 

minor amendment for further clarity. 

Several State trade associations and 

one large financial institution supported 

the proposed amendments to comment 

2(i)–4. One commenter stated that the 

proposal would ease the compliance 

burden regarding mixed-use properties. 

Another commenter stated that it shared 

the Bureau’s concern that, as adopted by 

the 2015 HMDA Final Rule, comments 

2(i)–4 and 3(c)(10)–3.ii could be 

interpreted as providing inconsistent 

guidance. This commenter stated that it 

agreed that loans or lines of credit to 

improve primarily the commercial 

portion of a multifamily dwelling 

should not be reported because they 

involve relatively small housing 

components and large commercial 

components of the dwelling in 

comparison to loans or lines of credit to 

improve primarily the commercial 

portion of a non-multifamily dwelling. 

A few commenters recommended 

alternative reporting requirements for 

loans to improve primarily the 

commercial portion of a mixed-use 

dwelling. One national trade association 

suggested that, if a property is subject to 

HMDA reporting requirements and a 

loan is made for any improvement on 

that property, that loan should be 

considered a home improvement loan. It 

stated that this recommendation would 

simplify compliance by providing a 

single standard for all loans to improve 

property used for residential and 

commercial purposes and avoid 

financial institutions having to 

determine the percentage of loan 

proceeds used for a residential purpose 

and whether the loan is for a nonmultifamily or multifamily dwelling. 

Another national trade association 

suggested that it would improve 

consistency to apply the same treatment 

to all loans that improve mixed-use 

properties. Alternatively, one State trade 

association recommended that, if any 

portion of the loan proceeds will be 

used to improve the commercial portion 

of a mixed-use property, the loan should 

not be a reportable home improvement 

loan, regardless of whether the dwelling 

is a multifamily dwelling. It suggested 

that, if the Bureau were to adopt the 

proposed guidance on reporting loans to 

improve commercial portions of mixeduse property, it would be helpful to 

clarify in comment 2(i)–4 that a loan to 

improve commercial space in a dwelling 

other than a multifamily dwelling 

would be a reportable home 

improvement loan. A national trade 

association stated that all commercialpurpose loans should be excluded from 

HMDA reporting. Finally, a few 

commenters expressed concern that the 

proposed guidance did not address how 

to treat loans to improve commercial 

portions of mixed-use property where 

the property would have been 

considered a multifamily dwelling 

under the proposed guidance in 

comment 2(f)–2, which would have 

explained that a loan secured by five or 

more separate dwellings in more than 

one location is a loan secured by a 

multifamily dwelling. 

The Bureau is adopting comment 2(i)– 

4 as proposed, with a minor amendment 

to provide further clarity. As adopted, 

comment 2(i)–4 also includes a crossreference to comment 3(c)(10)–3.ii for 

guidance on loans to improve primarily 

the commercial portion of a dwelling 

other than a multifamily dwelling. The 

Bureau declines to treat all loans to 

improve mixed-use property as home 

improvement loans as this would 

expand coverage of commercial-purpose 

transactions and result in the reporting 

of loans or lines of credit to improve 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43097 

82Current comment 2 (Home Improvement 

Loan)–4. In the 2015 HMDA Final Rule, the Bureau 

explained that ‘‘[e]xamples of commercial-purpose 

loans that currently are reported are: (1) A loan to 

an entity to purchase or improve an apartment 

building (or to refinance a loan secured thereby); 

and (2) a loan to an individual to purchase or 

improve a single-family home to be used either as 

a professional office or as a rental property (or to 

refinance a loan secured thereby).’’ 2015 HMDA 

Final Rule, 80 FR 66128, 66169 (Oct. 28, 2015). 

83Every national bank, State member bank, 

insured nonmember bank, and savings association 

is required by its primary Federal regulator to file 

consolidated Reports of Condition and Income, also 

known as Call Reports, for each quarter as of the 

close of business on the last day of each calendar 

quarter. The specific reporting requirements depend 

upon the size of the institution, the nature of its 

activities, and whether it has any foreign offices. 

See, e.g., FDIC, ‘‘Consolidated Reports of Condition 

and Income,’’ https://www.fdic.gov/regulations/

resources/call/index.html (last visited Aug. 13, 

2017). Credit unions that are not privately insured 

are also required to report Call Report data to 

NCUA. See, e.g., NCUA, ‘‘Credit Union and 

Corporate Call Report Data,’’ http://www.ncua.gov/ 

DataApps/QCallRptData/Pages/default.aspx (last 

visited Aug. 13, 2017). 

84 12 U.S.C. 2901 et seq. 

primarily the commercial portion of a 

multifamily dwelling. As discussed in 

the April 2017 HMDA Proposal, such 

loans or lines of credit involve relatively 

small housing components and large 

commercial components of the dwelling 

in comparison to loans or lines of credit 

to improve primarily the commercial 

portion of a dwelling other than a 

multifamily dwelling. Consequently, 

reporting such loans would provide 

limited information, at best, toward 

HMDA’s purpose of helping determine 

whether financial institutions are 

serving the housing needs of the 

communities in which they are located. 

The Bureau also declines to exclude all 

loans or lines of credit where any 

portion of the loan proceeds will be 

used to improve the commercial portion 

of a mixed-use property or to exclude all 

commercial-purpose loans. Regulation C 

currently covers closed-end, 

commercial-purpose loans made to 

purchase, refinance, or improve a 

dwelling, including certain loans to 

improve mixed-use property, and the 

Bureau has not proposed or seen any 

new reason to decrease the coverage of 

commercial-purpose transactions from 

its current level.82 Finally, as discussed 

in more detail in the section-by-section 

analysis of § 1003.2(f) above, the Bureau 

believes the revisions adopted in 

comment 2(f)–2 regarding the definition 

of multifamily dwellings address 

potential uncertainty that may have 

arisen regarding how proposed 

comment 2(f)–2 would have applied to 

the Bureau’s guidance regarding 

reporting requirements for loans to 

improve various types of mixed-use 

property. 

2(j) Home Purchase Loan 

Current § 1003.2 provides a definition 

of home purchase loan and provides 

guidance in commentary. The 2015 

HMDA Final Rule revised the current 

definition of home purchase loan in 

§ 1003.2(j) and revised the current home 

purchase loan commentary to conform 

to revised § 1003.2(j) and to provide 

additional clarifications. As discussed 

in more detail in the section-by-section 

analysis of § 1003.3(c)(3), the Bureau 

proposed certain amendments to the 

§ 1003.3(c)(3) commentary regarding 

temporary financing. The Bureau 

proposed conforming amendments to 

comment 2(j)–3 to reflect the proposed 

revisions to the § 1003.3(c)(3) 

commentary. Commenters supported 

the proposed amendments to comment 

2(j)–3. The Bureau is adopting comment 

2(j)–3 as proposed, with a minor 

amendment to conform to a clarification 

the Bureau is adopting in the 

commentary to § 1003.3(c)(3). 

2(n) Multifamily Dwelling 

In revised § 1003.2(f) and comment 

2(f)–2, the 2015 HMDA Final Rule 

revised and clarified the definition of 

‘‘dwelling’’ in Regulation C to provide, 

among other things, that multifamily 

residential structures include housing 

complexes and manufactured home 

communities and that such 

communities are dwellings. Revised 

§ 1003.2(n) provides that a ‘‘multifamily 

dwelling’’ is a dwelling that contains 

five or more individual dwelling units. 

To apply this definition and ease 

compliance, the Bureau proposed to add 

language to comment 2(f)–2 that would 

have clarified that a loan secured by five 

or more separate dwellings in more than 

one location is a loan secured by a 

multifamily dwelling and provided an 

example. 

Revised § 1003.4(a) excludes several 

data points for covered loans secured by 

or applications proposed to be secured 

by multifamily dwellings because such 

data may not be easily available, 

relevant, or useful for multifamily 

transactions. During implementation of 

the 2015 HMDA Final Rule, the Bureau 

was asked whether loans that are 

secured by five or more separate 

dwellings that each contain fewer than 

five individual dwelling units in more 

than one location are loans secured by 

multifamily dwellings and, thus, may 

take advantage of the exclusions for 

covered loans secured by or 

applications proposed to be secured by 

multifamily dwellings in revised 

§ 1003.4(a). For example, a landlord 

might use a covered loan to improve 

five or more single-family dwellings in 

different locations, with those 

properties securing the loan. At the time 

of the April 2017 HMDA Proposal, the 

Bureau believed that such a loan should 

be reported as secured by a multifamily 

dwelling. The Bureau believed that as 

with loans that are secured by 

multifamily dwellings in one location, 

the information that would be excluded 

from reporting under revised 

§ 1003.4(a), such as the debt-to-income 

ratio, might also not be easily available, 

relevant, or useful for loans secured by 

five or more separate non-multifamily 

dwellings in more than one location. 

Consequently, the Bureau proposed to 

add language to comment 2(f)–2 making 

clear that a loan secured by five or more 

separate dwellings in more than one 

location is a loan secured by a 

multifamily dwelling and providing an 

example. 

The Bureau received 14 comments 

discussing the proposed change to 

comment 2(f)–2. Five commenters 

expressed support for the change, and 

nine expressed opposition to it. The 

commenters supporting the change 

stated that it would ease compliance, 

and one wanted clarification of how 

loans with cross-collateralization 

clauses, which the commenter stated are 

often used in the multi-location loans 

that are implicated in the change, 

should be reported. 

The commenters opposing the 

proposed change stated several different 

objections. Several commenters stated 

that the change would not ease 

compliance but, instead, would make it 

more confusing and difficult. 

Commenters said that the new provision 

conflicted with Regulations X, Z, and B, 

as well as the Call Report 83 instructions 

that they were required to follow and 

the definition of multifamily under the 

Community Reinvestment Act (CRA).84

They stated that the proposed change to 

Regulation C’s definition of multifamily 

would require double tracking of 

multifamily loans under HMDA and 

CRA. Two commenters pointed out that 

the proposed change appeared to 

conflict with the proposed clarification 

on home improvement loans in 

comment 2(i)–4 because that provision 

relies on non-multifamily status to 

determine a loan’s purpose, but the 

change to comment 2(f)–2 would make 

non-multifamily structures potentially 

part of multifamily dwellings, muddling 

their status. One commenter suggested 

that the proposed change could make 

rural lending to investors look like loans 

secured by apartment buildings. 

Another commenter stated that the 

proposed language would conflict with 


sradovich on DSK3GMQ082PROD with RULES2
43098 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

85Covered loans secured by a multifamily 

dwelling are subject to additional reporting 

requirements under revised § 1003.4(a)(32), but are 

not subject to reporting requirements under revised 

§ 1003.4(a)(4), (a)(10)(iii), (a)(23), (a)(29), or (a)(30). 

Revised comment 2(n)–2. 

86FFIEC, ‘‘Filing Instructions Guide for HMDA 

Data Collected in 2018,’’ (2018 FIG), available at 

https://www.consumerfinance.gov/data-research/

hmda/static/for-filers/2018/2018-HMDA-FIG.pdf. 

The 2018 FIG is a compendium of resources to help 

financial institutions file HMDA data collected in 

2018 with the Bureau in 2019. 

87See FFIEC, ‘‘Home Mortgage Disclosure Act: 

Regulatory & Interpretive FAQ’s, Temporary 

the definition of multifamily in 

Regulation C itself. 

After careful consideration of all the 

comments received, the Bureau now 

believes that it is not appropriate to add 

language to comment 2(f)–2 providing 

that a loan secured by five or more 

separate dwellings in more than one 

location is a loan secured by a 

multifamily dwelling. To ensure clarity 

and facilitate compliance, the Bureau is 

now changing the language proposed in 

the April 2017 HMDA Proposal to 

provide explicitly that such a loan is not 

secured by a multifamily dwelling. The 

Bureau is also altering the example 

provided to clarify that the multilocation loan described in the example 

should not be reported as secured by a 

multifamily dwelling. In addition, the 

Bureau has incorporated the new 

language into new comment 2(n)–3, 

because the comment involves the 

definition of multifamily dwelling in 

§ 1003.2(n), rather than the definition of 

dwelling in § 1003.2(f). The Bureau has 

also added to the new comment a 

description and example of a situation 

similar to that of multi-location loans, as 

discussed below. 

The Bureau believes that the conflicts 

commenters described regarding the 

CRA and Call Reports would create the 

compliance burdens described by 

commenters. In addition, the Bureau 

acknowledges that additional 

clarification would be required to 

reconcile the proposed classification of 

multi-site loans language with the 

proposed change to the commentary on 

loans for improvement of commercial 

space in a non-multifamily dwellings in 

comment 2(i)–4. Consequently, the 

Bureau believes that the proposed 

language might have increased the 

compliance burden rather than 

decreased it as intended. 

In addition, further review of the five 

data points that are excluded 85 for 

multifamily loans suggests that it will be 

feasible for reporters of the multilocation loans that were the subject of 

the proposal to provide entries for them. 

If the borrower of such a loan is not a 

natural person, two of the data points, 

income and debt-to-income ratio, can be 

excluded. If the borrower is a natural 

person, these two data points will need 

to be reported only if they are relied on 

in making the credit decision or in 

processing the application. Similarly, 

the financial institution should be able 

to answer whether the application or 

covered loan involved a preapproval 

request. The two other data points that 

are excluded from reporting for loans 

secured by multifamily dwellings 

involve questions about manufactured 

housing that the financial institution 

should be able to answer for these loans. 

To the extent the clarifications in this 

rule require financial institutions to 

make technical changes, those changes 

require only minor adjustments, not 

significant system updates. In addition, 

the Bureau has issued this final rule in 

August, four months before 2018, which 

the Bureau believes should afford ample 

time to implement any necessary minor 

system adjustments. The Bureau is 

releasing implementation aids with this 

final rule to facilitate implementation. 

During consideration of the public 

comments and consultation with the 

relevant Federal agencies, the Bureau 

became aware that it might also be 

useful to provide guidance on the 

treatment of covered loans that are 

secured by multiple dwellings within a 

multifamily dwelling, but not secured 

by the entire multifamily dwelling itself. 

The Bureau has been told that these 

loans potentially could increase similar 

issues for HMDA, CRA, and Call Report 

reporting requirements unless the 

Bureau clarifies that they are not 

secured by a multifamily dwelling. In 

addition, revised § 1002.2(n)’s definition 

of a multifamily dwelling, stating that a 

multifamily dwelling is one that 

‘‘contains’’ five or more individual 

dwelling units, is reasonably interpreted 

to mean that a loan secured by five or 

more separate dwellings located in a 

multifamily dwelling but not secured by 

the entire multifamily dwelling is not 

secured by a loan that ‘‘contains’’ five or 

more individual dwelling units, just as 

it is reasonably interpreted to mean that 

a loan secured by a multi-location loan 

is not secured by a dwelling that 

‘‘contains’’ five or more dwelling units. 

Consequently, the Bureau is adding 

language to new comment 2(n)–2 stating 

that a covered loan secured by five or 

more separate dwellings that are located 

within a multifamily dwelling, but 

which is not secured by the entire 

multifamily dwelling (e.g., an entire 

apartment building or housing 

complex), is not secured by a 

multifamily dwelling as defined by 

§ 1003.2(n), and providing an example. 

The Bureau is also adding cross 

references and instructions to comment 

2(n)–2 to facilitate reporting of both the 

multi-location loans and the loans 

secured by multiple dwellings within a 

multifamily dwelling. 

Regarding reporting crosscollateralized loans, the Bureau notes 

that § 1003.4(a)(31) requires reporting of 

the number of individual dwelling units 

related to the property ‘‘securing’’ the 

covered loan or, in the case of an 

application, proposed to ‘‘secure’’ the 

covered loan. If the documents for a 

multi-location loan or a loan secured by 

multiple dwellings within a multifamily 

dwelling include a crosscollateralization clause that results in 

the loan being secured by six dwelling 

units, the financial institution complies 

with § 1003.4(a)(31) by reporting ‘‘6,’’ 

even though the loan is not secured by 

a multifamily dwelling. Nonetheless, 

the HMDA data will have a clear 

indication of whether a loan is in fact 

wholly or partially secured by a 

multifamily dwelling in the response to 

§ 1003.4(a)(32), which requires reporting 

of income restricted dwelling units if 

the property securing or proposed to 

secure the loan includes a multifamily 

dwelling. Revised comment 4(a)(32)–6 

makes clear that when no multifamily 

dwelling is included in the collateral, 

the institution reports that the data 

point is not applicable. The Filing 

Instructions Guide for HMDA Data 

Collected in 2018 (2018 FIG) 86 reflects 

this rule, further providing that when a 

multifamily dwelling is part of the 

collateral for a loan, the institution must 

report a number or ‘‘0,’’ and reports 

‘‘NA’’ for not applicable if the 

requirement to report multifamily 

affordable units does not apply to the 

covered loan or application. Therefore, 

any correctly reported loan or 

application with a value of ‘‘NA’’ in 

response to § 1003.4(a)(32) will not be 

either wholly or partially secured or 

proposed to be secured by a multifamily 

dwelling. 

Section 1003.3 Exempt Institutions 

and Excluded Transactions 

3(c) Excluded Transactions 

3(c)(3) 

Current Regulation C provides an 

exclusion for temporary financing in 

§ 1003.4(d)(3). The 2015 HMDA Final 

Rule revised the exclusion for 

temporary financing in § 1003.3(c)(3) 

and adopted comment 3(c)(3)–1 to 

clarify the scope of the exclusion and to 

incorporate existing guidance included 

in a Federal Financial Institutions 

Examination Council (FFIEC) 

Frequently Asked Question (FAQ).87 As 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43099 

Financing,’’ http://www.ffiec.gov/hmda/

faqreg.htm#TemporaryFinancing (last visited Aug. 

9, 2017). The existing FFIEC FAQ concerning 

temporary financing acknowledges that temporary 

financing is exempt and states that ‘‘financing is 

temporary if it is designed to be replaced by 

permanent financing of a much longer term. A loan 

is not temporary financing merely because its term 

is short. For example, a lender may make a loan 

with a one-year term to enable an investor to 

purchase a home, renovate it, and re-sell it before 

the term expires. Such a loan must be reported as 

a home purchase loan.’’ 

88 2015 HMDA Final Rule, 80 FR 66128, 66168 

(Oct. 28, 2015). 

89 Id. 

adopted by the 2015 HMDA Final Rule, 

comment 3(c)(3)–1 provides that 

temporary financing is excluded from 

coverage and explains that a loan or line 

of credit is temporary financing if it is 

designed to be replaced by permanent 

financing at a later time. The comment 

provides several illustrative examples to 

clarify whether a loan or line of credit 

is designed to be replaced by permanent 

financing. The Bureau proposed to 

clarify further the meaning of comment 

3(c)(3)–1 and to add new comment 

3(c)(3)–2 to clarify that a constructiononly loan or line of credit is considered 

temporary financing and excluded 

under § 1003.3(c)(3) if the loan or line 

of credit is extended to a person 

exclusively to construct a dwelling for 

sale. For the reasons discussed below, 

the Bureau is adopting the § 1003.3(c)(3) 

commentary as proposed, with certain 

minor amendments for further clarity. 

The majority of commenters 

supported the proposed changes to the 

§ 1003.3(c)(3) commentary. Several 

expressed support for the proposed 

clarifications generally, while a few 

State and national trade associations 

stated that the proposal would reduce 

burden and uncertainty. A few 

commenters indicated that constructiononly loans are often originated through 

separate channels from residential loans 

and that it would be expensive to 

develop systems to report constructiononly loans. A few commenters that 

supported the proposed clarifications 

regarding construction-only loans or 

lines of credit stated that buyers of the 

newly-constructed dwellings would 

often seek permanent financing that 

would be reportable under HMDA. 

One national trade association stated 

that the proposal would not clarify what 

constitutes temporary financing and that 

temporary financing may be structured 

in different ways, may involve a change 

in lender, or may involve only a single 

set of loan documents that does not 

reflect the permanent financing. This 

commenter suggested that the Bureau 

define temporary financing as any 

dwelling-secured loan to a borrower for 

any purpose where the initial advance 

of funds will be replaced by permanent 

financing at a later date. One State trade 

association requested further 

clarification on which loans would be 

excluded as temporary financing and 

expressed the belief that the proposal 

did not sufficiently distinguish between 

one-time closing home purchase loans 

and short-term construction loans with 

permanent financing to be obtained at a 

later date. A few commenters requested 

additional clarification on the treatment 

of bridge loans or construction loans 

that are paid in full with proceeds from 

the sale of the borrower’s current 

dwelling without the borrower 

obtaining permanent financing. 

The Bureau is adopting the 

amendments to the § 1003.3(c)(3) 

commentary substantially as proposed, 

with minor clarifications to comment 

3(c)(3)–1. Final comment 3(c)(3)–1 

states that § 1003.3(c)(3) provides that 

closed-end mortgage loans or open-end 

lines of credit obtained for temporary 

financing are excluded transactions. The 

comment then provides that a loan or 

line of credit is considered temporary 

financing and excluded under 

§ 1003.3(c)(3) if the loan or line of credit 

is designed to be replaced by separate 

permanent financing extended by any 

financial institution to the same 

borrower at a later time. The Bureau is 

also adopting revisions to the 

illustrative example in comment 

3(c)(3)–1.i to provide that the borrower 

obtains permanent financing for his or 

her new home either from the same 

lender or from another lender. 

Final comment 3(c)(3)–1 thus clarifies 

further that the applicability of the 

temporary financing exclusion does not 

depend on whether the financial 

institution that originates the permanent 

financing is the same institution that 

originated the loan or line of credit the 

permanent financing is designed to 

replace. The Bureau notes that, as 

adopted by the 2015 HMDA Final Rule, 

comment 3(c)(3)–1.ii provides an 

illustrative example of a construction 

loan that is excluded because it is 

designed to be replaced by permanent 

financing from either the lender that 

originated the loan or another lender. 

Nevertheless, the Bureau believes that 

the additional revisions adopted here to 

comment 3(c)(3)–1 clarify further that 

the determination of whether a loan or 

line of credit is temporary financing 

does not depend on the identity of the 

financial institution that originates the 

permanent financing to replace that loan 

or line of credit. Final comment 3(c)(3)– 

1 also omits proposed language 

regarding ‘‘except as provided in 

comment 3(c)(3)–2,’’ because both 

comments 3(c)(3)–1 and –2 set forth 

independent criteria for determining 

whether a loan or line of credit is 

considered temporary financing. 

Final comment 3(c)(3)–2 provides that 

a construction-only loan or line of credit 

is considered temporary financing and 

excluded under § 1003.3(c)(3) if the loan 

or line of credit is extended to a person 

exclusively to construct a dwelling for 

sale and cross-references comment 

3(c)(3)–1.ii through .iv for examples of 

the reporting requirement for 

construction loans that are not extended 

to a person exclusively to construct a 

dwelling for sale. 

The Bureau declines to adopt further 

revisions to the § 1003.3(c)(3) 

commentary as it believes the guidance 

adopted in this final rule provides a 

clear standard that serves HMDA’s 

purposes. Regarding the treatment of 

loans that close in a single transaction, 

the 2015 HMDA Final Rule explained 

that ‘‘the loan is temporary financing if 

it is designed to be replaced by longerterm financing at a later time (e.g., 

financing completed through a separate 

closing that will pay off the short-term 

loan).’’ 88 Final comment 3(c)(3)–1 

clarifies further that, for the temporary 

financing exclusion to apply, the 

permanent financing must be separate 

from the loan or line of credit it is 

designed to replace. Regarding the 

treatment of loans that are paid in full 

without the borrower obtaining separate 

permanent financing, except as 

provided in comment 3(c)(3)–2, the 

applicability of the temporary financing 

exclusion depends on whether the loan 

or line of credit is designed to be 

replaced by separate permanent 

financing extended to the same 

borrower at a later time. As discussed in 

the 2015 HMDA Final Rule, the 

commentary to § 1003.3(c)(3) will help 

to ensure reporting of short-term 

transactions that function as permanent 

financing while excluding those 

transactions that will be captured by the 

separate reporting of the longer-term 

financing, if it otherwise is covered by 

Regulation C.89

3(c)(10) 

Regulation C currently covers closedend, commercial-purpose loans made to 

purchase, refinance, or improve a 

dwelling. The 2015 HMDA Final Rule 

adopted § 1003.3(c)(10) to provide that 

loans and lines of credit made primarily 

for a commercial or business purpose 

are excluded transactions unless they 

are for the purpose of home purchase 

under § 1003.2(j), home improvement 

under § 1003.2(i), or refinancing under 


sradovich on DSK3GMQ082PROD with RULES2
43100 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

90As discussed in more detail in the section-bysection analysis of § 1003.2(i), the Bureau proposed 

to revise comment 2(i)–4 to clarify that it applies 

to multifamily dwellings. 

91As noted in the April 2017 HMDA Proposal, 

this provision as adopted by the 2015 HMDA Final 

Rule states the test as ‘‘fewer than 100 open-end 

lines of credit in each of the two preceding calendar 

years,’’ but this was a drafting error; the intent was 

to require that a financial institution exceeded the 

threshold in both of the two preceding calendar 

years to be subject to closed-end mortgage loan 

reporting, thus the exclusion should require that a 

financial institution originate fewer than 100 such 

lines of credit in either of the two preceding 

calendar years. See April 2017 HMDA Proposal, 82 

FR 19142, 19148–49 (Apr. 25, 2017). 

92The preamble to the 2015 HMDA Final Rule 

reflected this intent: ‘‘The institutional and 

transactional coverage thresholds are designed to 

operate in tandem. Under these thresholds, a 

financial institution will report closed-end 

mortgage loans only if it satisfies the closed-end 

mortgage threshold and will report open-end lines 

of credit only if it satisfies the separate open-end 

credit threshold.’’ 2015 HMDA Final Rule, 80 FR 

66128, 66149 (Oct. 28, 2015). 

93 Id. at 66150. 

§ 1003.2(p). The Bureau proposed to 

amend the example in comment 

3(c)(10)–3.ii to clarify that its guidance 

applies in the case of a dwelling other 

than a multifamily dwelling and to 

provide an additional illustration.90

Comments addressing the proposed 

changes to both comments 2(i)–4 and 

3(c)(10)–3.ii and comments related to 

the proposed clarifications regarding 

reporting requirements for loans to 

improve mixed-use property generally 

are discussed above in the section-bysection analysis of § 1003.2(i). One large 

financial institution expressed the belief 

that the examples in proposed comment 

3(c)(10)–3.ii would lead to uncertainty 

and stated that neither a doctor’s office 

nor a daycare center is considered a 

dwelling for purposes of HMDA 

reporting because they are commercial 

properties without any residential 

purposes. 

The Bureau is adopting comment 

3(c)(10)–3.ii as proposed. The Bureau 

notes that final comment 3(c)(10)–3.ii 

provides an illustrative example 

regarding a doctor’s office or a daycare 

center located in a dwelling other than 

a multifamily dwelling. Final comment 

3(c)(10)–3.ii does not affect the 

definition of dwelling in § 1003.2(f) or 

the guidance in comment 2(f)–4 

regarding the determination of whether 

a property used for both residential and 

commercial purposes is a dwelling for 

purposes of Regulation C. 

3(c)(11) 

Section 1003.2(g), as adopted by the 

2015 HMDA Final Rule, provides loanvolume thresholds for closed-end 

mortgage loans and open-end lines of 

credit for Regulation C’s coverage of 

financial institutions. The threshold for 

closed-end mortgage loans is 25 loans 

originated in each of the two preceding 

calendar years. Section 1003.3(c)(11), as 

adopted by the 2015 HMDA Final Rule, 

provides a complementary exclusion for 

financial institutions with loan volumes 

below the threshold, providing that a 

closed-end mortgage loan is an excluded 

transaction if a financial institution 

originated fewer than 25 closed-end 

mortgage loans in each of the two 

preceding calendar years. However, the 

use of the word ‘‘each’’ in 

§ 1003.3(c)(11) was a drafting error.91

Therefore, the Bureau proposed to 

amend § 1003.3(c)(11) and comment 

3(c)(11)–1 by replacing the word ‘‘each’’ 

with ‘‘either’’ to clarify how a financial 

institution applies the exclusion and to 

include an unrelated clarifying 

reference to purchased loans. In 

addition, the Bureau proposed to allow 

financial institutions voluntarily to 

report covered loans and applications 

excluded by § 1003.3(c)(11). 

Replacing ‘‘Each’’ With ‘‘Either’’ 

Five financial industry and vendor 

commenters supported the proposal to 

replace the word ‘‘each’’ with ‘‘either,’’ 

stating that it would add clarity. One 

consumer advocacy group commenter 

opposed the change, stating that the 

word ‘‘each’’ would increase the 

number of institutions reporting, and 

would particularly promote 

accountability for small financial 

institutions. One industry commenter 

requested that the Bureau add more 

examples so that community banks can 

better understand application of the 

loan-volume test. 

The Bureau is adopting the provision 

as proposed. To ensure that the 

exclusion mirrors the loan-volume 

threshold for financial institutions in 

§ 1003.2(g) and excludes transactions 

when that threshold is not met, 

§ 1003.3(c)(11) must provide that a 

closed-end mortgage loan is an excluded 

transaction if a financial institution 

originated fewer than 25 closed-end 

mortgage loans in ‘‘either’’ of the two 

preceding calendar years.92 Using the 

word ‘‘each’’ would increase the 

reporting requirements for smaller 

volume financial institutions, as one 

commenter explained, but the decision 

regarding how to apply the thresholds 

was carefully considered and explained 

when the Bureau adopted the 2015 

HMDA Final Rule,93 and commenters 

have not provided a basis to restructure 

the two-year look-back period in a way 

that would avoid re-introducing the 

reporting uncertainty that the structure 

of the thresholds aims to eliminate. The 

April 2017 HMDA Proposal did not 

envision increasing small entity 

reporting requirements. In addition, the 

Bureau did not propose additional 

compliance examples, and does not 

believe they are needed at this time. 

With the change from ‘‘each’’ to 

‘‘either,’’ the application of the 

thresholds and complementary 

exclusions should be much clearer than 

before. 

The Bureau also proposed a technical 

clarification to the example in comment 

3(c)(11)–1 to describe more thoroughly 

the reporting requirements for financial 

institutions whose origination totals for 

the prior two years are above the 

threshold. The clarification would 

specify that the financial institution 

must report purchased loans, as well as 

originated loans and applications, as 

required by §§ 1003.4(a) and 1003.5(a). 

One commenter stated its support for 

the change, without further discussion, 

and no other commenters discussed it. 

The Bureau now adopts the clarification 

as proposed. 

Optional Reporting 

Although the 2015 HMDA Final Rule 

did not specifically state that optional 

reporting of the loans excluded by 

§ 1003.3(c)(11) is allowed, comment 

3(c)(11)–1 states that a financial 

institution that is below the 25-mortgage 

loan threshold ‘‘need not’’ report such 

loans, suggesting that it might choose to 

report them. The Bureau proposed to 

clarify further that it interprets the 

exclusion in § 1003.3(c)(11), providing 

that the requirements of Regulation C do 

not apply to a closed-end mortgage loan 

if the financial institution originated 

fewer than 25 closed-end mortgage 

loans in either of the two preceding 

calendar years, to permit a financial 

institution to report closed-end 

mortgage loans and applications for 

closed-end mortgage loans voluntarily. 

The Bureau also solicited comment on 

whether a financial institution that 

reports such transactions voluntarily 

should be required to report all such 

transactions, and whether the voluntary 

reporting provision should be included 

in the regulation text, as well as the 

commentary. 

The Bureau received six comments 

discussing the voluntary reporting 

clarification. Four commenters 

expressed support for the provision and 

none expressed opposition. One 

commenter stated that voluntary 

reporting would reduce burden on 

smaller institutions. Another stated that 

voluntary reporting would allow 

financial institutions to prepare for 

implementation before they are required 

to report. A third commenter stated that 

a financial institution may prefer 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43101 

94Amendments to Equal Credit Opportunity Act 

(Regulation B) Ethnicity and Race Information 

Collection, 82 FR 16307 (Apr. 4, 2017). 

95 2015 HMDA Final Rule, 80 FR 66128, 66150 

(Oct. 28, 2015). 

96 Id. at 66153. 

97 Id. at 66173. 

voluntary reporting because it may 

continue to use the same compliance 

processes without incurring additional 

cost by switching implementation on 

and off from year to year, should its loan 

volumes vary above and below the 

threshold over time. However, one 

commenter stated that it did not believe 

that the information from voluntary 

reporting would be useful for fair 

lending analyses and that it would not 

itself choose to voluntarily report. 

Another commenter suggested that the 

Bureau explicitly state that the 

voluntary reporting provision includes 

and authorizes voluntary collection of 

demographic and other information. 

This commenter also requested that the 

Bureau clarify how the ‘‘permissible’’ 

collection of such information 

referenced in Regulation B relates to 

voluntary reporting. Regulation B 

generally prohibits the collection of 

certain consumer information unless 

such collection is required or permitted 

by law. The Bureau recently issued a 

proposed rule that would amend 

Regulation B.94 Under that proposal, 

proposed Regulation B § 1002.5(a)(4)(i) 

would permit certain voluntary 

collection of information as discussed in 

greater detail below. 

Three commenters expressed support 

for the inclusion of a requirement that 

voluntary reporters report all the 

relevant excluded covered loans and 

applications. No commenters expressed 

opposition to including this 

requirement. One industry commenter 

stated that requiring the reporting of all 

excluded covered loans and 

applications would give financial 

institutions a more complete 

understanding of the HMDA 

requirements. A consumer advocacy 

group commenter stated that selective 

reporting of excluded transactions could 

hide fair lending violations and 

compromise CRA exams. 

Two commenters expressed support 

for including the voluntary reporting 

provision in the regulation text rather 

than just the comment. No commenters 

expressed opposition. One of these 

commenters said that including the 

provision in the regulation text would 

avoid confusion, and the other stated 

that it would highlight the Bureau’s 

demonstrated attempts to harmonize 

regulations to reduce obligations on 

smaller institutions. 

The Bureau has considered the 

comments and is adopting the provision 

allowing optional reporting of the loans 

excluded by § 1003.3(c)(11) as proposed, 

and is placing it in the rule text with 

additional explanation in the 

commentary. Final § 1003.3(c)(11) 

includes new language stating that a 

financial institution may collect, record, 

report, and disclose information, as 

described in §§ 1003.4 and 1003.5, a 

closed-end mortgage loan that would 

otherwise be excluded under 

§ 1003.3(c)(11) because of the threshold 

as though it is a covered loan, provided 

that the financial institution complies 

with such requirements for all 

applications for closed-end mortgage 

loans which it receives, closed-end 

mortgage loans that it originates, and 

closed-end mortgage loans that it 

purchases during the calendar year 

during which final action is taken on 

the closed-end mortgage loan. As noted 

above, the Bureau recently proposed to 

amend Regulation B to add 

§ 1002.5(a)(4)(i), which would permit a 

creditor that is a financial institution 

under 12 CFR 1003.2(g) to collect 

information regarding the ethnicity, 

race, and sex of an applicant for a 

closed-end mortgage loan that is an 

excluded transaction under 12 CFR 

1003.3(c)(11) if it submits HMDA data 

concerning such closed-end mortgage 

loans and applications or if it submitted 

HMDA data concerning closed-end 

mortgage loans for any of the preceding 

five calendar years. The Bureau is in the 

process of reviewing the comments and 

considering whether to issue a final 

rule, which the Bureau expects would 

be issued soon after the date this rule is 

issued. The Bureau may offer additional 

clarification about the relationship 

between permissible collection and 

reporting at that time. 

The Bureau believes that the 

exclusion in § 1003.3(c)(11) (and, as 

discussed below, in § 1003.3(c)(12)), 

differs from the exclusions in 

§ 1003.3(c)(1)–(10), and the new 

§ 1003.3(c)(13), discussed below, 

because the applicability of the 

§ 1003.3(c)(11) exclusion is not intrinsic 

to the loan. Whether the loan is 

excluded can be determined only by 

reference to the financial institution’s 

origination activity over two years. The 

Bureau believes that financial 

institutions that choose to report when 

they are not required to, particularly 

when the institution’s total of closedend mortgage loans may fluctuate above 

or below the threshold, may reduce 

their regulatory burden by doing so. In 

addition, the Bureau believes that 

requiring financial institutions that 

choose to report such excluded loans to 

report all such covered loans and 

applications will help ensure the 

accuracy and usefulness of the HMDA 

data reported and prevent selective 

reporting that could disguise fair 

lending violations. The Bureau agrees 

that including the optional reporting 

provision in the regulation text will 

avoid confusion and facilitate 

compliance. 

As discussed in the 2015 HMDA Final 

Rule, the Bureau adopted § 1003.2(g)(1) 

pursuant to its authority under section 

305(a) of HMDA to provide for such 

adjustments and exceptions for any 

class of transactions that the Bureau 

judges are necessary and proper to 

effectuate the purposes of HMDA. 

Pursuant to section 305(a) of HMDA, for 

the reasons given in the 2015 HMDA 

Final Rule, the Bureau found that the 

exception in § 1003.2(g)(1) exception is 

necessary and proper to effectuate the 

purposes of HMDA. The Bureau found 

that by reducing burden on financial 

institutions and establishing a 

consistent loan-volume test applicable 

to all financial institutions, the 

provision will facilitate compliance 

with HMDA’s requirements.95 As 

discussed in the 2015 HMDA Final 

Rule, the Bureau adopted § 1003.2(g)(2) 

pursuant to its interpretation of HMDA 

sections 303(3)(B) and 303(5), which 

require persons other than banks, 

savings associations, and credit unions 

that are ‘‘engaged for profit in the 

business of mortgage lending’’ to report 

HMDA data. The Bureau stated that it 

interprets these provisions, as the Board 

also did, to evince the intent to exclude 

from coverage institutions that make a 

relatively small volume of mortgage 

loans.96 The Bureau implemented 

§ 1003.3(c)(11) (and, for similar reasons, 

§ 1003.3(c)(12), as discussed further 

below), because the Bureau does not 

believe that it is useful to burden such 

institutions with reporting closed-end 

mortgage data merely because their 

open-end lending exceeded the 

separate, open-end loan volume 

threshold in § 1003.2(g).97 As discussed 

above, the Bureau believes that 

permitting optional reporting of these 

excluded loans by a financial institution 

is consistent with the statute and will 

reduce burden on certain financial 

institutions. 

In addition to the comments directly 

addressing the voluntary reporting 

provision, two commenters suggested 

that the Bureau provide a safe harbor in 

relation to voluntary reporting. One of 

these commenters stated that the Bureau 

should provide voluntary reporters a 

safe harbor or other relief from liability 


sradovich on DSK3GMQ082PROD with RULES2
43102 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

98As noted above and as explained in the April 

2017 HMDA Proposal, under the institutional 

coverage threshold adopted by the 2015 HMDA 

Final Rule, the definition of financial institution 

included only institutions that originate either 25 

or more closed-end mortgage loans or 100 or more 

open-end lines of credit in each of the two 

preceding calendar years and satisfy the other 

applicable coverage criteria. That threshold and the 

transactional coverage threshold in 12 CFR 

1003.3(c)(11) and (12) were intended to be 

complementary exclusions. April 2017 HMDA 

Proposal, 82 FR 19142, 19149 (Apr. 25, 2017). 

99 In the 2015 HMDA Final Rule, the Bureau 

adopted § 1003.2(d) to provide that a closed-end 

mortgage loan is a dwelling-secured extension of 

credit that is not an open-end line of credit. Revised 

comment 2(d)–2 explains that, for purposes of 

Regulation C, an ‘‘extension of credit’’ refers to the 

under Regulation C. The other suggested 

that financial institutions should be 

given a safe harbor to collect 

demographic data if they are using the 

information for fair lending self-testing 

in accordance with Regulation B or the 

institution has met the reporting 

threshold in either of the previous two 

years. 

The Bureau did not propose a safe 

harbor for voluntary reporters of 

excluded transactions below the 

origination threshold and therefore does 

not believe that adopting one in this 

final rule would be appropriate. A safe 

harbor may weaken the reliability of the 

data reported, and the Bureau has not 

had the benefit of notice and public 

comment in considering this complex 

issue. 

3(c)(12) 

As adopted in the 2015 HMDA Final 

Rule, § 1003.3(c)(12) provides an 

exclusion from the requirement to 

report open-end lines of credit for 

institutions that did not originate at 

least 100 such loans in each of the two 

preceding calendar years. This 

threshold was intended to complement 

an open-end reporting threshold 

included in the definition of financial 

institution in § 1003.2(g), which sets 

forth Regulation C’s institutional 

coverage. The Bureau proposed 

amendments to § 1003(c)(12) and its 

commentary to raise temporarily the 

open-end threshold to 500 loans and to 

make the same clarifying amendments, 

including optional reporting, as in 

§ 1003.3(c)(11), which addresses the 

reporting threshold for closed-end 

mortgage loans. The Bureau is finalizing 

the proposed amendments as discussed 

below. 

Level of Threshold 

Section 1003.3(c)(12), as adopted by 

the 2015 HMDA Final Rule, provides 

that an open-end line of credit is an 

excluded transaction, and thus not 

subject to Regulation C, if the financial 

institution originated fewer than 100 

open-end lines of credit in each of the 

two preceding calendar years. As 

discussed in more detail in the sectionby-section analysis of § 1003.3(c)(11) 

and further below, the exclusion as 

adopted in the 2015 HMDA Final Rule 

was intended to apply if the financial 

institution originated fewer than 100 

open-end lines of credit in either of the 

two preceding calendar years.98 As 

discussed in more detail in the sectionby-section analysis of § 1003.(2)(g), in 

the July 2017 HMDA Proposal, the 

Bureau proposed to raise temporarily 

the open-end threshold to 500 loans. 

The Bureau proposed conforming 

amendments to § 1003.3(c)(12) and 

comment 3(c)(12)–1, and to proposed 

new comment 3(c)(12)–2, which was 

included in the April 2017 HMDA 

Proposal, as discussed in more detail 

below, to provide guidance regarding 

voluntary reporting. Under proposed 

§ 1003.3(c)(12), for calendar years 2018 

and 2019, a financial institution that 

originated between 100 and 499 openend lines of credit in either of the two 

preceding calendar years would not be 

required to begin collecting data on 

such open-end lines of credit before 

2020. Comments regarding the proposed 

temporary adjustment to the open-end 

threshold are discussed in the sectionby-section analysis of § 1003.2(g). For 

the reasons discussed in the section-bysection analysis of § 1003.2(g), the 

Bureau is adopting the amendments as 

proposed, increasing the open-end line 

of credit threshold to 500 for calendar 

years 2018 and 2019. 

Optional Reporting and Other Technical 

and Clarifying Amendments 

Section 1003.2(g), as adopted by the 

2015 HMDA Final Rule, provides loanvolume thresholds, for closed-end 

mortgage loans and open-end lines of 

credit, for Regulation C’s coverage of 

financial institutions. As discussed 

above, the 2015 HMDA Final Rule set 

the threshold for open-end lines of 

credit at 100 open-end lines originated 

in each of the two preceding calendar 

years. Section 1003.3(c)(12), as adopted 

by the 2015 HMDA Final Rule, provides 

an exclusion for loans below a given 

threshold, providing that an open-end 

line of credit is an excluded transaction 

if a financial institution originated fewer 

than 100 open-end lines of credit in 

each of the two preceding calendar 

years. The use of the word ‘‘each’’ in 

§ 1003.3(c)(12) is a drafting error. For 

the same reason as described above in 

the section-by-section analysis of 

§ 1003.3(c)(11), the Bureau proposed to 

amend § 1003.3(c)(12) and comment 

3(c)(12)–1 by replacing the word ‘‘each’’ 

with ‘‘either’’ to clarify how a financial 

institution applies the exclusion. The 

Bureau is now adopting that correction. 

Comments generally discussing the 

proposed adjustment to the open-end 

threshold are discussed in the sectionby-section analysis of § 1003.2(g). None 

of the comments received on the 

proposal to replace ‘‘each’’ with 

‘‘either’’ differentiated between the 

§ 1003.3(c)(11) closed-end mortgage 

loan exclusion explained above and the 

§ 1003.3(c)(12) open-end line of credit 

exclusion, and the Bureau believes that 

the same reasoning applies to both. 

Similarly, the Bureau adopts the 

clarification that would specify that the 

financial institution must report 

purchased loans, as well as originated 

loans and applications, as required by 

§§ 1003.4(a) and 1003.5(a), for the same 

reasons as described above in the 

section-by-section analysis of 

§ 1003.3(c)(11). 

As with the § 1003.3(c)(11) exclusion 

for closed-end mortgage loans, the 

Bureau proposed to clarify that it 

interprets the exclusion in 

§ 1003.3(c)(12), now providing that the 

requirements of Regulation C do not 

apply to an open-end line of credit if the 

financial institution originated fewer 

than 500 open-end lines of credit in 

either of the two preceding calendar 

years, to permit a financial institution to 

report such open-end lines of credit and 

applications for open-end lines of credit 

voluntarily. 

For the same reasons as explained 

above regarding the § 1003.3(c)(11) 

closed-end mortgage loan exclusion, the 

Bureau is adopting the provision 

allowing optional reporting of 

transactions excluded by § 1003.3(c)(12) 

by including language in the regulation 

text that states that a financial 

institution may collect and report data 

on such loans provided that it reports 

all open-end lines of credit and 

applications that would otherwise be 

covered loans for a given calendar year. 

None of the comments received on the 

issue of optional reporting differentiated 

between the § 1003.3(c)(11) closed-end 

mortgage loan exclusion explained 

above and the § 1003.3(c)(12) open-end 

line of credit exclusion, and the Bureau 

believes that the same reasoning applies 

to both. 

3(c)(13) 

Comment 2(d)–2.ii, as adopted by the 

2015 HMDA Final Rule, provided a 

narrow exception to Regulation C’s 

general rule that an extension of credit 

occurs only when a new debt obligation 

is created.99 The exception covers 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43103 

granting of credit pursuant to a new debt obligation. 

If a transaction modifies, renews, extends, or 

amends the terms of an existing debt obligation 

without satisfying and replacing the original debt 

obligation with a new debt obligation, the 

transaction generally is not an extension of credit 

under revised Regulation C. In addition, revised 

comment 2(d)–2.i provided another exception, for 

assumptions, which Regulation C historically has 

covered. The Bureau is not making any change to 

the assumptions exception. 

100See N.Y. Tax Law section 255 (McKinney. 

2004). 

101 2015 HMDA Final Rule, 80 FR 66128, 66143 

(Oct. 28, 2015). 

102See id. at 66142. 

transactions completed pursuant to a 

New York State consolidation, 

extension, and modification agreement 

and classified as a supplemental 

mortgage under New York Tax Law 

section 255, such that the borrower 

owes reduced or no mortgage recording 

taxes (New York CEMAs). To facilitate 

the newly required reporting of New 

York CEMAs, the Bureau proposed an 

exclusion from reporting for preliminary 

transactions that provide new funds that 

are then consolidated into New York 

CEMAs, as explained below, and an 

associated comment. The Bureau is 

adopting this provision largely as 

proposed, with language added to the 

associated comment to clarify use of the 

exclusion. 

New York CEMAs are loans secured 

by dwellings located in New York. They 

generally are used in place of traditional 

refinancings, either to amend a 

transaction’s interest rate or loan term, 

or to permit a borrower to take cash out. 

However, unlike a traditional 

refinancing, the existing debt obligation 

is not satisfied and replaced by a new 

obligation. Instead, the existing 

obligation or obligations are 

consolidated into a new loan, either by 

the same or a different lender, and 

either with or without new funds being 

added to the existing loan balance 

through a preliminary credit transaction 

that then becomes part of the 

consolidation. Under New York State 

law, if no new money is added by a 

preliminary, subsequently consolidated 

transaction, there is no ‘‘new’’ mortgage, 

and the borrower avoids paying the 

mortgage recording taxes that would 

have been imposed if a traditional 

refinancing had been used and the 

original obligation had been satisfied 

and replaced. If new money is added 

through a preliminary transaction that 

then becomes part of the consolidated 

loan, the borrower pays mortgage 

recording taxes only on the new 

money.100 While generally used in place 

of traditional refinancings, New York 

CEMAs also can be used for home 

purchases (i.e., to complete an 

assumption), where the seller and buyer 

agree that the buyer will assume the 

seller’s outstanding principal balance, 

and that balance is consolidated with a 

new loan to the borrower for the 

remainder of the purchase price that the 

buyer is financing. 

The Bureau explained in the 2015 

HMDA Final Rule preamble that New 

York CEMAs are to be reported because 

the Bureau believed that they present a 

situation where a new debt obligation is 

created in substance, if not in form, and 

that the benefits of requiring such 

transactions to be reported justify the 

burdens.101 Such transactions are 

relatively common in New York, and 

the Bureau believed that reporting of 

New York CEMAs would provide useful 

information about this segment of the 

market. The provision interpreting 

‘‘extension of credit’’ to include New 

York CEMAs in comment 2(d)–2.ii as 

adopted by the 2015 HMDA Final Rule 

was meant to clarify the reporting 

requirements regarding New York 

CEMAs. 

In treating New York CEMAs as 

extensions of credit, the 2015 HMDA 

Final Rule departed from prior guidance 

from the Board that CEMAs, which 

modify and consolidate existing debt 

while generally extending the loan term, 

were not covered transactions because 

they did not meet the definition of a 

refinancing.102 Comment 2(d)–2.ii, as 

adopted by the 2015 HMDA Final Rule, 

explains that a New York CEMA should 

be considered an extension of credit for 

purposes of Regulation C, and a 

financial institution must report New 

York CEMAs if they are otherwise 

covered transactions. To facilitate the 

reporting of New York CEMAs, the 

Bureau’s April 2017 HMDA Proposal 

would include an exclusion from 

reporting for preliminary transactions 

that provide new funds that are then 

consolidated into New York CEMAs, as 

explained above. The exception would 

further provide that the transaction is 

excluded only if final action on the 

consolidation was taken in the same 

calendar year as final action on the new 

funds. 

Four commenters discussed the 

proposed exclusion. Three expressed 

support for the exclusion, and the fourth 

only objected to the proposed timing 

requirement, as discussed below. A 

consumer advocacy group commenter 

stated that the proposal would eliminate 

double counting and lead to a more 

accurate picture of how successful 

financial institutions are at meeting 

credit needs. Although they expressed 

support for the proposal, two industry 

commenters objected to the 2015 HMDA 

Final Rule’s treatment of New York 

CEMAs as extensions of credit, and 

another requested that the proposed 

exclusion for preliminary transactions 

be expanded to include non-New York 

consolidations. 

The Bureau has considered the 

comments and is adopting the proposed 

exclusion as proposed, with the 

clarifications discussed below. The 

Bureau is adopting the exclusion to 

simplify and clarify reporting 

requirements regarding transactions 

associated with New York CEMAs. As 

explained above, a borrower may enter 

into a CEMA that consolidates both the 

prior debt and new funds. The new 

funds are added through a preliminary 

credit transaction in which the borrower 

obtains an extension of credit providing 

only the new funds. Then, the CEMA 

consolidates the new-funds transaction 

with the original mortgage loan into a 

single loan. Because the initial 

transaction is an extension of credit, it 

would be reportable under revised 

Regulation C if it were otherwise a 

covered loan. Regarding New York 

CEMAs, this would lead to double 

reporting of the new funds, once 

through reporting of the preliminary 

transaction, and again through reporting 

of the full New York CEMA, which 

includes the new funds. The Bureau 

believes that such an outcome would 

elevate the form of the transaction over 

the substance of the resulting consumer 

indebtedness and could present 

challenges in interpreting the reported 

data. Therefore, the Bureau believes it is 

appropriate to require that only the New 

York CEMA, i.e., the single, 

consolidated loan that results after both 

sequential transactions are completed, 

be reported. Insofar as a New York 

CEMA is the functional equivalent of a 

refinancing achieved by other means 

purely for tax reasons, a New York 

CEMA that consolidates a preliminary 

extension of new funds is generally the 

functional equivalent of a refinancing 

with new funds extended, i.e., a ‘‘cashout’’ refinancing, which is clearly a 

single transaction and thus is reported 

as such. 

To achieve this outcome, the Bureau 

is adopting § 1003.3(c)(13), which 

provides that any transaction providing 

or, in the case of an application, 

proposing to provide new funds in 

advance of a consolidation as part of a 

New York CEMA is an excluded 

transaction. The Bureau also adopts 

proposed comment 3(c)(13)–1 

explaining the application of the new 

§ 1003.3(c)(13) exclusion. The Bureau 

believes that this exclusion will clarify 

and simplify reporting of New York 

CEMAs, eliminating double reporting 


sradovich on DSK3GMQ082PROD with RULES2
43104 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

103 Id. at 66143. 104 Id. at 66143 n.113. 

and facilitating compliance for financial 

institutions that provide New York 

CEMAs. The exclusion does not change 

the exception in comment 2(d)–2.ii that 

requires New York CEMAs to be 

reported as extensions of credit, which 

the Bureau continues to believe is 

appropriate and necessary for the 

reasons stated above and in the 2015 

HMDA Final Rule.103 In addition, the 

Bureau chose not to change the 

treatment of preliminary, new money 

transactions regarding CEMAs made 

pursuant to the law of States other than 

New York because the problem of 

double counting does not exist when the 

CEMA is not itself being reported, as is 

the case outside New York. 

One industry commenter expressed 

support for the timing requirement of 

the § 1003.3(c)(13) exclusion, which 

requires that the preliminary transaction 

and the consolidation occur within the 

same calendar year, stating that it would 

provide a clear timeline for reporting. 

Two other industry commenters 

objected to the timing requirement, 

stating that it was unnecessary because 

the preliminary transaction and 

consolidation usually happens at about 

the same time. One of these commenters 

said that the timing provision was 

potentially confusing and problematic, 

and could create difficulties for yearend transactions. That commenter 

suggested that the Bureau should 

instead limit the exclusion to cases 

where the borrower applies for the new 

money and the consolidation at the 

same time. That commenter also 

requested that, if the timing provision is 

not changed, the Bureau clarify that an 

earlier, unrelated loan that occurs in the 

same year and is later consolidated in a 

New York CEMA is not required to be 

excluded, which would otherwise create 

tracking and compliance challenges. In 

addition, the industry commenter that 

expressed support for the timing 

provision requested that the Bureau 

clarify that a consolidation will be 

considered as having been concluded in 

a calendar year even if the right of 

rescission extends into January of the 

next year. 

The Bureau has considered the 

comments on the timing provision and 

is adopting the provision as proposed, 

clarifying that the exclusion applies 

only to a transaction that is consolidated 

in a New York CEMA if the final action 

on the consolidation has been taken 

before the end of the calendar year in 

which final action on the preliminary 

transaction occurred. The Bureau is also 

adding new language to comment 

3(c)(13)–1 to address how the exclusion 

relates to earlier, unrelated transactions 

that are consolidated into New York 

CEMAs in the same calendar year and 

how to report New York CEMAs that 

involve assumptions. 

The Bureau believes that 

consolidation of a prior transaction into 

the New York CEMA qualifies it as an 

excluded transaction, thus final action 

on the consolidation must occur within 

the relevant final reporting period in 

order for the HMDA data to be accurate 

and reporting requirements to be clear. 

As two of the commenters pointed out, 

the preliminary new funds transaction 

and the consolidation will generally 

occur at about the same time, and 

therefore in the vast majority of these 

situations the timing requirement will 

not even be potentially implicated. In 

addition, the three-day right of 

rescission has no bearing on the date of 

the action taken on the originated 

preliminary transaction or the New York 

CEMA, which would occur at closing. 

As long as the consolidation occurs on 

or before December 31 of the year final 

action was taken on the preliminary 

transaction, it would be excluded. For 

those very few situations in which the 

two transactions might straddle the 

year’s end, the financial institution can 

avoid this problem through a scheduling 

change, or can report the two 

transactions separately. 

The Bureau chooses not to adopt the 

suggestion that the proposed timing 

requirement be replaced with a 

requirement that the applications for the 

preliminary transaction and the 

consolidation into the New York CEMA 

occur at the same time. Such a provision 

would lack the clarity regarding 

reporting requirements that a definite 

year-end cutoff provides. 

To clarify the exclusion’s timing 

requirement, the Bureau is adding 

language to comment 3(c)(13)–1 to 

clarify that a transaction that occurs 

earlier in the same year and is later 

consolidated in a New York CEMA is 

not excluded if the financial institution 

did not, when originated, intend to later 

consolidate it into a New York CEMA. 

The comment now states that the 

exclusion applies only if, at the time of 

the transaction that provided or 

proposed to provide new funds, the 

financial institution intended to 

consolidate the loan into a New York 

CEMA. The Bureau believes that this 

language will clarify and simplify 

reporting requirements in this situation 

because the financial institution will not 

need to track earlier, unrelated loans 

and can apply the exclusion based on its 

own knowledge of the transaction. 

The commenters who discussed New 

York CEMAs also asked for certain 

clarifications of how the proposed 

exclusion and the 2015 HMDA Final 

Rule provision will work. One 

commenter requested clarification of 

how to report a new money transaction 

preliminary to a consolidation outside 

of New York. Another commenter asked 

the Bureau to clarify whether 

preliminary, new money transactions 

that are consolidated into New York 

CEMAs involving assumptions will be 

covered by the new exclusion. In 

addition, one commenter asked for 

clarification that the Bureau’s 

interpretation of New York CEMAs as 

extensions of credit is not meant to 

preempt State law interpretations of 

New York Tax Law section 255. 

Consolidation transactions similar to 

New York CEMAs occur in States other 

than New York, although the Bureau 

believes they are far less common.104

Non-New York CEMAs may be called 

CEMAs or MECAs (modification, 

extension and consolidation 

agreements). In the 2015 HMDA Final 

Rule, the Bureau limited the reporting 

requirement in comment 2(d)–2.ii to 

New York CEMAs. As with New York 

CEMAs, similar transactions in other 

States may involve preliminary 

transactions the proceeds of which 

become part of the consolidation. In 

addition to the interpretation discussed 

above, comment 3(c)(13)–1 explains that 

the exclusion for preliminary 

transactions consolidated into New 

York CEMAs does not apply to similar 

preliminary transactions that are 

consolidated pursuant to the law of 

States other than New York, providing 

an example. The comment also explains 

that, if such a preliminary transaction 

providing or proposing to provide new 

funds is a covered loan or application, 

it must be reported. In addition, the 

comment also states that if the 

associated consolidation and 

modification agreement is carried out 

pursuant to the law of a State other than 

New York and is not an extension of 

credit under Regulation C, it may not be 

reported. 

Regarding the method for reporting 

these preliminary transactions for 

CEMAs or MECAs outside New York, if 

the eventual consolidation is not an 

extension of credit, as described by 

comments 2(d)–2 as adopted by the 

2015 HMDA Final Rule, the financial 

institution should report data related 

only to the terms of the preliminary, 

new funds transaction and treat the 

CEMA or MECA that follows as if it 

were an unrelated transaction. As noted 

in the 2015 HMDA Final Rule, the 

Bureau believes that limiting the scope 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43105 

105 2015 HMDA Final Rule, 80 FR 66128, 66142 

(Oct. 28, 2015); April 2017 HMDA Proposal, 82 FR 

19142, 19150 (Apr. 25, 2017). 

106 12 U.S.C. 2804(a). 

107 Id. 108 12 U.S.C. 2803(b)(6)(G). 

of reportable MECAs/CEMAs to those 

covered by New York Tax Law section 

255 will permit New York CEMAs to be 

reported while avoiding the confusion 

that, as the Board worried, could result 

from departing from a bright-line 

‘‘satisfies and replaces’’ rule for the 

definition of refinancings generally. 

New York CEMAs are sometimes 

carried out in a transaction involving an 

assumption. The Bureau notes that the 

2015 HMDA Final Rule, the April 2017 

HMDA Proposal, and this final rule all 

include references to home purchase by 

assumption using a New York CEMA.105

As long as the CEMA fits the description 

of a New York CEMA in comment 2(d)– 

2.ii, and the preliminary new money 

transaction meets the requirements of 

§ 1003.3(c)(13), the financial institution 

should report the New York CEMA, 

pursuant to comment 2(d)–2.ii, and 

should not report the preliminary 

transaction, pursuant to § 1003.3(c)(13). 

In this way, the assumption is reported 

under Regulation C. The Bureau is 

adding language to comment 3(c)(13)–1 

to make this clear. 

Regarding the comment requesting 

clarification of the relation of Regulation 

C’s requirement to report New York 

CEMAs to New York State’s 

interpretation of New York Tax Law 

section 255, the Bureau points out that 

Regulation C and HMDA set out 

requirements for collecting, recording, 

and reporting information. The 

requirement to report New York CEMAs 

as extensions of credit for HMDA 

purposes is not intended to preempt or 

otherwise affect the proper 

interpretation of New York Tax Law 

section 255. 

HMDA section 305(a) authorizes the 

Bureau to prescribe such regulations as 

may be necessary to carry out HMDA’s 

purposes.106 These regulations may 

include ‘‘classifications, 

differentiations, or other provisions, and 

may provide for such adjustments and 

exceptions for any class of transactions, 

as in the judgment of the Bureau are 

necessary and proper to effectuate the 

purposes of [HMDA], and prevent 

circumvention or evasion thereof, or to 

facilitate compliance therewith.’’ 107 As 

explained above, the new exception 

would effectuate the purposes of HMDA 

and facilitate compliance by eliminating 

double reporting of preliminary 

transactions that are subsequently 

consolidated in New York CEMA 

transactions. 

Section 1003.4 Compilation of 

Reportable Data 

4(a) Data Format and Itemization 

4(a)(1) 

4(a)(1)(i) 

HMDA section 304(b)(6)(G), as 

amended by Dodd-Frank Act section 

1094(3)(A)(iv), authorizes the Bureau to 

require a universal loan identifier (ULI), 

as it may determine to be 

appropriate.108 Current § 1003.4(a)(1) 

requires financial institutions to report 

an identifying number for each covered 

loan or application reported. As adopted 

by the 2015 HMDA Final Rule, 

§ 1003.4(a)(1)(i) requires financial 

institutions to provide a universal loan 

identifier (ULI) for each covered loan or 

application reported. Section 

1003.4(a)(1)(i) and its associated 

commentary also address ULI 

requirements for purchased covered 

loans and applications that are 

reconsidered or reinstated during the 

same calendar year. In addition, 

§ 1003.4(a)(1)(i)(C), as adopted by the 

2015 HMDA Final Rule, requires a 

check digit as part of the ULI. The check 

digit is meant to enable financial 

institutions to identify and correct 

errors in the ULI, which would ensure 

a valid ULI, and therefore enhance data 

quality. As part of the 2015 HMDA Final 

Rule, the Bureau published new 

appendix C that includes the 

methodology for generating a check 

digit and instructions on how to 

validate a ULI using the check digit. In 

the April 2017 HMDA Proposal, the 

Bureau proposed certain amendments to 

appendix C and to the commentary to 

§ 1003.4(a)(1)(i). 

Previous to the April 2017 HMDA 

Proposal, the Bureau had become aware 

of a typographical error that occurs 

twice in appendix C and makes one 

method of computing the check digit 

inaccurate. The Bureau proposed to 

revise appendix C by substituting 97 for 

.97 in two places in the relevant 

instructions in appendix C. 

All the commenters that discussed the 

proposed technical correction to 

appendix C expressed support for the 

change. One industry commenter stated 

that it had noticed the error and had 

begun implementation assuming that it 

was wrong. 

The Bureau is adopting the technical 

correction as proposed. Step 3 of the 

method for computing the check digit 

has two alternatives. Appendix C 

mistakenly provided that the second of 

the alternatives requires multiplication 

by .97 when the needed operation 

requires multiplication by 97 for the 

result to be accurate. The same 

typographical error occurred in Step 3 

of the example based on this alternative 

method. The computation result 

presented in the example, 59.946, can 

be reached only by multiplying by 97, 

not .97. To ensure correct computation 

of the check digit, the Bureau now 

substitutes 97 for .97 in the two places 

where the error occurred. 

For those financial institutions that do 

not wish to calculate the check digit 

themselves, the Bureau also notes that it 

will provide a check digit tool on its 

Web site before the effective date of the 

2015 HMDA Final Rule. 

In addition to the check digit 

technical correction, the Bureau 

proposed to amend comments 4(a)(1)(i)– 

3 and –4 to reflect the different effective 

dates for data reporting requirements 

adopted by the 2015 HMDA Final Rule. 

Specifically, the Bureau proposed to 

amend comments 4(a)(1)(i)–3 and –4, 

effective January 1, 2018, to remove the 

references to quarterly reporting, and to 

amend comments 4(a)(1)(i)–3 and –4, 

effective January 1, 2020, to 

reincorporate the references to quarterly 

reporting. The Bureau also proposed 

certain non-substantive clarifications to 

comments 4(a)(1)(i)–3 and –4. For the 

reasons discussed below, the Bureau is 

adopting comments 4(a)(1)(i)–3 and –4, 

effective January 1, 2018, and as 

amended again effective January 1, 

2020, as proposed, with minor technical 

revisions. 

Several commenters expressed 

support for the proposed clarifications 

to comments 4(a)(1)(i)–3 and –4 

regarding purchased loans and 

reconsidered or reinstated applications. 

One national trade association stated 

that the guidance regarding reinstated or 

reconsidered applications generally 

reflects the operations of most lenders. 

A few vendor commenters expressed 

concern with the term ‘‘assigned’’ as 

used in proposed comment 4(a)(1)(i)–3 

and requested that it be removed or that 

a definition of the term be provided. 

These commenters also stated that, 

because the loan identification number 

is often part of the ULI, not being able 

to use the same ULI for a reconsidered 

or reinstated application more than once 

would result in lenders needing to 

restart the application process to obtain 

a unique ULI. A few commenters 

expressed concern that multiple entities 

involved in a transaction could assign a 

ULI and requested additional guidance 

on which ULI to report in such 

instances. One commenter requested 

additional guidance on whether a new 


sradovich on DSK3GMQ082PROD with RULES2
43106 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

109 2015 HMDA Final Rule, 80 FR 66128, 66178 

(Oct. 28, 2015). 110 Id. at 66180. 

ULI should be generated and reported in 

the case of assumptions while another 

commenter stated that uncertainty 

remained over how the ULI will be 

transferred between lenders, investors, 

and servicers. 

The Bureau is adopting comments 

4(a)(1)(i)–3 and –4 effective January 1, 

2018, and again as amended effective 

January 1, 2020, as proposed, with 

minor technical revisions. Final 

comment 4(a)(1)(i)–3 does not change 

any substantive reporting requirements 

regarding purchased covered loans with 

previously assigned ULIs. Rather, it 

clarifies further the requirement in 

§ 1003.4(a)(1)(i)(D) that, for a purchased 

covered loan that any financial 

institution has previously assigned or 

reported with a ULI under Regulation C, 

the financial institution that purchases 

the covered loan must use the ULI that 

was assigned or previously reported for 

the covered loan. Regarding 

commenters’ concerns about reinstated 

or reconsidered applications, final 

comment 4(a)(1)(i)–4 does not change 

the substantive requirements regarding 

when a financial institution may or may 

not use a previously reported ULI. Final 

comment 4(a)(1)(i)–4, effective January 

1, 2020, clarifies that a financial 

institution may not use a ULI previously 

reported if it reinstates or reconsiders an 

application that was reported in a prior 

calendar year, but that a financial 

institution does have the option to 

report a ULI previously reported if an 

application is reconsidered or reinstated 

during the same calendar year. As 

explained in the 2015 HMDA Final 

Rule, ‘‘the Bureau believes that 

providing this option for financial 

institutions will reduce burden 

associated with assigning a new ULI for 

a later transaction that a financial 

institution considers as a continuation 

of an earlier transaction.’’ 109

As to questions regarding the 

assignment of a ULI in situations where 

more than one entity is involved in a 

transaction, § 1003.4(a)(1) requires that, 

if a financial institution is required to 

report an application or origination 

under Regulation C, then, except as set 

forth in § 1003.4(a)(1)(i)(D) and (E), that 

financial institution is responsible for 

assigning and reporting a unique ULI for 

that application or origination. 

Comment 4(a)(1)(i)–1 clarifies that a 

financial institution should assign only 

one ULI to any particular covered loan 

or application, and each ULI should 

correspond to a single application and 

ensuing loan if the application is 

approved and a loan is originated. 

Comment 4(a)(1)(i)–1 clarifies further 

that a financial institution may use a 

ULI that was reported previously to 

refer only to the same loan or 

application for which the ULI was used 

previously or a loan that ensues from an 

application for which the ULI was used 

previously. Under comment 4(a)–2.i, if 

more than one financial institution is 

involved in the origination of a covered 

loan, then the institution that makes the 

credit decision approving the 

application before loan closing or 

account opening reports the origination 

and pursuant to § 1003.4(a)(1) must 

assign a unique ULI to the covered loan. 

Pursuant to comment 4(a)–2.ii, in the 

case of an application for a covered loan 

that did not result in an origination, a 

financial institution reports the action it 

took on that application, and pursuant 

to § 1003.4(a)(1) assigns a unique ULI to 

that application, if the financial 

institution made a credit decision on the 

application or was reviewing the 

application when the application was 

withdrawn or closed for 

incompleteness. Comment 4(a)–2.ii 

further provides that it is not relevant 

whether the financial institution 

received the application from the 

applicant or from another institution, 

such as a broker, or whether another 

financial institution also reviewed, 

reported an action taken, and assigned 

a ULI to the same application. 

4(a)(2) 

HMDA section 304(b)(1) requires 

financial institutions to report ‘‘the 

number and dollar amount of mortgage 

loans which are insured under Title II 

of the National Housing Act or under 

Title V of the Housing Act of 1949 or 

which are guaranteed under chapter 37 

of Title 38.’’ Current § 1003.4(a)(2) 

implements HMDA section 304(b)(1) by 

requiring financial institutions to report 

the type of loan or application. In the 

2015 HMDA Final Rule, the Bureau 

revised § 1003.4(a)(2) to require 

financial institutions to report whether 

the covered loan is, or in the case of an 

application would have been, insured 

by the Federal Housing Administration, 

guaranteed by the Veterans 

Administration, or guaranteed by the 

Rural Housing Service or the Farm 

Service Agency. The Bureau adopted 

new comment 4(a)(2)–1 to provide 

further guidance. The Bureau proposed 

to substitute ‘‘Department of Veterans 

Affairs’’ for ‘‘Veterans Administration’’ 

in § 1003.4(a)(2) and comment 4(a)(2)–1. 

The Bureau received one comment in 

support of these proposed changes, and 

is adopting § 1003.4(a)(2) and comment 

4(a)(2)–1 as proposed. 

4(a)(3) 

Current § 1003.4(a)(3) requires 

financial institutions to report the 

purpose of a covered loan or application 

using the categories home purchase, 

home improvement, or refinancing. The 

Bureau revised § 1003.4(a)(3) in the 

2015 HMDA Final Rule to add an 

‘‘other’’ category, a cash-out refinancing 

category, and to make changes to the 

commentary to implement these 

additional categories and provide 

instructions for reporting covered loans 

with multiple purposes. In the April 

2017 HMDA Proposal the Bureau 

proposed to add new comment 4(a)(3)– 

6 to provide that, for purchased covered 

loans where the origination took place 

before January 1, 2018, a financial 

institution complies with § 1003.4(a)(3) 

by reporting that the requirement is not 

applicable. 

The Bureau received many comments 

supporting the proposed clarification, 

and several commenters stated that it 

would alleviate burden for purchasers of 

loans originated before January 1, 2018. 

One vendor stated that many smaller 

financial institutions may be able to 

determine loan purpose because they 

review purchased loan files and 

recommended that financial institutions 

have the option to comply with 

§ 1003.4(a)(3) by reporting the loan 

purpose or not applicable. A few 

commenters requested that the 

definitions of the loan purpose 

categories be changed to align with 

those set forth in Regulation Z 

§ 1026.37(a)(9). 

The Bureau is adopting comment 

4(a)(3)–6 as proposed. The Bureau 

believes that final comment 4(a)(3)–6 

provides a consistent standard that will 

facilitate compliance for financial 

institutions that purchase covered loans 

originated before January 1, 2018. The 

Bureau declines to revise § 1003.4(a)(3) 

to align with Regulation Z 

§ 1026.37(a)(9). As explained in the 

2015 HMDA Final Rule, the Bureau 

does not believe that aligning 

§ 1003.4(a)(3) with Regulation Z 

§ 1026.37(a)(9) would be appropriate 

because Regulation Z § 1026.37(a)(9) 

does not include a loan purpose for 

home improvement loans and does not 

include a separate cash-out refinancing 

purpose.110

4(a)(8) 

4(a)(8)(i) 

Section 1003.4(a)(8)(i), as adopted by 

the 2015 HMDA Final Rule, requires 

financial institutions to report the action 

taken on covered loans and 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43107 

applications, and comment 4(a)(8)(i)–9 

explains how to report the action taken 

when a financial institution makes a 

counteroffer to lend on terms different 

from the applicant’s initial request and 

the applicant does not accept the 

counteroffer or fails to respond. 

Comment 4(a)(8)(i)–13, as adopted by 

the 2015 HMDA Final Rule, provides 

guidance on how to report the action 

taken for different scenarios in which a 

conditional approval occurs. The 

Bureau proposed to clarify the guidance 

on reporting action taken for 

counteroffers, including its relation to 

the guidance on reporting action taken 

on conditional approvals. 

The Bureau recognized that revised 

comments 4(a)(8)(i)–9 and 4(a)(8)(i)–13 

may be read as in tension regarding how 

to report the action taken on an 

application for which a counteroffer is 

made, the applicant expresses interest 

in the new terms, and the financial 

institution provides a conditional 

approval to which the applicant does 

not respond or which otherwise does 

not result in an originated loan. 

Comment 4(a)(8)(i)–9 could be read to 

require the financial institution to report 

the action taken as a denial on the 

original loan terms applied for, while 

comment 4(a)(8)(i)–13 could be read to 

require the action taken to be reported 

as a denial, file closed for 

incompleteness, approved but not 

accepted, or application withdrawn, 

depending on the circumstances. In 

addition, the Bureau believed that 

limiting the reportable actions taken for 

counteroffers to only covered loan 

originated or application denied might 

lead to less complete and accurate 

reporting. 

In addressing inquiries raising this 

concern, the Bureau had provided 

informal guidance that a financial 

institution should follow comment 

4(a)(8)(i)–13 when an application for 

which a counteroffer is made is 

followed by a conditional approval that 

does not result in an originated loan. In 

accordance with this informal guidance, 

and to address the need to provide a full 

range of options in reporting the action 

taken on an application when there is a 

counteroffer, the Bureau proposed to 

amend the language of comment 

4(a)(8)(i)–9 to broaden the possible 

actions taken that could be reported. 

The Bureau proposed to clarify that, if 

the applicant agrees to proceed with 

consideration of the financial 

institution’s counteroffer, the 

counteroffer takes the place of the prior 

application, and the financial institution 

reports the action taken on the 

application under the terms of the 

counteroffer. In addition, the Bureau 

proposed to illustrate this interpretation 

by providing an example in comment 

4(a)(8)(i)–9. The example would clarify 

that, if a financial institution makes a 

counteroffer, the applicant agrees to 

proceed with consideration of the 

counteroffer, and the financial 

institution sends a conditional approval 

letter stating the terms of the 

counteroffer, the financial institution 

reports the action taken on the 

application in accordance with 

comment 4(a)(8)(i)–13 regarding 

conditional approvals. 

Five industry commenters expressed 

support for the changes to comment 

4(a)(8)(i)–9, and three industry 

commenters expressed opposition. One 

commenter who expressed support for 

the changes stated that the guidance 

would ease the difficulties of reporting 

by allowing financial institutions’ 

systems to reflect more accurately the 

specifics of the loan file at the time of 

final action without requiring additional 

fields. 

One commenter who expressed 

opposition to the changes preferred that 

comment 4(a)(8)(i)–9 be read to require 

that the action taken be reported as loan 

denied whenever a counteroffer is made 

and the loan is not ultimately 

originated. This commenter also stated 

that the new language was a major 

change and that financial institutions 

would have problems implementing it 

before the effective date. Two 

commenters expressed concern that it 

might be difficult for financial 

institutions to determine and track 

whether an applicant agrees to proceed 

with a counteroffer. Two commenters 

stated that this difficulty would be 

greater in the case of commercial and 

multifamily transactions because the 

negotiations are often fluid and several 

counteroffers may go back and forth. 

One commenter suggested that a 

financial institution should only have to 

report something more than loan denied 

if the loan origination system has been 

updated with the applicant’s agreement 

to proceed. Another commenter 

suggested specific guidance for 

reporting action taken for different 

scenarios after a counteroffer. 

Two commenters suggested that the 

language added to comment 4(a)(8)(i)–9 

conflicts with the treatment of 

counteroffers in Regulation B, which 

one suggested does not treat a 

counteroffer as a new application when 

an applicant agrees to proceed. Two 

commenters objected to the idea of a 

counteroffer being treated as a new 

application, with one asking how the 

original application should then be 

reported. One commenter who 

expressed support for the changes stated 

that many financial institutions do not 

use conditional approval letters, and 

requested that the example in comment 

4(a)(8)(i)–9 be changed to allow other 

indications of a conditional approval. 

Finally, one commenter requested that a 

deleted sentence stating that a financial 

institution should report the action 

taken as loan originated when a loan is 

originated after a counteroffer should be 

put back into the comment. 

The Bureau now adopts the 

amendment to comment 4(a)(8)(i)–9 

largely as proposed, with some 

modifications to address commenters’ 

concerns. First, the example in 

comment 4(a)(8)(i)–9 no longer includes 

a reference to a conditional approval 

letter, which the Bureau did not intend 

to suggest was required for a conditional 

approval to exist. The Bureau believes 

that removing the reference to a 

conditional approval letter will broaden 

the applicability of the example and 

facilitate compliance. Second, the 

comment is revised to clarify that a 

financial institution reports the action 

taken based on the final disposition of 

the application in response to the terms 

of the counteroffer. Information such as 

the application date and ULI will not 

change as a result of the existence of a 

counteroffer with which the applicant is 

proceeding. An additional example is 

also added to the commentary. 

The Bureau continues to believe that 

it is necessary to provide a full range of 

options in reporting the action taken on 

an application when there is a 

counteroffer. The Bureau agrees with 

the industry commenter who stated that 

the guidance would ease the difficulties 

of reporting by allowing financial 

institutions’ systems to reflect more 

accurately the specifics of the loan file 

at the time of final action. In addition, 

the Bureau believes that those 

institutions and vendors that were 

reading comments 4(a)(8)(i)–9 and –13 

differently from this clarification will 

have adequate time to change their 

systems. To the extent the clarifications 

in this rule require financial institutions 

to make technical changes, those 

changes require only minor 

adjustments, not significant system 

updates. In addition, the Bureau has 

issued this final rule in August, four 

months before 2018, which the Bureau 

believes should afford ample time to 

implement any necessary minor system 

adjustments. The Bureau is releasing 

implementation aids with this final rule 

to facilitate implementation. 

Although some financial institutions 

may find added difficulty in 

determining and tracking the action 

taken for counteroffers if they were 

previously interpreting the comments 


sradovich on DSK3GMQ082PROD with RULES2
43108 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

111The new language in comment 4(a)(8)(i)–9 

does not affect a financial institution’s obligation to 

comply with Regulation B § 1002.9. See comment 

4(a)(8)(i)–6 for a discussion of the relation between 

Regulation B and Regulation C compliance 

regarding reporting the action taken when the file 

is closed for incompleteness. 

112See HMDA section 304(b)(6)(H), 12 U.S.C. 

2803(b)(6)(H). 

113Section 1003.4(a)(9) requires reporting of 

property location information if the property 

securing the covered loan or in the case of an 

application proposed to secure the covered loan is 

located in a MSA or Metropolitan Division (MD) in 

which the financial institution has a home or 

branch office. In addition, § 1003.4(e) requires 

banks and savings associations that are required to 

report data on small business, small farm, and 

community development lending under regulations 

that implement the Community Reinvestment Act 

to collect the location of property located outside 

MSAs and MDs in which the institution has a home 

or branch office, or outside of any MSA. 

differently, the majority of industry 

commenters support the clarification 

and do not appear to believe that undue 

burden will result. In addition, the 

Bureau believes that accurate reporting 

of the action taken in this situation will 

enhance the accuracy and usefulness of 

HMDA data. The Bureau does not 

believe that allowing compliance and 

accuracy to depend entirely on whether 

a financial institution has updated its 

loan origination system would provide 

the necessary accuracy or uniformity. 

Regarding commercial and multifamily 

transactions, the Bureau notes that a 

financial institution may report the 

action taken on an application that does 

not result in an originated loan by 

reference to the final counteroffer made 

and is not required to consider any 

previous negotiations. Although the 

Bureau appreciates the suggestion of 

new options for reporting action taken 

that were provided by one of the 

commenters, the Bureau believes that 

the combination of options provided by 

comments 4(a)(8)(i)–9 and –13 are 

sufficient, and the Bureau has not had 

the benefit of notice and public 

comment on this newly suggested 

guidance. 

In addition, the Bureau does not 

believe that the new language in 

comment 4(a)(8)(i)–9 conflicts with the 

requirements of Regulation B.111

Regulation B and Regulation C address 

different requirements: The revisions to 

comment 4(a)(8)(i)–9 clarify reporting of 

the action taken field while Regulation 

B, 12 CFR 1002.9(a), sets forth when an 

adverse action notice is required. Thus, 

comment 4(a)(8)(i)–9 does not affect a 

financial institution’s obligation to 

comply with Regulation B. 

Furthermore, the Bureau has replaced 

the language in the proposed comment 

stating that the counteroffer takes the 

place of the prior application. This 

change is meant to make clear that the 

revisions to comment 4(a)(8)(i)–9 do not 

treat a counteroffer as a new covered 

loan that must be reported as a separate 

entry in the loan/application register, 

but rather provide that for purposes of 

reporting action taken, where the 

applicant agrees to proceed with 

consideration of the financial 

institution’s counteroffer, the financial 

institution reports the action taken field 

as the disposition of the application 

based on the terms of counteroffer. 

In addition to the change to comment 

4(a)(8)(i)–9, the Bureau proposed a 

technical correction to comment 

4(a)(8)(i)–6, as adopted by the 21015 

HMDA Final Rule, correcting a citation 

that was intended to reference 

Regulation B, 12 CFR 1002.9(c)(1)(i). 

The citation read, ‘‘12 CFR 1002.9(c)(i).’’ 

The proposal would correct the 

typographical error by inserting the 

‘‘(1)’’ paragraph designation missing 

from the citation. The Bureau received 

no comments on this technical 

correction and now adopts it as 

proposed. The Bureau is also adding 

language to clarify a different, correct 

citation in the comment. 

4(a)(9) 

4(a)(9)(i) 

Section 1003.4(a)(9)(i) as adopted by 

the 2015 HMDA Final Rule requires 

financial institutions to report the 

property address of the property 

securing the covered loan or, in the case 

of an application, proposed to secure 

the covered loan.112 Comment 4(a)(9)(i)– 

3 as adopted by the 2015 HMDA Final 

Rule explains that this requirement is 

not applicable if the address of the 

property securing the covered loan is 

not known and provides an example. 

The Bureau proposed certain nonsubstantive amendments to comment 

4(a)(9)(i)–3 to replace ‘‘indicating’’ with 

‘‘reporting’’ for consistency with other 

comments providing similar guidance. 

The Bureau did not receive any 

comments discussing the replacement of 

‘‘indicating’’ with ‘‘reporting’’ in 

comment 4(a)(9)(i)–3. The Bureau is 

adopting the amendments to comment 

4(a)(9)(i)–3 as proposed, replacing 

‘‘indicating’’ with ‘‘reporting’’ for 

consistency with other comments 

providing similar guidance. 

4(a)(9)(ii) 

Current § 1003.4(a)(9) introductory 

text and (a)(9)(ii), as adopted by the 

2015 HMDA Final Rule, both require 

financial institutions to report certain 

information for certain transactions 

about the location of the property 

related to the covered loan or 

application, including the State, county, 

and census tract.113 The Bureau 

proposed amendments to the 

commentary to § 1003.4(a)(9)(ii)(A) 

through (C) to provide guidance on what 

a financial institution should report if it 

has incomplete information about the 

location of the property when reporting 

an application. 

A financial institution may have 

incomplete information about the 

location of a property when it takes final 

action on an application in certain 

situations. For example, an applicant 

may not identify a specific property or 

census tract, but may provide the 

financial institution with only the State 

and county where the applicant intends 

to purchase a home before the financial 

institution denies the application. 

The Bureau proposed new comments 

4(a)(9)(ii)(A)–1, 4(a)(9)(ii)(B)–2, and 

4(a)(9)(ii)(C)–2 to clarify that, when 

reporting an application, the financial 

institution reports that the property 

location requirement is not applicable if 

the State, county, or census tract, 

respectively, was not known before the 

application was denied, withdrawn, or 

closed for incompleteness. 

The Bureau received two comments 

on the proposed comments, and both 

expressed support for the change. One 

commenter stated that the new 

comments would be extremely helpful. 

The Bureau also received one comment 

urging the Bureau to clarify whether 

reporting State, county, or census tract 

is permissible when a property is not 

located in a Metropolitan Statistical 

Area (MSA) or Metropolitan Division 

(MD) in which a financial institution 

has a home or branch office. Instruction 

I.C.5 in current appendix A to 

Regulation C addresses the situations 

when a financial institution may report 

not applicable. It states that for loans on 

property located outside the MSAs and 

MDs in which an institution has a home 

or branch office, or for property located 

outside of any MSA or MD and for 

which the institution is not required to 

report such information by § 1003.4(e), 

the institution may choose one of the 

following two options: First, a financial 

institution may enter the property 

location information, and the 

information reported must accurately 

identify the property location. Second, a 

financial institution may indicate that 

the requirement to report the property 

location is not applicable. The Bureau 

agrees that it is appropriate to clarify 

that a financial institution may report 

not applicable in these circumstances 

and is finalizing new comment 

4(a)(9)(ii)–1 to clarify that in 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43109 

114Revised § 1003.4(a)(10)(iii) also excluded from 

the reporting of this data point covered loans and 

applications for which the credit decision did not 

consider or would not have considered income. See 

the commentary to § 1003.4(a)(10)(iii) for more 

information and descriptions of different situations 

in which the income reporting requirement is not 

applicable. 

115 Intermittent actual withdrawals from the 

remaining assets should not be reported if the 

financial institution does not consider them as 

income in its underwriting. 

circumstances where State, county, or 

census tract reporting is not required, 

financial institutions may report that the 

requirement is not applicable, or may 

voluntarily report the State, county, or 

census tract information. 

In addition, the Bureau is adopting 

new comments 4(a)(9)(ii)(A)–1, 

4(a)(9)(ii)(B)–2, and 4(a)(9)(ii)(C)–2 as 

proposed. 

4(a)(10) 

4(a)(10)(ii) 

Section 1003.4(a)(10)(ii) as adopted by 

the 2015 HMDA Final Rule requires that 

a financial institution report the age of 

the applicant or borrower. Comment 

4(a)(10)(ii)–3, as adopted by the 2015 

HMDA Final Rule, contains a drafting 

error in providing guidance on 

treatment of purchased loans that refers 

to reporting income rather than age. The 

Bureau proposed to correct the drafting 

error in comment 4(a)(10)(ii)–3 by 

replacing the term ‘‘income’’ with ‘‘age’’ 

to clarify that a financial institution 

complies with § 1003.4(a)(10)(ii) by 

reporting that the requirement is not 

applicable when reporting a purchased 

loan for which the institution chooses 

not to report the age of the applicant or 

borrower. 

The Bureau received one comment 

discussing this correction. The 

commenter expressed support for the 

change and asked for further guidance 

on reporting an applicant’s age for a 

purchased loan when a financial 

institution chooses to report age. 

The Bureau adopts the technical 

correction as proposed. Regarding 

optional reporting of a borrower’s age 

for purchased loans, as explained in 

comment 4(a)(10)(ii)–1, a financial 

institution complies with 

§ 1003.4(a)(10)(ii) by reporting the 

applicant’s age, as of the application 

date under § 1003.4(a)(1)(ii), as the 

number of whole years derived from the 

date of birth as shown on the 

application form. 

4(a)(10)(iii) 

HMDA section 304(b)(4) requires the 

reporting of income level for borrowers 

and applicants. The 2015 HMDA Final 

Rule requires in § 1003.4(a)(10)(iii) that 

a financial institution report the gross 

annual income relied on in making the 

credit decision or processing the 

application if a credit decision was not 

made.114 Comment 4(a)(10)(iii)–4 

adopted by the 2015 HMDA Final Rule 

explains that a financial institution does 

not include as income amounts 

considered in making a credit decision 

based on factors that an institution 

relies on in addition to income, such as 

amounts derived from annuitization or 

depletion of an applicant’s remaining 

assets. The Bureau proposed to clarify 

the intended meaning of this comment 

by amending the comment language to 

specify that a financial institution does 

not include as income amounts 

considered in making a credit decision 

based on factors that an institution 

relies on in addition to income, such as 

amounts derived from underwriting 

calculations of the potential 

annuitization or depletion of an 

applicant’s remaining assets. The new 

comment language would also state that 

actual distributions from retirement 

accounts or other assets that are relied 

on by the financial institution as income 

should be reported as income, and that 

comment 4(a)(10)(iii)–4’s interpretation 

of income does not apply to 

§ 1003.4(a)(23), which requires reporting 

of the debt-to-income ratio. 

The Bureau proposed this 

clarification because it had become 

aware of uncertainty among financial 

institutions regarding how to determine 

which amounts are derived from 

annuitization or depletion of an 

applicant’s remaining assets. The 

Bureau explained in the proposal that 

the use of the modifier ‘‘remaining’’ 

regarding the assets referred to was 

meant to specify assets that are not in 

actual distribution, but are remaining. In 

addition, the word ‘‘derived’’ was meant 

to refer to the underwriting method by 

which hypothetical (not actual) 

distributions are calculated from the 

amounts of the remaining assets. 

Four industry commenters discussed 

the proposed clarification, and all four 

expressed opposition to it. Commenters 

stated that the provision would require 

separate tracking of income and 

hypothetical income formulated from 

assets for HMDA compliance. One 

commenter stated that this would make 

compliance and programming difficult, 

and another suggested that filers should 

be able to report either the income and 

formulated asset depletion together as 

income or else that the income data 

point is not applicable when a financial 

institution relies on formulated asset 

depletion. Otherwise, one commenter 

suggested, the institution will be 

reporting partial information that could 

incorrectly raise fair lending red flags. 

Another commenter stated that failure 

to include the asset depletion 

information may result in false positives 

during an underwriting matched pair 

analysis. One commenter stated that 

applicants that have reportable income 

may use assets to qualify for the loan, 

such as when an applicant will be 

returning to work from an extended 

leave or is planning to retire shortly 

after receiving the loan. 

One commenter asked that the Bureau 

create a special rule for reverse 

mortgages or else exclude them from the 

income reporting requirement. Another 

asked for guidance in reporting income 

as ‘‘0,’’ such as when an applicant 

becomes unemployed after applying for 

the loan. 

The Bureau is adopting the clarifying 

language in comment 4(a)(10)(iii)–4 as 

proposed, providing that a financial 

institution does not include as income 

amounts considered in making a credit 

decision based on factors in addition to 

income, such as amounts derived from 

underwriting calculations of the 

potential annuitization or depletion of 

an applicant’s remaining assets. The 

comment further provides that actual 

distributions from retirement accounts 

or other assets that are relied on by the 

financial institution as income should 

be reported as income. Because the 

determination of what to exclude 

depends on the underwriting method 

the financial institution applies in 

making the credit decision, the 

proposed clarification should facilitate 

implementation of the 2015 HMDA 

Final Rule.115 In addition, to avoid 

confusion and facilitate compliance, the 

Bureau also adopts the proposed 

language clarifying that the comment’s 

interpretation of income does not apply 

to § 1003.4(a)(23) as adopted in the 2015 

HMDA Final Rule, which requires, 

except for purchased covered loans, the 

collection of the ratio of the applicant’s 

or borrower’s total monthly debt to the 

total monthly income relied on in 

making the credit decision. 

The commenters’ objections to 

separate tracking of income and asset 

depletion were not relevant in assessing 

the proposed clarification. The 2015 

HMDA Final Rule income reporting 

provision already required a separate 

determination when remaining assets 

were used, and the April 2017 HMDA 

Proposal would limit the number of 

times that separate tracking would be 

required. Similarly, although the Bureau 

believes that careful analysis will avoid 

fair lending misinterpretations, the 


sradovich on DSK3GMQ082PROD with RULES2
43110 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

116 2015 HMDA Final Rule, 80 FR 66128, 66166 

(Oct. 28, 2015). 

117See revised comment 4(a)(10)(iii)–1. 

118Section 1094(3)(A)(iv) of the Dodd-Frank Act 

amended HMDA by adding section 304(b)(5)(B), 

which expanded the rate spread reporting 

requirement beyond higher-priced mortgage loans. 

119For example, revised § 1003.4(a)(3) requires a 

financial institution to report whether the covered 

loan is, or the application is for, a home purchase 

loan, a home improvement loan, a refinancing, a 

cash-out refinancing, or for a purpose other than 

home purchase, home improvement, refinancing, or 

cash-out refinancing. Revised § 1003.4(a)(21) 

requires a financial institution to report the interest 

rate applicable to the approved application or to the 

covered loan at closing or account opening. Revised 

§ 1003.4(a)(22) requires a financial institution to 

report, for covered loans or applications subject to 

Regulation Z, 12 CFR part 1026, other than reverse 

mortgages or purchased covered loans, the term in 

months of any prepayment penalty, as defined in 

Regulation Z § 1026.32(b)(6)(i) or (ii), as applicable. 

120Notice of Availability of Revised Methodology 

for Determining Average Prime Offer Rates, 81 FR 

64142 (Sept. 19, 2016). The source of survey data 

used by the Bureau to calculate APORs is currently 

available on the FFIEC Web site. FFIEC, ‘‘Mortgage 

Rate Survey Data Used To Calculate Rate Spreads 

for Loans Reportable Under HMDA,’’ https://

www.ffiec.gov/ratespread/mortgagerates.htm (last 

visited Aug. 8, 2017). 

potential for such problems should 

actually be mitigated by the new 

language. The comments about the use 

of assets when income is available also 

appear more relevant to the provision 

adopted by the 2015 HMDA Final Rule, 

as opposed to the proposed clarification 

in the April 2017 HMDA Proposal. The 

Bureau did not propose revisions to the 

2015 HMDA Final Rule’s treatment of 

the reliance on assets when income is 

not available and therefore the need for 

such revisions has not benefited from 

appropriate notice and comment 

regarding any such amendment. The 

comment does not provide a basis to 

change the approach proposed by the 

Bureau in the April 2017 HMDA 

Proposal. Accordingly, the Bureau 

declines to adopt such amendments in 

this final rule. 

Similarly, the Bureau did not propose 

any change to the treatment of income 

reporting for reverse mortgages and so 

has not benefited from notice and 

comment on this complex issue. In 

addition, the 2015 HMDA Final Rule 

preamble noted that the reverse 

mortgage flag required by § 1003.4(a)(36) 

will ensure that data reported for 

reverse mortgages will not be 

commingled unknowingly with data 

reported for other covered loans.116

Finally, the Bureau notes that the 

2015 HMDA Final Rule and the 2018 

FIG do not include any language that 

would bar a financial institution from 

reporting an applicant’s gross annual 

income as ‘‘0’’ or even a negative 

number when that is the accurate figure 

that it relied on.117

4(a)(12) 

HMDA section 304(b)(5)(B) requires 

financial institutions to report mortgage 

loan information, grouped according to 

measurements of ‘‘the difference 

between the annual percentage rate 

associated with the loan and a 

benchmark rate or rates for all 

loans.’’ 118 Current § 1003.4(a)(12)(i) 

requires financial institutions to report, 

for originated loans subject to 

Regulation Z, 12 CFR part 1026 that are 

considered higher priced, the difference 

between a loan’s annual percentage rate 

(APR) and the average prime offer rate 

(APOR) for a comparable transaction, as 

of the date the interest rate is set. 

Current § 1003.4(a)(12)(ii) explains the 

definition of APOR, that the Bureau 

publishes APORs for a broad range of 

types of transactions in tables updated 

at least weekly, and the methodology 

the Bureau uses to derive these rates. As 

revised by the 2015 HMDA Final Rule, 

§ 1003.4(a)(12)(i) requires financial 

institutions to report, for covered loans 

subject to Regulation Z, 12 CFR part 

1026, other than assumptions, 

purchased covered loans, and reverse 

mortgages, the difference between the 

covered loan’s APR and APOR for a 

comparable transaction as of the date 

the interest rate is set. The Bureau 

proposed certain amendments to 

§ 1003.4(a)(12)(ii) and to the 

§ 1003.4(a)(12) commentary adopted by 

the 2015 HMDA Final Rule and 

proposed new comment 4(a)(12)–9 to 

address reporting requirements when a 

financial institution provides corrected 

disclosures. For the reasons discussed 

below, the Bureau is revising 

§ 1003.4(a)(12)(i) to clarify its scope and 

is adopting § 1003.4(a)(12)(ii) and the 

associated commentary substantially as 

proposed, with certain additional 

amendments for clarity. 

Scope 

The Bureau is adopting an 

amendment to § 1003.4(a)(12)(i) to 

clarify that the reporting requirement 

applies to covered loans and 

applications that are approved but not 

accepted. Although the Bureau did not 

propose to revise § 1003.4(a)(12)(i), it 

believes this amendment will address 

potential uncertainty regarding the 

scope of § 1003.4(a)(12). As discussed 

above, the 2015 HMDA Final Rule 

revised § 1003.4(a)(12)(i) to require that 

financial institutions report, for covered 

loans subject to Regulation Z, other than 

assumptions, purchased covered loans, 

and reverse mortgages, the difference 

between the covered loan’s APR and the 

APOR for a comparable transaction as of 

the date the interest rate is set. However, 

as adopted in the 2015 HMDA Final 

Rule, comments 4(a)(12)–7 and –8 

clarify the Bureau’s intent that 

§ 1003.4(a)(12) also apply to 

applications and preapproval requests 

approved but not accepted. Several 

other data points revised or adopted by 

the 2015 HMDA Final Rule, such as 

loan purpose, interest rate, and 

prepayment penalty, specify that 

reporting is required for covered loans 

or applications.119 The Bureau believes 

it would improve clarity and 

consistency between § 1003.4(a)(12)(i) 

and its associated commentary to 

provide expressly in regulation text that 

the rate spread reporting requirement 

applies to covered loans and 

applications that are approved but not 

accepted. Thus, final § 1003.4(a)(12)(i) 

provides that, for covered loans and 

applications that are approved but not 

accepted subject to Regulation Z, other 

than assumptions, purchased covered 

loans, and reverse mortgages, the 

financial institution must report the 

difference between the covered loan’s 

APR and the APOR for a comparable 

transaction as of the date the interest 

rate is set. 

Average Prime Offer Rate (APOR) 

The Bureau calculates APORs on a 

weekly basis according to a 

methodology statement that is available 

to the public and then posts the APORs 

on the FFIEC Web site. In light of recent 

variability in the sources of survey data 

used to calculate APORs and the 

Bureau’s resulting revisions to the 

methodology statement,120 the Bureau 

proposed certain amendments to 

§ 1003.4(a)(12)(ii). The Bureau proposed 

to amend revised comment 4(a)(12)–1 to 

conform to the proposed amendments to 

§ 1003.4(a)(12)(ii). The Bureau proposed 

to amend comment 4(a)(12)–2 to explain 

that the Bureau publishes tables of 

current and historic APORs by 

transaction type and its methodology 

statement on its Web site (http://

www.consumerfinance.gov), in addition 

to the FFIEC Web site, and to make 

certain other minor clarifications. The 

Bureau received no specific comments 

on the proposed changes to 

§ 1003.4(a)(12)(ii) and comments 

4(a)(12)–1 and –2 and, accordingly, is 

adopting those provisions as proposed, 

with a minor technical revision to 

comment 4(a)(12)–2. 

Open-End Lines of Credit 

The 2015 HMDA Final Rule revised 

comment 4(a)(12)–3 to clarify that the 

requirements of § 1003.4(a)(12)(i) refer 

to the covered loan’s APR. Revised 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43111 

comment 4(a)(12)–3 explains further 

that a financial institution complies 

with § 1003.4(a)(12)(i) by relying on the 

APR for the covered loan, as calculated 

and disclosed pursuant to Regulation Z 

§ 1026.18 or § 1026.38 (for closed-end 

mortgage loans) or § 1026.40 (for openend lines of credit), as applicable. The 

Bureau proposed to amend revised 

comment 4(a)(12)–3 to remove the 

reference to Regulation Z § 1026.40, 

which sets forth requirements regarding 

the disclosures provided at the time an 

application is provided to the consumer, 

and to replace it with a reference to 

Regulation Z § 1026.6, which sets forth 

the disclosure requirements for openend lines of credit at account opening. 

For the reasons discussed below, the 

Bureau is adopting comment 4(a)(12)–3 

substantially as proposed, with 

additional clarifications regarding openend lines of credit and a cross-reference 

to comment 4(a)(12)–8. 

A few commenters expressed support 

for the proposed clarification. One 

national trade association stated that 

information on rate spread would be 

more useful if calculated based on the 

account-specific APR disclosed on the 

account opening disclosures rather than 

on the non-specific APR disclosed at the 

time of application. Another national 

trade association suggested that a simple 

approach would be to require reporting 

based on the APR at the time of closing 

or account opening, and that in 

situations where the loan does not close, 

the lender rely on the last APR 

disclosed to the borrower. One 

commenter that supported the proposed 

clarification stated that account opening 

disclosures may disclose more than one 

APR and recommended that the final 

rule clarify which APR to use in that 

circumstance. The commenter also 

sought clarification on whether rate 

spreads for open-end lines of credit 

under Regulation C should be calculated 

in the same manner as set forth in 

Regulation Z § 1026.32(a). 

Final comment 4(a)(12)–3 explains 

that the requirements of 

§ 1003.4(a)(12)(i) refer to the covered 

loan’s APR. It provides further that, for 

closed-end mortgage loans, a financial 

institution complies with 

§ 1003.4(a)(12)(i) by relying on the APR 

for the covered loan, as calculated and 

disclosed pursuant to Regulation Z 

§ 1026.18 or § 1026.38. Final comment 

4(a)(12)–3 provides still further that, for 

open-end lines of credit, a financial 

institution complies with 

§ 1003.4(a)(12)(i) by relying on the APR 

for the covered loan, as calculated and 

disclosed pursuant to Regulation Z 

§ 1026.6. The comment clarifies that, if 

multiple APRs are calculated and 

disclosed pursuant to Regulation Z 

§ 1026.6, a financial institution relies on 

the APR in effect at the time of account 

opening. It provides that, if an open-end 

line of credit has a variable-rate feature 

and a fixed-rate and -term payment 

option during the draw period, a 

financial institution relies on the APR in 

effect at the time of account opening 

under the variable-rate feature, which 

would be a discounted initial rate if one 

is offered under the variable-rate 

feature. Finally, the comment includes a 

cross-reference to comment 4(a)(12)–8 

for guidance regarding the APR a 

financial institution relies on in the case 

of an application or preapproval request 

that was approved but not accepted. 

As to the request for clarification 

regarding Regulation Z § 1026.32(a) and 

the calculation of rate spreads for openend lines of credit, the Bureau believes 

that existing provisions already address 

this question. Regulation Z § 1026.14(b) 

sets forth the method of calculating APR 

for purposes of the disclosures required 

under Regulation Z § 1026.6, and 

Regulation C § 1003.4(a)(12) and its 

associated commentary set forth the 

method of calculating rate spread for 

purposes of Regulation C. 

Rate-Set Date 

The 2015 HMDA Final Rule adopted 

new comment 4(a)(12)–5 to clarify that 

the relevant date to use to determine the 

APOR for a comparable transaction is 

the date on which the covered loan’s 

interest rate was set by the financial 

institution for the final time before 

closing or account opening. Comment 

4(a)(12)–5 includes several illustrative 

examples. To reflect the renumbering of 

proposed comment 4(a)–4 to comment 

4(a)–2 in the 2015 HMDA Final Rule, 

the Bureau proposed to amend comment 

4(a)(12)–5.iii to replace the reference to 

comment 4(a)–4 with a reference to 

comment 4(a)–2. Comment 4(a)–2 

provides guidance on a financial 

institution’s reporting responsibilities 

when a single transaction involves more 

than one institution. The Bureau did not 

receive specific comment on the 

proposed amendment to comment 

4(a)(12)–5.iii. One commenter stated 

that it agreed that the rate-set date 

should be the date when the lender last 

set the rate for the transaction. One 

commenter expressed concern that a 

financial institution would need to 

update its loan/application register 

when a rate-lock agreement is extended, 

and another commenter stated that, 

where a rate-lock agreement is 

extended, using the date the interest rate 

was originally locked to determine the 

APOR would provide more relevant 

pricing information. One commenter 

requested further clarification on how a 

financial institution may exercise 

discretion in setting the rate before 

closing. 

The Bureau is adopting comment 

4(a)(12)–5 as proposed, with minor 

amendments for further clarity. Final 

comment 4(a)(12)–5 explains that the 

relevant date to use to determine the 

APOR for a comparable transaction is 

the date on which the interest rate was 

set by the financial institution for the 

final time before final action is taken 

(i.e., the application was approved but 

not accepted or the covered loan was 

originated). Final comment 4(a)(12)–5.i 

also refers to the final time before final 

action is taken, rather than the final 

time before closing or account opening. 

Because § 1003.4(a)(12) also applies to 

applications that are approved but not 

accepted, the Bureau believes it is more 

appropriate to refer to final action rather 

than to closing or account opening. The 

Bureau has not seen any new reason to 

amend further the guidance adopted in 

the 2015 HMDA Final Rule regarding 

the determination of the rate-set date, 

and it does not believe that complying 

with § 1003.4(a)(12)(i) when a rate-lock 

agreement is extended will be unduly 

burdensome. The Bureau does not 

believe that it is appropriate to prescribe 

in Regulation C how a financial 

institution may exercise discretion in 

setting the rate. 

Application or Preapproval Request 

Approved But Not Accepted 

As adopted by the 2015 HMDA Final 

Rule, comment 4(a)(12)–8 explains that, 

in the case of an application or 

preapproval request that was approved 

but not accepted, § 1003.4(a)(12) 

requires the financial institution to 

report the applicable rate spread. As 

discussed above, final comment 

4(a)(12)–3 provides that, for closed-end 

mortgage loans, a financial institution 

complies with § 1003.4(a)(12)(i) by 

relying on the APR for the covered loan 

as calculated and disclosed pursuant to 

Regulation Z § 1026.18 or § 1026.38 and 

that, for open-end lines of credit, a 

financial institution complies with 

§ 1003.4(a)(12)(i) by relying on the APR 

as calculated and disclosed pursuant to 

Regulation Z § 1026.6. The Bureau 

proposed to amend comment 4(a)(12)–8 

to clarify reporting requirements where 

an application or preapproval request is 

approved but not accepted and only the 

early disclosures required under 

Regulation Z § 1026.18 or § 1026.37 (for 

closed-end mortgage loans) or § 1026.40 

(for open-end lines of credit) are 

provided. The Bureau is adopting 

comment 4(a)(12)–8 substantially as 

proposed, with a clarification to address 


sradovich on DSK3GMQ082PROD with RULES2
43112 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

121 12 CFR 1003.2(b), 1026.2(a)(3). 

situations where no Regulation Z 

disclosures are required for a 

transaction. 

A few national trade associations and 

one large financial institution expressed 

support for the proposed clarifications 

to comment 4(a)(12)–8. Several 

commenters stated, however, that an 

application or a preapproval request for 

purposes of Regulation C may not meet 

the definition of application under 

Regulation Z, and thus would not trigger 

the early disclosure requirements under 

Regulation Z. One national trade 

association requested further guidance 

because, in such instances where no 

Regulation Z disclosures are required, 

the proposed guidance regarding relying 

on the APR disclosed pursuant to the 

early Regulation Z disclosures would 

not suffice. One large financial 

institution expressed concern that the 

proposal would require a financial 

institution to provide the early 

Regulation Z disclosures in situations 

where such disclosures would not 

otherwise be required under Regulation 

Z, merely to permit compliance with 

Regulation C. This commenter, along 

with a national trade association and 

another large financial institution, 

requested that applications or 

preapproval requests that do not trigger 

the Regulation Z disclosure 

requirements be excluded from the 

reporting requirements in 

§ 1003.4(a)(12). 

One national trade association stated 

that rate spreads should not be required 

for open-end lines of credit where the 

account is not opened because the APR 

disclosed at the time of application is 

generic and would not provide useful 

data. Another national trade association 

stated that rate spreads would only be 

valuable for covered loans and 

recommended that this data point not 

apply to applications that do not result 

in a covered loan. 

The Bureau is adopting comment 

4(a)(12)–8 as proposed, with certain 

minor amendments for clarity and to 

address an issue discussed by several 

commenters. Final comment 4(a)(12)–8 

provides that, in the case of an 

application or preapproval request that 

was approved but not accepted, 

§ 1003.4(a)(12) requires a financial 

institution to report the applicable rate 

spread. The comment provides further 

that, in such cases, the financial 

institution would provide early 

disclosures under Regulation Z 

§ 1026.18 or § 1026.37 (for closed-end 

mortgage loans) or § 1026.40 (for openend lines of credit), but might never 

provide any subsequent disclosures. 

Final comment 4(a)(12)–8 provides still 

further that, in such cases where no 

subsequent disclosures are provided, a 

financial institution complies with 

§ 1003.4(a)(12)(i) by relying on the APR 

for the application or preapproval 

request, as calculated and disclosed 

pursuant to Regulation Z § 1026.18 or 

§ 1026.37 (for closed-end mortgage 

loans) or § 1026.40 (for open-end lines 

of credit), as applicable. Final comment 

4(a)(12)–8 includes an additional 

clarification that, for transactions 

subject to Regulation C for which no 

disclosures under Regulation Z are 

required, a financial institution 

complies with § 1003.4(a)(12)(i) by 

reporting that the requirement is not 

applicable. 

The Bureau recognizes that an 

application or a preapproval request as 

defined under Regulation C may not 

meet the definition of application under 

Regulation Z and, in such instances, 

would not trigger the early Regulation Z 

disclosures.121 Where an application or 

a preapproval request under Regulation 

C is not an application under Regulation 

Z, then that application or preapproval 

request is not subject to Regulation Z 

and thus is not covered by the reporting 

requirements in § 1003.4(a)(12). Final 

§ 1003.4(a)(12)(i) applies to covered 

loans and applications that are 

approved but not accepted subject to 

Regulation Z, other than assumptions, 

purchased covered loans, and reverse 

mortgages. The Bureau does not intend 

that a financial institution provide the 

early Regulation Z disclosures or 

calculate an APR for a transaction solely 

for purposes of complying with 

Regulation C where it is not otherwise 

required to do so under Regulation Z. 

Accordingly, this final rule clarifies 

further that the requirement to report 

under § 1003.4(a)(12) is not applicable if 

no Regulation Z disclosures are required 

for the transaction. The Bureau declines 

to specify further instances in which 

§ 1003.4(a)(12) is not applicable for 

applications and preapproval requests 

that are approved but not accepted, as 

it continues to believe such data will 

further HMDA’s purposes and that 

reporting rate spreads for transactions 

for which Regulation Z disclosures are 

required will not be unduly 

burdensome. 

Corrected Disclosures 

The 2015 HMDA Final Rule does not 

explain how a financial institution 

complies with § 1003.4(a)(12)(i) where a 

financial institution provides a 

corrected disclosure under Regulation Z 

that reflects a corrected APR. 

Specifically, the 2015 HMDA Final Rule 

does not clarify whether a financial 

institution relies on the APR for the 

covered loan or application approved 

but not accepted as initially calculated 

and disclosed or as calculated and 

disclosed pursuant to the corrected 

disclosure. The Bureau proposed to add 

new comment 4(a)(12)–9 to provide 

that, if a financial institution provides a 

corrected disclosure under Regulation Z 

that reflects a corrected APR, the 

financial institution complies with 

§ 1003.4(a)(12)(i) by comparing the 

corrected and disclosed APR to the most 

recently available APOR that was in 

effect for a comparable transaction as of 

the rate-set date, so long as the corrected 

disclosure was provided to the borrower 

before the end of the reporting period in 

which final action is taken. The Bureau 

also proposed to amend new comment 

4(a)(12)–9, effective January 1, 2020, to 

include additional guidance pertaining 

to quarterly reporting. For the reasons 

discussed below, the Bureau is adopting 

new comment 4(a)(12)–9 effective 

January 1, 2018, and as amended 

effective January 1, 2020, substantially 

as proposed, with certain amendments 

for clarity. 

A few commenters expressed support 

for the proposal to clarify reporting 

requirements under § 1003.4(a)(12) 

when a corrected disclosure is provided 

pursuant to Regulation Z. One national 

trade association noted that the 

proposed comment would apply to 

applications and preapproval requests 

that are approved but not accepted and 

stated that, because only the early 

Regulation Z disclosures could be 

provided in such instances, the 

proposed comment should apply to 

originated loans. This commenter also 

stated that the proposed guidance 

regarding the date on which the 

corrected disclosure was provided to the 

borrower would be helpful for 

transactions subject to Regulation Z 

§ 1026.19(f) and requested additional 

guidance regarding the date on which 

the corrected disclosure was provided to 

the borrower for transactions subject to 

the disclosure requirements in 

Regulation Z § 1026.6(a) or § 1026.19(a). 

One national trade association that 

supported the proposal stated that the 

same guidance regarding the use of a 

corrected APR would also apply when 

a lender provides a corrected disclosure 

reflecting a corrected amount of total 

points and fees, total loan costs, 

borrower-paid origination charges, 

discount points, lender credits, or 

interest rate. This commenter stated that 

it would be simpler and more accurate 

if a financial institution were permitted 

to use the corrected information 

disclosed on the corrected disclosure so 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43113 

122Effective January 1, 2020, when quarterly 

reporting begins, revised comment 4(a)(12)–9 will 

provide that a financial institution does not report 

on its quarterly loan/application register the 

difference between the corrected APR and the most 

recently available APOR that was in effect for a 

comparable transaction as of the rate-set date if the 

corrected disclosure was provided to the borrower 

after the end of the quarter in which final action 

is taken. However, a financial institution does 

report the difference between the corrected APR 

and the most recently available APOR that was in 

effect for a comparable transaction as of the rate-set 

date on its annual loan/application register, 

provided that the corrected disclosure was provided 

to the borrower prior to the end of the calendar year 

in which final action is taken. 123 12 U.S.C. 2803(b)(6)(I). 

long as the corrected disclosure was 

provided to the borrower before the 

institution’s submission of its loan/

application register. One small financial 

institution that supported the proposed 

guidance regarding corrected 

disclosures nonetheless stated that 

many financial institutions begin 

gathering information to complete the 

loan/application register well before the 

end of a reporting period such that the 

proposal could increase significantly the 

number of adjustments made to the data 

when a corrected disclosure is provided 

before the end of the reporting period in 

which final action is taken. 

The Bureau is adopting new comment 

4(a)(12)–9 substantially as proposed, 

with certain clarifications to address 

issues discussed by commenters. To 

correct an oversight in the April 2017 

HMDA Proposal, the Bureau is adopting 

the first sentence of comment 4(a)(12)– 

9 with revisions to clarify that the 

guidance in comment 4(a)(12)–9 applies 

to covered loans and applications that 

are approved but not accepted. The 

Bureau recognizes that, where a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z 

§ 1026.19(a), pursuant to § 1026.19(a)(2), 

under Regulation Z § 1026.19(f), 

pursuant to § 1026.19(f)(2), or under 

Regulation Z § 1026.6(a), it is often 

doing so for a covered loan. The Bureau 

also understands that such corrected 

disclosures under Regulation Z could be 

provided in situations where the 

application is approved but not 

accepted and the loan is not originated 

or the account is not opened. Final 

comment 4(a)(12)–9 does not 

specifically refer to preapproval 

requests, which are included in the 

definition of application, because, in 

contrast to comment 4(a)(12)–8, the 

Bureau believes the situations described 

in comment 4(a)(12)–9 are not likely to 

arise in connection with preapproval 

requests. 

Final comment 4(a)(12)–9 is also 

revised to explain that, for purposes of 

§ 1003.4(a)(12), the date the corrected 

disclosure was provided to the borrower 

is the date the disclosure was mailed or 

delivered to the borrower in person; the 

financial institution’s method of 

delivery does not affect the date 

provided. It includes an illustrative 

example providing that, where a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z 

§ 1026.19(f), pursuant to § 1026.19(f)(2), 

the date provided is the date disclosed 

pursuant to Regulation Z 

§ 1026.38(a)(3)(i). Final comment 

4(a)(12)–9 thus provides guidance 

applicable to all of the Regulation Z 

disclosures discussed in the comment 

regarding the date the corrected version 

of the disclosures is provided to the 

borrower for purposes of § 1003.4(a)(12). 

In addition, the Bureau is adopting 

comment 4(a)(12)–9 with a revision to 

explain that the provision of a corrected 

disclosure does not affect how a 

financial institution determines the rateset date and to include a cross-reference 

to comment 4(a)(12)–5. The April 2017 

HMDA Proposal explained that the 

corrected disclosure does not affect the 

rate-set date and cross-referenced 

comment 4(a)(12)–5. The Bureau 

recognizes, however, that the rate-set 

date may be affected in a situation 

where a corrected disclosure reflects a 

corrected APR that changed because of 

a change in the interest rate. Thus, 

while the provision of a corrected 

disclosure does not, on its own, affect 

the rate-set date, the circumstances 

necessitating the provision of a 

corrected disclosure could affect the 

rate-set date. The final rule makes clear 

that the provision of a corrected 

disclosure does not change how a 

financial institution applies the 

guidance in comment 4(a)(12)–5 to 

determine the rate-set date. 

The Bureau declines to permit 

financial institutions to update their 

reporting when a corrected disclosure is 

provided to the borrower after the end 

of the reporting period in which final 

action is taken.122 Comment 4(a)(12)–9 

establishes a clear, bright-line standard 

for reporting that is consistent with 

Regulation C’s December 31 cutoff date 

for data collection and recording for the 

calendar year. Additionally, the Bureau 

believes that the instances in which a 

corrected disclosure reflecting a 

corrected APR is provided to the 

borrower after the calendar year in 

which final action is taken but before 

the March 1 deadline in the following 

calendar year for a financial institution’s 

submission of its annual loan/

application register should be relatively 

limited and do not justify the potential 

inconsistencies in data that could result 

from permitting optional updates to data 

based on corrected disclosures provided 

after the end of the calendar year being 

reported. As to the burden associated 

with updating data when a corrected 

disclosure is provided before the end of 

the reporting period in which final 

action is taken, the guidance in final 

comment 4(a)(12)–9 is consistent with 

the guidance regarding corrected 

disclosures adopted in the 2015 HMDA 

Final Rule for the pricing data points in 

§ 1003.4(a)(17) through (20). The Bureau 

believes such guidance will generally 

provide for greater accuracy in reporting 

without requiring that financial 

institutions continue to update their 

reportable data if corrected disclosures 

are provided after the reporting period 

in which final action is taken. 

4(a)(15) 

Section 1094(3)(A)(iv) of the DoddFrank Act amended section 304(b) of 

HMDA to require financial institutions 

to report the credit scores of borrowers 

and applicants ‘‘in such form as the 

Bureau may prescribe.’’ 123 Section 

1003.4(a)(15), as adopted by the 2015 

HMDA Final Rule, requires that a 

financial institution report, except for 

purchased covered loans, the credit 

score or scores relied on in making the 

credit decision and the name and 

version of the scoring model used to 

generate each credit score. Comment 

4(a)(15)–2, as adopted by the 2015 

HMDA Final Rule, explains how to 

report the credit score and scoring 

model when there are multiple credit 

scores obtained or created by a financial 

institution. Comment 4(a)(15)–3, as 

adopted by the 2015 HMDA Final Rule, 

explains how to report credit scores 

when there are multiple applicants or 

borrowers. To facilitate the reporting of 

credit scores and credit scoring models, 

the Bureau proposed to add clarifying 

language to comments 4(a)(15)–2 and 

–3. 

During implementation of the 2015 

HMDA Final Rule, the Bureau had 

become aware that comments 4(a)(15)– 

2 and –3 might not explain clearly how 

to report the scoring model for a 

composite credit score and how to 

report a single credit score when there 

are multiple applicants or borrowers. 

Consequently, the Bureau proposed to 

amend comment 4(a)(15)–2 to clarify 

that, when a financial institution uses 

more than one credit scoring model and 

combines the scores into a composite 

credit score, the financial institution 

should report that score and report that 

more than one credit scoring model was 

used. In addition, the Bureau proposed 


sradovich on DSK3GMQ082PROD with RULES2
43114 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

124Section 1094(3)(A)(iv) of the Dodd-Frank Act 

amended section 304(b) of HMDA to provide for the 

reporting of total points and fees. 

125 15 U.S.C. 1602(aa)(4) is part of the Truth in 

Lending Act. Prior to amendments made by the 

Dodd-Frank Act, that section generally defined 

‘‘points and fees’’ for the purpose of determining 

whether a transaction was a high-cost mortgage. 

Section 1100A of the Dodd-Frank Act redesignated 

section 1602(aa)(4) as section 1602(bb)(4), where it 

is currently codified. In light of that redesignation, 

the Bureau interprets HMDA section 304(b)(5)(A) as 

directing it to take into account 15 U.S.C. 

1602(bb)(4) and its implementing regulations, as 

those provisions address ‘‘points and fees’’ and 

because current section 1602(aa)(4) is no longer 

relevant to a determination regarding points and 

fees. 

to amend comment 4(a)(15)–3 to clarify 

that, in a transaction involving two or 

more applicants or borrowers for which 

the financial institution obtains or 

creates a single credit score and relies 

on that credit score in making the credit 

decision for the transaction, the 

institution complies with § 1003.4(a)(15) 

by reporting that credit score for the 

applicant and reporting that the 

requirement is not applicable for the 

first co-applicant or, alternatively, by 

reporting that credit score for the first 

co-applicant and reporting that the 

requirement is not applicable for the 

applicant. 

The Bureau received eight comments 

on the proposed changes to the credit 

score commentary. Four commenters 

expressed support for the changes, and 

no commenters expressed opposition to 

them. Two commenters stated that 

comment 4(a)(15)–3, which in certain 

situations requires a financial 

institution to report a credit score for 

the applicant or, alternatively, for the 

co-applicant, is not clear on whether the 

choice of the two alternatives is within 

the financial institution’s discretion. 

Commenters also stated that, when there 

are more than two applicants, a median 

or middle credit score may be used and 

that our proposal did not address this 

situation. One commenter said that our 

proposal would add clarity, but that 

these clarifications may not reflect how 

some lenders are programming their 

systems, and urged the Bureau to allow 

flexibility in treatment of these issues 

until the Bureau can propose further 

amendments to the Regulation C 

commentary with adequate time for 

implementation. 

Commenters also asked for guidance 

on two issues not addressed in the April 

2017 HMDA Proposal. Three 

commenters asked for guidance on 

reporting the credit score when a credit 

score is ordered but the applicant has no 

credit score. Another commenter asked 

that the Bureau adopt an exclusion from 

credit score reporting for loans to 

employees of the financial institution to 

protect their privacy. 

The Bureau is adopting the clarifying 

language to comments 4(a)(15)–2 and –3 

largely as proposed, with a small change 

to comment 4(a)(15)–3 to clarify the 

discretion a financial institution has in 

reporting a score for the applicant or, 

alternatively, the co-applicant, and a 

minor word edit. The commenters who 

expressed a position uniformly 

supported the proposed changes, and 

the Bureau believes that the adopted 

language will clarify and facilitate 

reporting of credit scores. Although 

there may be implementation 

challenges, the Bureau believes that 

financial institutions and their software 

vendors will have sufficient time to 

adjust to this minor change and that any 

such challenges will be outweighed by 

the implementation benefits of these 

clarifications. 

Comment 4(a)(15)–3 as adopted states 

that, in a transaction involving two or 

more applicants or borrowers for whom 

the financial institution obtains or 

creates a single credit score and relies 

on that credit score in making the credit 

decision for the transaction, the 

institution complies with § 1003.4(a)(15) 

by reporting that credit score for the 

applicant and reporting that the 

requirement is not applicable for the 

first co-applicant or, at the institution’s 

discretion, by reporting that credit score 

for the first co-applicant and reporting 

that the requirement is not applicable 

for the applicant. This change to the 

language of the proposed comment will 

clarify that a financial institution may 

use its discretion in deciding whether to 

disclose a single credit score as the 

applicant’s or co-applicant’s score. The 

Bureau believes that any minor loss in 

the exactness of credit score reporting 

caused by this decision will be 

outweighed by the compliance benefits 

gained by not requiring financial 

institutions to calibrate systems and 

engage in ongoing compliance to 

account for the various situations likely 

to arise. 

Regarding the comments discussing 

reporting when a median or middle 

credit score is relied on, the Bureau 

notes that comment 4(a)(15)–3 as 

adopted addresses this situation: A 

financial institution should report the 

median or middle credit score for the 

applicant or, at the financial 

institution’s discretion, for the coapplicant. 

Regarding the request for guidance on 

reporting when a credit score is 

requested but none is available, 

§ 1003.4(a)(15) requires reporting the 

credit score or scores relied on in 

making the credit decision, so a 

financial institution would report that 

the requirement is not applicable if it 

did not rely on a credit score. In regard 

to the comment on employee loans, the 

Bureau did not propose or seek 

comment about an exclusion from credit 

score reporting for loans to employees, 

and declines to adopt one. 

4(a)(17) 

Section 304(b)(5)(A) of HMDA 124

provides for reporting of ‘‘the total 

points and fees payable at origination in 

connection with the mortgage as 

determined by the Bureau, taking into 

account 15 U.S.C. 1602(aa)(4).’’ 125

Section 1003.4(a)(17), as adopted by the 

2015 HMDA Final Rule, implements 

this provision and provides that, for 

covered loans subject to Regulation Z 

§ 1026.43(c), other than purchased 

covered loans, a financial institution 

shall report the amount of total loan 

costs, as disclosed pursuant to 

Regulation Z § 1026.38(f)(4), if a 

disclosure is provided for the covered 

loan pursuant to Regulation Z 

§ 1026.19(f), or the total points and fees 

charged for the covered loan, expressed 

in dollars and calculated pursuant to 

Regulation Z § 1026.32(b)(1), if the 

covered loan is not subject to the 

disclosure requirements in Regulation Z 

§ 1026.19(f). As adopted by the 2015 

HMDA Final Rule, comment 4(a)(17)(i)– 

3 explains that, if the amount of total 

loan costs changes because a financial 

institution provides a revised version of 

the disclosures required under 

Regulation Z § 1026.19(f), pursuant to 

§ 1026.19(f)(2), the financial institution 

complies with § 1003.4(a)(17)(i) by 

reporting the revised amount, provided 

that the revised disclosure was provided 

to the borrower during the same 

reporting period in which closing 

occurred, and provides an illustrative 

example. Comments 4(a)(18)–3, 

4(a)(19)–3, and 4(a)(20)–3 provide 

identical guidance for reporting the 

other data points derived from the 

Closing Disclosure. The Bureau 

proposed to amend comment 

4(a)(17)(i)–3, effective January 1, 2018, 

to remove the references to quarterly 

reporting, and to again amend comment 

4(a)(17)(i)–3, effective January 1, 2020, 

to reincorporate the references to 

quarterly reporting. The Bureau also 

proposed other minor clarifications to 

comment 4(a)(17)(i)–3. 

Two commenters stated that the 

proposal to refer to ‘‘final action’’ 

instead of the date that ‘‘closing 

occurred’’ regarding reporting total loan 

costs would create ambiguity in 

proposed comment 4(a)(17)(i)–3. These 

commenters requested clarification on 

whether final action refers to: (1) The 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43115 

126April 2017 HMDA Proposal, 82 FR 19142, 

19157 (Apr. 25, 2017). 

date of disclosure; (2) the date of the 

corrected disclosure; (3) the date of the 

event that necessitated the corrected 

disclosure; or (4) the date the loan 

documents were recorded. One national 

trade association recommended that 

financial institutions be permitted to 

report corrected amounts reflected on a 

corrected disclosure so long as the 

disclosure was provided to the borrower 

before the financial institution’s 

submission of its loan/application 

register. 

The Bureau is adopting comment 

4(a)(17)(i)–3 effective January 1, 2018, 

and as amended again effective January 

1, 2020, substantially as proposed. The 

Bureau is not adopting the proposal to 

refer to the date ‘‘final action is taken’’ 

instead of the date ‘‘closing occurs.’’ 

The Bureau explained in the April 2017 

HMDA Proposal that it believed that 

referring to the reporting period in 

which final action is taken, rather than 

when closing occurred, would improve 

clarity and consistency with the 

language used in Regulation C.126

However, in light of comments 

indicating potential uncertainty 

regarding the significance of this 

proposed change, the Bureau is 

adopting comment 4(a)(17)(i)–3 to 

include the phrase ‘‘closing occurs,’’ as 

adopted in the 2015 HMDA Final Rule. 

Because § 1003.4(a)(17)(i) applies to 

covered loans for which a Closing 

Disclosure is provided pursuant to 

Regulation Z § 1026.19(f), for purposes 

of comment 4(a)(17)(i)–3 final action 

means the date that closing occurs. 

Thus, the Bureau believes it is 

appropriate to refer to the date closing 

occurs in comment 4(a)(17)(i)–3. 

Regarding the cutoff date for reporting 

corrected amounts as disclosed on a 

corrected disclosure, the Bureau refers 

to the discussion in the section-bysection analysis of § 1003.4(a)(12) above. 

4(a)(18) 

Pursuant to HMDA sections 305(a) 

and 304(b)(5)(D), in the 2015 HMDA 

Final Rule the Bureau adopted 

§ 1003.4(a)(18) to require financial 

institutions to report, for covered loans 

subject to the disclosure requirements in 

Regulation Z § 1026.19(f), the total of all 

itemized amounts that are designated 

borrower-paid at or before closing, as 

disclosed pursuant to § 1026.38(f)(1). 

Comment 4(a)(18)–3, as adopted by the 

2015 HMDA Final Rule, provides the 

same guidance concerning reporting of 

the total of all itemized amounts that are 

designated borrower-paid at or before 

closing as provided in comment 

4(a)(17)(i)–3 regarding reporting total 

loan costs in situations where a 

financial institution has issued a revised 

Closing Disclosure with a new amount 

of total borrower-paid origination 

charges. The Bureau proposed parallel 

amendments to comment 4(a)(18)–3 to 

those proposed to comment 4(a)(17)(i)– 

3. For the reasons discussed above in 

the section-by-section analysis of 

§ 1003.4(a)(17), the Bureau is adopting 

comment 4(a)(18)–3 effective January 1, 

2018, and as amended again effective 

January 1, 2020, substantially as 

proposed. 

4(a)(19) 

Pursuant to HMDA sections 305(a) 

and 304(b)(5)(D), in the 2015 HMDA 

Final Rule the Bureau adopted 

§ 1003.4(a)(19) to require financial 

institutions to report, for covered loans 

subject to the disclosure requirements in 

Regulation Z § 1026.19(f), the points 

paid to the creditor to reduce the 

interest rate, expressed in dollars, as 

described in Regulation Z 

§ 1026.37(f)(1)(i) and disclosed pursuant 

to § 1026.38(f)(1). As adopted by the 

2015 HMDA Final Rule, comment 

4(a)(19)–3 provides the same guidance 

concerning reporting of discount points 

as provided in comment 4(a)(17)(i)–3 

regarding reporting total loan costs in 

situations where a financial institution 

has issued a revised Closing Disclosure 

with a new amount of discount points. 

The Bureau proposed parallel 

amendments to comment 4(a)(19)–3 to 

those proposed to comment 4(a)(17)(i)– 

3. For the reasons discussed above in 

the section-by-section analysis of 

§ 1003.4(a)(17), the Bureau is adopting 

comment 4(a)(19)–3 effective January 1, 

2018, and as amended again effective 

January 1, 2020, substantially as 

proposed. 

4(a)(20) 

Pursuant to HMDA sections 305(a) 

and 304(b)(5)(D), in the 2015 HMDA 

Final Rule the Bureau adopted 

§ 1003.4(a)(20) to require financial 

institutions to report, for covered loans 

subject to the disclosure requirements in 

Regulation Z § 1026.19(f), the total 

amount of lender credits, as disclosed 

pursuant to § 1026.38(h)(3). As adopted 

by the 2015 HMDA Final Rule, 

comment 4(a)(20)–3 provides the same 

guidance concerning reporting of lender 

credits as provided in comment 

4(a)(17)(i)–3 regarding reporting total 

loan costs in situations where a 

financial institution has issued a revised 

Closing Disclosure with a new amount 

of lender credits. The Bureau proposed 

parallel edits to comment 4(a)(20)–3 to 

those proposed to comment 4(a)(17)(i)– 

3. For the reasons discussed above in 

the section-by-section analysis of 

§ 1003.4(a)(17), the Bureau is adopting 

comment 4(a)(20)–3 effective January 1, 

2018, and as amended again effective 

January 1, 2020, substantially as 

proposed. 

4(a)(21) 

Pursuant to HMDA sections 305(a) 

and 304(b)(6)(J), the Bureau adopted 

§ 1003.4(a)(21) in the 2015 HMDA Final 

Rule to require financial institutions to 

report the interest rate applicable to the 

approved application or to the covered 

loan at closing or account opening. 

Comment 4(a)(21)–1 clarifies the 

interest rate that financial institutions 

must report for covered loans or 

applications subject to the disclosure 

requirements of Regulation Z 

§ 1026.19(e) or (f). The Bureau proposed 

to amend comment 4(a)(21)–1 to clarify 

that, if a financial institution provides a 

revised or corrected version of the 

disclosures required under Regulation Z 

§ 1026.19(e) or (f), as applicable, the 

financial institution complies with 

§ 1003.4(a)(21) by reporting the interest 

rate on the revised or corrected 

disclosure, provided that the revised or 

corrected disclosure was provided to the 

borrower before the end of the reporting 

period in which final action is taken. 

The Bureau also proposed certain other 

minor clarifications to comment 

4(a)(21)–1. One national trade 

association recommended that financial 

institutions be permitted to report 

corrected amounts reflected on a 

corrected disclosure so long as the 

disclosure was provided to the borrower 

before the financial institution’s 

submission of its loan/application 

register. See the discussion above in the 

section-by-section analysis of 

§ 1003.4(a)(12) concerning that 

comment. The Bureau is adopting 

comment 4(a)(21)–1 as proposed, with a 

minor clarification to specify the early 

and the final disclosure requirements in 

Regulation Z § 1026.19(e) and (f) and to 

add an omitted ‘‘the.’’ 

4(a)(24) 

Pursuant to its authority under 

sections 304(b)(6)(J) and 305(a) of 

HMDA, the Bureau adopted 

§ 1003.4(a)(24) in the 2015 HMDA Final 

Rule to require, except for purchased 

covered loans, financial institutions to 

report the ratio of the total amount of 

debt secured by the property to the 

value of the property relied on in 

making the credit decision. The ratio of 

the total amount of debt secured by the 

property to the value of the property 

relied on in making the credit decision 

generally is referred to as the combined 


sradovich on DSK3GMQ082PROD with RULES2
43116 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

127 Dodd-Frank Act section 1094(3)(A)(iv), 12 

U.S.C. 2803(b)(6)(F). 

loan-to-value (CLTV) ratio. The Bureau 

proposed a technical correction to 

comment 4(a)(24)–2 and to add new 

comment 4(a)(24)–6 to provide 

additional guidance on the requirement 

to report the CLTV ratio relied on in 

making the credit decision. 

A few commenters requested 

exemptions from the reporting 

requirements in § 1003.4(a)(24) for 

reverse mortgages, assumptions, or 

loans made by credit unions, with one 

commenter suggesting that the data 

point be removed entirely. One national 

trade association requested the Bureau 

clarify that, in the case of reverse 

mortgages, the total amount of debt 

secured by the property is limited to 

mortgage liens, while another national 

trade association requested 

resubmission guidelines for reporting 

CLTV ratio. 

The Bureau is adopting comments 

4(a)(24)–2 and –6 as proposed, with 

technical revisions for clarity. Regarding 

the calculation of the CLTV ratio, final 

comment 4(a)(24)–6 clarifies further that 

§ 1003.4(a)(24) does not require a 

financial institution to use a particular 

CLTV ratio calculation method but 

instead requires financial institutions to 

report the CLTV ratio relied on in 

making the credit decision. As to 

commenters’ requests for exemptions 

from § 1003.4(a)(24), the Bureau notes 

that § 1003.4(a)(24) does not require a 

financial institution to calculate a CLTV 

ratio and does not require a financial 

institution to rely on a CLTV ratio in 

making a credit decision. If a financial 

institution makes a credit decision 

without relying on a CLTV ratio, the 

financial institution complies with 

§ 1003.4(a)(24) by reporting that the 

requirement is not applicable. The 

Bureau also notes that, as provided in 

comment 2(d)–2.i, assumptions are 

considered extensions of credit even if 

the new borrower assumes an existing 

debt obligation. Thus, if a financial 

institution that grants an assumption of 

a debt obligation relies on a CLTV ratio 

in making the credit decision related to 

the application for the assumption, the 

financial institution complies with 

§ 1003.4(a)(24) by reporting that CLTV 

ratio. A financial institution that grants 

an assumption of a debt obligation does 

not report the CLTV ratio relied on by 

the originating institution, unless it 

relied on that CLTV ratio in making the 

credit decision related to the application 

for the assumption. The same principles 

regarding reporting the CLTV ratio 

apply to reverse mortgages as defined 

under § 1003.2(q). 

4(a)(26) 

The Bureau implemented HMDA 

section 304(b)(6)(B) in the 2015 HMDA 

Final Rule by adopting § 1003.4(a)(26) to 

require that financial institutions collect 

and report data on the number of 

months, or proposed number of months 

in the case of an application, until the 

first date the interest rate may change 

after closing or account opening. The 

Bureau proposed additional 

commentary to § 1003.4(a)(26) to clarify 

reporting requirements for non-monthly 

introductory interest rate periods. 

A few commenters expressed support 

for the proposed clarification regarding 

non-monthly introductory rate periods, 

stating that the proposal would help 

facilitate implementation. A vendor that 

supported the proposal requested 

additional clarification on situations 

where a construction loan that converts 

to permanent financing features a 

different interest rate than the 

permanent financing and where a loan 

has a temporary buydown agreement 

that is separate from the note. A large 

financial institution expressed 

uncertainty regarding reporting when a 

variable-rate loan is tied to an index that 

can change at any time and requested 

that financial institutions be permitted 

to report ‘‘not applicable’’ in such 

circumstances. One national trade 

association recommended that the 

Bureau exempt purchases and 

assumptions of loans secured by 

multifamily dwellings, stating that 

reporting such information would 

provide limited public policy benefits. 

This commenter also suggested referring 

to the ‘‘initial rate period’’ instead of to 

the ‘‘introductory’’ rate to reduce 

confusion. One national trade 

association requested that reverse 

mortgages be exempt from 

§ 1003.4(a)(26). 

The Bureau is adopting new comment 

4(a)(26)–5 as proposed. Comment 

4(a)(26)–5 provides that if a covered 

loan or application includes an 

introductory interest rate period 

measured in a unit of time other than 

months, the financial institution 

complies with § 1003.4(a)(26) by 

reporting the introductory interest rate 

period for the covered loan or 

application using an equivalent number 

of whole months without regard for any 

remainder and provides an example. 

Regarding requests for further 

clarifications, § 1003.4(a)(26) requires a 

financial institution to report the 

number of months, or proposed number 

of months in the case of an application, 

from closing or account opening until 

the first date the interest rate may 

change. Regarding the request for 

additional guidance on reporting when 

a construction loan converts to 

permanent financing, § 1003.4(a)(26) 

provides a single standard for reporting 

that does not depend on loan type or 

loan purpose and that applies regardless 

of how the interest rate adjustment is 

characterized. Regarding the request for 

additional guidance on reporting when 

a loan has a temporary buydown 

agreement, § 1003.4(a)(26) does not 

prescribe a specific method by which 

the change in interest rate must be 

reflected (i.e., on the note or in a 

separate agreement). As to situations 

where it is not known with certainty 

when the interest rate may change, 

§ 1003.4(a)(26) refers to the first date the 

interest rate may change, rather than 

will change, after closing or account 

opening. Comment 4(a)(26)–1 explains 

that § 1003.4(a)(26) requires a financial 

institution to report the number of 

months based on when the first interest 

rate adjustment may occur, even if an 

interest rate adjustment is not required 

to occur at that time and even if the 

rates that will apply, or the periods for 

which they will apply, are not known at 

closing or account opening, and 

includes an illustrative example. The 

Bureau notes that § 1003.4(a)(26) does 

not refer to ‘‘introductory’’ rates and 

that the commentary to § 1003.4(a)(26) 

uses this term solely to illustrate, and 

not to change, the substantive 

requirements in § 1003.4(a)(26). The 

Bureau declines to adopt further 

exemptions from § 1003.4(a)(26). As the 

Bureau explained in the 2015 HMDA 

Final Rule, interest rate variability can 

be an important feature in affordability, 

and having such information on covered 

loans and applications could be used to 

identify possible discriminatory lending 

patterns. The Bureau also notes that, as 

adopted in the 2015 HMDA Final Rule, 

comments 4(a)(26)–3 and –4 exclude 

certain transactions from the reporting 

requirements in § 1003.4(a)(26). 

4(a)(34) 

HMDA section 304(b)(6)(F) requires 

the reporting of, ‘‘as the Bureau may 

determine to be appropriate, a unique 

identifier that identifies the loan 

originator as set forth in’’ the Secure and 

Fair Enforcement for Mortgage 

Licensing Act (SAFE Act).127 Section 

1003.4(a)(34) as adopted by the 2015 

HMDA Final Rule implements this 

provision by requiring the reporting of 

the unique identifier assigned to the 

loan originator by the National Mortgage 

Licensing System and Registry (NMLSR 

ID) for covered loans and applications, 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43117 

128 2015 HMDA Final Rule, 80 FR 66128, 66231 

(Oct. 28, 2015). See Regulation Z § 1026.36(g). 

including purchased loans. Comment 

4(a)(34)–2 as adopted by the 2015 

HMDA Final Rule explains that, if a 

mortgage loan originator has been 

assigned an NMLSR ID, a financial 

institution complies with § 1003.4(a)(34) 

by reporting the mortgage loan 

originator’s NMLSR ID regardless of 

whether the mortgage loan originator is 

required to obtain an NMLSR ID for the 

particular transaction being reported by 

the financial institution. To avoid 

difficulties that purchasers of loans are 

likely to experience in reporting the 

NMLSR ID during the transition to the 

new reporting regime, the Bureau 

proposed new comment 4(a)(34)–4, 

which would provide two transitional 

rules for loan purchases. 

The preamble to the 2015 HMDA 

Final Rule stated the Bureau’s belief that 

reporting the NMLSR ID would impose 

little to no ongoing cost for financial 

institutions because the information is 

required to be provided on certain loan 

documents pursuant to Regulation Z 

(the loan originator rules).128 However, 

the Bureau had become aware that 

financial institutions reporting covered 

loans that they purchase may sometimes 

have difficulty reporting this 

information because the NMLSR ID may 

not be listed on the loan documents of 

purchased loans that were originated 

before the ID disclosure requirement 

took effect. In addition, the loan 

documents for purchased loans that are 

not covered by Regulation Z may not 

include the NMLSR ID even when the 

loan originator has been assigned an 

NMLSR ID. A later purchaser must 

report the NMLSR ID according to the 

interpretation in comment 4(a)(34)–2, as 

adopted by the 2015 HMDA Final Rule, 

if it is a covered loan (e.g., a commercial 

purpose home purchase loan). 

Consequently, the Bureau proposed two 

transitional rules for purchasers to 

facilitate the reporting of the NMLSR 

ID—one for loans covered by Regulation 

Z and originated before the effective 

date of the loan originator rules on 

January 10, 2014, and a second for loans 

not covered by Regulation Z and 

originated before January 1, 2018. 

Seven commenters discussed the 

NMLSR ID transition rules and all of 

them expressed support for the changes. 

Three of these commenters requested 

that the Bureau extend or make 

permanent the transitional rule for nonRegulation Z loans. One commenter 

stated that there will be difficulties 

when purchasing loans from an 

originating seller that is not itself a 

HMDA reporter. Another commenter 

said that the practical difficulties that 

the non-Regulation Z transitional rule is 

meant to allay will still exist after 

January 1, 2018. A third commenter 

suggested that the Bureau allow 

purchasers to report that the 

requirement is not applicable whenever 

there is no NMLSR ID on the loan 

documents. 

Commenters also suggested that the 

transitional rules for purchasers be 

extended to data points beyond the 

NMLSR ID. One commenter suggested a 

transitional rule that would allow 

purchasers to report whatever data was 

originally reported on the loan. Another 

commenter requested a transitional rule 

for reporting of assumptions. 

The Bureau has carefully considered 

the comments submitted and is 

adopting comment 4(a)(34)–4 as 

proposed. Commenters have pointed out 

that they may purchase after the 

effective date of the 2015 HMDA Final 

Rule loans that were originated before 

Regulation Z’s loan originator rules 

became effective on January 10, 2014. In 

such cases, the loan documents may not 

include the NMLSR ID, even when the 

loan originator had been assigned one. 

Comment 4(a)(34)–2, however, 

otherwise provides that § 1003.4(a)(34) 

requires reporting the NMLSR ID for 

such loans. In such a circumstance, this 

reporting may impose considerable 

challenges to require purchasers to 

acquire this information. Therefore, the 

transitional rule in new comment 

4(a)(34)–4 explains that, if a financial 

institution purchases a covered loan 

that satisfies the coverage criteria of 

Regulation Z § 1026.36(g) and that was 

originated before January 10, 2014, the 

financial institution complies with 

§ 1003.4(a)(34) by reporting that the 

requirement is not applicable. 

As explained above, the loan 

documents for purchased loans that are 

not covered by Regulation Z but are 

nevertheless covered loans (e.g., a 

commercial purpose home purchase 

loan) also may not include the NMLSR 

ID, even when the loan originator has 

been assigned an NMLSR ID. 

Nevertheless, a later purchaser must 

report the NMLSR ID under comment 

4(a)(34)–2, as adopted by the 2015 

HMDA Final Rule. The Bureau believes 

that it is appropriate to provide 

sufficient time for originators and 

purchasers to develop processes that 

will ensure compliance in this situation. 

The Bureau also believes that 

originators and purchasers of such loans 

will be able to arrange for compliance 

given the extra transitional period 

provided and therefore declines to 

extend or make permanent this 

transitional rule. Therefore, the Bureau 

adopts the second transitional rule in 

new comment 4(a)(34)–4 as proposed. 

The comment explains that, if a 

financial institution purchases a 

covered loan that does not satisfy the 

coverage criteria of Regulation Z 

§ 1026.36(g) and that was originated 

before January 1, 2018, the financial 

institution complies with § 1003.4(a)(34) 

by reporting that the requirement is not 

applicable. 

As adopted, new comment 4(a)(34)–4 

also makes clear that purchasers of the 

loans exempted by the transitional rules 

discussed above may report the NMLSR 

ID voluntarily. The information may be 

useful, and the Bureau believes that, if 

the NMLSR ID is present in the loan 

data of purchased loans to which the 

transitional rules apply, it may add 

burden to require it to be removed. 

Commenters’ suggestions about 

transitional rules for other data points 

and general treatment of purchased 

loans were not proposed, and the 

Bureau has not benefited from public 

comment concerning them. The 

transitional rules regarding the NMLSR 

ID are being adopted due to specific 

documentation issues that will create 

challenges for purchasers, and the 

absence of data that will result is 

reasonably well known and 

circumscribed. Commenters did not 

provide specific discussion of the 

challenges that other transitional rules 

would address and what potential 

burdens would exist. 

In addition, the Bureau notes that 

assumptions are reportable under the 

current HMDA rule and are treated as 

new extensions of credit, so reporting 

will not require data from the previous 

origination of the loan being assumed. 

4(a)(35) 

In the 2015 HMDA Final Rule, 

pursuant to its authority under sections 

305(a) and 304(b)(6)(J) of HMDA, the 

Bureau adopted § 1003.4(a)(35)(i) to 

require a financial institution to report, 

except for purchased covered loans, the 

name of the automated underwriting 

system (AUS) it used to evaluate the 

application and the result generated by 

that AUS. As adopted by the 2015 

HMDA Final Rule, § 1003.4(a)(35)(ii) 

provides that an AUS means an 

electronic tool developed by a 

securitizer, Federal government insurer, 

or Federal government guarantor that 

provides a result regarding the credit 

risk of the applicant and whether the 

covered loan is eligible to be originated, 

purchased, insured, or guaranteed by 

that securitizer, Federal government 

insurer, or Federal government 

guarantor. The Bureau proposed to 

amend § 1003.4(a)(35)(ii) to clarify 


sradovich on DSK3GMQ082PROD with RULES2
43118 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

further the definition of AUS. The 

Bureau proposed conforming 

amendments to comment 4(a)(35)–2 and 

proposed new comment 4(a)(35)–7 to 

provide guidance regarding a financial 

institution’s determination of whether 

the system it is using to evaluate an 

application is an AUS for purposes of 

§ 1003.4(a)(35). 

A few commenters supported the 

proposed clarifications to the definition 

of AUS and the additional guidance in 

proposed new comment 4(a)(35)–7. One 

national trade association stated that the 

2015 HMDA Final Rule uses the term 

securitizer in the present tense, thereby 

indicating that, if the financial 

institution that developed the electronic 

system is no longer securitizing loans, 

that system would not meet the 

definition of AUS. It asserted that the 

proposal to clarify that a person is a 

securitizer if it has ever securitized a 

loan is a substantive change that should 

result in an additional implementation 

period. A software vendor commenter 

requested additional guidance on 

reporting requirements when a financial 

institution uses Technology Open to 

Approved Lenders (TOTAL) Scorecard 

in conjunction with other AUSs. 

The Bureau is adopting 

§ 1003.4(a)(35)(ii) and comments 

4(a)(35)–2 and –7 as proposed, with 

minor amendments for clarity in 

comment 4(a)(12)–2. Accordingly, final 

§ 1003.4(a)(35)(ii) explains that, for 

purposes of § 1003.4(a)(35), an AUS 

means an electronic tool developed by 

a securitizer, Federal government 

insurer, or Federal government 

guarantor of closed-end mortgage loans 

or open-end lines of credit that provides 

a result regarding the credit risk of the 

applicant and whether the covered loan 

is eligible to be originated, purchased, 

insured, or guaranteed by that 

securitizer, Federal government insurer, 

or Federal government guarantor. Final 

§ 1003.4(a)(35)(ii) explains further that, 

a person is a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, respectively, if it has ever 

securitized, provided Federal 

government insurance, or provided a 

Federal government guarantee for a 

closed-end mortgage loan or open-end 

line of credit. 

The Bureau is adopting conforming 

amendments to comment 4(a)(35)–2 to 

reflect final § 1003.4(a)(35)(ii). Final 

comment 4(a)(35)–2 clarifies that, to be 

covered by the AUS definition in 

§ 1003.4(a)(35)(ii), a system must be an 

electronic tool that has been developed 

by a securitizer, Federal government 

insurer, or a Federal government 

guarantor of closed-end mortgage loans 

or open-end lines of credit. Final 

comment 4(a)(35)–2 provides further 

that, a person is a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, respectively, if it has securitized, 

provided Federal government insurance, 

or provided a Federal government 

guarantee for a closed-end mortgage 

loan or open-end line of credit at any 

point in time. It provides still further 

that, a person may be a securitizer, 

Federal government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, respectively, for purposes of 

§ 1003.4(a)(35) even if it is not actively 

securitizing, insuring, or guaranteeing 

closed-end mortgage loans or open-end 

lines of credit at the time a financial 

institution uses the system in question. 

Additionally, final comment 4(a)(35)–2 

clarifies that where the person that 

developed the electronic tool has never 

been a securitizer, Federal government 

insurer, or Federal government 

guarantor of closed-end mortgage loans 

or open-end lines of credit, respectively, 

at the time a financial institution uses 

the tool to evaluate an application, the 

financial institution complies with 

§ 1003.4(a)(35) by reporting that the 

requirement is not applicable because 

an AUS was not used to evaluate the 

application. In addition to these 

conforming amendments, the Bureau is 

adopting final comment 4(a)(35)–2 with 

minor technical revisions. 

The Bureau is adopting new comment 

4(a)(35)–7 to add clarity regarding a 

financial institution’s determination of 

whether the system it is using to 

evaluate an application is an electronic 

tool developed by a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit. Comment 4(a)(35)–7 sets forth 

the definition of AUS under final 

§ 1003.4(a)(35)(ii). It clarifies that if a 

financial institution knows or 

reasonably believes that the system it is 

using to evaluate an application is an 

electronic tool that has been developed 

by a securitizer, Federal government 

insurer, or Federal government 

guarantor of closed-end mortgage loans 

or open-end lines of credit, then the 

financial institution complies with 

§ 1003.4(a)(35) by reporting the name of 

that system and the result generated by 

that system. Comment 4(a)(35)–7 

explains that knowledge or reasonable 

belief could, for example, be based on 

a sales agreement or other related 

documents, the financial institution’s 

previous transactions or relationship 

with the developer of the electronic 

tool, or representations made by the 

developer of the electronic tool 

demonstrating that the developer of the 

electronic tool is a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit. 

Additionally, comment 4(a)(35)–7 

provides that if a financial institution 

does not know or reasonably believe 

that the system it is using to evaluate an 

application is an electronic tool that has 

been developed by a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, the financial institution complies 

with § 1003.4(a)(35) by reporting that 

the requirement is not applicable, 

provided that the financial institution 

maintains procedures reasonably 

adapted to determine whether the 

electronic tool it is using to evaluate an 

application meets the definition in 

§ 1003.4(a)(35)(ii). The comment 

explains that reasonably adapted 

procedures include attempting to 

determine with reasonable frequency, 

such as annually, whether the developer 

of the electronic tool is a securitizer, 

Federal government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit. Finally, comment 4(a)(35)–7 

includes illustrative examples 

demonstrating how a financial 

institution complies with § 1003.4(a)(35) 

depending on whether it knows or 

reasonably believes that the system it is 

using to evaluate an application is an 

electronic tool that has been developed 

by a securitizer, Federal government 

insurer, or Federal government 

guarantor of closed-end mortgage loans 

or open-end lines of credit. 

As to one commenter’s statement that 

the proposal would constitute a 

substantive change requiring a new 

implementation period, the Bureau 

notes that, as discussed in the April 

2017 HMDA Proposal, the 2015 HMDA 

Final Rule did not define the timeframe 

relevant to the determination of whether 

a person is a securitizer, Federal 

government insurer, or Federal 

government guarantor for purposes of 

§ 1003.4(a)(35). Thus, the Bureau 

believes the final rule should facilitate 

implementation by addressing potential 

uncertainty while also ensuring the 

continued availability of reliable AUS 

data regardless of potential changes in 

the marketplace that may affect a 

person’s status as an active securitizer, 

Federal government insurer, or Federal 

government guarantor of closed-end 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43119 

129 Id. at 66233. 

130 Id. 

mortgage loans or open-end lines of 

credit. To the extent the clarifications in 

this rule require financial institutions to 

make technical changes, those changes 

require only minor adjustments, not 

significant system updates. In addition, 

the Bureau has issued this final rule in 

August, four months before 2018, which 

the Bureau believes should afford ample 

time to implement any necessary minor 

system adjustments. The Bureau is 

releasing implementation aids with this 

final rule to facilitate implementation. 

The Bureau declines to clarify further 

reporting requirements when a financial 

institution uses TOTAL Scorecard to 

evaluate an application because that 

scenario is addressed in the 2015 

HMDA Final Rule.129 The Bureau 

explained that TOTAL Scorecard works 

in conjunction with various AUSs, and 

that if a financial institution uses 

TOTAL Scorecard to evaluate an 

application, the Bureau had determined 

that the HMDA data’s usefulness will be 

improved by requiring the financial 

institution to report that it used TOTAL 

Scorecard along with the result 

generated by that system.130

Section 1003.5 Disclosure and 

Reporting 

5(a) Reporting to Agency 

5(a)(3) 

Pursuant to HMDA section 305(a), in 

the 2015 HMDA Final Rule the Bureau 

adopted § 1003.5(a)(3), effective January 

1, 2019, to require financial institutions 

to provide their Legal Entity Identifier 

(LEI) when reporting HMDA data and to 

set forth certain other requirements 

regarding the information a financial 

institution must include in its 

submission. Specifically, 

§ 1003.5(a)(3)(ii) requires a financial 

institution to provide with its 

submission the calendar year the data 

submission covers pursuant to 

§ 1003.5(a)(1)(i) or calendar quarter and 

year the data submission covers 

pursuant to § 1003.5(a)(1)(ii). The 

Bureau proposed to amend 

§ 1003.5(a)(3)(ii) to reflect the different 

effective dates for annual reporting 

requirements in § 1003.5(a)(1)(i) and 

quarterly reporting requirements in 

§ 1003.5(a)(1)(ii) adopted by the 2015 

HMDA Final Rule. The Bureau received 

no comments regarding the proposed 

amendments and therefore is adopting 

§ 1003.5(a)(3)(ii) as proposed. 

Section 1003.6—Enforcement 

6(b) Bona Fide Errors 

Current § 1003.6(b) provides that 

‘‘bona fide errors’’ are not violations of 

HMDA and Regulation C and provides 

guidance about what qualifies as a bona 

fide error. Current § 1003.6(b)(2) 

provides that an incorrect entry for a 

census tract number is deemed a bona 

fide error, and is not a violation of 

HMDA or Regulation C, if the financial 

institution maintains procedures 

reasonably adapted to avoid such errors. 

The Bureau proposed amendments to 

the commentary to § 1003.6(b) to clarify 

that incorrect entries reporting the 

census tract number of a property are 

not a violation of HMDA or Regulation 

C if the financial institution properly 

uses a geocoding tool made available 

through the Bureau’s Web site, the 

financial institution enters an accurate 

property address, and the tool provides 

a census tract number for the property 

address entered. 

To ease the burden associated with 

reporting the census tract number 

required by Regulation C, the Bureau 

plans to make available on its Web site 

a geocoding tool to provide the census 

tract based on property addresses 

entered by users. The Bureau proposed 

new comment 6(b)–2 to clarify that 

obtaining census tract information for 

covered loans and applications from the 

geocoding tool on the Bureau’s Web site 

is an example of a procedure reasonably 

adapted to avoid incorrect entries for a 

census tract number under 

§ 1003.6(b)(2). The proposed comment 

stated that a census tract error is not a 

violation of HMDA or Regulation C if 

the financial institution obtained the 

census tract number from the geocoding 

tool on the Bureau’s Web site after 

entering an accurate property address. 

The proposed comment stated, however, 

that a financial institution’s failure to 

provide the required census tract 

information for a covered loan or 

application on its loan/application 

register because the geocoding tool on 

the Bureau’s Web site did not provide 

a census tract for the property address 

entered by the financial institution is 

not excused as a bona fide error. The 

proposed comment also explained that 

a census tract error caused by a financial 

institution entering an inaccurate 

property address into the geocoding tool 

on the Bureau’s Web site is not excused 

as a bona fide error. The Bureau also 

proposed to add to comment 6(b)–1 a 

cross reference to proposed comment 

6(b)–2. 

The Bureau received nine comments 

from trade associations, financial 

institutions, and other industry 

participants on the proposed 

amendments. One commenter 

supported the safe harbor protections 

provided by using the geocoding tool on 

the Bureau’s Web site. Several 

commenters suggested that the bona fide 

error should include any error generated 

by the geocoding tool on the Bureau’s 

Web site, including the tool’s failure to 

return an address. One vendor 

commenter opposed providing a safe 

harbor for the geocoding tool on the 

Bureau’s Web site unless other 

geocoding tools receive a similar safe 

harbor. Several commenters expressed 

concern that the geocoding tool on the 

Bureau’s Web site would not be 

available in a timeframe that would 

allow for testing and implementation 

and suggested that the Bureau delay the 

effective date of the safe harbor 

provision. 

The Bureau is finalizing comments 

6(b)–1 and –2 largely as proposed. The 

Bureau does not agree with commenters 

that the scope of proposed comment 

6(b)–2 is too narrow. To provide 

protections for all errors generated 

through the use of the geocoding tool on 

the Bureau’s Web site, regardless of the 

reason for the error, would be 

overbroad. Accurate information about 

the census tract of the property is 

essential to HMDA’s purposes. 

Therefore, the Bureau believes that an 

accurate census tract should be reported 

in as many cases as possible. At the 

same time, however, a financial 

institution should not face compliance 

risk for inaccuracies resulting from 

information provided by the geocoding 

tool on the Bureau’s Web site. The 

Bureau believes that proposed comment 

6(b)–2 appropriately balances those 

concerns by requiring financial 

institutions to enter an accurate 

property address. For the same reason, 

in cases when the geocoding tool on the 

Bureau’s Web site does not generate a 

census tract number for a particular 

address, the Bureau believes the burden 

is appropriately placed on financial 

institutions to, by other means, identify 

the census tract, as they do when using 

any other Geocoding Tool. Financial 

institutions bear the reporting 

responsibility under HMDA generally, 

to identify the census tract; financial 

institutions are in a better position to 

identify the census tract using other 

information that they have about 

property location, such as the local area 

or parcel number. 

The Bureau did not intend, as 

commenters appear to have inferred, 

that only census tract errors generated 

by the geocoding tool on the Bureau’s 

Web site are bona fide errors. Current 

§ 1003.6 states that an error in 


sradovich on DSK3GMQ082PROD with RULES2
43120 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

131As noted below, the effective date for an 

amendment to the commentary to § 1003.6(b)(1) is 

changed to January 1, 2019, to align with the 

effective date for the corresponding amendment in 

the 2015 HMDA Final Rule. See 2015 HMDA Final 

Rule, 80 FR 66128, 66257 (Oct. 28, 2015)(‘‘The 

Bureau is adopting an effective date of January 1, 

2019 for § 1003.6, which concerns enforcement of 

HMDA and Regulation C. The amendments to 

§ 1003.6 adopted in this final rule apply to HMDA 

data reported beginning in 2019. Thus, current 

§ 1003.6 applies to data collected in 2017 and 

reported in 2018, and amended § 1003.6 applies to 

2018 data reported in 2019.’’). 

132 12 U.S.C. 2803(b)(4); 12 CFR 1003.4(a)(10). 

133Revised § 1003.4(a)(10)(i); revised comment 

4(a)(10)(i)–1; revised appendix B to part 1003. 

compiling or recording data for a 

covered loan or application is not a 

violation if the error was unintentional 

and occurred despite the maintenance 

of procedures reasonably adapted to 

avoid such an error, and neither the 

2015 HMDA Final Rule nor this final 

rule changes that provision. New 

comment 6(b)–2 merely clarifies that the 

geocoding tool on the Bureau’s Web site 

serves as one example of a procedure 

reasonably adapted to avoid incorrect 

entries for census tract numbers. 

Obtaining census tract numbers using 

other geocoding tools may constitute a 

procedure reasonably adapted to avoid 

geocoding errors, depending on the facts 

and circumstances. If a financial 

institution chooses to use an alternative 

geocoding tool that constitutes a 

procedure reasonably adapted to avoid 

census tract errors, the financial 

institution will receive the same safe 

harbor protections. The Bureau cannot 

extend safe harbor status to any and all 

such alternative geocoding tools, 

however, because it does not control the 

accuracy or reliability of such tools. 

The Bureau declines to delay the 

effective date of these bona fide error 

protections, and is making the 

protections available beginning with 

data collected during the 2018 calendar 

year.131 The Bureau believes that 

financial institutions should be able to 

take advantage of the safe harbor as soon 

as the Bureau makes a geocoding tool 

available on its Web site. While some 

financial institutions may not adopt its 

use immediately, for those that do so, 

the safe harbor should be available 

without any delay. However, to avoid 

any confusion in the event that the 

Bureau does not make the geocoding 

tool available on its Web site before 

financial institutions begin collecting 

2018 calendar year data the Bureau is 

modifying the language in proposed 

comment 6(b)–2 to clarify that the safe 

harbor is available only once the Bureau 

has made the geocoding tool available 

on its Web site. The Bureau also is 

making some technical changes to the 

comment for clarity. 

6(c) Quarterly Recording and Reporting 

Current § 1003.6(b)(3) provides that 

errors and omissions in data that a 

financial institution records on its loan/ 

application register on a quarterly basis 

as required under § 1003.4(a) are not 

violations of HMDA or Regulation C if 

the institution makes a good-faith effort 

to record all required data fully and 

accurately within thirty calendar days 

after the end of each calendar quarter 

and corrects or completes the data 

before reporting the data to its 

appropriate Federal agency. In the 2015 

HMDA Final Rule, the Bureau moved 

the substance of current § 1003.6(b)(3) to 

new § 1003.6(c)(1) and added new 

§ 1003.6(c)(2) to provide that a similar 

safe harbor applies to data reported on 

a quarterly basis pursuant to 

§ 1003.5(a)(1)(ii). Pursuant to 

§ 1003.6(c)(2), errors and omissions in 

the data submitted pursuant to 

§ 1003.5(a)(1)(ii) will not be considered 

HMDA or Regulation C violations 

provided the same conditions that 

currently provide a safe harbor for errors 

and omissions in quarterly recorded 

data are satisfied. The Bureau proposed 

to amend § 1003.6(c)(2) so that its 

effective date aligns with the effective 

date for the quarterly reporting 

requirements in § 1003.5(a)(1)(ii), for 

which § 1003.6(c)(2) provides a safe 

harbor. Specifically, the Bureau 

proposed to remove § 1003.6(c)(2) and 

to redesignate § 1003.6(c)(1) as 

§ 1003.6(c) effective January 1, 2019. 

The Bureau proposed to add 

§ 1003.6(c)(2), as adopted by the 2015 

HMDA Final Rule, and to redesignate 

§ 1003.6(c) as § 1003.6(c)(1) effective 

January 1, 2020. The Bureau received no 

comments regarding this proposal and 

therefore is adopting the revisions to 

§ 1003.6(c) effective January 1, 2019, 

and effective January 1, 2020, as 

proposed. 

Appendix B to Part 1003—Form and 

Instructions for Data Collection of 

Ethnicity, Race, and Sex 

HMDA and Regulation C currently 

require financial institutions to collect 

the ethnicity, race, and sex of an 

applicant or borrower for covered loans 

and applications.132 Current appendix B 

to Regulation C provides data collection 

instructions and a sample data 

collection form for use in collecting an 

applicant’s or borrower’s information. In 

the 2015 HMDA Final Rule, the Bureau 

revised the ethnicity, race, and sex data 

collection requirements and 

instructions.133 Among other changes, 

revised appendix B requires financial 

institutions to collect disaggregated 

ethnic and racial categories beginning 

January 1, 2018. To facilitate 

compliance and make various 

corrections, the Bureau proposed certain 

amendments to the instructions and 

sample data collection form contained 

in revised appendix B. 

Ethnicity and Race Subcategories 

Instruction 8 in revised appendix B 

provides that financial institutions must 

report the ethnicity, race, and sex of an 

applicant as provided by the applicant. 

The instruction provides the example 

that, if an applicant selects the Mexican 

ethnicity subcategory, the financial 

institution reports Mexican for the 

ethnicity of the applicant. Instruction 9.i 

similarly provides that a financial 

institution must report each ethnicity 

category and subcategory selected by the 

applicant. Instruction 9.i further 

provides that, if an applicant selects the 

Hispanic or Latino ethnicity category, 

the applicant may select up to four 

ethnicity subcategories. 

To clarify the circumstances in which 

an applicant may select a subcategory 

and to address any perceived 

inconsistencies, the Bureau proposed to 

amend instructions 8 and 9.i. 

Specifically, the Bureau proposed to 

amend instruction 8 to provide that an 

applicant may select an ethnicity or race 

subcategory even if the applicant does 

not select an aggregate ethnicity or race 

category. The April 2017 HMDA 

Proposal also clarified that a financial 

institution should not report an 

aggregate category if not selected by the 

applicant. The Bureau further proposed 

to amend instruction 9.i to remove 

language suggesting that the selection of 

Hispanic or Latino is a precondition to 

selecting the ethnicity subcategories. 

For the reasons discussed below, the 

Bureau is adopting instructions 8 and 

9.i concerning the selection of ethnicity 

and race subcategories as proposed with 

minor revisions for clarity. 

The majority of commenters 

addressing the proposed revisions to 

instruction 8 and 9.i expressed 

appreciation for the clarifications. 

Consumer advocacy groups and an 

industry commenter also supported the 

proposal because it would reflect an 

applicant’s preferences and identity. 

Some industry commenters opposed 

the proposed revisions to instruction 8 

and 9.i. One commenter argued that the 

proposed clarifications are contrary to 

the instructions in revised appendix B 

and would undermine implementation 

work already performed. The 

commenter further asserted that the 

proposed revisions would not promote 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43121 

134Status of New Uniform Residential Loan 

Application and Collection of Expanded Home 

Mortgage Disclosure Information About Ethnicity 

and Race in 2017, 81 FR 66930 (Sep 29, 2016). 

135 Id. at 66931. 

self-identification or other benefits, as 

consumers submitting applications 

online know how to navigate through a 

variety of menu options. The 

commenter expressed the view that the 

proposed changes could instead have 

negative effects on consumers by 

providing too much information. The 

commenter further argued that the 

proposed revisions would require 

additional engineering and software 

development that may delay 

implementation. The commenter 

suggested that the Bureau defer making 

any amendments until the Bureau 

reviews ethnicity and race data 

submitted under revised appendix B. 

Another industry commenter argued 

that the proposed revisions would not 

align with lender systems, which in 

some cases are programmed to trigger 

automatically the selection of a main 

category when a subcategory is selected. 

The industry commenter explained that 

permitting automatic selection of the 

aggregate category would also be 

important for data analysis. The 

commenter suggested that, if an 

applicant selects only a subcategory, the 

financial institution must also report the 

aggregate category to which the 

subcategory belongs. 

The Bureau disagrees that the 

proposed revisions are inconsistent with 

the 2015 HMDA Final Rule, as revised 

appendix B does not definitively 

address the reporting of subcategories 

alone. Rather, as described above and in 

the April 2017 HMDA Proposal, the 

Bureau finds that revised appendix B 

instructions 8 and 9.i provide 

potentially inconsistent instructions 

that may cause uncertainty on whether 

an applicant may select only a 

subcategory without the corresponding 

aggregate category. The Bureau therefore 

finds it necessary to provide certainty, 

and indeed several commenters have 

expressed support for the Bureau’s 

clarification of this issue. The 

clarification is also consistent with 

informal guidance provided to date by 

the Bureau. 

The Bureau believes financial 

institutions can implement and test any 

adjustments that might be required as a 

result of the clarification before the 

effective date. To the extent the 

clarification requires certain financial 

institutions to make technical changes, 

those changes will require only minor 

adjustments rather than significant 

system updates. Moreover, commenters 

who expressed concern about the 

implementation period may not have 

expected this rule to be finalized so 

quickly, providing industry more than 

four months time for implementation. 

For these reasons, the Bureau concludes 

that financial institutions will be 

capable of making the required changes 

in the several months remaining before 

the effective date of January 1, 2018. 

The Bureau also disagrees that 

providing applicants the opportunity to 

select a subcategory alone will be 

confusing to applicants, and notes that 

the commenter provides no testing 

results or data for such a conclusion. 

Rather, the Bureau believes that 

providing applicants with the 

opportunity to view and select the 

enumerated subcategories will increase 

optionality for the applicant and 

promote self-identification. For 

example, an applicant may identify as 

Mexican, but not Hispanic or Latino, 

and providing the applicant the option 

to view and choose only Mexican 

therefore may increase the response 

rate. The Bureau believes that 

applicants should always be able to 

select only a subcategory if it best 

reflects their self-identification 

preferences. 

The Bureau also declines to adopt the 

alternative proposed by an industry 

commenter to require a financial 

institution to report the corresponding 

aggregate category if an applicant selects 

only a subcategory. While the Bureau 

understands that such a requirement 

may reflect some institutions’ systems, 

it may not reflect all financial 

institutions’ practices. The Bureau 

declines as part of this rulemaking to 

impose an additional requirement on 

financial institutions to report the 

aggregate category if a subcategory is 

selected. Moreover, as discussed above, 

the Bureau believes that some 

applicants may self-identify as a 

subcategory but not the corresponding 

aggregate category, thus reporting only 

what the applicant selects would better 

reflect applicant identity and may 

increase the response rate. The Bureau 

also does not believe that such an 

alternative is necessary for data 

analysis, as users may roll up the 

subcategories into their corresponding 

categories when analyzing the data, 

irrespective of how the data are 

reported. 

One industry commenter argued that 

the proposed clarification would result 

in inconsistent reporting. The 

commenter noted that the same 

applicant could be reported as an 

aggregate category before the effective 

date and a subcategory after the effective 

date. The commenter further noted that 

by removing a requirement to report the 

aggregate categories, many additional 

subcategories will be created and 

therefore dilute the data being reported. 

The commenter argued that inconsistent 

reporting would undermine HMDA’s 

purposes and requested that the Bureau 

provide guidance on how to analyze 

data collected before and after the 

effective date. 

The Bureau declines to provide such 

guidance. As noted above, reporting 

requirements may differ from data 

analysis methods, and nothing in the 

revisions to instructions 8 and 9.i would 

preclude a financial institution from 

rolling up the subcategories into their 

corresponding aggregate categories for 

purposes of data analysis. Moreover, the 

Bureau sought comment only on the 

reporting requirements. The Bureau 

disagrees that the clarification will 

dilute the data being reported and notes 

that the commenter provides no 

evidence to support this conclusion. To 

the extent the clarification may result in 

differing reporting before and after the 

effective date, the Bureau notes that 

some variation is common during any 

transition period. 

Several commenters asked for 

clarification concerning how the 

revisions to instructions 8 and 9.i may 

affect other requirements of revised 

appendix B. One industry commenter 

requested confirmation that the 

amendments would not alter the 

requirements in revised appendix B 

concerning the collection of ethnicity, 

race, and sex information on the basis 

of visual observation or surname. The 

Bureau agrees that the proposed 

amendments would not alter revised 

appendix B in this respect. 

Another industry commenter 

requested guidance on how the 

clarifications would affect applications 

dated before January 1, 2018. The 

Bureau believes the commenter is 

referring to a Bureau approval notice 

issued on September 23, 2016, 

concerning the collection of ethnicity 

and race information in 2017 (Bureau 

Approval Notice), which provides that, 

at any time from January 1, 2017, 

through December 31, 2017, a creditor 

may, at its option, permit applicants to 

self-identify using disaggregated ethnic 

and racial categories as instructed in 

revised appendix B.134 Specifically, the 

Bureau Approval Notice provides that, 

for any application in which final action 

is taken in 2017, a financial institution 

that chooses to collect disaggregated 

information should report the aggregate 

ethnicity and race categories that 

‘‘correspond’’ with the disaggregated 

categories.135 The Bureau Approval 

Notice provides further that for 


sradovich on DSK3GMQ082PROD with RULES2
43122 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

136 Id. 

purposes of submitting HMDA data for 

applications received on or after January 

1, 2017, and before January 1, 2018, and 

on which final action is taken on or after 

January 1, 2018, the financial 

institution, at its option, may submit the 

information concerning ethnicity and 

race using disaggregated categories if the 

applicant provided such information 

instead of using the transition rule set 

forth in comment 4(a)(10)(i)–2 as 

adopted by the 2015 HMDA Final Rule, 

or it may submit the information in 

accordance with that transition rule.136

The Bureau’s clarifications to 

instructions 8 and 9.i do not affect the 

Bureau Approval Notice or the 

transition rule for reporting ethnicity 

and race information collected in 2017 

for which final action is taken in 2017 

or 2018; where a financial institution 

collects disaggregated information in 

2017, but reports only aggregate 

information, the financial institution 

should report the categories that 

correspond to any selected 

subcategories. 

For the reasons given above, the 

Bureau is adopting the amendments in 

instructions 8 and 9.i concerning the 

selection of ethnicity and race 

subcategories as proposed with minor 

revisions for clarity. 

Other Ethnicity and Other Race 

Subcategories and the American Indian 

or Alaska Native Race Category 

Instructions 9.ii and 9.iv in revised 

appendix B provide instructions for 

collecting and reporting an Other 

ethnicity or race subcategory and freeform field. Specifically, instruction 9.ii 

provides that, if an applicant selects the 

Other Hispanic or Latino ethnicity 

subcategory, the applicant may also 

provide a particular Hispanic or Latino 

ethnicity not listed in the standard 

subcategories. Instruction 9.iv similarly 

provides that, if an applicant selects the 

Other Asian race subcategory or the 

Other Pacific Islander race subcategory, 

the applicant may also provide a 

particular Other Asian or Other Pacific 

Islander race not listed in the standard 

subcategories. The sample data 

collection form included in revised 

appendix B provides for an Other 

ethnicity or race subcategory the 

applicant can select and a free-form 

field in which an applicant can provide 

a particular ethnicity or race. The 

sample data collection form also 

includes an American Indian or Alaska 

Native race category an applicant can 

select and a free-form field in which an 

applicant can provide a particular 

American Indian or Alaska Native 

enrolled or principal tribe. Instruction 8 

provides that only an applicant may 

self-identify as a particular American 

Indian or Alaska Native enrolled or 

principal tribe. 

The Bureau proposed to revise 

instructions 9.ii and 9.iv to clarify that 

an applicant may provide a particular 

ethnicity or race in the free-form field, 

whether or not the applicant selects the 

Other Hispanic or Latino, Other Asian, 

or Other Pacific Islander subcategory. 

Specifically, the Bureau proposed to 

amend instruction 9.ii to provide that an 

applicant may select the Other Hispanic 

or Latino ethnicity subcategory, an 

applicant may provide a particular 

Hispanic or Latino ethnicity not listed 

in the standard subcategories, or an 

applicant may do both. The Bureau 

proposed similar revisions to 

instructions 9.iv, as related to the Other 

race subcategories. 

Several commenters opposed the 

proposed amendments to instructions 

9.ii and 9.iv. Some commenters stated 

that the proposal is a departure from 

revised appendix B and the 2018 FIG, 

which both indicate that an applicant 

may provide an Other race or ethnicity 

in the free-form field if (and arguably, 

by implication, only if) the applicant 

selects the associated Other race or 

ethnicity subcategory. Some 

commenters also argued that the 

proposed amendments would be 

inconsistent with existing industry 

practice and programming already 

conducted in preparation for the 

January 1, 2018, effective date. Another 

industry commenter stated that the 

proposal could potentially delay 

implementation and would not have 

consumer benefits. 

Some commenters expressed 

particular concern about reporting only 

a free-form Other ethnicity or race. One 

commenter expressed uncertainty about 

how such information would be 

reported and concern about sending a 

free-form field with no code or, 

alternatively, improperly reporting an 

Other ethnicity or race subcategory code 

that was not selected by the applicant. 

A commenter suggested the Bureau 

amend the rule to provide that, when an 

applicant provides a specific Other 

ethnicity or race in the free-form field 

without selecting the Other ethnicity or 

race subcategory, a financial institution 

is permitted to report the associated 

Other ethnicity or race subcategory in 

addition to the information the 

applicant provided. 

After consideration of the comments, 

the Bureau concludes that amendments 

to instructions 9.ii and 9.iv remain 

necessary. The Bureau finds that 

ensuring an applicant has the 

opportunity to provide a specific Other 

ethnicity or race not listed in the 

standard subcategories will encourage 

self-identification and further the 

purposes of HMDA by improving the 

data. While the Bureau acknowledges 

that the proposed amendments are 

somewhat of a departure from revised 

appendix B and certain industry 

practice, the Bureau believes that an 

applicant should be provided an 

opportunity to provide a specific Other 

ethnicity or race without any 

preconditions or restrictions. To the 

extent revised appendix B implied 

otherwise, it did not do so intentionally. 

In response to commenter concerns 

about reporting a free-form field that is 

not linked to any associated code, the 

Bureau will permit a financial 

institution to select automatically and to 

report the Other ethnicity or race 

subcategory if an applicant provides a 

specific Other ethnicity or race in the 

free-form field but does not actively 

select the Other ethnicity or race 

subcategory. The Bureau finds that the 

need for such flexibility is greater in the 

case of the Other race and ethnicity 

subcategory, as compared to the 

aggregate category and subcategory issue 

discussed above, given commenters’ 

concerns and questions about 

maintaining and reporting a free-form 

field without linking that field to any 

associated code. The Bureau believes 

that such increased burden and 

uncertainty may undermine the 

purposes of HMDA and the quality of 

the data. Accordingly, the Bureau will 

permit, but not require, financial 

institutions to report the corresponding 

Other race or ethnicity subcategory 

when an applicant provides an Other 

race or ethnicity not listed in the 

standard subcategories, even where the 

applicant did not actively select the 

Other race or ethnicity subcategory, and 

final instructions 9.ii and 9.iv so 

provide. The Bureau believes that such 

a permissive standard will address 

industry concerns without imposing any 

additional regulatory burden on 

financial institutions. 

The Bureau concludes that similar 

conforming revisions are also necessary 

in connection with the American Indian 

or Alaska Native race category and freeform field. Similar to the Other ethnicity 

or race subcategory, the Bureau believes 

that an applicant should be provided an 

opportunity to provide a particular 

American Indian or Alaska Native 

enrolled or principal tribe without any 

preconditions or restrictions. The 

Bureau further concludes that the same 

concerns about reporting a free-form 

field that is not linked to any associated 

code would also apply to the American 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43123 

137 2015 HMDA Final Rule, 80 FR 66128, 66192 

(Oct. 28, 2015). 

138U.S. Census Bureau, C2010BR–02, ‘‘Overview 

of Race and Hispanic Origin: 2010,’’ at 4 (2011), 

available at https://www.census.gov/prod/cen2010/ 

briefs/c2010br-02.pdf. 

139 Id. at 8–9. 

Indian or Alaska Native free-form field. 

Accordingly, the Bureau is adding a 

new instruction 9.v that mirrors the 

instructions for reporting the Other race 

or ethnicity subcategories set forth in 

final instruction 9.ii and 9.iv. 

One commenter requested additional 

clarification on how to count the Other 

race or ethnicity subcategory for 

purposes of the five-race or -ethnicity 

maximum. As described in instructions 

9.ii and 9.iv, the Other race or ethnicity 

field will always constitute one 

selection for purposes of the five-race or 

-ethnicity maximum. For example, if an 

applicant selects only the Other 

Hispanic or Latino subcategory and does 

not provide a specific Other race or 

ethnicity in the free-form field, that 

selection counts as one selection for 

purposes of the maximum. Similarly, if 

an applicant selects the Other Hispanic 

or Latino ethnicity subcategory and also 

provides a specific Hispanic or Latino 

ethnicity in the free-form field, these 

selections together constitute only one 

selection. As set forth in final 

instruction 9.v, the American Indian or 

Alaska Native field will also always 

constitute one selection for purposes of 

the five-race maximum. 

For the reasons discussed above, the 

Bureau is adopting certain revisions to 

instructions 9.ii and 9.iv to address 

industry comments and adding 

instruction 9.v to provide conforming 

changes to the American Indian and 

Alaska Native field. Specifically, the 

Bureau is amending instructions 9.ii 

and 9.iv to permit, but not require, a 

financial institution to report an Other 

Hispanic or Latino, Other Asian, or 

Other Pacific Islander subcategory, as 

applicable, if an applicant provides a 

specific Hispanic or Latino, Asian, or 

Pacific Islander ethnicity or race in the 

free-form field. The Bureau is also 

amending instructions 9.ii and 9.iv to 

provide examples. Otherwise, the 

Bureau is adopting the amendments to 

instructions 9.ii and 9.iv as proposed, 

with certain other, technical revisions 

for clarity. The Bureau is also adding 

instruction 9.v to provide guidance on 

the collection and reporting of the 

American Indian and Alaska Native race 

category and free-form field that mirror 

the guidance in final instructions 9.ii 

and 9.iv concerning the reporting of the 

Other race and ethnicity subcategories, 

as well as a technical revision to 

instruction 9.iii. 

Five-Ethnicity Maximum 

Instruction 9 in revised appendix B 

requires that an applicant be offered the 

option to select more than one ethnicity 

or race. Instruction 9.i sets forth two 

aggregate ethnicity categories and four 

ethnicity subcategories that may be 

selected by an applicant (for a total of 

six categories and subcategories). 

Instruction 9.i requires that a financial 

institution report each aggregate 

ethnicity category and each ethnicity 

subcategory selected by the applicant. 

As reflected in the 2018 FIG, however, 

a financial institution may report up to 

only five-ethnicity codes. While revised 

appendix B includes a five-race 

maximum and related instructions for 

reporting race, revised appendix B did 

not include a similar five-ethnicity 

maximum and instructions. 

Accordingly, the Bureau proposed to 

amend instruction 9.i to provide 

instructions to financial institutions on 

how to report ethnicity if an applicant 

selects both aggregate categories and all 

four subcategories. The proposed 

revisions mirror the instructions for 

how to report race when an applicant 

has selected a total of more than five 

aggregate race categories and race 

subcategories. Specifically, the Bureau 

proposed to revise instruction 9.i to 

provide that a financial institution must 

report every aggregate ethnicity category 

selected by the applicant. The proposed 

instruction states that a financial 

institution must also report every 

ethnicity subcategory selected by the 

applicant, except that a financial 

institution must not report more than a 

total of five aggregate ethnicity 

categories and ethnicity subcategories 

combined. The Bureau also proposed 

amendments to instruction 9.ii to 

provide that, if an applicant selects the 

Other Hispanic or Latino subcategory 

and provides a particular Hispanic or 

Latino subcategory not listed in the 

standard subcategories, the financial 

institution should count the information 

as one selection for purposes of 

reporting only up to the five-ethnicity 

maximum. 

Although the Bureau did not receive 

comments that pertained specifically to 

ethnicity, it received numerous 

comments from industry on the 

maximum generally. The commenters 

expressed unease about picking for the 

applicant which subcategories to report 

where the applicant selects more than 

five categories and subcategories 

combined. Some commenters noted that 

such a limitation is in conflict with 

other instructions in revised appendix 

B, which generally permit an applicant 

to choose as many selections as desired. 

Commenters expressed concern that, 

without further guidance, financial 

institutions may be subject to 

compliance scrutiny or liability. Other 

commenters were concerned that 

allowing the financial institution to 

choose which subcategories to report 

could lead to inaccurate results, 

underreporting, or failure to identify 

discrimination against specific groups. 

The commenters requested that the 

Bureau either permit a financial 

institution to report all ethnicity and 

race selections made by the applicant or 

provide further guidance to financial 

institutions on how to pick which fiveethnicity or -race selections to report. 

For the reasons discussed below, the 

Bureau is adopting instructions 9.i and 

9.ii as proposed. Initially, the Bureau 

notes that many of the commenters’ 

concerns pertain to the five-race 

maximum, which was not the subject of 

the April 2017 HMDA Proposal. As 

discussed in the 2015 HMDA Final 

Rule, to facilitate compliance, the 

Bureau limited the number of racial 

designations a financial institution may 

report.137 The Bureau reviewed 2010 

Census data to consider the occurrence 

of respondents that self-identify as being 

more than one particular race and found 

that, for example, where only Asian was 

reported as the respondents’ race, only 

0.11 percent of those respondents selfidentified as being of three particular 

Asian races, and only 0.02 percent selfidentified as being of seven particular 

Asian races. Accordingly, the Bureau 

concluded in the 2015 HMDA Final 

Rule that the likelihood of applicants 

self-identifying as more than five-racial 

designations is extremely low. 

The Bureau similarly concludes that 

the likelihood that an applicant will 

report more than five-ethnicities is also 

very low. Although 2010 Census reports 

do not provide data on the number of 

instances in which a respondent chose 

multiple ethnicity selections, based on 

Census race reporting, the Bureau 

expects that the number of occurrences 

in which an applicant will select both 

aggregate ethnicity categories and all 

four ethnicity subcategories will be 

extremely low. For example, according 

to 2010 Census data, 97.1 percent of 

respondents reported only one aggregate 

race category.138 Among respondents 

reporting two or more aggregate race 

categories, less than 1 percent reported 

four or more races, and only 0.1 percent 

of respondents identified as five 

races.139 Given that there are fewer 

ethnicity categories and subcategories 

compared to race categories and 

subcategories, the Bureau expects the 

likelihood an applicant will select more 

than five-ethnicity selections to be even 


sradovich on DSK3GMQ082PROD with RULES2
43124 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

lower than the likelihood that an 

applicant will select more than five-race 

selections. 

The Bureau declines to permit 

unlimited ethnicity category and 

subcategory reporting. Permitting 

unlimited reporting would require 

adding a data field for each additional 

possible subcategory, therefore 

expanding the total number of data 

fields within the HMDA loan/

application register. The Bureau 

believes that doing so would add 

additional complexity to reporting that 

may undermine the quality of the data. 

Given that the Bureau expects an 

applicant will rarely select more than 

five-ethnicity designations, the Bureau 

does not believe the risks and 

complexity of additional data fields are 

justified in these circumstances. 

Similarly, the Bureau declines to 

impose additional requirements on how 

to report ethnicity categories and 

subcategories when an applicant has 

selected a total of more than five. 

Proposed instruction 9.i (as well as 

instruction 9.iii as related to race) 

provides substantial guidance. Under 

those instructions, a financial 

institution would report all the 

aggregate categories first, and then any 

subcategories up to a combined fiveethnicity maximum (or five-race 

maximum, as applicable to race). 

Several commenters submitted 

comments requesting guidance on 

whether a particular method of choosing 

which categories and subcategories to 

report would be acceptable. Other than 

as described above, the rule does not 

place any additional limitations on 

which five categories and subcategories 

to report. Thus, to the extent the total 

categories and subcategories exceed 

five, a financial institution may choose 

any method for determining which 

additional subcategories to choose for 

reporting, so long as the financial 

institution initially complies with the 

instructions provided in revised 

appendix B. In light of the Bureau’s 

conclusion that applicants will very 

rarely choose a total of more than five 

categories and subcategories, the Bureau 

declines at this time to impose 

additional reporting limitations and 

requirements on financial institutions. 

Sample Data Collection Form 

Revised appendix B includes a 

sample data collection form for use in 

collecting ethnicity, race, and sex 

information about the applicant. The 

Bureau proposed to make various 

technical revisions to the sample data 

collection form. The Bureau proposed to 

revise the applicant instructions to 

provide that an applicant may select one 

or more designations for ‘‘Ethnicity,’’ 

rather than one or more Hispanic or 

Latino origins. The Bureau also 

proposed to move the instruction to 

‘‘check one or more’’ next to the 

‘‘Ethnicity’’ heading, rather than next to 

the Hispanic or Latino category. The 

Bureau also proposed to add the ‘‘check 

one or more’’ instructions on the side of 

the form designated for the collection of 

a co-applicant’s ethnicity and race 

information, rather than only on the 

side of the form for the applicant. The 

Bureau received one comment opposing 

the additional ‘‘check one or more’’ 

language added to the sample data 

collection form. Although the 

commenter noted generally that the 

proposed changes to revised appendix B 

are contrary to the 2015 HMDA Final 

Rule, will undo work already 

performed, and would not be in the 

interests of consumers, the commenter 

did not provide any specific examples, 

data, or reasoning as related to the 

sample data collection form. 

Accordingly, the Bureau is adopting the 

corrections to the sample data collection 

form as proposed. 

VI. Effective Dates 

In the April 2017 HMDA Proposal, the 

Bureau proposed that the amendments 

take effect when the related 

amendments to Regulation C adopted by 

the 2015 HMDA Final Rule take effect. 

As discussed more fully above, these 

amendments to Regulation C make 

technical corrections to and address 

certain areas to facilitate 

implementation of the 2015 HMDA 

Final Rule. For the proposed 

amendments to have the intended effect, 

the amendments’ effective dates must be 

synchronized with the related effective 

dates in the 2015 HMDA Final Rule. In 

the July 2017 HMDA Proposal, the 

Bureau proposed successive 

amendments to the provisions in 

§§ 1003.2(g) and 1003.3(c)(12) and 

associated commentary to effectuate a 

temporary increase in the open-end 

threshold. Accordingly, the Bureau 

proposed to raise the open-end 

threshold to 500 loans effective January 

1, 2018, and then to lower the open-end 

threshold back to 100 loans effective 

January 1, 2020. For the reasons 

discussed below, the Bureau is adopting 

the effective dates for this final rule as 

proposed. 

Concerning the proposed effective 

dates included in the April 2017 HMDA 

Proposal, one national trade association 

stated that scheduled updates to loan 

origination software cannot proceed 

until the proposal is finalized and 

recommended that the Bureau finalize 

the proposed amendments quickly if 

any meaningful burden reduction is to 

be achieved. A national and State trade 

association recommended that the 

effective date for the 2015 HMDA Final 

Rule be delayed because, they posited, 

the proposal would not be finalized 

before January 1, 2018. One national 

trade association noted that the proposal 

would provide effective dates of January 

1, 2019, or January 1, 2020, to 

correspond to related effective dates for 

certain amendments included in the 

2015 HMDA Final Rule, but 

recommended that the Bureau delay the 

effective date of the 2015 HMDA Final 

Rule until it finalized the clarifications 

or for at least one year. 

Many national and State trade 

associations, financial institutions, and 

industry commenters, when 

commenting on both the April and July 

2017 HMDA Proposals, recommended 

that the Bureau delay the effective date 

for most amendments included in the 

2015 HMDA Final Rule from January 1, 

2018, to January 1, 2019. Several of 

these commenters argued that a delay of 

the general January 1, 2018, effective 

date for the 2015 HMDA Final Rule was 

necessary because questions remained 

regarding collection and reporting of 

data, the Bureau had not yet released 

the geocoding tool, edits, or platforms 

necessary for financial institutions to 

update their software and run tests, and 

questions remained regarding 

implementation of the new Uniform 

Residential Loan Application (URLA). 

Some commenters stated that the 

effective date of the 2015 HMDA Final 

Rule should be delayed until the Bureau 

has addressed public disclosure and 

data resubmission standards for data 

collected and reported under amended 

Regulation C. One national trade 

association recommended that financial 

institutions have the option to delay 

reporting of the new data points 

adopted in the 2015 HMDA Final Rule 

for one year, while one State trade 

association recommended that the 

effective date be delayed for one year 

but that optional early compliance be 

permitted. A State trade association 

suggested the Bureau look for good faith 

efforts at HMDA compliance as the 

Bureau explained it would do during 

implementation of the Integrated 

Mortgage Disclosures Under the Real 

Estate Settlement Procedures Act 

(Regulation X) and the Truth in Lending 

Act (Regulation Z) final rule (TILA– 

RESPA Final Rule). Some trade 

associations requested that transactional 

coverage for the 2018 data collection be 

based on the date an application was 

received, instead of the final action 

taken date, so as to allow more time in 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43125 

140The effective date for an amendment to the 

commentary to § 1003.6(b)(1) is changed to January 

1, 2019, to align with the effective date for the 

corresponding amendment in the 2015 HMDA Final 

Rule. See 2015 HMDA Final Rule, 80 FR 66128, 

66257 (Oct. 28, 2015)(‘‘The Bureau is adopting an 

effective date of January 1, 2019 for § 1003.6, which 

concerns enforcement of HMDA and Regulation C. 

The amendments to § 1003.6 adopted in this final 

rule apply to HMDA data reported beginning in 

2019. Thus, current § 1003.6 applies to data 

collected in 2017 and reported in 2018, and 

amended § 1003.6 applies to 2018 data reported in 

2019.’’). 

141 2015 HMDA Final Rule, 80 FR 66128, 66257 

(Oct. 28, 2015). 142 Id. at 66252–53 (Oct. 28, 2015). 

143Press Release, Uniform Mortgage Data 

Program, Fannie Mae and Freddie Mac at the 

direction of the FHFA, ‘‘URLA Implementation 

Guidance and Update,’’ (Nov. 1, 2016), available at 

https://www.fanniemae.com/content/news/urlaannouncement-november-2016.pdf. Uniform 

Mortgage Data Program, Fannie Mae and Freddie 

Mac at the direction of the FHFA, ‘‘Uniform 

Residential Loan Application (URLA)/Uniform 

Loan Application Dataset (ULAD) FAQs’’, at ¶ 6 

(Nov. 1, 2016), available at https://

www.fanniemae.com/content/faq/urla-uladfaqs.pdf. 

144Status of New Uniform Residential Loan 

Application and Collection of Expanded Home 

Mortgage Disclosure Act of Information About 

Ethnicity and Race in 2017, 81 FR 66930 (Sept. 29, 

2016). The options for collection and reporting of 

HMDA information about ethnicity and race are 

summarized in a chart available on the Bureau’s 

Web site. See Bureau of Consumer Fin. Prot., 

‘‘Collection and Reporting of HMDA Information 

About Ethnicity and Race,’’ (Jan. 1, 2017), available 

at https://www.consumerfinance.gov/documents/

2507/201701_cfpb_HMDA-Ethnicity-and-RaceCollection.pdf. 

2017 to prepare for the January 1, 2018, 

effective date in response to the 

clarifications in this rule. 

The Bureau largely is adopting the 

effective dates for this final rule as 

proposed.140 The 2015 HMDA Final 

Rule takes effect in stages between 

January 1, 2017, and January 1, 2020, 

with most of the amendments included 

in the 2015 HMDA Final Rule taking 

effect on January 1, 2018. Accordingly, 

as provided in the amendatory 

instructions below, the Bureau is 

adopting most of the amendments 

included in this final rule to take effect 

on January 1, 2018. The Bureau is 

adopting some of the amendments 

included in this final rule to take effect 

on January 1, 2019, or January 1, 2020, 

respectively, to correspond to related 

effective dates of amendments in the 

2015 HMDA Final Rule. The 

amendments that will take effect on 

January 1, 2019, or January 1, 2020, 

respectively, are noted in the applicable 

section-by-section discussion in part V 

above, in the Dates section above, and 

in the amendatory instructions below. 

The amendatory instructions are 

organized sequentially by effective date, 

starting with all amendments that will 

take effect on January 1, 2018. 

Apart from the temporary adjustment 

to the open-end threshold, the Bureau 

did not propose, and declines in this 

final rule, to delay the effective dates for 

the amendments included in the 2015 

HMDA Final Rule or to provide for 

optional compliance for the 2018 

calendar year. As explained in the 2015 

HMDA Final Rule, ‘‘the Bureau believes 

that these effective dates, which provide 

an extended implementation period of 

over two years, is appropriate and will 

provide industry with sufficient time to 

revise and update policies and 

procedures; implement comprehensive 

systems change; and train staff.’’ 141 The 

Bureau believes that the clarifications, 

technical corrections, minor 

amendments, and temporary adjustment 

to the open-end threshold adopted in 

this final rule will facilitate 

implementation of the 2015 HMDA 

Final Rule. To the extent the 

clarifications in this rule require 

financial institutions to make technical 

changes, those changes require only 

minor adjustments, not significant 

system updates. In addition, the Bureau 

has issued this final rule in August, four 

months before 2018, which the Bureau 

believes should afford ample time to 

implement any necessary minor system 

adjustments. The Bureau is releasing 

implementation aids with this final rule 

to facilitate implementation. 

Morever, commenters’ concerns the 

timing of the release of certain Bureau 

materials do not justify delaying the 

effective date. In July of 2017 the Bureau 

published updates to the 2018 FIG for 

HMDA data collected in 2018, which 

includes HMDA edits, and the Bureau is 

issuing updates to the 2018 FIG related 

to the amendments adopted in this final 

rule simultaneous to the release of this 

rule. Furthermore, the FFIEC agencies 

published on August 22, 2017, the 

HMDA Examination Transaction 

Testing Guidelines for data collected in 

or after 2018. In addition, the Bureau’s 

new HMDA filing platform is being 

demonstrated widely through webinars, 

conferences, and in-person user testing 

sessions. The platform will be available 

for wider testing in the Fall of 2017 as 

an open beta release prior to the start of 

filing season in 2018. In addition, 

commenters’ concerns about the timing 

of the Bureau’s decisions related to the 

public disclosure of the HMDA data do 

not provide a logistical reason to delay 

the effective date of the new data 

collection requirements, because, under 

changes adopted in the 2015 HMDA 

Final Rule, financial institutions will no 

longer have responsibility for disclosure 

of the data beginning with data 

collected for the 2017 calendar year.142

Furthermore, the Bureau does not 

believe that commenters’ concerns 

about the URLA implementation 

provide a reason to delay the effective 

date of the data collection requirements. 

The Federal Home Loan Mortgage 

Corporation and the Federal National 

Mortgage Association (collectively, the 

Enterprises), under the conservatorship 

of FHFA, issued a revised and 

redesigned Uniform Residential Loan 

Application on August 23, 2016. The 

Enterprises have not yet provided a date 

when lenders may begin using the 2016 

URLA or the date lenders are required 

to use the 2016 URLA (the cutover date), 

but have stated their intention to 

collaborate with industry stakeholders 

to help shape the implementation 

timeline for the 2016 URLA, with a goal 

to provide lenders with more precise 

information in 2017 regarding the 

cutover date.143

The Bureau did not propose and also 

declines to amend the 2015 HMDA 

Final Rule to provide that data collected 

in 2018 include only applications 

received in 2018. The Bureau believes, 

as stated in the 2015 HMDA Final Rule, 

that collection of the new data should 

begin with transactions for which final 

action is taken in 2018. This collection 

timeframe is consistent with how 

financial institutions currently 

determine in which calendar year’s data 

to include a transaction. Moreover, 

financial institutions already have 

significant flexibility concerning the 

collection of the new disaggregated 

ethnicity and race fields adopted in the 

2015 HMDA Final Rule. For example, 

revised comment 4(a)(10)(i)–2 allows 

financial institutions to collect 

ethnicity, race, and sex information in 

accordance with the requirements in 

effect at that the time the information is 

collected, even if final action is taken on 

or after January 1, 2018. The Bureau also 

issued an approval notice in October 

2016 that provides financial institutions 

the alternative option to begin collecting 

disaggregated categories in 2017.144 As 

stated above, the Bureau believes there 

is sufficient time to prepare to collect 

data in 2018 for all covered transactions, 

including those with applications 

received in 2017, for which final action 

is taken in 2018. Given all of these 

considerations, and the over two years 

to prepare for the January 1, 2018, 

effective date provided by the 2015 

HMDA Final Rule, the Bureau declines 

to change the timing of the new 

requirements’ coverage as suggested by 

commenters. 

Additionally, as discussed in the 

section-by-section analysis of 

§ 1003.6(b) above, the Bureau is not 


sradovich on DSK3GMQ082PROD with RULES2
43126 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

145As noted above, the effective date for an 

amendment to the commentary to § 1003.6(b)(1) is 

changed to January 1, 2019, to align with the 

effective date for the corresponding amendment in 

the 2015 HMDA Final Rule. See 2015 HMDA Final 

Rule, 80 FR 66128, 66257 (Oct. 28, 2015)(‘‘The 

Bureau is adopting an effective date of January 1, 

2019 for § 1003.6, which concerns enforcement of 

HMDA and Regulation C. The amendments to 

§ 1003.6 adopted in this final rule apply to HMDA 

data reported beginning in 2019. Thus, current 

§ 1003.6 applies to data collected in 2017 and 

reported in 2018, and amended § 1003.6 applies to 

2018 data reported in 2019.’’). 

146HMDA section 302(b), 12 U.S.C. 2801(b); see 

also 12 CFR 1003.1(b)(1)(i) and (ii). 

147Fair Housing Loan Data System, 54 FR 51356, 

51357 (Dec. 15, 1989), codified at 12 CFR 

1003.1(b)(1). 

148Public Law 111–203, 124 Stat. 1376, 1980, 

2035–38, 2097–101 (2010). 

149 2015 HMDA Final Rule, 80 FR 66128 (Oct. 28, 

2015). 

150 July 2017 HMDA Proposal, 82 FR 33455 (July 

20, 2017). 

151Specifically, section 1022(b)(2)(A) of the 

Dodd-Frank Act calls for the Bureau to consider the 

potential benefits and costs of a regulation to 

consumers and covered persons, including the 

potential reduction of access by consumers to 

consumer financial products or services; the impact 

on depository institutions or credit unions with $10 

billion or less in total assets as described in section 

1026 of the Dodd-Frank Act; and the impact on 

consumers in rural areas. 

152Because the analysis of the 2015 HMDA Final 

Rule reflected the Bureau’s intended transactional 

thresholds, rather than those created by the drafting 

error in § 1003.3(c)(11), (12), the 2015 HMDA Final 

Rule baseline incorporates this rulemaking’s 

proposed correction of the error. 

153Some commenters on the April 2017 HMDA 

Proposal noted that even though in the long run, the 

proposed changes would reduce the burden on the 

HMDA reporters, like any changes in regulatory 

requirements, it could be possible that some 

institutions may incur a transitory cost to adapt to 

such changes in the short run, as they might need 

to invest certain time and resources updating 

policies and procedures, audits, and adjusting 

programming in their systems. The Bureau 

acknowledges that such transitory costs could 

occur. No commenters however have provided 

specific estimates on such transitory costs. Overall, 

it is the Bureau’s belief that compared to long run 

reduction in compliance costs as the results of the 

changes contained in this final rule, the transitory 

costs for financial institutions to adapt to the 

changes is minimal. 

delaying the effective date of the safe 

harbor for the geocoder because the 

Bureau believes that financial 

institutions should be able to take 

advantage of the safe harbor as soon as 

the Bureau makes the geocoding tool 

available on its Web site.145

VII. Section 1022(b)(2) of the DoddFrank Act 

HMDA provides the public and public 

officials with information to help 

determine whether financial institutions 

are serving the housing needs of the 

communities in which they are located. 

It assists public officials in their 

determination of the distribution of 

public sector investments in a manner 

designed to improve the private 

investment environment.146 It also 

provides the public with information to 

assist in identifying possible 

discriminatory lending patterns and 

enforcing antidiscrimination statutes.147

In 2010, Congress enacted the DoddFrank Act, which amended HMDA and 

also transferred HMDA rulemaking 

authority and other functions from the 

Board to the Bureau.148 In October 2015, 

the Bureau issued the 2015 HMDA Final 

Rule which implemented the DoddFrank Act amendments to HMDA.149

The 2015 HMDA Final Rule modifies 

the types of institutions and 

transactions subject to Regulation C, the 

types of data that institutions are 

required to collect, and the processes for 

reporting and disclosing the required 

data. 

Since issuing the 2015 HMDA Final 

Rule, the Bureau has identified certain 

technical errors in the 2015 HMDA 

Final Rule as well as ways to ease the 

burden of reporting certain data 

requirements and clarifications of key 

terms that will facilitate compliance 

with the Final Rule. On April 25, 2017, 

the Bureau issued a notice of proposed 

rulemaking (April 2017 HMDA 

Proposal) proposing amendments to 

Regulation C to make technical 

corrections to and to clarify certain 

requirements of the 2015 HMDA Final 

Rule. In the April 2017 HMDA Proposal, 

the Bureau also proposed a new 

reporting exclusion. Since issuing the 

2015 HMDA Final Rule, the Bureau also 

has heard concerns that the open-end 

threshold, which the Bureau set at 100 

transactions, is too low. On July 20, 

2017, the Bureau published a second 

proposal (July 2017 HMDA Proposal) to 

seek comment on addressing the 

threshold for reporting open-end lines 

of credit.150 After reviewing the 

comments received on the April 2017 

HMDA Proposal and the July 2017 

HMDA Proposal, the Bureau is 

publishing final amendments to 

Regulation C pursuant to the April 2017 

HMDA Proposal and the July 2017 

HMDA Proposal. Comments on the 

benefits and costs of the rule are also 

discussed above in the section-bysection analysis of the preamble. 

In developing this final rule, the 

Bureau has considered the potential 

benefits, costs, and impacts.151 As 

discussed in Section III above, the 

Bureau has consulted with, or offered to 

consult with, the Board, the Federal 

Deposit Insurance Corporation (FDIC), 

the Office of the Comptroller of the 

Currency, the National Credit Union 

Administration (NCUA), the Department 

of Housing and Urban Development 

(HUD), the Securities and Exchange 

Commission, the Department of Justice, 

the Department of Veterans Affairs, the 

Federal Housing Finance Agency, the 

Department of the Treasury, the 

Department of Agriculture, the Federal 

Trade Commission, and the Federal 

Financial Institutions Examination 

Council. 

This final rule amends Regulation C 

to make technical corrections and 

clarify certain requirements under the 

2015 HMDA Final Rule amending 

Regulation C. As part of these 

amendments, the final rule corrects a 

drafting error and revises both the openend and closed-end thresholds so that 

only financial institutions that meet the 

threshold for two years in a row are 

required to collect data in the following 

calendar years. The final rule also 

temporarily increases the open-end 

reporting threshold to 500 or more 

open-end lines of credit for two years 

(calendar years 2018 and 2019). With 

these amendments, financial 

institutions that originated between 100 

and 499 open-end lines of credit in 

either of the two preceding calendar 

years will not be required to begin 

collecting data on their open-end 

lending before January 1, 2020. This 

temporary increase will provide time for 

the Bureau to consider the appropriate 

level for the open-end threshold without 

requiring financial institutions 

originating fewer than 500 open-end 

lines of credit per year to collect and 

report data with respect to open-end 

lending in the meanwhile. 

In the 2015 HMDA Final Rule, the 

Bureau conducted an in-depth Section 

1022(b)(2) analysis of the costs and 

benefits of the 2015 HMDA Final Rule. 

The Bureau used as a baseline for that 

analysis the state of the world before the 

implementation in Regulation C of the 

Dodd-Frank Act provisions. The 

baseline for the analysis below assumes 

that the 2015 HMDA Final Rule took 

effect absent the amendments in this 

final rule. In other words, the potential 

benefits and costs of the provisions 

contained in this final rule are evaluated 

relative to the state of the world defined 

by the 2015 HMDA Final Rule.152

Changes Adopted From April 2017 

HMDA Proposal 

The amendments that were proposed 

in the April 2017 HMDA Proposal and 

adopted substantially in this final rule 

are largely clarifications and technical 

corrections that do not change the 

compliance requirements of the 2015 

HMDA Final Rule and should reduce 

burden by easing compliance. The few 

minor substantive changes will all 

reduce burden on industry 153 and have 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43127 

154There is a third transitional rule that eases 

NMLSR ID reporting requirements for purchases of 

commercial loans originated prior to January 1, 

2018, but it is expected to apply to only a very 

small number of loans. 

155The 2015 HMDA Final Rule contained 

aggregated estimates for credit unions, banks, and 

thrifts. In developing the estimates for the July 2017 

HMDA Proposal, the Bureau had constructed 

separate estimates for credit unions using the credit 

union Call Report data and assumed the parallel 

trend exists in the overall market. Specifically, the 

Bureau estimated that in 2013 there were 534 credit 

unions that originated 100 or more open-end lines 

of credit. Based on 2015 credit union Call Report 

data, that number is now 699. The estimates 

contained in the 2015 HMDA Final Rule and those 

stated in text are based on origination volumes for 

a single-year, and may overstate coverage. 

either a positive or neutral effect on 

consumers. 

To ease the burden associated with 

obtaining certain information about 

purchased loans, the final rule 

establishes certain transitional rules for 

reporting purchased loans. Financial 

institutions report that the requirement 

is not applicable for the loan purpose if 

the financial institution is reporting a 

purchased covered loan that was 

originated prior to January 1, 2018. 

Financial institutions also may opt not 

to report that the requirement is not 

applicable for the unique identifier for 

the loan originator when reporting 

purchased loans that were originated 

prior to January 10, 2014.154 The final 

rule also provides that financial 

institutions have the option to report 

open-end lines of credit or closed-end 

mortgage loans, even if the financial 

institution may exclude those loans 

pursuant to the transactional thresholds 

included in § 1003.3(c)(11) or (12) under 

the 2015 HMDA Final Rule and this 

final rule, as discussed above in the 

section-by-section analysis of 

§ 1003.3(c)(11) and (12). In addition, the 

final rule provides assurances to 

financial institutions that obtain the 

census tract number from a forthcoming 

geocoding tool on the Bureau’s Web site, 

provided that the tool returned a census 

tract number for the address entered and 

that the financial institution entered an 

accurate property address into the tool. 

The final rule also clarifies certain key 

terms, including temporary financing, 

automated underwriting system, 

multifamily dwelling, extension of 

credit, income, and mixed-use property. 

The proposal also excludes preliminary 

transactions associated with New York 

CEMAs, which reduces burden by 

avoiding double reporting. 

The final rule corrects a drafting error 

and aligns the transactional thresholds 

included in § 1003.3(c)(11) and (12) 

under the 2015 HMDA Final Rule with 

the institutional coverage thresholds in 

§ 1003.2(g). The final rule addresses 

certain technical aspects of reporting, 

such as how the reporting requirements 

for certain data points relate to 

disclosures required by the Bureau’s 

Regulation Z and how to collect and 

report certain information about an 

applicant’s race and ethnicity. The final 

rule also includes a variety of minor 

changes and technical corrections. 

The Bureau sought comment on data 

to quantify costs and benefits and any 

associated burden with the proposed 

changes in its April 2017 HMDA 

Proposal. Specifically, the Bureau 

sought information on the projected 

number of loans that would be 

originated prior to January 1, 2018, and 

then purchased by financial institutions 

after January 1, 2018, and which would 

be required to be reported according to 

the 2015 HMDA Final Rule. Similarly, 

the Bureau sought information on the 

projected number of loans that would be 

originated prior to January 10, 2014, and 

then purchased by financial institutions 

after January 1, 2018, and which would 

be required to be reported according to 

the 2015 HMDA Final Rule. The Bureau 

also sought information on the projected 

numbers and characteristics of financial 

institutions that would opt to report 

open-end lines of credit or closed-end 

loans under HMDA even though they 

would have fallen below the respective 

loan-volume threshold. The Bureau 

requested any other data that would 

assist in quantifying the costs and 

benefits of the proposal. As described in 

greater detail below, the Bureau 

received some public comments 

estimating the costs of the proposed 

changes for financial institutions. These 

comments have been considered in 

revising the cost-benefit analyses 

contained in this part. In general, the 

comments did not provide specific data. 

Changes Adopted From July 2017 

HMDA Proposal 

The Bureau believes that the 

temporary increase in the open-end 

transactional coverage threshold, as 

proposed in July 2017 HMDA Proposal 

and finalized in this rule, generally will 

benefit financial institutions that 

originate between 100 and 499 open-end 

lines of credit in either of the two 

preceding calendar years by, at a 

minimum, allowing them to delay 

incurring one-time costs and delay the 

start of ongoing compliance costs 

associated with collecting and reporting 

data on open-end lines of credit, 

compared to the baseline established by 

the 2015 HMDA Final Rule. The Bureau 

estimates that roughly 690 such 

institutions will be able to take 

advantage of the two-year temporary 

increase in the open-end transactional 

coverage threshold. The Bureau 

estimates that the savings on the 

ongoing costs from the collection and 

reporting of open-end lines of credit by 

financial institutions temporarily 

exempted under this final rule will be 

at least $6 million per year for two 

years. The Bureau believes that 

temporarily increasing the open-end 

transactional coverage threshold for two 

years will reduce the benefits to 

consumers from the open-end reporting 

provisions of the 2015 HMDA Final 

Rule as those benefits are described in 

the rule. However, any such impact 

should be minimal because 

approximately three-quarters of all 

open-end lines of credit will still be 

reported. 

The Bureau sought comment on data 

that would help to quantify costs and 

benefits and any associated burden with 

the proposed temporary increase in 

open-end reporting threshold in its 

April 2017 HMDA Proposal. In general, 

the comments did not provide specific 

data. 

A. Potential Benefits and Costs to 

Consumers and Covered Persons 

Temporary Increase of Open-End Line 

of Credit Threshold 

Under the final rule, the open-end 

reporting threshold will be temporarily 

increased to 500 for two years (calendar 

years 2018 and 2019). Compared to the 

baseline established by the 2015 HMDA 

Final Rule, the proposed temporary 

increase in the open-end transactional 

coverage threshold will generally 

benefit financial institutions that 

originate between 100 and 499 open-end 

lines of credit in either of the two 

preceding calendar years. Such financial 

institutions will be able to delay the 

start of ongoing compliance costs 

associated with collecting and reporting 

data on open-end lines of credit for two 

years. They are also likely able to delay 

incurring one-time costs of commencing 

implementation of open-end reporting. 

The Bureau can estimate the number 

of depository institutions that will be 

able to take advantage of the two-year 

temporary increase in the open-end 

transactional coverage threshold and the 

amount that each of these institutions 

will save in costs. In the July 2017 

HMDA Proposal, the Bureau estimated 

that, in 2015, 289 depository 

institutions originated 500 or more 

open-end lines of credit and 980 

depository institutions originated at 

least 100 open-end lines of credit.155

Thus, roughly 690 depository 

institutions will be able to take 

advantage of the two-year temporary 

increase in the open-end transactional 


sradovich on DSK3GMQ082PROD with RULES2
43128 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

156See July 2017 HMDA Proposal, 82 FR 33459, 

33459 n.57 (July 20, 2017). The median loan 

volume discussed above is based on the same credit 

union call report data that the Bureau used for the 

July 2017 HMDA Proposal. 

157 2015 HMDA Final Rule, 80 FR 66128, 66286 

(Oct. 28, 2015). 158 Id. at 66264; see also id. at 66284–85. 

159As noted above, the Bureau recently proposed 

to amend Regulation B to add § 1002.5(a)(4)(i), 

which would permit a creditor that is a financial 

institution under 12 CFR 1003.2(g) to collect 

information regarding the ethnicity, race, and sex of 

an applicant for a closed-end mortgage loan that is 

an excluded transaction under 12 CFR 1003.3(c)(11) 

or (12) if it submits HMDA data concerning such 

closed-end mortgage loans and applications or if it 

submitted HMDA data concerning closed-end 

mortgage loans for any of the preceding five 

calendar years. The Bureau is in the process of 

reviewing the comments and considering whether 

to issue a final rule, which the Bureau expects 

would be issued soon after the date this rule is 

issued. The option to voluntarily report analyzed in 

these impact analyses is conditional on the Bureau 

finalizing the proposed amendments to Regulation 

B. In the July 2017 HMDA Proposal the Bureau 

noted that it did not have reliable estimates of costs 

some institutions would incur because they have 

already planned to report open-end lines of credit 

coverage threshold. On average, the 

institutions that will be able to take 

advantage of the two-year temporary 

increase originated fewer than 250 

open-end lines of credit per year, with 

their median origination volume slightly 

below 200.156

The amount that each of these 

depository institutions will save in costs 

depends on the level of complexity of 

their compliance operations as defined 

in the 2015 HMDA Final Rule. The level 

of complexity in turn is related to the 

number of loans that an institution must 

report. In the 2015 HMDA Final Rule, 

the Bureau assumed a representative 

low-complexity (tier 3) open-end 

reporter would have 150 open-end lines 

of credit records reportable to HMDA, 

while the number of open-end lines of 

credit records for a representative 

moderate-complexity (tier 2) open-end 

reporter would be at 1,000. Specifically, 

in estimating costs specific to collecting 

and reporting data for open-end lines of 

credit in the 2015 HMDA Final Rule, the 

Bureau assumed that institutions that 

originate more than 7,000 open-end 

lines of credit are high-complexity or 

tier 1 institutions; those that originate 

between 200 and 7,000 such lines of 

credit are moderate-complexity or tier 2 

institutions; and those that originate 

fewer than 200 such lines of credit are 

low-complexity or tier 3 institutions. 

Given the previous results, the Bureau 

believes that most of the financial 

institutions that will benefit from the 

two year temporary increase of the 

open-end lines of credit threshold are 

tier 3 institutions, some are tier 2 

institutions, and none are tier 1 

institutions. Further, the tier 2 

institutions most likely to benefit from 

the final rule are among the smaller 

ones in tier 2 in terms of open-end lines 

of credit volume. 

In the 2015 HMDA Final Rule, the 

Bureau estimated that, for the average 

tier 3 institution, the ongoing 

operational costs of open-end reporting 

will be $8,600 per year; and for the 

average tier 2 institution, the ongoing 

operational costs will be $43,400 per 

year.157 Thus, if all 690 financial 

institutions that will benefit from the 

temporary threshold increase are in tier 

3, the Bureau estimates that the savings 

in the ongoing costs from collecting and 

reporting open-end lines of credit will 

be roughly $6 million in each of two 

years (approximately $12 million total). 

Assuming instead that all 690 financial 

institutions that will benefit from the 

temporary threshold increase are in tier 

2, the Bureau estimates that the savings 

in the ongoing costs from collecting and 

reporting open-end lines of credit will 

be roughly $30 million in each of two 

years (approximately $60 million total). 

Since the tier 2 institutions most likely 

to benefit from the final rule are among 

the smaller ones in tier 2 in terms of 

open-end lines of credit volume, the 

Bureau believes that the savings in 

ongoing costs will be closer to the lower 

estimate ($6 million per year for two 

years) than the higher estimate ($30 

million per year for two years). On the 

other hand, as stated in Section V, the 

Bureau may have underestimated the 

average ongoing costs for lowcomplexity institutions in the 2015 

HMDA Final Rule. If so, the estimate of 

$6 million per year in savings would 

understate the actual savings. 

The Bureau recognized that the onetime costs of reporting open-end lines of 

credit could be substantial because most 

financial institutions do not currently 

report open-end lines of credit and thus 

will have to develop completely new 

reporting infrastructures to begin 

reporting these data. As a result, there 

will be one-time costs to create 

processes and systems to report openend lines of credit in addition to the 

one-time costs to modify processes and 

systems for other mortgage products.158

In the July 2017 HMDA Proposal, the 

Bureau acknowledged that the Bureau 

might have underestimated the one-time 

costs of open-end lines of credit 

reporting in the 2015 HMDA Final Rule, 

in addition to possible under-estimation 

of on-going costs of open-end reporting, 

as the Bureau was handicapped by the 

lack of available data concerning openend lending. 

The Bureau believes the temporary 

increase of the open-end threshold will 

allow the financial institutions that have 

open-end lines of credit volume 

between 100 and 499 per year to delay 

incurring one-time costs associated with 

open-end lines of credit reporting. 

However, for the purpose of this impact 

analysis, the Bureau is not counting 

such delay as one-time net cost savings 

because the threshold increase is only 

temporary. The Bureau will have the 

opportunity over the ensuing two-year 

period to assess whether to adjust the 

threshold permanently, and, if the 

Bureau were to adjust the threshold 

permanently as the result of that 

reassessment, the permanent reduction 

in one-time costs of open-end reporting 

for exempted institutions would be in 

the scope of a new impact analysis for 

any such potential rulemaking in the 

future. If the Bureau were not to adjust 

the threshold permanently, those 

temporarily exempted reporters would 

still incur the one-time costs of openend reporting. 

Some financial institutions may incur 

costs attributable to the temporary openend lines of credit reporting threshold 

increase, because they have already 

planned to report open-end lines of 

credit and now will need to change their 

systems to delay reporting. To the extent 

institutions that already have incurred 

costs in preparing for compliance elect 

to take advantage of the two-year 

temporary increase in the open-end 

transactional coverage threshold, unless 

the Bureau elects during the two-year 

review period to make the increase 

permanent, these institutions will incur 

one-time expenses that, when added to 

expenses already incurred, may be 

greater than the one-time costs that 

would have been incurred had the 

institutions completed their compliance 

work by January 1, 2018. As noted 

above, the Bureau estimates that roughly 

690 such institutions will be able to take 

advantage of the two-year temporary 

increase in the open-end transactional 

coverage threshold. As explained in the 

July 2017 HMDA Proposal, the Bureau 

does not have a reliable basis to estimate 

those costs. However, as discussed in 

the section-by-section analysis of 

§ 1003.3(c)(11) and (12), financial 

institutions may opt to report open-end 

lines of credit or closed-end mortgage 

loans even if the institution may 

exclude those loans pursuant to the 

transactional thresholds included in 

§ 1003.3(c)(11) or (12) under the 2015 

HMDA Final Rule. Thus, a temporary 

increase in the open-end transactional 

coverage threshold will obviate the need 

for institutions that are prepared to 

report open-end lines of credit to change 

their systems.159 As explained in the 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43129 

and would be required to change their systems if 

they were not able to voluntarily report. The Bureau 

did not receive comments providing estimates of 

these costs. 

160As noted above, the Bureau recently proposed 

to amend Regulation B to add § 1002.5(a)(4)(i), 

which would permit a creditor that is a financial 

institution under 12 CFR 1003.2(g) to collect 

information regarding the ethnicity, race, and sex of 

an applicant for a closed-end mortgage loan that is 

an excluded transaction under 12 CFR 1003.3(c)(11) 

or (12) if it submits HMDA data concerning such 

closed-end mortgage loans and applications or if it 

submitted HMDA data concerning closed-end 

mortgage loans for any of the preceding five 

calendar years. The Bureau is in the process of 

reviewing the comments and considering whether 

to issue a final rule, which the Bureau expects 

would be issued soon after the date this rule is 

issued. The option to voluntarily report analyzed in 

these impact analyses is conditional on the Bureau 

finalizing the proposed amendments to Regulation 

B. 

analysis of the optional reporting below, 

the Bureau believes that financial 

institutions that choose to exercise the 

option may incur benefits and costs but 

must benefit on net. No commenter on 

the July 2017 HMDA Proposal has 

provided data or discussion regarding 

such costs. 

The Bureau believes that temporarily 

increasing the open-end transactional 

coverage threshold for two years will 

reduce the benefits to consumers from 

the open-end reporting provisions of the 

2015 HMDA Final Rule as those benefits 

are described in the rule. However, the 

Bureau believes that such impact should 

be minimal because the temporary 

increase in the open-end transactional 

coverage threshold will still result in 

reporting on approximately threequarters of all open-end lines of credit. 

The Bureau recognizes that there may be 

particular localities where the impact of 

the temporary increase in the open-end 

transactional coverage threshold will be 

more pronounced. The Bureau lacks 

data to be able to estimate the extent to 

which that may be true. No commenter 

on the July 2017 HMDA Proposal has 

provided data or discussion regarding 

such costs. 

Allowing Optional Reporting for 

Financial Institutions When Below 

Loan-Volume Thresholds 

This Bureau recognizes that some 

financial institutions that meet only one 

threshold may prefer to report loans 

even if they fall under the other 

transactional threshold in certain years. 

Thus, the final rule provides that 

financial institutions may opt to report 

open-end lines of credit or closed-end 

mortgage loans even if the institution 

may exclude those loans pursuant to the 

transactional thresholds included in 

§ 1003.3(c)(11) or (12) under the final 

rule.160

Economic theory predicts that a firm 

will exercise an option when (and only 

when) the firm benefits from doing so. 

Thus, an option granted to a financial 

institution has no impact on those that 

choose not to exercise the option, i.e., 

they are no better or worse off than if 

the option had not been granted. 

Financial institutions that choose to 

exercise the option may incur benefits 

and costs but must benefit on net. 

The Bureau believes the financial 

institutions most likely to choose to 

report when not required to do so will 

be low-volume, low-complexity 

institutions that may have made a onetime investment in reporting 

infrastructure and prefer to utilize it 

even though the volatility in their loan 

production volume may cause them to 

fall below the relevant mandatory 

reporting threshold in certain years. 

Such institutions will only choose to 

report if the ongoing costs of reporting 

are less than the costs of switching off 

their open-end reporting systems but 

having to maintain the systems and 

potentially switching them back. In the 

April 2017 HMDA Proposal, the Bureau 

sought comments on the data related to 

the potential number and characteristics 

of financial institutions that may be 

interested in opting into either closedend or open-end HMDA reporting, even 

if they are not required to report under 

the 2015 HMDA Final Rule. However, 

the Bureau received no comments or 

data to this specific request. 

Consumers may benefit from the 

optional reporting clarification to the 

extent that low-volume, low-complexity 

institutions achieve cost reductions and 

pass them on to their customers. The 

Bureau believes that any such consumer 

savings will be small. Consumers may 

also benefit if low-volume, lowcomplexity institutions are more willing 

to originate loans because passing the 

thresholds will not increase burden if 

the institutions are already reporting 

HMDA information. 

Transitional Rules on Purchased Loans 

Three separate amendments provide 

for some flexibility with regard to 

reporting on purchased loans. Each of 

the proposed transitional rules directs 

or permits reporting that the 

requirement is not applicable for 

purchased loans that were originated in 

a time period prior to the January 1, 

2018, effective date for the reportable 

data points in the 2015 HMDA Final 

Rule. Under the final rule, financial 

institutions report that the requirement 

to report the loan purpose under 

§ 1003.4(a)(3) is not applicable if the 

financial institution is reporting a 

purchased covered loan that was 

originated prior to January 1, 2018. The 

final rule will also provide financial 

institutions with the option to report 

that the requirement to report the 

unique identifier for the loan originator 

is not applicable when reporting 

purchased loans that were originated 

prior to January 10, 2014, when 

Regulation Z’s requirement to include 

the loan originator’s unique identifier 

on loan documents went into effect. 

Finally, there is a transitional rule that 

eases NMLSR ID reporting requirements 

for purchases of commercial loans 

originated prior to January 1, 2018. The 

Bureau believes providing these options 

to financial institutions will not add 

costs to financial institutions but will be 

burden reducing. Without such 

temporary relief, it would be 

burdensome for financial institutions to 

obtain the relevant information on the 

loan purpose and NMLSR ID of the 

loans originated during the respective 

transitional periods. 

The extent to which the transitional 

rules will reduce burden depends on the 

complexity of the financial institutions 

and the number of loans affected. The 

Bureau believes most of the financial 

institutions that purchase loans and are 

required to report under HMDA are in 

the high-complexity tier, with some 

possibly in the moderate-complexity 

tier, and very few in the low-complexity 

tier. 

In the April 2017 HMDA Proposal, the 

Bureau specifically sought information 

on the projected number of loans that 

would be originated prior to January 1, 

2018, and then purchased by financial 

institutions after January 1, 2018, and 

which would be required to be reported 

according to the 2015 HMDA Final 

Rule. The Bureau also sought 

information on the projected number of 

loans that would be originated prior to 

January 10, 2014, and then purchased 

by financial institutions after January 1, 

2018, and which would be required to 

be reported according to the 2015 

HMDA Final Rule. However, the Bureau 

received no comments or data 

corresponding to these requests. 

The Bureau believes that the number 

of reportable loans purchased after 

January 1, 2018, and originated before 

January 1, 2018, will be relatively large 

in the beginning of 2018 but will 

diminish over time. The Bureau 

understands that typically there is some 

delay between loan origination by small 

creditors and loan purchase by larger 

financial institutions. Providing a 

transitional rule to exempt these 

purchased loans from loan purpose 

reporting will therefore reduce the 

burden on those financial institutions. 

This will be particularly true during the 


sradovich on DSK3GMQ082PROD with RULES2
43130 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

first few years after January 1, 2018. 

Further, the Bureau believes that the 

number of reportable loans purchased 

after January 1, 2018, and originated 

before January 10, 2014, will be 

relatively small and will diminish over 

time. Providing a transitional rule to 

exempt those eligible purchased loans 

from NMLSR ID reporting reduces the 

ongoing reporting cost on those 

financial institutions where this change 

is applicable. 

Regarding benefits to consumers, the 

Bureau expects the effects of the 

transitional rules for purchased loans to 

be small or nonexistent. HMDA 

reporting by purchasers does not 

directly affect consumers. To the extent 

that the rules create cost reductions 

relative to the baseline established by 

the 2015 HMDA Final Rule, those 

reductions may be indirectly passed on 

to consumers. Standard economic 

theory predicts that in a market where 

financial institutions are profit 

maximizers, the affected financial 

institutions will pass on to consumers 

the cost saving per application or 

origination (i.e., the reduction in 

marginal cost) and would retain the onetime cost saving and saving on fixed 

costs of complying with the rule. 

Deem Census Tract Errors as Bona Fide 

Errors if a Geocoding Tool That the 

Bureau Makes Available on Its Web Site 

Is Used 

The final rule treats a census tract 

error as a bona fide error and not a 

violation of HMDA or Regulation C if 

the financial institution obtained the 

incorrect census tract number from the 

geocoding tool that the Bureau makes 

available on its Web site, provided that 

the financial institution entered an 

accurate property address into the tool 

and the tool returned a census tract 

number for the property address. 

In the impact analyses in the 2015 

HMDA Final Rule, the Bureau discussed 

implementing several operational 

enhancements, including working to 

improve the geocoding process to 

reduce the burden on financial 

institutions. The Bureau provided cost 

estimates on financial institutions with 

or without those operational 

enhancements. This final rule further 

extends the burden reduction by 

providing a safe harbor for the use of the 

geocoding tool on the Bureau’s Web site. 

In the impact analyses of the 2015 

HMDA Final Rule, the Bureau breaks 

down the typical HMDA operational 

process of financial institutions into 18 

operational tasks. The Bureau believes 

this final rule will reduce the costs of 

financial institutions on the following 

tasks: completion of geocoding data, 

standard annual edit and internal check, 

internal audit, external audit, exam 

preparation, and exam assistance on the 

issues related to geocoding. The Bureau 

believes the financial institutions that 

will benefit most from this provision are 

low-complexity institutions that lack 

the resources to adopt commercially 

available geocoding tools. 

The Bureau believes that the 

provision of the safe harbor to financial 

institutions using the geocoding tool on 

the Bureau’s Web site will have a small 

impact on consumers. Consumers will 

benefit indirectly from the geocoding 

safe harbor to the extent that lowcomplexity institutions pass on any cost 

savings. 

Clarifying Certain Key Terms and Other 

Minor Changes/Corrections 

The final rule clarifies certain key 

terms, including temporary financing, 

automated underwriting system, 

multifamily dwelling, extension of 

credit, income, and mixed-use property. 

The proposal excludes preliminary 

transactions associated with New York 

CEMAs to avoid double reporting. The 

final rule also addresses certain 

technical aspects of reporting, such as 

how the reporting requirements for 

certain data points relate to disclosures 

required by the Bureau’s Regulation Z 

and how to collect and report certain 

information about an applicant’s race 

and ethnicity. The final rule also 

includes a variety of minor changes and 

technical corrections. 

These are all minor or clarifying 

changes that follow the meaning of the 

2015 HMDA Final Rule as issued. The 

Bureau believes that these clarifications 

and technical corrections have the 

potential to reduce reporting burdens on 

financial institutions, as these 

amendments will reduce potential 

confusion related to certain data points 

and transactions. In particular, the 

Bureau believes these changes will help 

reduce the ongoing costs associated 

with researching questions and 

resolving question responses. 

Some commenters on the proposal 

noted that even though, in the long run, 

the proposed changes would reduce the 

burden on the HMDA reporters, like any 

changes in regulatory requirements, 

some institutions could incur a cost to 

adapt to such changes in the short run, 

as they might need to invest certain time 

and resources updating policies and 

procedures, performing audits, and 

adjusting system programming. The 

Bureau acknowledges that such costs 

could occur. No commenters, however, 

provided specific estimates on such 

costs. Overall, the Bureau believes that 

there will be long-term reduction in 

compliance costs resulting from this 

final rule and that the costs for financial 

institutions to adapt to the changes are 

minimal. The impact on consumers will 

also be small. Consumers will benefit to 

the extent to which financial 

institutions pass on any cost savings to 

consumers. 

B. Impact on Depository Institutions and 

Credit Unions With No More Than $10 

Billion in Assets 

To the extent there are benefits to 

covered persons resulting from the 

temporary increase in the open-end 

transactional coverage threshold, the 

Bureau believes those benefits flow 

almost exclusively to depository 

institutions and credit unions with no 

more than $10 billion in assets, as 

described in section 1026 of the DoddFrank Act. As discussed above, the 

institutions that will be temporarily 

excluded by the open-end threshold 

change originate between 100 and 499 

open-end lines of credit and average 

fewer than 250 open-end lines of credit 

per year. In the 2015 HMDA Final Rule, 

the Bureau assumed a representative 

low-complexity, tier 3, open-end 

reporter would have 150 open-end lines 

of credit records reportable to HMDA, a 

representative moderate-complexity, tier 

2, financial institutions would have 

1000 open-end lines of credit records, 

while the number of open-end lines of 

credit records for a representative highcomplexity, tier 1, open-end reporters 

would be at 30,000. Hence, the Bureau 

believes that, of the financial 

institutions that would most likely 

benefit from the two year temporary 

increase of the open-end lines of credit 

threshold, some, most likely most, 

belong to low-complexity, tier 3 

institutions, some belong to moderatecomplexity, tier 2 institutions, and none 

belong to high-complexity, tier 1 

institutions. The Bureau believes none 

of the impacted depository institutions 

have assets over $10 billion. Using the 

credit union Call Report data, the 

Bureau was able to verify that none of 

the credit unions that may benefit from 

this temporary increase in open-end 

reporting threshold have assets over $10 

billion. 

The Bureau believes that some of the 

other changes in the final rule could 

benefit depository institutions and 

credit unions with no more than $10 

billion in assets more than larger 

financial institutions. For instance, the 

safe harbor for use of the geocoding tool 

on the Bureau’s Web site mostly benefits 

financial institutions with assets of $10 

billion or less, because those 

institutions may not use a commercially 

available geocoder. Furthermore, the 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43131 

Bureau believes that the provision that 

permits that financial institutions to 

have the option to report open-end lines 

of credit or closed-end loans even if 

they fall under the other transactional 

threshold mostly benefits financial 

institutions that have assets no more 

than $10 billion. Financial institutions 

that are most likely to exercise such 

options will be low-volume, lowcomplexity institutions that may have 

made a one-time investment in 

reporting infrastructure and prefer to 

utilize it even though the volatility in 

their loan production volume may cause 

them to fall below the relevant 

mandatory reporting threshold in 

certain years. As explained above, the 

Bureau believes financial institutions 

would only choose to report if doing so 

was burden reducing. To the extent that 

the majority of such small financial 

institutions have $10 billion or less in 

assets, the changes mentioned above 

create a disproportional benefit for those 

institutions with assets of $10 billion or 

less. 

The only changes that could 

potentially benefit financial institutions 

with assets over $10 billion relatively 

more than financial institutions with 

assets of no more than $10 billion are 

the transitional rules related to reporting 

certain data points for purchased loans. 

Larger institutions will benefit relatively 

more because they are more likely to be 

purchasers of loans. 

C. Impact on Access to Credit 

The Bureau does not believe that the 

proposed temporary increase in the 

open-end transactional coverage 

threshold will reduce consumer access 

to consumer financial products and 

services. It may increase consumer 

access by decreasing the possibility that 

certain financial institutions increase 

their pricing as a result of the 

requirements of the 2015 HMDA Final 

Rule or seek to cap the number of openend lines of credit they originate to stay 

under the open-end transactional 

coverage threshold. 

As discussed above, the Bureau 

believes that none of the other changes 

in this final rule will add additional net 

costs to financial institutions. 

Furthermore, the clarifications in the 

final rule should reduce costs to 

financial institutions by easing 

implementation. Thus, all changes have 

the potential to reduce the costs of 

HMDA reporting for financial 

institutions. Further, as discussed 

above, standard economic theory 

predicts that in a market where financial 

institutions are profit maximizers, the 

affected financial institutions will pass 

on to consumers the cost saving per 

application or origination (i.e., the 

reduction in marginal cost) and will 

retain the one-time cost saving and 

saving on fixed costs of complying with 

the rule. Thus, the Bureau believes the 

impacts on consumers’ access to credit 

will be neutral or beneficial. In no event 

does the Bureau anticipate that 

consumers will experience reduced 

access to credit as a result of these 

changes. 

D. Impact on Consumers in Rural Areas 

The Bureau believes that none of the 

changes is likely to have an adverse 

impact on consumers in rural areas. The 

Bureau believes that, to the extent that 

consumers in rural areas are more likely 

to be served by smaller depository 

institutions and credit unions and the 

temporary increase in open-end 

reporting threshold is expected to affect 

mainly small financial institutions, the 

benefits from the temporary open-end 

threshold increase will affect consumers 

in rural areas positively. The Bureau 

asked for comments as to the impact on 

consumers in rural areas in the July 

2017 HMDA Proposal. None of the 

comments the Bureau received has led 

the Bureau to question this assessment. 

The Bureau believes that smaller 

financial institutions that may opt to 

report HMDA information even though 

they fall below the other transaction 

threshold in certain years are more 

likely to be located in rural areas. If so, 

financial institutions and consumers in 

rural areas may benefit 

disproportionately from the clarification 

of options allowing lenders to choose to 

report. In the April 2017 HMDA 

Proposal, the Bureau requested 

comment and data on the likelihood 

that smaller financial institutions that 

may opt to report HMDA information 

even though they may fall below 

transaction thresholds in certain years 

are relatively more likely to be located 

in rural areas. The Bureau received no 

comment to this request. 

The Bureau also believes that rural 

consumers may benefit more than 

consumers in urban areas from the safe 

harbor created for use of the geocoding 

tool on the Bureau’s Web site because 

properties located in rural areas may 

face more geocoding challenges. The 

safe harbor alleviates some of that 

potential burden. In the April 2017 

HMDA Proposal, the Bureau requested 

comment and data on whether 

properties located in rural areas face 

more geocoding challenges and whether 

the safe harbor would alleviate some of 

that burden. The Bureau received no 

comment on this specific request. For 

the rest of the changes contained in the 

final rule, the Bureau believes financial 

institutions based in rural areas and 

consumers will not face higher burdens. 

VIII. Regulatory Flexibility Act 

The Regulatory Flexibility Act (the 

RFA), as amended by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, requires each 

agency to consider the potential impact 

of its regulations on small entities, 

including small businesses, small 

governmental units, and small nonprofit 

organizations. The RFA defines a ‘‘small 

business’’ as a business that meets the 

size standard developed by the Small 

Business Administration pursuant to the 

Small Business Act. 

The RFA generally requires an agency 

to conduct an initial regulatory 

flexibility analysis (IRFA) and a final 

regulatory flexibility analysis (FRFA) of 

any rule subject to notice-and-comment 

rulemaking requirements, unless the 

agency certifies that the rule will not 

have a significant economic impact on 

a substantial number of small entities. 

In the absence of such a certification, 

the Bureau also is subject to certain 

additional procedures under the RFA 

involving the convening of a panel to 

consult with small business 

representatives prior to proposing a rule 

for which an IRFA is required. 

In the April 2017 HMDA Proposal, the 

Bureau concluded that the proposal, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities and that an 

IRFA was therefore not required. The 

Bureau requested comment on the 

analysis under the RFA and any 

relevant data. The Bureau did not 

receive any comments on the analysis or 

data. This final rule adopts the proposed 

rule substantially as proposed, and, as 

discussed above, the Bureau believes 

that none of the changes will create a 

significant economic impact on any 

covered persons, including small 

entities. Therefore, a FRFA is not 

required. 

In the July 2017 HMDA Proposal, the 

Bureau concluded that the proposal, if 

adopted, would not have a significant 

economic impact on a substantial 

number of small entities and that an 

IRFA was therefore not required. The 

Bureau requested comment on the 

analysis under the RFA and any 

relevant data. The Bureau did not 

receive any comments on the analysis or 

data. This final rule adopts the proposed 

rule as proposed, and as discussed 

above, the Bureau believes that none of 

the changes would create a significant 

economic impact on any covered 

persons, including small entities. 

Therefore, a FRFA is not required. 


sradovich on DSK3GMQ082PROD with RULES2
43132 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

Accordingly, the undersigned certifies 

that this final rule will not have a 

significant economic impact on a 

substantial number of small entities. 

IX. Paperwork Reduction Act 

Under the Paperwork Reduction Act 

of 1995 (PRA) (44 U.S.C. 3501 et seq.), 

Federal agencies are generally required 

to seek the Office of Management and 

Budget (OMB) approval for information 

collection requirements prior to 

implementation. Under the PRA, the 

Bureau may not conduct or sponsor, 

and, notwithstanding any other 

provision of law, a person is not 

required to respond to an information 

collection unless the information 

collection displays a valid control 

number assigned by OMB. The 

information collection requirements 

contained in Regulation C have been 

previously approved by OMB and 

assigned OMB control number 3170– 

0008. You may access this information 

collection on www.reginfo.gov by 

selecting ‘‘Information Collection 

Review’’ from the main menu, clicking 

on ‘‘Search,’’ and then entering the 

OMB control number. 

The Bureau has determined that the 

final rule will not impose any new 

recordkeeping, reporting, or disclosure 

requirements on members of the public 

that will constitute collections of 

information requiring approval under 

the PRA. The final rule does, however, 

make a temporary modification to a 

previously-approved information 

collection by including a temporary 

increase in the open-end reporting 

threshold for two years. The Bureau 

estimates that this temporary 

modification will save financial 

institutions between $6 million and $30 

million per year for two years on 

ongoing operational cost related to 

open-end lines of credit reporting to 

HMDA. Using the hourly wage of $33 

that was used in 2015 Final Rule and its 

PRA analysis, the Bureau estimates that 

the final rule will reduce the 

recordkeeping, reporting, or disclosure 

requirements on members of the public 

associated with open-end reporting by 

approximately between 180,000 and 

900,000 hours each year for two years 

during which the temporary threshold 

change is in effect. 

The Bureau has a continuing interest 

in the public’s opinions regarding this 

determination. At any time, comments 

regarding this determination may be 

sent to: The Consumer Financial 

Protection Bureau (Attention: PRA 

Office), 1700 G Street NW., Washington, 

DC 20552, or by email to CFPB_Public_

PRA@cfpb.gov. 

List of Subjects in 12 CFR Part 1003 

Banks, Banking, Credit unions, 

Mortgages, National banks, Reporting 

and recordkeeping requirements, 

Savings associations. 

Authority and Issuance 

For the reasons set forth above, the 

Bureau amends Regulation C, 12 CFR 

part 1003, as set forth below: 

PART 1003—HOME MORTGAGE 

DISCLOSURE (REGULATION C) 

■ 1. The authority citation for part 1003 

continues to read as follows: 

Authority: 12 U.S.C. 2803, 2804, 2805, 

5512, 5581. 

■ 2. Effective January 1, 2018, § 1003.2, 

as amended at 80 FR 66128, is further 

amended by revising paragraphs 

(g)(1)(v)(A) and (B) and (g)(2)(ii)(A) and 

(B) to read as follows: 

§ 1003.2 Definitions. 

* * * * * 

(g) * * * 

(1) * * * 

(v) * * * 

(A) In each of the two preceding 

calendar years, originated at least 25 

closed-end mortgage loans that are not 

excluded from this part pursuant to 

§ 1003.3(c)(1) through (10) or (13); or 

(B) In each of the two preceding 

calendar years, originated at least 500 

open-end lines of credit that are not 

excluded from this part pursuant to 

§ 1003.3(c)(1) through (10); and 

(2) * * * 

(ii) * * * 

(A) In each of the two preceding 

calendar years, originated at least 25 

closed-end mortgage loans that are not 

excluded from this part pursuant to 

§ 1003.3(c)(1) through (10) or (13); or 

(B) In each of the two preceding 

calendar years, originated at least 500 

open-end lines of credit that are not 

excluded from this part pursuant to 

§ 1003.3(c)(1) through (10). 

* * * * * 

■ 3. Effective January 1, 2018, § 1003.3, 

as amended at 80 FR 66128, is further 

amended by revising paragraphs (c)(11) 

and (12) and adding paragraph (c)(13) to 

read as follows: 

§ 1003.3 Exempt institutions and excluded 

transactions. 

* * * * * 

(c) * * * 

(11) A closed-end mortgage loan, if 

the financial institution originated fewer 

than 25 closed-end mortgage loans in 

either of the two preceding calendar 

years; a financial institution may 

collect, record, report, and disclose 

information, as described in §§ 1003.4 

and 1003.5, for such an excluded 

closed-end mortgage loan as though it 

were a covered loan, provided that the 

financial institution complies with such 

requirements for all applications for 

closed-end mortgage loans that it 

receives, closed-end mortgage loans that 

it originates, and closed-end mortgage 

loans that it purchases that otherwise 

would have been covered loans during 

the calendar year during which final 

action is taken on the excluded closedend mortgage loan; 

(12) An open-end line of credit, if the 

financial institution originated fewer 

than 500 open-end lines of credit in 

either of the two preceding calendar 

years; a financial institution may 

collect, record, report, and disclose 

information, as described in §§ 1003.4 

and 1003.5, for such an excluded openend line of credit as though it were a 

covered loan, provided that the 

financial institution complies with such 

requirements for all applications for 

open-end lines of credit that it receives, 

open-end lines of credit that it 

originates, and open-end lines of credit 

that it purchases that otherwise would 

have been covered loans during the 

calendar year during which final action 

is taken on the excluded open-end line 

of credit; or 

(13) A transaction that provided or, in 

the case of an application, proposed to 

provide new funds to the applicant or 

borrower in advance of being 

consolidated in a New York State 

consolidation, extension, and 

modification agreement classified as a 

supplemental mortgage under New York 

Tax Law section 255; the transaction is 

excluded only if final action on the 

consolidation was taken in the same 

calendar year as final action on the new 

funds transaction. 

■ 4. Effective January 1, 2018, § 1003.4, 

as amended at 80 FR 66128, is further 

amended by revising paragraphs (a)(2), 

(12), and (35) to read as follows: 

§ 1003.4 Compilation of reportable data. 

(a) * * * 

(2) Whether the covered loan is, or in 

the case of an application would have 

been, insured by the Federal Housing 

Administration, guaranteed by the 

Department of Veterans Affairs, or 

guaranteed by the Rural Housing 

Service or the Farm Service Agency. 

* * * * * 

(12)(i) For covered loans and 

applications that are approved but not 

accepted, and that are subject to 

Regulation Z, 12 CFR part 1026, other 

than assumptions, purchased covered 

loans, and reverse mortgages, the 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43133 

difference between the covered loan’s 

annual percentage rate and the average 

prime offer rate for a comparable 

transaction as of the date the interest 

rate is set. 

(ii) ‘‘Average prime offer rate’’ means 

an annual percentage rate that is derived 

from average interest rates and other 

loan pricing terms currently offered to 

consumers by a set of creditors for 

mortgage loans that have low-risk 

pricing characteristics. The Bureau 

publishes tables of average prime offer 

rates by transaction type at least weekly 

and also publishes the methodology it 

uses to derive these rates. 

* * * * * 

(35)(i) Except for purchased covered 

loans, the name of the automated 

underwriting system used by the 

financial institution to evaluate the 

application and the result generated by 

that automated underwriting system. 

(ii) For purposes of this paragraph 

(a)(35), an ‘‘automated underwriting 

system’’ means an electronic tool 

developed by a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit that provides a result regarding 

the credit risk of the applicant and 

whether the covered loan is eligible to 

be originated, purchased, insured, or 

guaranteed by that securitizer, Federal 

government insurer, or Federal 

government guarantor. A person is a 

securitizer, Federal government insurer, 

or Federal government guarantor of 

closed-end mortgage loans or open-end 

lines of credit, respectively, if it has ever 

securitized, provided Federal 

government insurance, or provided a 

Federal government guarantee for a 

closed-end mortgage loan or open-end 

line of credit. 

* * * * * 

■ 5. Effective January 1, 2018, appendix 

B to part 1003, as amended at 80 FR 

66128, is further amended by revising 

paragraphs 8 and 9.i through 9.iv, 

adding paragraph 9.v, and revising the 

Sample Data Collection Form at the end 

of the appendix to read as follows: 

Appendix B to Part 1003—Form and 

Instructions for Data Collection on 

Ethnicity, Race, and Sex 

* * * * * 

8. You must report the ethnicity, race, 

and sex of an applicant as provided by 

the applicant. For example, if an 

applicant selects the ‘‘Asian’’ box the 

institution reports ‘‘Asian’’ for the race 

of the applicant. Only an applicant may 

self-identify as being of a particular 

Hispanic or Latino subcategory 

(Mexican, Puerto Rican, Cuban, Other 

Hispanic or Latino) or of a particular 

Asian subcategory (Asian Indian, 

Chinese, Filipino, Japanese, Korean, 

Vietnamese, Other Asian) or of a 

particular Native Hawaiian or Other 

Pacific Islander subcategory (Native 

Hawaiian, Guamanian or Chamorro, 

Samoan, Other Pacific Islander) or of a 

particular American Indian or Alaska 

Native enrolled or principal tribe. An 

applicant may select an ethnicity or race 

subcategory even if the applicant does 

not select an aggregate ethnicity or 

aggregate race category. For example, if 

an applicant selects only the ‘‘Mexican’’ 

box, the institution reports ‘‘Mexican’’ 

for the ethnicity of the applicant but 

does not also report ‘‘Hispanic or 

Latino.’’ 

9. * * * 

i. Ethnicity—Aggregate categories and 

subcategories. There are two aggregate 

ethnicity categories: Hispanic or Latino; 

and Not Hispanic or Latino. The 

Hispanic or Latino category has four 

subcategories: Mexican; Puerto Rican; 

Cuban; and Other Hispanic or Latino. 

You must report every aggregate 

ethnicity category selected by the 

applicant. If the applicant also selects 

one or more ethnicity subcategories, you 

must report each ethnicity subcategory 

selected by the applicant, except that 

you must not report more than a total 

of five aggregate ethnicity categories and 

ethnicity subcategories combined. For 

example, if the applicant selects both 

aggregate ethnicity categories and also 

selects all four ethnicity subcategories, 

you must report Hispanic or Latino, Not 

Hispanic or Latino, and any three, at 

your option, of the four ethnicity 

subcategories selected by the applicant. 

To determine how to report the Other 

Hispanic or Latino ethnicity subcategory 

for purposes of the five-ethnicity 

maximum, see paragraph 9.ii below. 

ii. Ethnicity—Other subcategories. An 

applicant may select the Other Hispanic 

or Latino ethnicity subcategory, an 

applicant may provide a particular 

Hispanic or Latino ethnicity not listed 

in the standard subcategories, or an 

applicant may do both. If the applicant 

provides only a particular Hispanic or 

Latino ethnicity in the space provided, 

you are permitted, but are not required, 

to report Other Hispanic or Latino in 

addition to reporting the particular 

Hispanic or Latino ethnicity provided 

by the applicant. For example, if an 

applicant provides only ‘‘Dominican,’’ 

you should report ‘‘Dominican.’’ You 

are permitted, but not required, to report 

Other Hispanic or Latino as well. If an 

applicant selects the Other Hispanic or 

Latino ethnicity subcategory and also 

provides a particular Hispanic or Latino 

ethnicity not listed in the standard 

subcategories, you must report both the 

selection of Other Hispanic or Latino 

and the additional information provided 

by the applicant, subject to the fiveethnicity maximum. For purposes of the 

maximum of five reportable ethnicity 

categories and ethnicity subcategories 

combined, as set forth in paragraph 9.i, 

the Other Hispanic or Latino 

subcategory and additional information 

provided by the applicant together 

constitute only one selection. For 

example, if the applicant selects Other 

Hispanic or Latino and enters 

‘‘Dominican’’ in the space provided, 

Other Hispanic or Latino and 

‘‘Dominican’’ are considered one 

selection. Similarly, if the applicant 

only enters ‘‘Dominican’’ in the space 

provided and you report both 

‘‘Dominican’’ and Other Hispanic or 

Latino as permitted by this paragraph 

9.ii, the reported items together are 

considered one selection. 

iii. Race—Aggregate categories and 

subcategories. There are five aggregate 

race categories: American Indian or 

Alaska Native; Asian; Black or African 

American; Native Hawaiian or Other 

Pacific Islander; and White. The Asian 

and the Native Hawaiian or Other 

Pacific Islander aggregate categories 

have seven and four subcategories, 

respectively. The Asian race 

subcategories are: Asian Indian; 

Chinese; Filipino; Japanese; Korean; 

Vietnamese; and Other Asian. The 

Native Hawaiian or Other Pacific 

Islander race subcategories are: Native 

Hawaiian; Guamanian or Chamorro; 

Samoan; and Other Pacific Islander. You 

must report every aggregate race 

category selected by the applicant. If the 

applicant also selects one or more race 

subcategories, you must report each race 

subcategory selected by the applicant, 

except that you must not report more 

than a total of five aggregate race 

categories and race subcategories 

combined. For example, if the applicant 

selects all five aggregate race categories 

and also selects some race 

subcategories, you report only the five 

aggregate race categories. On the other 

hand, if the applicant selects the White, 

Asian, and Native Hawaiian or Other 

Pacific Islander aggregate race 

categories, and the applicant also selects 

the Korean, Vietnamese, and Samoan 

race subcategories, you must report 

White, Asian, Native Hawaiian or Other 

Pacific Islander, and any two, at your 

option, of the three race subcategories 

selected by the applicant. In this 

example, you must report White, Asian, 

and Native Hawaiian or Other Pacific 

Islander, and in addition you must 

report (at your option) either Korean 


sradovich on DSK3GMQ082PROD with RULES2
43134 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

and Vietnamese, Korean and Samoan, or 

Vietnamese and Samoan. To determine 

how to report an Other race subcategory 

and the American Indian or Alaska 

Native category for purposes of the fiverace maximum, see paragraphs 9.iv and 

9.v below. 

iv. Race—Other subcategories. An 

applicant may select the Other Asian 

race subcategory or the Other Pacific 

Islander race subcategory, an applicant 

may provide a particular Asian race or 

Pacific Islander race not listed in the 

standard subcategories, or an applicant 

may do both. If the applicant provides 

only a particular Asian race or Pacific 

Islander race in the space provided, you 

are permitted, but are not required, to 

report Other Asian or Other Pacific 

Islander, as applicable, in addition to 

reporting the particular Asian race or 

Pacific Islander race provided by the 

applicant. For example, if an applicant 

provides only ‘‘Hmong,’’ you should 

report ‘‘Hmong.’’ You are permitted, but 

not required, to report Other Asian as 

well. If an applicant selects the Other 

Asian race or the Other Pacific Islander 

race subcategory and provides a 

particular Asian race or Pacific Islander 

race not listed in the standard 

subcategories, you must report both the 

selection of Other Asian or Other Pacific 

Islander, as applicable, and the 

additional information provided by the 

applicant, subject to the five-race 

maximum. For purposes of the 

maximum of five reportable race 

categories and race subcategories 

combined, as set forth in paragraph 9.iii, 

the Other race subcategory and 

additional information provided by the 

applicant together constitute only one 

selection. Thus, using the same facts in 

the example offered in paragraph 9.iii 

above, if the applicant also selects Other 

Asian and enters ‘‘Thai’’ in the space 

provided, Other Asian and Thai are 

considered one selection. Similarly, if 

the applicant enters only ‘‘Thai’’ in the 

space provided and you report both 

‘‘Thai’’ and Other Asian as permitted by 

this paragraph 9.iv, the reported items 

together are considered one selection. In 

the same example, you must report any 

two (at your option) of the four race 

subcategories selected by the applicant, 

Korean, Vietnamese, Other Asian-Thai, 

and Samoan, in addition to the three 

aggregate race categories selected by the 

applicant. 

v. Race—American Indian or Alaska 

Native category. An applicant may 

select the American Indian or Alaska 

Native race category, an applicant may 

provide a particular American Indian or 

Alaska Native enrolled or principal 

tribe, or an applicant may do both. If the 

applicant provides only a particular 

American Indian or Alaska Native 

enrolled or principal tribe in the space 

provided, you are permitted, but are not 

required, to report American Indian or 

Alaska Native in addition to reporting 

the particular American Indian or 

Alaska Native enrolled or principal tribe 

provided by the applicant. For example, 

if an applicant provides only ‘‘Navajo,’’ 

you should report ‘‘Navajo.’’ You are 

permitted, but not required, to report 

American Indian or Alaska Native as 

well. If an applicant selects the 

American Indian or Alaska Native race 

category and also provides a particular 

American Indian or Alaska Native 

enrolled or principal tribe, you must 

report both the selection of American 

Indian or Alaska Native and the 

additional information provided by the 

applicant. For purposes of the 

maximum of five reportable race 

categories and race subcategories 

combined, as set forth in paragraph 9.iii, 

the American Indian or Alaska Native 

category and additional information 

provided by the applicant together 

constitute only one selection. 

* * * * * 

BILLING CODE 4810–AM–P 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43135 

BILLING CODE 4810–AM–C 

■ 6. Effective January 1, 2018, appendix 

C to part 1003, as amended at 80 FR 

66128, is further amended by revising 

‘‘Generating a Check Digit’’ and the 

‘‘Example’’ to ‘‘Generating a Check 

Digit’’ to read as follows: 

Appendix C to Part 1003—Procedures 

for Generating a Check Digit and 

Validating a ULI 

* * * * * 

Generating a Check Digit 

Step 1: Starting with the leftmost 

character in the string that consists of 

the combination of the Legal Entity 

Identifier (LEI) pursuant to 

§ 1003.4(a)(1)(i)(A) and the additional 

characters identifying the covered loan 

or application pursuant to 

§ 1003.4(a)(1)(i)(B), replace each 

alphabetic character with numbers in 


sradovich on DSK3GMQ082PROD with RULES2Er13se17.000</GPH>

SAMPLE DATA COLLECTION FORM 

DEMOGRAPHIC INFORMATION OF APPLICANT AND CO-APPLICANT 

The pLJrpose of collecting this. infom1.ation is to help ensure thet 

all applicants are treated fairly and that the hous1ng needs of 

communities and neighborhoods are being fulfilled. For 

res1dent1al mortgage lending Federal law requires that we ask 

applicants for their demographic information (ethniclty, race, and 

sex) in order to monitor our compliarwe with equal credit 

opportunity. fair housiog. and home mortgage d'"closure laws. 

You are not required to provide this information, but are 

encouraged to do so_ You me.y select one or more 

designations for "Ethnicity" and one or more designations for 

"Race." 

Applicant: 

Ethnicity:- ChecA one or more 

0 Hispanic or Latino 

J Mexican 

J Puerto Rican 

J Cuban 

l Other Hispanic or Latino- Print origin, fer example, 

Argentinean, Colombian. Dominican .. Nicaragu~w, 

Salvadoran Spamard. and so on 

I I I I I I I I I I I D Not Hispanic or Latino 

D I do not w1sh to prov1de this infonmation 

Race: - Check one or more 

0 .American lrldian Oi Alaska Native- Print rtC1mt! of tmralfed 

or prirwipal tribe: 

I I I I I D Asian 

:J Asian Indian 

J Chinese 

J Filipino 

J Japanese 

J Korean 

l Vietnamese 

_j Other Asian -Print race, tor exampfe. Hmong, Laottan, 

T/Jal, Pak1•tam, Cambodian. and so on: 

I I I I I I I I I I I I U Black or African American 

D Native HaiJiraiian or Other Pacific Islander 

l Native Hawaiian 

J Guamanian or Chamorro 

J Samoan 

J Other Pacific Islander- Print race. for example Fijian, 

Tongan and so on: 

I I I I I I D White 

D I do not wish to prov1de this infonmation 

Sex: 

o Female 

D Male 

n I do not wish to provide this infonmation 

The la.w provides that we may not discriminate on the basis of 

this information, or on whether you choose to provide it 

Ho.rvever. if you choose nat to provide the information and you 

have made this appl1cat1on 1n person. 1- eceral regulations requ1re 

us to note yoor elhnic1ty, race. and sex on the basis of visual 

observation or surname. If you do not wish to provide some or all 

of th1s iofonmation. please check below. 

Co-Applicant: 

I I I I I I I I I I I D Not H spanic or Laboo 

D I do not wish to provide this informa.:ian 

Rae e: - Chec-k one or more 

D American In di•n 01 .AJ~sk• Native- Ptint ""''"' ur enrolled 

or principal tribe: 

I I I I I D Asian 

D Asian Indian 

D Chinese 

D Filipino 

D Japanese 

n Korean 

n VIetnamese 

u other Asian- Print race for example, Hmong Umtian, 

TIJat, Pakistani, Cambodian, and so on: 

I I I I I I I I I I I I U Black or African American 

D Native Hawaiian or Other Pacific Islander 

1"1 Notive Hawaiian 

0 Guamanian or Chamorro 

D Samoan 

D Other Pacific I sian der- .Print race, for example, Fu!an, 

Tongan and so on. 

I I I I I I D White 

D I do not wish to proVJde this informacion 

Sex: 

D Female 

D Male 

n I do not wish to provide this information 

To Be Completed by Financial Institution lfor an application taken in person): 

Was the ethn1city of the applicant collected on the 

basis of visual observation or surname? 

n Yes 

u No 

Was the race of the applicant collected on the basis 

of visual observation or surname? 

n Yes 

u No 

Was the sex ofthe applicant collected on the basis 

of vis-ual observation cr surname? 

n Yes 

D No 

Was the ethn1citv of the co-applicant collected on the 

basis of visual observation or surnarre? 

n Yes 

u No 

Was the race oft he co-applicant collected on the basis 

of visual observation or surname? 

n Yes 

u No 

Was the sex of the co-applicant collected on the basis 

of visual observation or surname? 

n Yes 

D No 
43136 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

accordance with Table I below to obtain 

all numeric values in the string. 

Table I—Alphabetic to Numeric 

Conversion Table 

The alphabetic characters are not 

case-sensitive and each letter, whether it 

is capitalized or in lower-case, is equal 

to the same value as each letter 

illustrates in the conversion table. For 

example, A and a are each equal to 10. 

A = 10 

B = 11 

C = 12 

D = 13 

E = 14 

F = 15 

G = 16 

H = 17 

I = 18 

J = 19 

K = 20 

L = 21 

M = 22 

N = 23 

O = 24 

P = 25 

Q = 26 

R = 27 

S = 28 

T = 29 

U = 30 

V = 31 

W = 32 

X = 33 

Y = 34 

Z = 35 

Step 2: After converting the combined 

string of characters to all numeric 

values, append two zeros to the 

rightmost positions. 

Step 3: Apply the mathematical 

function mod = (n,97) where n = the 

number obtained in step 2 above and 97 

is the divisor. 

Alternatively, to calculate without 

using the modulus operator, divide the 

numbers in step 2 above by 97. Truncate 

the remainder to three digits and 

multiply it by 97. Round the result to 

the nearest whole number. 

Step 4: Subtract the result in step 3 

from 98. If the result is one digit, add 

a leading 0 to make it two digits. 

Step 5: The two digits in the result 

from step 4 is the check digit. Append 

the resulting check digit to the rightmost 

position in the combined string of 

characters described in step 1 above to 

generate the ULI. 

Example 

For example, assume the LEI for a 

financial institution is 

10Bx939c5543TqA1144M and the 

financial institution assigned the 

following string of characters to identify 

the covered loan: 999143X. The 

combined string of characters is 

10Bx939c5543TqA1144M999143X. 

Step 1: Starting with the leftmost 

character in the combined string of 

characters, replace each alphabetic 

character with numbers in accordance 

with Table I above to obtain all numeric 

values in the string. The result is 

1011339391255432926

1011442299914333. 

Step 2: Append two zeros to the 

rightmost positions in the combined 

string. The result is 

1011339391255432926

101144229991433300. 

Step 3: Apply the mathematical 

function mod = (n,97) where n = the 

number obtained in step 2 above and 97 

is the divisor. The result is 60. 

Alternatively, to calculate without 

using the modulus operator, divide the 

numbers in step 2 above by 97. The 

result is 10426179291293122

94946332267952920.618556701030928. 

Truncate the remainder to three digits, 

which is .618, and multiply it by 97. 

The result is 59.946. Round this result 

to the nearest whole number, which is 

60. 

Step 4: Subtract the result in step 3 

from 98. The result is 38. 

Step 5: The two digits in the result 

from step 4 is the check digit. Append 

the check digit to the rightmost 

positions in the combined string of 

characters that consists of the LEI and 

the string of characters assigned by the 

financial institution to identify the 

covered loan to obtain the ULI. In this 

example, the ULI would be 

10Bx939c5543TqA1144M999143X38. 

* * * * * 

■ 7. Effective January 1, 2018, 

Supplement I to Part 1003—Official 

Interpretations, as amended at 80 FR 

66128, is further amended as follows: 

■ a. Under Section 1003.2—Definitions: 

■ i. Under 2(d) Closed-end Mortgage 

Loan, paragraph 2 is revised; 

■ ii. Under 2(f) Dwelling, paragraph 2 is 

revised; 

■ iii. Under 2(g) Financial Institution, 

paragraphs 3 and 5 are revised; 

■ iv. Under 2(i) Home Improvement 

Loan, paragraph 4 is revised; 

■ v. Under 2(j) Home Purchase Loan, 

paragraph 3 is revised; and 

■ vi. Under 2(n) Multifamily Dwelling, 

paragraph 3 is added; 

■ b. Under Section 1003.3—Exempt 

Institutions and Excluded Transactions, 

under 3(c)(3) Excluded Transactions: 

■ i. Paragraph 3(c)(3) is revised; 

■ ii. Under Paragraph 3(c)(10), 

paragraph 3 is revised; 

■ iii. Paragraph 3(c)(11) and Paragraph 

3(c)(12) are revised; and 

■ iv. After the entry for Paragraph 

3(c)(12), the heading Paragraph 3(c)(13) 

is added and paragraph 1 is added 

under that heading. 

■ c. Under Section 1003.4—Compilation 

of Reportable Data, under 4(a) Data 

Format and Itemization: 

■ i. Under Paragraph 4(a)(1)(i), 

paragraphs 3 and 4 are revised; 

■ ii. Paragraph 4(a)(2) is revised; 

■ iii. Under Paragraph 4(a)(3), 

paragraph 6 is added; 

■ iv. Under Paragraph 4(a)(8)(i), 

paragraphs 6 and 9 are revised; 

■ v. Under Paragraph 4(a)(9)(i), 

paragraph 3 is revised; 

■ vi. After the entry for Paragraph 

4(a)(9)(i), add the heading Paragraph 

4(a)(9)(ii) and paragraph 1 under that 

heading is added; 

■ vii. After the entry for Paragraph 

4(a)(9)(ii), add the heading Paragraph 

4(a)(9)(ii)(A) and paragraph 1 under that 

heading is added; 

■ viii. Under Paragraph 4(a)(9)(ii)(B), 

paragraph 2 is added; 

■ ix. Under Paragraph 4(a)(9)(ii)(C), 

paragraph 2 is added; 

■ x. Under Paragraph 4(a)(10)(ii), 

paragraph 3 is revised; 

■ xi. Under Paragraph 4(a)(10)(iii), 

paragraph 4 is revised; 

■ xii. Under Paragraph 4(a)(12), 

paragraphs 1, 2, 3, 5, and 8 are revised 

and paragraph 9 is added; 

■ xiii. Under Paragraph 4(a)(15), 

paragraphs 2 and 3 are revised; 

■ xiv. Under Paragraph 4(a)(17)(i), 

paragraph 3 is revised; 

■ xv. Under Paragraph 4(a)(18), 

paragraph 3 is revised; 

■ xvi. Under Paragraph 4(a)(19), 

paragraph 3 is revised; 

■ xvii. Under Paragraph 4(a)(20), 

paragraph 3 is revised; 

■ xviii. Under Paragraph 4(a)(21), 

paragraph 1 is revised; 

■ xix. Under Paragraph 4(a)(24), 

paragraph 2 is revised and paragraph 6 

is added; 

■ xx. Under Paragraph 4(a)(26), 

paragraph 5 is added; 

■ xxi. Under Paragraph 4(a)(34), 

paragraph 4 is added; and 

■ xxii. Under Paragraph 4(a)(35) 

paragraph 2 is revised and paragraph 7 

is added. 

The revisions and addition read as 

follows: 

Supplement I to Part 1003—Official 

Interpretations 

* * * * * 

Section 1003.2—Definitions 

* * * * * 

2(d) Closed-end Mortgage Loan 

* * * * * 

2. Extension of credit. Under 

§ 1003.2(d), a dwelling-secured loan is 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43137 

not a closed-end mortgage loan unless it 

involves an extension of credit. For 

example, some transactions completed 

pursuant to installment sales contracts, 

such as some land contracts, depending 

on the facts and circumstances, may or 

may not involve extensions of credit 

rendering the transactions closed-end 

mortgage loans. In general, extension of 

credit under § 1003.2(d) refers to the 

granting of credit only pursuant to a 

new debt obligation. Thus, except as 

described in comments 2(d)–2.i and .ii, 

if a transaction modifies, renews, 

extends, or amends the terms of an 

existing debt obligation, but the existing 

debt obligation is not satisfied and 

replaced, the transaction is not a closedend mortgage loan under § 1003.2(d) 

because there has been no new 

extension of credit. The phrase 

extension of credit thus is defined 

differently under Regulation C than 

under Regulation B, 12 CFR part 1002. 

i. Assumptions. For purposes of 

Regulation C, an assumption is a 

transaction in which an institution 

enters into a written agreement 

accepting a new borrower in place of an 

existing borrower as the obligor on an 

existing debt obligation. For purposes of 

Regulation C, assumptions include 

successor-in-interest transactions, in 

which an individual succeeds the prior 

owner as the property owner and then 

assumes the existing debt secured by the 

property. Under § 1003.2(d), 

assumptions are extensions of credit 

even if the new borrower merely 

assumes the existing debt obligation and 

no new debt obligation is created. See 

also comment 2(j)–5. 

ii. New York State consolidation, 

extension, and modification 

agreements. A transaction completed 

pursuant to a New York State 

consolidation, extension, and 

modification agreement and classified 

as a supplemental mortgage under New 

York Tax Law section 255, such that the 

borrower owes reduced or no mortgage 

recording taxes, is an extension of credit 

under § 1003.2(d). Comments 2(i)–1, 

2(j)–5, and 2(p)–2 clarify whether such 

transactions are home improvement 

loans, home purchase loans, or 

refinancings, respectively. Section 

1003.3(c)(13) provides an exclusion 

from the reporting requirement for a 

preliminary transaction providing or, in 

the case of an application, proposing to 

provide new funds to the borrower in 

advance of being consolidated within 

the same calendar year into a 

supplemental mortgage under New York 

Tax Law section 255. See comment 

3(c)(13)–1 concerning how to report a 

supplemental mortgage under New York 

Tax Law section 255 in this situation. 

2(f) Dwelling 

* * * * * 

2. Multifamily residential structures 

and communities. A dwelling also 

includes a multifamily residential 

structure or community such as an 

apartment, condominium, cooperative 

building or housing complex, or a 

manufactured home community. A loan 

related to a manufactured home 

community is secured by a dwelling for 

purposes of § 1003.2(f) even if it is not 

secured by any individual manufactured 

homes, but only by the land that 

constitutes the manufactured home 

community including sites for 

manufactured homes. However, a loan 

related to a multifamily residential 

structure or community that is not a 

manufactured home community is not 

secured by a dwelling for purposes of 

§ 1003.2(f) if it is not secured by any 

individual dwelling units and is, for 

example, instead secured only by 

property that only includes common 

areas, or is secured only by an 

assignment of rents or dues. 

* * * * * 

2(g) Financial Institution 

* * * * * 

3. Merger or acquisition—coverage of 

surviving or newly formed institution. 

After a merger or acquisition, the 

surviving or newly formed institution is 

a financial institution under § 1003.2(g) 

if it, considering the combined assets, 

location, and lending activity of the 

surviving or newly formed institution 

and the merged or acquired institutions 

or acquired branches, satisfies the 

criteria included in § 1003.2(g). For 

example, A and B merge. The surviving 

or newly formed institution meets the 

loan threshold described in 

§ 1003.2(g)(1)(v)(B) if the surviving or 

newly formed institution, A, and B 

originated a combined total of at least 

500 open-end lines of credit in each of 

the two preceding calendar years. 

Likewise, the surviving or newly formed 

institution meets the asset-size 

threshold in § 1003.2(g)(1)(i) if its assets 

and the combined assets of A and B on 

December 31 of the preceding calendar 

year exceeded the threshold described 

in § 1003.2(g)(1)(i). Comment 2(g)–4 

discusses a financial institution’s 

responsibilities during the calendar year 

of a merger. 

* * * * * 

5. Originations. Whether an 

institution is a financial institution 

depends in part on whether the 

institution originated at least 25 closedend mortgage loans in each of the two 

preceding calendar years or at least 500 

open-end lines of credit in each of the 

two preceding calendar years. 

Comments 4(a)–2 through –4 discuss 

whether activities with respect to a 

particular closed-end mortgage loan or 

open-end line of credit constitute an 

origination for purposes of § 1003.2(g). 

* * * * * 

2(i) Home Improvement Loan 

* * * * * 

4. Mixed-use property. A closed-end 

mortgage loan or an open-end line of 

credit to improve a multifamily 

dwelling used for residential and 

commercial purposes (for example, a 

building containing apartment units and 

retail space), or the real property on 

which such a dwelling is located, is a 

home improvement loan if the loan’s 

proceeds are used either to improve the 

entire property (for example, to replace 

the heating system), or if the proceeds 

are used primarily to improve the 

residential portion of the property. An 

institution may use any reasonable 

standard to determine the primary use 

of the loan proceeds. An institution may 

select the standard to apply on a caseby-case basis. See comment 3(c)(10)–3.ii 

for guidance on loans to improve 

primarily the commercial portion of a 

dwelling other than a multifamily 

dwelling. 

* * * * * 

2(j) Home Purchase Loan 

* * * * * 

3. Construction and permanent 

financing. A home purchase loan 

includes both a combined construction/ 

permanent loan or line of credit, and the 

separate permanent financing that 

replaces a construction-only loan or line 

of credit for the same borrower at a later 

time. A home purchase loan does not 

include a construction-only loan or line 

of credit that is designed to be replaced 

by separate permanent financing 

extended by any financial institution to 

the same borrower at a later time or that 

is extended to a person exclusively to 

construct a dwelling for sale, which are 

excluded from Regulation C as 

temporary financing under 

§ 1003.3(c)(3). Comments 3(c)(3)–1 and 

–2 provide additional details about 

transactions that are excluded as 

temporary financing. 

* * * * * 

2(n) Multifamily Dwelling 

* * * * * 

3. Separate dwellings. A covered loan 

secured by five or more separate 

dwellings, which are not multifamily 

dwellings, in more than one location is 

not a loan secured by a multifamily 

dwelling. For example, assume a 

landlord uses a covered loan to improve 


sradovich on DSK3GMQ082PROD with RULES2
43138 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

five or more dwellings, each with one 

individual dwelling unit, located in 

different parts of a town, and the loan 

is secured by those properties. The 

covered loan is not secured by a 

multifamily dwelling as defined by 

§ 1003.2(n). Likewise, a covered loan 

secured by five or more separate 

dwellings that are located within a 

multifamily dwelling, but which is not 

secured by the entire multifamily 

dwelling (e.g., an entire apartment 

building or housing complex), is not 

secured by a multifamily dwelling as 

defined by § 1003.2(n). For example, 

assume that an investor purchases 10 

individual unit condominiums in a 100- 

unit condominium complex using a 

covered loan. The covered loan would 

not be secured by a multifamily 

dwelling as defined by § 1003.2(n). In 

both of these situations, a financial 

institution reporting a covered loan or 

application secured by these separate 

dwellings would not be subject to the 

additional reporting requirements for 

covered loans secured by or 

applications proposed to be secured by 

multifamily dwellings under 

§ 1003.4(a)(32). However, a financial 

institution would report the information 

required by § 1003.4(a)(4), (a)(10)(iii), 

and (a)(23), (29), and (30), which is not 

applicable to covered loans secured by 

and applications proposed to be secured 

by multifamily dwellings. See comment 

2(n)–2. In addition, in both of these 

situations, the financial institution 

reports the number of individual 

dwelling units securing the covered 

loan or proposed to secure a covered 

loan as required by § 1003.4(a)(31). See 

comment 4(a)(31)–3. 

* * * * * 

Section 1003.3—Exempt Institutions 

and Excluded Transactions 

3(c) Excluded Transactions 

* * * * * 

Paragraph 3(c)(3) 

1. Temporary financing. Section 

1003.3(c)(3) provides that closed-end 

mortgage loans or open-end lines of 

credit obtained for temporary financing 

are excluded transactions. A loan or line 

of credit is considered temporary 

financing and excluded under 

§ 1003.3(c)(3) if the loan or line of credit 

is designed to be replaced by separate 

permanent financing extended by any 

financial institution to the same 

borrower at a later time. For example: 

i. Lender A extends credit in the form 

of a bridge or swing loan to finance a 

borrower’s down payment on a home 

purchase. The borrower pays off the 

bridge or swing loan with funds from 

the sale of his or her existing home and 

obtains permanent financing for his or 

her new home from Lender A or from 

another lender. The bridge or swing 

loan is excluded as temporary financing 

under § 1003.3(c)(3). 

ii. Lender A extends credit to a 

borrower to finance construction of a 

dwelling. The borrower will obtain a 

new extension of credit for permanent 

financing for the dwelling, either from 

Lender A or from another lender, and 

either through a refinancing of the 

initial construction loan or a separate 

loan. The initial construction loan is 

excluded as temporary financing under 

§ 1003.3(c)(3). 

iii. Assume the same scenario as in 

comment 3(c)(3)–1.ii, except that the 

initial construction loan is, or may be, 

renewed one or more times before the 

separate permanent financing is 

obtained. The initial construction loan, 

including any renewal thereof, is 

excluded as temporary financing under 

§ 1003.3(c)(3). 

iv. Lender A extends credit to finance 

construction of a dwelling. The loan 

automatically will convert to permanent 

financing extended to the same 

borrower with Lender A once the 

construction phase is complete. Under 

§ 1003.3(c)(3), the loan is not designed 

to be replaced by separate permanent 

financing extended to the same 

borrower, and therefore the temporary 

financing exclusion does not apply. See 

also comment 2(j)–3. 

v. Lender A originates a loan with a 

nine-month term to enable an investor 

to purchase a home, renovate it, and resell it before the term expires. Under 

§ 1003.3(c)(3), the loan is not designed 

to be replaced by separate permanent 

financing extended to the same 

borrower, and therefore the temporary 

financing exclusion does not apply. 

Such a transaction is not temporary 

financing under § 1003.3(c)(3) merely 

because its term is short. 

2. Loan or line of credit to construct 

a dwelling for sale. A construction-only 

loan or line of credit is considered 

temporary financing and excluded 

under § 1003.3(c)(3) if the loan or line 

of credit is extended to a person 

exclusively to construct a dwelling for 

sale. See comment 3(c)(3)–1.ii through 

.iv for examples of the reporting 

requirement for construction loans that 

are not extended to a person exclusively 

to construct a dwelling for sale. 

* * * * * 

Paragraph 3(c)(10) 

* * * * * 

3. Examples—covered business- or 

commercial-purpose transactions. The 

following are examples of closed-end 

mortgage loans and open-end lines of 

credit that are not excluded from 

reporting under § 1003.3(c)(10) because, 

although they primarily are for a 

business or commercial purpose, they 

also meet the definition of a home 

improvement loan under § 1003.2(i), a 

home purchase loan under § 1003.2(j), 

or a refinancing under § 1003.2(p): 

i. A closed-end mortgage loan or an 

open-end line of credit to purchase or to 

improve a multifamily dwelling or a 

single-family investment property, or a 

refinancing of a closed-end mortgage 

loan or an open-end line of credit 

secured by a multifamily dwelling or a 

single-family investment property; 

ii. A closed-end mortgage loan or an 

open-end line of credit to improve a 

doctor’s office or a daycare center that 

is located in a dwelling other than a 

multifamily dwelling; and 

iii. A closed-end mortgage loan or an 

open-end line of credit to a corporation, 

if the funds from the loan or line of 

credit will be used to purchase or to 

improve a dwelling, or if the transaction 

is a refinancing. 

* * * * * 

Paragraph 3(c)(11) 

1. General. Section 1003.3(c)(11) 

provides that a closed-end mortgage 

loan is an excluded transaction if a 

financial institution originated fewer 

than 25 closed-end mortgage loans in 

either of the two preceding calendar 

years. For example, assume that a bank 

is a financial institution in 2018 under 

§ 1003.2(g) because it originated 600 

open-end lines of credit in 2016, 650 

open-end lines of credit in 2017, and 

met all of the other requirements under 

§ 1003.2(g)(1). Also assume that the 

bank originated 10 and 20 closed-end 

mortgage loans in 2016 and 2017, 

respectively. The open-end lines of 

credit that the bank originated or 

purchased, or for which it received 

applications, during 2018 are covered 

loans and must be reported, unless they 

otherwise are excluded transactions 

under § 1003.3(c). However, the closedend mortgage loans that the bank 

originated or purchased, or for which it 

received applications, during 2018 are 

excluded transactions under 

§ 1003.3(c)(11) and need not be 

reported. See comments 4(a)–2 through 

–4 for guidance about the activities that 

constitute an origination. 

2. Optional reporting. A financial 

institution may report applications for, 

originations of, or purchases of closedend mortgage loans that are excluded 

transactions because the financial 

institution originated fewer than 25 

closed-end mortgage loans in either of 

the two preceding calendar years. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43139 

However, a financial institution that 

chooses to report such excluded 

applications for, originations of, or 

purchases of closed-end mortgage loans 

must report all such applications for 

closed-end mortgage loans that it 

receives, closed-end mortgage loans that 

it originates, and closed-end mortgage 

loans that it purchases that otherwise 

would be covered loans for a given 

calendar year. Note that applications 

which remain pending at the end of a 

calendar year are not reported, as 

described in comment 4(a)(8)(i)–14. 

Paragraph 3(c)(12) 

1. General. Section 1003.3(c)(12) 

provides that an open-end line of credit 

is an excluded transaction if a financial 

institution originated fewer than 500 

open-end lines of credit in either of the 

two preceding calendar years. For 

example, assume that a bank is a 

financial institution in 2018 under 

§ 1003.2(g) because it originated 50 

closed-end mortgage loans in 2016, 75 

closed-end mortgage loans in 2017, and 

met all of the other requirements under 

§ 1003.2(g)(1). Also assume that the 

bank originated 75 and 85 open-end 

lines of credit in 2016 and 2017, 

respectively. The closed-end mortgage 

loans that the bank originated or 

purchased, or for which it received 

applications, during 2018 are covered 

loans and must be reported, unless they 

otherwise are excluded transactions 

under § 1003.3(c). However, the openend lines of credit that the bank 

originated or purchased, or for which it 

received applications, during 2018 are 

excluded transactions under 

§ 1003.3(c)(12) and need not be 

reported. See comments 4(a)–2 through 

–4 for guidance about the activities that 

constitute an origination. 

2. Optional reporting. A financial 

institution may report applications for, 

originations of, or purchases of openend lines of credit that are excluded 

transactions because the financial 

institution originated fewer than 500 

open-end lines of credit in either of the 

two preceding calendar years. However, 

a financial institution that chooses to 

report such excluded applications for, 

originations of, or purchases of openend lines of credit must report all such 

applications for open-end lines of credit 

on which it receives, open-end lines of 

credit that it originates, and open-end 

lines of credit that it purchases that 

otherwise would be covered loans for a 

given calendar year. Note that 

applications which remain pending at 

the end of a calendar year are not 

reported, as described in comment 

4(a)(8)(i)–14. 

Paragraph 3(c)(13) 

1. New funds extended before 

consolidation. Section 1003.3(c)(13) 

provides an exclusion for a transaction 

that provided or, in the case of an 

application, proposed to provide new 

funds to the borrower in advance of 

being consolidated in a New York State 

consolidation, extension, and 

modification agreement classified as a 

supplemental mortgage under New York 

Tax Law section 255 (New York CEMA) 

and for which final action is taken on 

both transactions within the same 

calendar year. The excluded transaction 

provides or proposes to provide funds 

that are not part of any existing debt 

obligation of the borrower and that are 

then consolidated or proposed to be 

consolidated with an existing debt 

obligation or obligations as part of the 

supplemental mortgage. The new funds 

are reported only insofar as they form 

part of the total amount of the reported 

New York CEMA, and not as a separate 

amount. This exclusion applies only if, 

at the time the transaction that provided 

new funds was originated, the financial 

institution intended to consolidate the 

loan into a New York CEMA. If a New 

York CEMA that consolidates an 

excluded preliminary transaction is 

carried out in a transaction involving an 

assumption, the financial institution 

reports the New York CEMA and does 

not report the preliminary transaction 

separately. The § 1003.3(c)(13) 

exclusion does not apply to similar 

preliminary transactions that provide or 

propose to provide new funds to be 

consolidated not pursuant to New York 

Tax Law section 255 but under some 

other law in a transaction that is not an 

extension of credit. For example, 

assume a financial institution extends 

new funds to a consumer in a 

preliminary transaction that is then 

consolidated as part of a consolidation, 

extension and modification agreement 

pursuant to the law of a State other than 

New York. If the preliminary extension 

of new funds is a covered loan, it must 

be reported. If the consolidation, 

extension and modification agreement 

pursuant to the law of a State other than 

New York is not an extension of credit 

pursuant to Regulation C, it may not be 

reported. For discussion of how to 

report a cash-out refinancing, see 

comment 4(a)(3)–2. 

Section 1003.4—Compilation of 

Reportable Data 

4(a) Data Format and Itemization 

* * * * * 

Paragraph 4(a)(1)(i) 

* * * * * 

3. ULI—purchased covered loan. If a 

financial institution has previously 

assigned a covered loan with a ULI or 

reported a covered loan with a ULI 

under this part, a financial institution 

that purchases that covered loan must 

report the same ULI that was previously 

assigned or reported. For example, if a 

loan origination previously was 

reported under this part with a ULI, the 

financial institution that purchases the 

covered loan would report the purchase 

of the covered loan using the same ULI. 

A financial institution that purchases a 

covered loan must use the ULI that was 

assigned by the financial institution that 

originated the covered loan. A financial 

institution that purchases a covered 

loan assigns a ULI and records and 

submits it in its loan/application 

register pursuant to § 1003.5(a)(1) if the 

covered loan was not assigned a ULI by 

the financial institution that originated 

the loan because, for example, the loan 

was originated prior to January 1, 2018, 

or the loan was originated by an 

institution not required to report under 

this part. 

4. ULI—reinstated or reconsidered 

application. A financial institution may 

not use a ULI previously reported if it 

reinstates or reconsiders an application 

that was reported in a prior calendar 

year. For example, if a financial 

institution reports a denied application 

in its annual 2020 data submission, 

pursuant to § 1003.5(a)(1), but then 

reconsiders the application, resulting in 

an origination in 2021, the financial 

institution reports a denied application 

under the original ULI in its annual 

2020 data submission and an origination 

with a different ULI in its annual 2021 

data submission, pursuant to 

§ 1003.5(a)(1). 

* * * * * 

Paragraph 4(a)(2) 

1. Loan type—general. If a covered 

loan is not, or in the case of an 

application would not have been, 

insured by the Federal Housing 

Administration, guaranteed by the 

Department of Veterans Affairs, or 

guaranteed by the Rural Housing 

Service or the Farm Service Agency, an 

institution complies with § 1003.4(a)(2) 

by reporting the covered loan as not 

insured or guaranteed by the Federal 

Housing Administration, Department of 

Veterans Affairs, Rural Housing Service, 

or Farm Service Agency. 

Paragraph 4(a)(3) 

* * * * * 

6. Purpose—purchased loans. For 

purchased covered loans where 

origination took place prior to January 1, 

2018, a financial institution complies 


sradovich on DSK3GMQ082PROD with RULES2
43140 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

with § 1003.4(a)(3) by reporting that the 

requirement is not applicable. 

* * * * * 

Paragraph 4(a)(8)(i) 

* * * * * 

6. Action taken—file closed for 

incompleteness. A financial institution 

reports that the file was closed for 

incompleteness if the financial 

institution sent a written notice of 

incompleteness under Regulation B, 12 

CFR 1002.9(c)(2), and the applicant did 

not respond to the request for additional 

information within the period of time 

specified in the notice before the 

applicant satisfies all underwriting or 

creditworthiness conditions. See 

comment 4(a)(8)(i)–13. If a financial 

institution then provides a notification 

of adverse action on the basis of 

incompleteness under Regulation B, 12 

CFR 1002.9(c)(1)(i), the financial 

institution may report the action taken 

as either file closed for incompleteness 

or application denied. A preapproval 

request that is closed for incompleteness 

is not reportable under HMDA. See 

§ 1003.4(a) and comment 4(a)–1.ii. 

* * * * * 

9. Action taken—counteroffers. If a 

financial institution makes a 

counteroffer to lend on terms different 

from the applicant’s initial request (for 

example, for a shorter loan maturity, 

with a different interest rate, or in a 

different amount) and the applicant 

declines to proceed with the 

counteroffer or fails to respond, the 

institution reports the action taken as a 

denial on the original terms requested 

by the applicant. If the applicant agrees 

to proceed with consideration of the 

financial institution’s counteroffer, the 

financial institution reports the action 

taken as the disposition of the 

application based on the terms of the 

counteroffer. For example, assume a 

financial institution makes a 

counteroffer, the applicant agrees to 

proceed with the terms of the 

counteroffer, and the financial 

institution then makes a credit decision 

approving the application conditional 

on satisfying underwriting or 

creditworthiness conditions, and the 

applicant expressly withdraws before 

satisfying all underwriting or 

creditworthiness conditions and before 

the institution denies the application or 

closes the file for incompleteness. The 

financial institution reports that the 

action taken as application withdrawn 

in accordance with comment 4(a)(8)(i)– 

13.i. Similarly, assume a financial 

institution makes a counteroffer, the 

applicant agrees to proceed with 

consideration of the counteroffer, and 

the financial institution provides a 

conditional approval stating the 

conditions to be met to originate the 

counteroffer. The financial institution 

reports the action taken on the 

application in accordance with 

comment 4(a)(8)(i)–13 regarding 

conditional approvals. 

* * * * * 

Paragraph 4(a)(9)(i) 

* * * * * 

3. Property address—not applicable. 

A financial institution complies with 

§ 1003.4(a)(9)(i) by reporting that the 

requirement is not applicable if the 

property address of the property 

securing the covered loan is not known. 

For example, if the property did not 

have a property address at closing or if 

the applicant did not provide the 

property address of the property to the 

financial institution before the 

application was denied, withdrawn, or 

closed for incompleteness, the financial 

institution complies with 

§ 1003.4(a)(9)(i) by reporting that the 

requirement is not applicable. 

Paragraph 4(a)(9)(ii) 

1. Optional reporting. Section 

1003.4(a)(9)(ii) requires a financial 

institution to report the State, county, 

and census tract of the property 

securing the covered loan or, in the case 

of an application, proposed to secure 

the covered loan if the property is 

located in an MSA or MD in which the 

financial institution has a home or 

branch office or if the institution is 

subject to § 1003.4(e). Section 

1003.4(a)(9)(ii)(C) further limits the 

requirement to report census tract to 

covered loans secured by or 

applications proposed to be secured by 

properties located in counties with a 

population of more than 30,000 

according to the most recent decennial 

census conducted by the U.S. Census 

Bureau. For transactions for which 

State, county, or census tract reporting 

is not required under § 1003.4(a)(9)(ii) 

or (e), financial institutions may report 

that the requirement is not applicable, 

or they may voluntarily report the State, 

county, or census tract information. 

Paragraph 4(a)(9)(ii)(A) 

1. Applications—State not provided. 

When reporting an application, a 

financial institution complies with 

§ 1003.4(a)(9)(ii)(A) by reporting that the 

requirement is not applicable if the 

State in which the property is located 

was not known before the application 

was denied, withdrawn, or closed for 

incompleteness. 

Paragraph 4(a)(9)(ii)(B) 

* * * * * 

2. Applications—county not provided. 

When reporting an application, a 

financial institution complies with 

§ 1003.4(a)(9)(ii)(B) by reporting that the 

requirement is not applicable if the 

county in which the property is located 

was not known before the application 

was denied, withdrawn, or closed for 

incompleteness. 

Paragraph 4(a)(9)(ii)(C) 

* * * * * 

2. Applications—census tract not 

provided. When reporting an 

application, a financial institution 

complies with § 1003.4(a)(9)(ii)(C) by 

reporting that the requirement is not 

applicable if the census tract in which 

the property is located was not known 

before the application was denied, 

withdrawn, or closed for 

incompleteness. 

* * * * * 

Paragraph 4(a)(10)(ii) 

* * * * * 

3. Applicant data—purchased loan. A 

financial institution complies with 

§ 1003.4(a)(10)(ii) by reporting that the 

requirement is not applicable when 

reporting a purchased loan for which 

the institution chooses not to report the 

age. 

* * * * * 

Paragraph 4(a)(10)(iii) 

* * * * * 

4. Income data—assets. A financial 

institution does not include as income 

amounts considered in making a credit 

decision based on factors that an 

institution relies on in addition to 

income, such as amounts derived from 

underwriting calculations of the 

potential annuitization or depletion of 

an applicant’s remaining assets. Actual 

distributions from retirement accounts 

or other assets that are relied on by the 

financial institution as income should 

be reported as income. The 

interpretation of income in this 

paragraph does not affect 

§ 1003.4(a)(23), which requires, except 

for purchased covered loans, the 

collection of the ratio of the applicant’s 

or borrower’s total monthly debt to the 

total monthly income relied on in 

making the credit decision. 

* * * * * 

Paragraph 4(a)(12) 

1. Average prime offer rate. Average 

prime offer rates are annual percentage 

rates derived from average interest rates 

and other loan pricing terms offered to 

borrowers by a set of creditors for 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43141 

mortgage loans that have low-risk 

pricing characteristics. Other loan 

pricing terms may include commonly 

used indices, margins, and initial fixedrate periods for variable-rate 

transactions. Relevant pricing 

characteristics may include a 

consumer’s credit history and 

transaction characteristics such as the 

loan-to-value ratio, owner-occupant 

status, and purpose of the transaction. 

To obtain average prime offer rates, the 

Bureau uses creditor data by transaction 

type. 

2. Bureau tables. The Bureau 

publishes tables of current and historic 

average prime offer rates by transaction 

type on the FFIEC’s Web site (http://

www.ffiec.gov/hmda) and the Bureau’s 

Web site (https://

www.consumerfinance.gov). The Bureau 

calculates an annual percentage rate, 

consistent with Regulation Z (see 12 

CFR 1026.22 and 12 CFR part 1026, 

appendix J), for each transaction type 

for which pricing terms are available 

from the creditor data described in 

comment 4(a)(12)–1. The Bureau uses 

loan pricing terms available in the 

creditor data and other information to 

estimate annual percentage rates for 

other types of transactions for which the 

creditor data are limited or not 

available. The Bureau publishes on the 

FFIEC’s Web site and the Bureau’s Web 

site the methodology it uses to arrive at 

these estimates. A financial institution 

may either use the average prime offer 

rates published by the Bureau or 

determine average prime offer rates 

itself by employing the methodology 

published on the FFIEC’s Web site and 

the Bureau’s Web site. A financial 

institution that determines average 

prime offer rates itself, however, is 

responsible for correctly determining 

the rates in accordance with the 

published methodology. 

3. Rate spread calculation—annual 

percentage rate. The requirements of 

§ 1003.4(a)(12)(i) refer to the covered 

loan’s annual percentage rate. For 

closed-end mortgage loans, a financial 

institution complies with 

§ 1003.4(a)(12)(i) by relying on the 

annual percentage rate for the covered 

loan, as calculated and disclosed 

pursuant to Regulation Z, 12 CFR 

1026.18 or 1026.38. For open-end lines 

of credit, a financial institution 

complies with § 1003.4(a)(12)(i) by 

relying on the annual percentage rate for 

the covered loan, as calculated and 

disclosed pursuant to Regulation Z, 12 

CFR 1026.6. If multiple annual 

percentage rates are calculated and 

disclosed pursuant to Regulation Z, 12 

CFR 1026.6, a financial institution relies 

on the annual percentage rate in effect 

at the time of account opening. If an 

open-end line of credit has a variablerate feature and a fixed-rate and -term 

payment option during the draw period, 

a financial institution relies on the 

annual percentage rate in effect at the 

time of account opening under the 

variable-rate feature, which would be a 

discounted initial rate if one is offered 

under the variable-rate feature. See 

comment 4(a)(12)–8 for guidance 

regarding the annual percentage rate a 

financial institution relies on in the case 

of an application or preapproval request 

that was approved but not accepted. 

* * * * * 

5. Rate-set date. The relevant date to 

use to determine the average prime offer 

rate for a comparable transaction is the 

date on which the interest rate was set 

by the financial institution for the final 

time before final action is taken (i.e., the 

application was approved but not 

accepted or the covered loan was 

originated). 

i. Rate-lock agreement. If an interest 

rate is set pursuant to a ‘‘lock-in’’ 

agreement between the financial 

institution and the borrower, then the 

date on which the agreement fixes the 

interest rate is the date the rate was set. 

Except as provided in comment 

4(a)(12)–5.ii, if a rate is reset after a 

lock-in agreement is executed (for 

example, because the borrower exercises 

a float-down option or the agreement 

expires), then the relevant date is the 

date the financial institution exercises 

discretion in setting the rate for the final 

time before final action is taken. The 

same rule applies when a rate-lock 

agreement is extended and the rate is 

reset at the same rate, regardless of 

whether market rates have increased, 

decreased, or remained the same since 

the initial rate was set. If no lock-in 

agreement is executed, then the relevant 

date is the date on which the institution 

sets the rate for the final time before 

final action is taken. 

ii. Change in loan program. If a 

financial institution issues a rate-lock 

commitment under one loan program, 

the borrower subsequently changes to 

another program that is subject to 

different pricing terms, and the financial 

institution changes the rate promised to 

the borrower under the rate-lock 

commitment accordingly, the rate-set 

date is the date of the program change. 

However, if the financial institution 

changes the promised rate to the rate 

that would have been available to the 

borrower under the new program on the 

date of the original rate-lock 

commitment, then that is the date the 

rate is set, provided the financial 

institution consistently follows that 

practice in all such cases or the original 

rate-lock agreement so provided. For 

example, assume that a borrower locks 

a rate of 2.5 percent on June 1 for a 30- 

year, variable-rate loan with a five-year, 

fixed-rate introductory period. On June 

15, the borrower decides to switch to a 

30-year, fixed-rate loan, and the rate 

available to the borrower for that 

product on June 15 is 4.0 percent. On 

June 1, the 30-year, fixed-rate loan 

would have been available to the 

borrower at a rate of 3.5 percent. If the 

financial institution offers the borrower 

the 3.5 percent rate (i.e., the rate that 

would have been available to the 

borrower for the fixed-rate product on 

June 1, the date of the original rate-lock) 

because the original agreement so 

provided or because the financial 

institution consistently follows that 

practice for borrowers who change loan 

programs, then the financial institution 

should use June 1 as the rate-set date. 

In all other cases, the financial 

institution should use June 15 as the 

rate-set date. 

iii. Brokered loans. When a financial 

institution has reporting responsibility 

for an application for a covered loan 

that it received from a broker, as 

discussed in comment 4(a)–2 (e.g., 

because the financial institution makes 

a credit decision prior to closing or 

account opening), the rate-set date is the 

last date the financial institution set the 

rate with the broker, not the date the 

broker set the borrower’s rate. 

* * * * * 

8. Application or preapproval request 

approved but not accepted. In the case 

of an application or preapproval request 

that was approved but not accepted, 

§ 1003.4(a)(12) requires a financial 

institution to report the applicable rate 

spread. In such cases, the financial 

institution would provide early 

disclosures under Regulation Z, 12 CFR 

1026.18 or 1026.37 (for closed-end 

mortgage loans), or 1026.40 (for openend lines of credit), but might never 

provide any subsequent disclosures. In 

such cases where no subsequent 

disclosures are provided, a financial 

institution complies with 

§ 1003.4(a)(12)(i) by relying on the 

annual percentage rate for the 

application or preapproval request, as 

calculated and disclosed pursuant to 

Regulation Z, 12 CFR 1026.18 or 

1026.37 (for closed-end mortgage loans), 

or 1026.40 (for open-end lines of credit), 

as applicable. For transactions subject to 

Regulation C for which no disclosures 

under Regulation Z are required, a 

financial institution complies with 

§ 1003.4(a)(12)(i) by reporting that the 

requirement is not applicable. 


sradovich on DSK3GMQ082PROD with RULES2
43142 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

9. Corrected disclosures. In the case of 

a covered loan or an application that 

was approved but not accepted, if the 

annual percentage rate changes because 

a financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(a), pursuant to 12 CFR 

1026.19(a)(2), under 12 CFR 1026.19(f), 

pursuant to 12 CFR 1026.19(f)(2), or 

under 12 CFR 1026.6(a), the financial 

institution complies with 

§ 1003.4(a)(12)(i) by comparing the 

corrected and disclosed annual 

percentage rate to the most recently 

available average prime offer rate that 

was in effect for a comparable 

transaction as of the rate-set date, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

final action is taken. For purposes of 

§ 1003.4(a)(12), the date the corrected 

disclosure was provided to the borrower 

is the date the disclosure was mailed or 

delivered to the borrower in person; the 

financial institution’s method of 

delivery does not affect the date 

provided. For example, where a 

financial institution provides a 

corrected version of the disclosures 

required under 12 CFR 1026.19(f), 

pursuant to 12 CFR 1026.19(f)(2), the 

date provided is the date disclosed 

pursuant to Regulation Z, 12 CFR 

1026.38(a)(3)(i). The provision of a 

corrected disclosure does not affect how 

a financial institution determines the 

rate-set date. See comment 4(a)(12)–5. 

For example, in the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1), if the financial institution 

provides a corrected disclosure to the 

borrower pursuant to Regulation Z, 12 

CFR 1026.19(f)(2)(v), that reflects a 

corrected annual percentage rate, the 

financial institution reports the 

difference between the corrected annual 

percentage rate and the most recently 

available average prime offer rate that 

was in effect for a comparable 

transaction as of the rate-set date if the 

corrected disclosure was provided to the 

borrower prior to the end of the 

calendar year in which final action is 

taken. 

* * * * * 

Paragraph 4(a)(15) 

* * * * * 

2. Credit score—multiple credit 

scores. When a financial institution 

obtains or creates two or more credit 

scores for a single applicant or borrower 

but relies on only one score in making 

the credit decision (for example, by 

relying on the lowest, highest, most 

recent, or average of all of the scores), 

the financial institution complies with 

§ 1003.4(a)(15) by reporting that credit 

score and information about the scoring 

model used. When a financial 

institution uses more than one credit 

scoring model and combines the scores 

into a composite credit score that it 

relies on, the financial institution 

reports that score and reports that more 

than one credit scoring model was used. 

When a financial institution obtains or 

creates two or more credit scores for an 

applicant or borrower and relies on 

multiple scores for the applicant or 

borrower in making the credit decision 

(for example, by relying on a scoring 

grid that considers each of the scores 

obtained or created for the applicant or 

borrower without combining the scores 

into a composite score), § 1003.4(a)(15) 

requires the financial institution to 

report one of the credit scores for the 

applicant or borrower that was relied on 

in making the credit decision. In 

choosing which credit score to report in 

this circumstance, a financial institution 

need not use the same approach for its 

entire HMDA submission, but it should 

be generally consistent (such as by 

routinely using one approach within a 

particular division of the institution or 

for a category of covered loans). In 

instances such as these, the financial 

institution should report the name and 

version of the credit scoring model for 

the score reported. 

3. Credit score—multiple applicants 

or borrowers. In a transaction involving 

two or more applicants or borrowers for 

whom the financial institution obtains 

or creates a single credit score and relies 

on that credit score in making the credit 

decision for the transaction, the 

institution complies with § 1003.4(a)(15) 

by reporting that credit score for the 

applicant and reporting that the 

requirement is not applicable for the 

first co-applicant or, at the financial 

institution’s discretion, by reporting that 

credit score for the first co-applicant 

and reporting that the requirement is 

not applicable for the applicant. 

Otherwise, a financial institution 

complies with § 1003.4(a)(15) by 

reporting a credit score for the applicant 

that it relied on in making the credit 

decision, if any, and a credit score for 

the first co-applicant that it relied on in 

making the credit decision, if any. To 

illustrate, assume a transaction involves 

one applicant and one co-applicant and 

that the financial institution obtains or 

creates two credit scores for the 

applicant and two credit scores for the 

co-applicant. Assume further that the 

financial institution relies on a single 

credit score that is the lowest, highest, 

most recent, or average of all of the 

credit scores obtained or created to 

make the credit decision for the 

transaction. The financial institution 

complies with § 1003.4(a)(15) by 

reporting that credit score and 

information about the scoring model 

used for the applicant and reporting that 

the requirement is not applicable for the 

first co-applicant or, at the financial 

institution’s discretion, by reporting the 

data for the first co-applicant and 

reporting that the requirement is not 

applicable for the applicant. 

Alternatively, assume a transaction 

involves one applicant and one coapplicant and that the financial 

institution obtains or creates three credit 

scores for the applicant and three credit 

scores for the co-applicant. Assume 

further that the financial institution 

relies on the middle credit score for the 

applicant and the middle credit score 

for the co-applicant to make the credit 

decision for the transaction. The 

financial institution complies with 

§ 1003.4(a)(15) by reporting both the 

middle score for the applicant and the 

middle score for the co-applicant. 

* * * * * 

Paragraph 4(a)(17)(i) 

* * * * * 

3. Corrected disclosures. If the amount 

of total loan costs changes because a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(f), pursuant to 12 CFR 

1026.19(f)(2), the financial institution 

complies with § 1003.4(a)(17)(i) by 

reporting the corrected amount, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

closing occurs. For purposes of 

§ 1003.4(a)(17)(i), the date the corrected 

disclosure was provided to the borrower 

is the date disclosed pursuant to 

Regulation Z, 12 CFR 1026.38(a)(3)(i). 

For example, in the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1), if the financial institution 

provides a corrected disclosure to the 

borrower to reflect a refund made 

pursuant to Regulation Z, 12 CFR 

1026.19(f)(2)(v), the financial institution 

reports the corrected amount of total 

loan costs only if the corrected 

disclosure was provided to the borrower 

prior to the end of the calendar year in 

which closing occurs. 

* * * * * 

Paragraph 4(a)(18) 

* * * * * 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43143 

3. Corrected disclosures. If the total 

amount of borrower-paid origination 

charges changes because a financial 

institution provides a corrected version 

of the disclosures required under 

Regulation Z, 12 CFR 1026.19(f), 

pursuant to 12 CFR 1026.19(f)(2), the 

financial institution complies with 

§ 1003.4(a)(18) by reporting the 

corrected amount, provided that the 

corrected disclosure was provided to the 

borrower prior to the end of the 

reporting period in which closing 

occurs. For purposes of § 1003.4(a)(18), 

the date the corrected disclosure was 

provided to the borrower is the date 

disclosed pursuant to Regulation Z, 12 

CFR 1026.38(a)(3)(i). For example, in 

the case of a financial institution’s 

annual loan/application register 

submission made pursuant to 

§ 1003.5(a)(1), if the financial institution 

provides a corrected disclosure to the 

borrower to reflect a refund made 

pursuant to Regulation Z, 12 CFR 

1026.19(f)(2)(v), the financial institution 

reports the corrected amount of 

borrower-paid origination charges only 

if the corrected disclosure was provided 

to the borrower prior to the end of the 

calendar year in which closing occurs. 

Paragraph 4(a)(19) 

* * * * * 

3. Corrected disclosures. If the amount 

of discount points changes because a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(f), pursuant to 12 CFR 

1026.19(f)(2), the financial institution 

complies with § 1003.4(a)(19) by 

reporting the corrected amount, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

closing occurs. For purposes of 

§ 1003.4(a)(19), the date the corrected 

disclosure was provided to the borrower 

is the date disclosed pursuant to 

Regulation Z, 12 CFR 1026.38(a)(3)(i). 

For example, in the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1), if the financial institution 

provides a corrected disclosure to the 

borrower to reflect a refund made 

pursuant to Regulation Z, 12 CFR 

1026.19(f)(2)(v), the financial institution 

reports the corrected amount of 

discount points only if the corrected 

disclosure was provided to the borrower 

prior to the end of the calendar year in 

which closing occurs. 

Paragraph 4(a)(20) 

* * * * * 

3. Corrected disclosures. If the amount 

of lender credits changes because a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(f), pursuant to 12 CFR 

1026.19(f)(2), the financial institution 

complies with § 1003.4(a)(20) by 

reporting the corrected amount, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

closing occurs. For purposes of 

§ 1003.4(a)(20), the date the corrected 

disclosure was provided to the borrower 

is the date disclosed pursuant to 

Regulation Z, 12 CFR 1026.38(a)(3)(i). 

For example, in the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1), if the financial institution 

provides a corrected disclosure to the 

borrower to reflect a refund made 

pursuant to Regulation Z, 12 CFR 

1026.19(f)(2)(v), the financial institution 

reports the corrected amount of lender 

credits only if the corrected disclosure 

was provided to the borrower prior to 

the end of the calendar year in which 

closing occurs. 

Paragraph 4(a)(21) 

1. Interest rate—disclosures. Section 

1003.4(a)(21) requires a financial 

institution to identify the interest rate 

applicable to the approved application, 

or to the covered loan at closing or 

account opening. For covered loans or 

applications subject to the integrated 

mortgage disclosure requirements of 

Regulation Z, 12 CFR 1026.19(e) and (f), 

a financial institution complies with 

§ 1003.4(a)(21) by reporting the interest 

rate disclosed on the applicable 

disclosure. For covered loans or 

approved applications for which 

disclosures were provided pursuant to 

both the early and the final disclosure 

requirements in Regulation Z, 12 CFR 

1026.19(e) and (f), a financial institution 

reports the interest rate disclosed 

pursuant to 12 CFR 1026.19(f). A 

financial institution may rely on the 

definitions and commentary to the 

sections of Regulation Z relevant to the 

disclosure of the interest rate pursuant 

to 12 CFR 1026.19(e) or (f). If a financial 

institution provides a revised or 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(e) or (f), pursuant to 12 CFR 

1026.19(e)(3)(iv) or (f)(2), as applicable, 

the financial institution complies with 

§ 1003.4(a)(21) by reporting the interest 

rate on the revised or corrected 

disclosure, provided that the revised or 

corrected disclosure was provided to the 

borrower prior to the end of the 

reporting period in which final action is 

taken. For purposes of § 1003.4(a)(21), 

the date the revised or corrected 

disclosure was provided to the borrower 

is the date disclosed pursuant to 

Regulation Z, 12 CFR 1026.37(a)(4) or 

1026.38(a)(3)(i), as applicable. 

* * * * * 

Paragraph 4(a)(24) 

* * * * * 

2. Transactions for which a combined 

loan-to-value ratio was one of multiple 

factors. A financial institution relies on 

the ratio of the total amount of debt 

secured by the property to the value of 

the property (combined loan-to-value 

ratio) in making the credit decision if 

the combined loan-to-value ratio was a 

factor in the credit decision, even if it 

was not a dispositive factor. For 

example, if the combined loan-to-value 

ratio is one of multiple factors in a 

financial institution’s credit decision, 

the financial institution has relied on 

the combined loan-to-value ratio and 

complies with § 1003.4(a)(24) by 

reporting the combined loan-to-value 

ratio, even if the financial institution 

denies the application because one or 

more underwriting requirements other 

than the combined loan-to-value ratio 

are not satisfied. 

* * * * * 

6. Property. A financial institution 

reports the combined loan-to-value ratio 

relied on in making the credit decision, 

regardless of which property or 

properties it used in the combined loanto-value ratio calculation. The property 

used in the combined loan-to-value ratio 

calculation does not need to be the 

property identified in § 1003.4(a)(9) and 

may include more than one property 

and non-real property. For example, if a 

financial institution originated a 

covered loan for the purchase of a 

multifamily dwelling, the loan was 

secured by the multifamily dwelling 

and by non-real property, such as 

securities, and the financial institution 

used the multifamily dwelling and the 

non-real property to calculate the 

combined loan-to-value ratio that it 

relied on in making the credit decision, 

§ 1003.4(a)(24) requires the financial 

institution to report the relied upon 

ratio. Section 1003.4(a)(24) does not 

require a financial institution to use a 

particular combined loan-to-value ratio 

calculation method but instead requires 

financial institutions to report the 

combined loan-to-value ratio relied on 

in making the credit decision. 

* * * * * 

Paragraph 4(a)(26) 

* * * * * 

5. Non-monthly introductory periods. 

If a covered loan or application includes 

an introductory interest rate period 


sradovich on DSK3GMQ082PROD with RULES2
43144 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

measured in a unit of time other than 

months, the financial institution 

complies with § 1003.4(a)(26) by 

reporting the introductory interest rate 

period for the covered loan or 

application using an equivalent number 

of whole months without regard for any 

remainder. For example, assume an 

open-end line of credit contains an 

introductory interest rate for 50 days 

after the date of account opening, after 

which the interest rate may adjust. In 

this example, the financial institution 

complies with § 1003.4(a)(26) by 

reporting the number of months as ‘‘1.’’ 

The financial institution must report 

one month for any introductory interest 

rate period that totals less than one 

whole month. 

* * * * * 

Paragraph 4(a)(34) 

* * * * * 

4. Purchased loans. If a financial 

institution purchases a covered loan 

that satisfies the coverage criteria of 

Regulation Z, 12 CFR 1026.36(g), and 

that was originated prior to January 10, 

2014, the financial institution complies 

with § 1003.4(a)(34) by reporting that 

the requirement is not applicable. In 

addition, if a financial institution 

purchases a covered loan that does not 

satisfy the coverage criteria of 

Regulation Z, 12 CFR 1026.36(g), and 

that was originated prior to January 1, 

2018, the financial institution complies 

with § 1003.4(a)(34) by reporting that 

the requirement is not applicable. 

Purchasers of both such types of 

covered loans may report the NMLSR 

ID. 

Paragraph 4(a)(35) 

* * * * * 

2. Definition of automated 

underwriting system. A financial 

institution must report the information 

required by § 1003.4(a)(35)(i) if the 

financial institution uses an automated 

underwriting system (AUS), as defined 

in § 1003.4(a)(35)(ii), to evaluate an 

application. To be covered by the 

definition in § 1003.4(a)(35)(ii), a system 

must be an electronic tool that has been 

developed by a securitizer, Federal 

government insurer, or a Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit. A person is a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, respectively, if it has securitized, 

provided Federal government insurance, 

or provided a Federal government 

guarantee for a closed-end mortgage 

loan or open-end line of credit at any 

point in time. A person may be a 

securitizer, Federal government insurer, 

or Federal government guarantor of 

closed-end mortgage loans or open-end 

lines of credit, respectively, for 

purposes of § 1003.4(a)(35) even if it is 

not actively securitizing, insuring, or 

guaranteeing closed-end mortgage loans 

or open-end lines of credit at the time 

a financial institution uses the AUS to 

evaluate an application. Where the 

person that developed the electronic 

tool has never been a securitizer, 

Federal government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, respectively, at the time a 

financial institution uses the tool to 

evaluate an application, the financial 

institution complies with § 1003.4(a)(35) 

by reporting that the requirement is not 

applicable because an AUS was not 

used to evaluate the application. If a 

financial institution has developed its 

own proprietary system that it uses to 

evaluate an application and the 

financial institution is also a securitizer, 

then the financial institution complies 

with § 1003.4(a)(35) by reporting the 

name of that system and the result 

generated by that system. On the other 

hand, if a financial institution has 

developed its own proprietary system 

that it uses to evaluate an application 

and the financial institution is not a 

securitizer, then the financial institution 

is not required by § 1003.4(a)(35) to 

report the use of that system and the 

result generated by that system. In 

addition, for an AUS to be covered by 

the definition in § 1003.4(a)(35)(ii), the 

system must provide a result regarding 

both the credit risk of the applicant and 

the eligibility of the covered loan to be 

originated, purchased, insured, or 

guaranteed by the securitizer, Federal 

government insurer, or Federal 

government guarantor that developed 

the system being used to evaluate the 

application. For example, if a system is 

an electronic tool that provides a 

determination of the eligibility of the 

covered loan to be originated, 

purchased, insured, or guaranteed by 

the securitizer, Federal government 

insurer, or Federal government 

guarantor that developed the system 

being used by a financial institution to 

evaluate the application, but the system 

does not also provide an assessment of 

the creditworthiness of the applicant— 

such as an evaluation of the applicant’s 

income, debt, and credit history—then 

that system does not qualify as an AUS, 

as defined in § 1003.4(a)(35)(ii). A 

financial institution that uses a system 

that is not an AUS, as defined in 

§ 1003.4(a)(35)(ii), to evaluate an 

application does not report the 

information required by 

§ 1003.4(a)(35)(i). 

* * * * * 

7. Determination of securitizer, 

Federal government insurer, or Federal 

government guarantor. Section 

1003.4(a)(35)(ii) provides that an 

‘‘automated underwriting system’’ 

means an electronic tool developed by 

a securitizer, Federal government 

insurer, or Federal government 

guarantor of closed-end mortgage loans 

or open-end lines of credit that provides 

a result regarding the credit risk of the 

applicant and whether the covered loan 

is eligible to be originated, purchased, 

insured, or guaranteed by that 

securitizer, Federal government insurer, 

or Federal government guarantor. A 

person is a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, respectively, if it has ever 

securitized, insured, or guaranteed a 

closed-end mortgage loan or open-end 

line of credit. If a financial institution 

knows or reasonably believes that the 

system it is using to evaluate an 

application is an electronic tool that has 

been developed by a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, then the financial institution 

complies with § 1003.4(a)(35) by 

reporting the name of that system and 

the result generated by that system. 

Knowledge or reasonable belief could, 

for example, be based on a sales 

agreement or other related documents, 

the financial institution’s previous 

transactions or relationship with the 

developer of the electronic tool, or 

representations made by the developer 

of the electronic tool demonstrating that 

the developer of the electronic tool is a 

securitizer, Federal government insurer, 

or Federal government guarantor of 

closed-end mortgage loans or open-end 

lines of credit. If a financial institution 

does not know or reasonably believe 

that the system it is using to evaluate an 

application is an electronic tool that has 

been developed by a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit, the financial institution complies 

with § 1003.4(a)(35) by reporting that 

the requirement is not applicable, 

provided that the financial institution 

maintains procedures reasonably 

adapted to determine whether the 

electronic tool it is using to evaluate an 

application meets the definition in 

§ 1003.4(a)(35)(ii). Reasonably adapted 

procedures include attempting to 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43145 

determine with reasonable frequency, 

such as annually, whether the developer 

of the electronic tool is a securitizer, 

Federal government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit. For example: 

i. In the course of renewing an annual 

sales agreement the developer of the 

electronic tool represents to the 

financial institution that it has never 

been a securitizer, Federal government 

insurer, or Federal government 

guarantor of closed-end mortgage loans 

or open-end lines of credit. On this 

basis, the financial institution does not 

know or reasonably believe that the 

system it is using to evaluate an 

application is an electronic tool that has 

been developed by a securitizer, Federal 

government insurer, or Federal 

government guarantor of closed-end 

mortgage loans or open-end lines of 

credit and complies with § 1003.4(a)(35) 

by reporting that the requirement is not 

applicable. 

ii. Based on their previous 

transactions a financial institution is 

aware that the developer of the 

electronic tool it is using to evaluate an 

application has securitized a closed-end 

mortgage loan or open-end line of credit 

in the past. On this basis, the financial 

institution knows or reasonably believes 

that the developer of the electronic tool 

is a securitizer and complies with 

§ 1003.4(a)(35) by reporting the name of 

that system and the result generated by 

that system. 

* * * * * 

■ 8. Effective January 1, 2019, § 1003.5, 

as amended at 80 FR 66128, is further 

amended by revising paragraph (a)(3)(ii) 

to read as follows: 

§ 1003.5 Disclosure and reporting. 

(a) * * * 

(3) * * * 

(ii) The calendar year the data 

submission covers pursuant to 

paragraph (a)(1)(i) of this section; 

* * * * * 

■ 9. Effective January 1, 2019, § 1003.6, 

as amended at 80 FR 66128, is further 

amended by revising paragraph (c) to 

read as follows: 

§ 1003.6 Enforcement. 

* * * * * 

(c) Quarterly recording and reporting. 

If a financial institution makes a goodfaith effort to record all data required to 

be recorded pursuant to § 1003.4(f) fully 

and accurately within 30 calendar days 

after the end of each calendar quarter, 

and some data are nevertheless 

inaccurate or incomplete, the 

inaccuracy or omission is not a violation 

of the Act or this part provided that the 

institution corrects or completes the 

data prior to submitting its annual loan/ 

application register pursuant to 

§ 1003.5(a)(1)(i). 

■ 10. Effective January 1, 2019, 

Supplement I to Part 1003—Official 

Interpretations, as amended at 80 FR 

66128, is further amended under 

Section 1003.6—Enforcement by 

revising 6(b) Bona Fide Errors to read as 

follows: 

Supplement I to Part 1003—Official 

Interpretations 

* * * * * 

Section 1003.6—Enforcement 

6(b) Bona Fide Errors 

1. Information from third parties. 

Section 1003.6(b) provides that an error 

in compiling or recording data for a 

covered loan or application is not a 

violation of the Act or this part if the 

error was unintentional and occurred 

despite the maintenance of procedures 

reasonably adapted to avoid such an 

error. A financial institution that obtains 

the required data, such as propertylocation information, from third parties 

is responsible for ensuring that the 

information reported pursuant to 

§ 1003.5 is correct. See comment 6(b)– 

2 concerning obtaining census tract 

information from a geocoding tool that 

the Bureau makes available on its Web 

site. 

2. Information from the Bureau. 

Section 1003.6(b)(2) provides that an 

incorrect entry for census tract number 

is deemed a bona fide error, and is not 

a violation of the Act or this part, 

provided that the financial institution 

maintains procedures reasonably 

adapted to avoid an error. Obtaining the 

census tract numbers for covered loans 

and applications from a geocoding tool 

available on the Bureau’s Web site that 

identifies the census tract of a property 

using property addresses entered by 

users is an example of a procedure 

reasonably adapted to avoid errors 

under § 1003.6(b)(2). Accordingly, a 

census tract error is not a violation of 

the Act or this part if the financial 

institution obtained the census tract 

number from the geocoding tool on the 

Bureau’s Web site. However, a financial 

institution’s failure to provide the 

correct census tract number for a 

covered loan or application on its loan/ 

application register, as required by 

§ 1003.4(a)(9)(ii)(C) or (e), because the 

geocoding tool on the Bureau’s Web site 

did not provide a census tract number 

for the property address entered by the 

financial institution is not excused as a 

bona fide error. In addition, a census 

tract error caused by a financial 

institution entering an inaccurate 

property address into the geocoding tool 

on the Bureau’s Web site is not excused 

as a bona fide error. 

■ 11. Effective January 1, 2020, § 1003.2, 

as amended at 80 FR 66128, is further 

amended by revising paragraphs 

(g)(1)(v)(B) and (g)(2)(ii)(B) to read as 

follows: 

§ 1003.2 Definitions. 

* * * * * 

(g) * * * 

(1) * * * 

(v) * * * 

(B) In each of the two preceding 

calendar years, originated at least 100 

open-end lines of credit that are not 

excluded from this part pursuant to 

§ 1003.3(c)(1) through (10); and 

(2) * * * 

(ii) * * * 

(B) In each of the two preceding 

calendar years, originated at least 100 

open-end lines of credit that are not 

excluded from this part pursuant to 

§ 1003.3(c)(1) through (10). 

* * * * * 

■ 12. Effective January 1, 2020, § 1003.3, 

as amended at 80 FR 66128, is further 

amended by revising paragraph (c)(12) 

to read as follows: 

§ 1003.3 Exempt institutions and excluded 

transactions. 

* * * * * 

(c) * * * 

(12) An open-end line of credit, if the 

financial institution originated fewer 

than 100 open-end lines of credit in 

either of the two preceding calendar 

years; a financial institution may 

collect, record, report, and disclose 

information, as described in §§ 1003.4 

and 1003.5, for such an excluded openend line of credit as though it were a 

covered loan, provided that the 

financial institution complies with such 

requirements for all applications for 

open-end lines of credit that it receives, 

open-end lines of credit that it 

originates, and open-end lines of credit 

that it purchases that otherwise would 

have been covered loans during the 

calendar year during which final action 

is taken on the excluded open-end line 

of credit; or 

* * * * * 

■ 13. Effective January 1, 2020, § 1003.5, 

as amended at 80 FR 66128, is further 

amended by revising paragraph (a)(3)(ii) 

to read as follows: 

§ 1003.5 Disclosure and reporting. 

(a) * * * 

(3) * * * 

(ii) The calendar year the data 

submission covers pursuant to 


sradovich on DSK3GMQ082PROD with RULES2
43146 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

paragraph (a)(1)(i) of this section or 

calendar quarter and year the data 

submission covers pursuant to 

paragraph (a)(1)(ii) of this section; 

* * * * * 

■ 14. Effective January 1, 2020, § 1003.6, 

as amended at 80 FR 66128, is further 

amended by revising paragraph (c) to 

read as follows: 

§ 1003.6 Enforcement. 

* * * * * 

(c) Quarterly recording and reporting. 

(1) If a financial institution makes a 

good-faith effort to record all data 

required to be recorded pursuant to 

§ 1003.4(f) fully and accurately within 

30 calendar days after the end of each 

calendar quarter, and some data are 

nevertheless inaccurate or incomplete, 

the inaccuracy or omission is not a 

violation of the Act or this part provided 

that the institution corrects or completes 

the data prior to submitting its annual 

loan/application register pursuant to 

§ 1003.5(a)(1)(i). 

(2) If a financial institution required 

to comply with § 1003.5(a)(1)(ii) makes 

a good-faith effort to report all data 

required to be reported pursuant to 

§ 1003.5(a)(1)(ii) fully and accurately 

within 60 calendar days after the end of 

each calendar quarter, and some data 

are nevertheless inaccurate or 

incomplete, the inaccuracy or omission 

is not a violation of the Act or this part 

provided that the institution corrects or 

completes the data prior to submitting 

its annual loan/application register 

pursuant to § 1003.5(a)(1)(i). 

■ 15. Effective January 1, 2020, 

Supplement I to Part 1003—Official 

Interpretations, as amended at 80 FR 

66128, is further amended as follows: 

■ a. Under Section 1003.2—Definitions, 

under 2(g) Financial Institution, 

paragraphs 3 and 5 are revised. 

■ b. Under Section 1003.3—Exempt 

institutions and excluded transactions, 

under 3(c) Excluded transactions, 

Paragraph 3(c)(12) is revised. 

■ c. Under Section 1003.4—Compilation 

of Reportable Data, under 4(a) Data 

Format and Itemization: 

■ i. Under Paragraph 4(a)(1)(i), 

paragraphs 3 and 4 are revised; 

■ ii. Under Paragraph 4(a)(12), 

paragraph 9 is revised; 

■ iii. Under Paragraph 4(a)(17)(i), 

paragraph 3 is revised; 

■ iv. Under Paragraph 4(a)(18), 

paragraph 3 is revised; 

■ v. Under Paragraph 4(a)(19), 

paragraph 3 is revised; and 

■ vi. Under Paragraph 4(a)(20), 

paragraph 3 is revised. 

The revisions read as follows: 

Supplement I to Part 1003—Official 

Interpretations 

* * * * * 

Section 1003.2—Definitions 

* * * * * 

2(g) Financial Institution 

* * * * * 

3. Merger or acquisition—coverage of 

surviving or newly formed institution. 

After a merger or acquisition, the 

surviving or newly formed institution is 

a financial institution under § 1003.2(g) 

if it, considering the combined assets, 

location, and lending activity of the 

surviving or newly formed institution 

and the merged or acquired institutions 

or acquired branches, satisfies the 

criteria included in § 1003.2(g). For 

example, A and B merge. The surviving 

or newly formed institution meets the 

loan threshold described in 

§ 1003.2(g)(1)(v)(B) if the surviving or 

newly formed institution, A, and B 

originated a combined total of at least 

100 open-end lines of credit in each of 

the two preceding calendar years. 

Likewise, the surviving or newly formed 

institution meets the asset-size 

threshold in § 1003.2(g)(1)(i) if its assets 

and the combined assets of A and B on 

December 31 of the preceding calendar 

year exceeded the threshold described 

in § 1003.2(g)(1)(i). Comment 2(g)–4 

discusses a financial institution’s 

responsibilities during the calendar year 

of a merger. 

* * * * * 

5. Originations. Whether an 

institution is a financial institution 

depends in part on whether the 

institution originated at least 25 closedend mortgage loans in each of the two 

preceding calendar years or at least 100 

open-end lines of credit in each of the 

two preceding calendar years. 

Comments 4(a)–2 through –4 discuss 

whether activities with respect to a 

particular closed-end mortgage loan or 

open-end line of credit constitute an 

origination for purposes of § 1003.2(g). 

* * * * * 

Section 1003.3—Exempt Institutions 

and Excluded Transactions 

3(c) Excluded Transactions 

* * * * * 

Paragraph 3(c)(12) 

1. General. Section 1003.3(c)(12) 

provides that an open-end line of credit 

is an excluded transaction if a financial 

institution originated fewer than 100 

open-end lines of credit in either of the 

two preceding calendar years. For 

example, assume that a bank is a 

financial institution in 2018 under 

§ 1003.2(g) because it originated 50 

closed-end mortgage loans in 2016, 75 

closed-end mortgage loans in 2017, and 

met all of the other requirements under 

§ 1003.2(g)(1). Also assume that the 

bank originated 75 and 85 open-end 

lines of credit in 2016 and 2017, 

respectively. The closed-end mortgage 

loans that the bank originated or 

purchased, or for which it received 

applications, during 2018 are covered 

loans and must be reported, unless they 

otherwise are excluded transactions 

under § 1003.3(c). However, the openend lines of credit that the bank 

originated or purchased, or for which it 

received applications, during 2018 are 

excluded transactions under 

§ 1003.3(c)(12) and need not be 

reported. See comments 4(a)–2 through 

–4 for guidance about the activities that 

constitute an origination. 

2. Optional reporting. A financial 

institution may report applications for, 

originations of, or purchases of openend lines of credit that are excluded 

transactions because the financial 

institution originated fewer than 100 

open-end lines of credit in either of the 

two preceding calendar years. However, 

a financial institution that chooses to 

report such excluded applications for, 

originations of, or purchases of openend lines of credit must report all such 

applications for open-end lines of credit 

which it receives, open-end lines of 

credit that it originates, and open-end 

lines of credit that it purchases that 

otherwise would be covered loans for a 

given calendar year. Note that 

applications which remain pending at 

the end of a calendar year are not 

reported, as described in comment 

4(a)(8)(i)–14. 

* * * * * 

Section 1003.4—Compilation of 

Reportable Data 

4(a) Data Format and Itemization 

* * * * * 

Paragraph 4(a)(1)(i) 

* * * * * 

3. ULI—purchased covered loan. If a 

financial institution has previously 

assigned a covered loan with a ULI or 

reported a covered loan with a ULI 

under this part, a financial institution 

that purchases that covered loan must 

report the same ULI that was previously 

assigned or reported. For example, if a 

financial institution that submits an 

annual loan/application register 

pursuant to § 1003.5(a)(1)(i) originates a 

covered loan that is purchased by a 

financial institution that also submits an 

annual loan/application register 

pursuant to § 1003.5(a)(1)(i), the 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43147 

financial institution that purchases the 

covered loan must report the purchase 

of the covered loan using the same ULI 

that was reported by the originating 

financial institution. If a financial 

institution that originates a covered loan 

has previously assigned the covered 

loan with a ULI under this part but has 

not yet reported the covered loan, a 

financial institution that purchases that 

covered loan must report the same ULI 

that was previously assigned. For 

example, if a financial institution that 

submits an annual loan/application 

register pursuant to § 1003.5(a)(1)(i) 

(Institution A) originates a covered loan 

that is purchased by a financial 

institution that submits a quarterly loan/ 

application register pursuant to 

§ 1003.5(a)(1)(ii) (Institution B), then 

Institution B must report the ULI that 

was assigned by Institution A on 

Institution B’s quarterly loan/

application register pursuant to 

§ 1003.5(a)(1)(ii), even though 

Institution A has not yet submitted its 

annual loan/application register 

pursuant to § 1003.5(a)(1)(i). A financial 

institution that purchases a covered 

loan must assign it a ULI pursuant to 

§ 1003.4(a)(1)(i) and report it pursuant 

to § 1003.5(a)(1)(i) or (ii), whichever is 

applicable, if the covered loan was not 

assigned a ULI by the financial 

institution that originated the loan 

because, for example, the loan was 

originated prior to January 1, 2018, or 

the loan was originated by an institution 

not required to report under this part. 

4. ULI—reinstated or reconsidered 

application. A financial institution may, 

at its option, report a ULI previously 

reported under this part if, during the 

same calendar year, an applicant asks 

the institution to reinstate a counteroffer 

that the applicant previously did not 

accept or asks the financial institution 

to reconsider an application that was 

previously denied, withdrawn, or closed 

for incompleteness. For example, if a 

financial institution reports a denied 

application in its second-quarter 2020 

data submission, pursuant to 

§ 1003.5(a)(1)(ii), but then reconsiders 

the application, resulting in an 

origination in the third quarter of 2020, 

the financial institution may report the 

origination in its third-quarter 2020 data 

submission using the same ULI that was 

reported for the denied application in 

its second-quarter 2020 data 

submission, so long as the financial 

institution treats the origination as the 

same transaction for reporting. 

However, a financial institution may not 

use a ULI previously reported if it 

reinstates or reconsiders an application 

that was reported in a prior calendar 

year. For example, if a financial 

institution reports a denied application 

in its fourth-quarter 2020 data 

submission, pursuant to 

§ 1003.5(a)(1)(ii), but then reconsiders 

the application, resulting in an 

origination in the first quarter of 2021, 

the financial institution reports a denied 

application under the original ULI in its 

fourth-quarter 2020 data submission and 

an origination with a different ULI in its 

first-quarter 2021 data submission, 

pursuant to § 1003.5(a)(1)(ii). 

* * * * * 

Paragraph 4(a)(12) 

* * * * * 

9. Corrected disclosures. In the case of 

a covered loan or an application that 

was approved but not accepted, if the 

annual percentage rate changes because 

a financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(a), pursuant to 12 CFR 

1026.19(a)(2), under 12 CFR 1026.19(f), 

pursuant to 12 CFR 1026.19(f)(2), or 

under 12 CFR 1026.6(a), the financial 

institution complies with 

§ 1003.4(a)(12)(i) by comparing the 

corrected and disclosed annual 

percentage rate to the most recently 

available average prime offer rate that 

was in effect for a comparable 

transaction as of the rate-set date, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

final action is taken. For purposes of 

§ 1003.4(a)(12), the date the corrected 

disclosure was provided to the borrower 

is the date the disclosure was mailed or 

delivered to the borrower in person; the 

financial institution’s method of 

delivery does not affect the date 

provided. For example, where a 

financial institution provides a 

corrected version of the disclosures 

required under 12 CFR 1026.19(f), 

pursuant to 12 CFR 1026.19(f)(2), the 

date provided is the date disclosed 

pursuant to Regulation Z, 12 CFR 

1026.38(a)(3)(i). The provision of a 

corrected disclosure does not affect how 

a financial institution determines the 

rate-set date. See comment 4(a)(12)–5. 

For example: 

i. In the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1)(i), if the financial 

institution provides a corrected 

disclosure pursuant to Regulation Z, 12 

CFR 1026.19(f)(2)(v), that reflects a 

corrected annual percentage rate, the 

financial institution reports the 

difference between the corrected annual 

percentage rate and the most recently 

available average prime offer rate that 

was in effect for a comparable 

transaction as of the rate-set date only 

if the corrected disclosure was provided 

to the borrower prior to the end of the 

calendar year in which final action is 

taken. 

ii. In the case of a financial 

institution’s quarterly submission made 

pursuant to § 1003.5(a)(1)(ii), if the 

financial institution provides a 

corrected disclosure pursuant to 

Regulation Z, 12 CFR 1026.19(f)(2)(v), 

that reflects a corrected annual 

percentage rate, the financial institution 

reports the difference between the 

corrected annual percentage rate and the 

most recently available average prime 

offer rate that was in effect for a 

comparable transaction as of the rate-set 

date only if the corrected disclosure was 

provided to the borrower prior to the 

end of the quarter in which final action 

is taken. The financial institution does 

not report the difference between the 

corrected annual percentage rate and the 

most recently available average prime 

offer rate that was in effect for a 

comparable transaction as of the rate-set 

date if the corrected disclosure was 

provided to the borrower after the end 

of the quarter in which final action is 

taken, even if the corrected disclosure 

was provided to the borrower prior to 

the deadline for timely submission of 

the financial institution’s quarterly data. 

However, the financial institution 

reports the difference between the 

corrected annual percentage rate and the 

most recently available average prime 

offer rate that was in effect for a 

comparable transaction as of the rate-set 

date on its annual loan/application 

register, provided that the corrected 

disclosure was provided to the borrower 

prior to the end of the calendar year in 

which final action is taken. 

* * * * * 

Paragraph 4(a)(17)(i) 

* * * * * 

3. Corrected disclosures. If the amount 

of total loan costs changes because a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(f), pursuant to 12 CFR 

1026.19(f)(2), the financial institution 

complies with § 1003.4(a)(17)(i) by 

reporting the corrected amount, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

closing occurs. For purposes of 

§ 1003.4(a)(17)(i), the date the corrected 

disclosure was provided to the borrower 

is the date disclosed pursuant to 


sradovich on DSK3GMQ082PROD with RULES2
43148 Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 

Regulation Z, 12 CFR 1026.38(a)(3)(i). 

For example: 

i. In the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1)(i), if the financial 

institution provides a corrected 

disclosure to the borrower to reflect a 

refund made pursuant to Regulation Z, 

12 CFR 1026.19(f)(2)(v), the financial 

institution reports the corrected amount 

of total loan costs only if the corrected 

disclosure was provided to the borrower 

prior to the end of the calendar year in 

which closing occurs. 

ii. In the case of a financial 

institution’s quarterly submission made 

pursuant to § 1003.5(a)(1)(ii), if the 

financial institution provides a 

corrected disclosure to the borrower to 

reflect a refund made pursuant to 

Regulation Z, 12 CFR 1026.19(f)(2)(v), 

the financial institution reports the 

corrected amount of total loan costs 

only if the corrected disclosure was 

provided to the borrower prior to the 

end of the quarter in which closing 

occurs. The financial institution does 

not report the corrected amount of total 

loan costs in its quarterly submission if 

the corrected disclosure was provided to 

the borrower after the end of the quarter 

in which closing occurs, even if the 

corrected disclosure was provided to the 

borrower prior to the deadline for timely 

submission of the financial institution’s 

quarterly data. However, the financial 

institution reports the corrected amount 

of total loan costs on its annual loan/

application register, provided that the 

corrected disclosure was provided to the 

borrower prior to the end of the 

calendar year in which closing occurs. 

* * * * * 

Paragraph 4(a)(18) 

* * * * * 

3. Corrected disclosures. If the total 

amount of borrower-paid origination 

charges changes because a financial 

institution provides a corrected version 

of the disclosures required under 

Regulation Z, 12 CFR 1026.19(f), 

pursuant to 12 CFR 1026.19(f)(2), the 

financial institution complies with 

§ 1003.4(a)(18) by reporting the 

corrected amount, provided that the 

corrected disclosure was provided to the 

borrower prior to the end of the 

reporting period in which closing 

occurs. For purposes of § 1003.4(a)(18), 

the date the corrected disclosure was 

provided to the borrower is the date 

disclosed pursuant to Regulation Z, 12 

CFR 1026.38(a)(3)(i). For example: 

i. In the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1)(i), if the financial 

institution provides a corrected 

disclosure to the borrower to reflect a 

refund made pursuant to Regulation Z, 

12 CFR 1026.19(f)(2)(v), the financial 

institution reports the corrected amount 

of borrower-paid origination charges 

only if the corrected disclosure was 

provided to the borrower prior to the 

end of the calendar year in which 

closing occurs. 

ii. In the case of a financial 

institution’s quarterly submission made 

pursuant to § 1003.5(a)(1)(ii), if the 

financial institution provides a 

corrected disclosure to the borrower to 

reflect a refund made pursuant to 

Regulation Z, 12 CFR 1026.19(f)(2)(v), 

the financial institution reports the 

corrected amount of borrower-paid 

origination charges only if the corrected 

disclosure was provided to the borrower 

prior to the end of the quarter in which 

closing occurs. The financial institution 

does not report the corrected amount of 

borrower-paid origination charges in its 

quarterly submission if the corrected 

disclosure was provided to the borrower 

after the end of the quarter in which 

closing occurs, even if the corrected 

disclosure was provided to the borrower 

prior to the deadline for timely 

submission of the financial institution’s 

quarterly data. However, the financial 

institution reports the corrected amount 

of borrower-paid origination charges on 

its annual loan/application register, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the calendar year in which 

closing occurs. 

Paragraph 4(a)(19) 

* * * * * 

3. Corrected disclosures. If the amount 

of discount points changes because a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(f), pursuant to 12 CFR 

1026.19(f)(2), the financial institution 

complies with § 1003.4(a)(19) by 

reporting the corrected amount, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

closing occurs. For purposes of 

§ 1003.4(a)(19), the date the corrected 

disclosure was provided to the borrower 

is the date disclosed pursuant to 

Regulation Z, 12 CFR 1026.38(a)(3)(i). 

For example: 

i. In the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1)(i), if the financial 

institution provides a corrected 

disclosure to the borrower to reflect a 

refund made pursuant to Regulation Z, 

12 CFR 1026.19(f)(2)(v), the financial 

institution reports the corrected amount 

of discount points only if the corrected 

disclosure was provided to the borrower 

prior to the end of the calendar year in 

which closing occurred. 

ii. In the case of a financial 

institution’s quarterly submission made 

pursuant to § 1003.5(a)(1)(ii), if the 

financial institution provides a 

corrected disclosure to the borrower to 

reflect a refund made pursuant to 

Regulation Z, 12 CFR 1026.19(f)(2)(v), 

the financial institution reports the 

corrected amount of discount points 

only if the corrected disclosure was 

provided to the borrower prior to the 

end of the quarter in which closing 

occurred. The financial institution does 

not report the corrected amount of 

discount points in its quarterly 

submission if the corrected disclosure 

was provided to the borrower after the 

end of the quarter in which closing 

occurred, even if the corrected 

disclosure was provided to the borrower 

prior to the deadline for timely 

submission of the financial institution’s 

quarterly data. However, the financial 

institution reports the corrected amount 

of discount points on its annual loan/

application register, provided that the 

corrected disclosure was provided to the 

borrower prior to the end of the 

calendar year in which closing 

occurred. 

Paragraph 4(a)(20) 

* * * * * 

3. Corrected disclosures. If the amount 

of lender credits changes because a 

financial institution provides a 

corrected version of the disclosures 

required under Regulation Z, 12 CFR 

1026.19(f), pursuant to 12 CFR 

1026.19(f)(2), the financial institution 

complies with § 1003.4(a)(20) by 

reporting the corrected amount, 

provided that the corrected disclosure 

was provided to the borrower prior to 

the end of the reporting period in which 

closing occurred. For purposes of 

§ 1003.4(a)(20), the date the corrected 

disclosure was provided to the borrower 

is the date disclosed pursuant to 

Regulation Z, 12 CFR 1026.38(a)(3)(i). 

For example: 

i. In the case of a financial 

institution’s annual loan/application 

register submission made pursuant to 

§ 1003.5(a)(1)(i), if the financial 

institution provides a corrected 

disclosure to the borrower to reflect a 

refund made pursuant to Regulation Z, 

12 CFR 1026.19(f)(2)(v), the financial 

institution reports the corrected amount 

of lender credits only if the corrected 

disclosure was provided to the borrower 

prior to the end of the calendar year in 

which closing occurred. 


sradovich on DSK3GMQ082PROD with RULES2
Federal Register / Vol. 82, No. 176 / Wednesday, September 13, 2017 / Rules and Regulations 43149 

ii. In the case of a financial 

institution’s quarterly submission made 

pursuant to § 1003.5(a)(1)(ii), if the 

financial institution provides a 

corrected disclosure to the borrower to 

reflect a refund made pursuant to 

Regulation Z, 12 CFR 1026.19(f)(2)(v), 

the financial institution reports the 

corrected amount of lender credits only 

if the corrected disclosure was provided 

to the borrower prior to the end of the 

quarter in which closing occurred. The 

financial institution does not report the 

corrected amount of lender credits in its 

quarterly submission if the corrected 

disclosure was provided to the borrower 

after the end of the quarter in which 

closing occurred, even if the corrected 

disclosure was provided to the borrower 

prior to the deadline for timely 

submission of the financial institution’s 

quarterly data. However, the financial 

institution reports the corrected amount 

of lender credits on its annual loan/

application register, provided that the 

corrected disclosure was provided to the 

borrower prior to the end of the 

calendar year in which closing 

occurred. 

* * * * * 

Dated: August 23, 2017. 

Richard Cordray, 

Director, Bureau of Consumer Financial 

Protection. 

[FR Doc. 2017–18284 Filed 9–12–17; 8:45 am] 

BILLING CODE 4810–AM–P 


sradovich on DSK3GMQ082PROD with RULES2