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Effective Date of New Home Mortgage Disclosures Postponed; Use of 2000 Census Data Required

by Jean M. McCarthy and Michael C. Tomkies*

The Federal Reserve Board has postponed the effective date from January 1, 2003 to January 1, 2004 of amendments to Regulation C that increase the amount and quality of mortgage loan information made available to federal regulators and consumer advocates. See 67 Fed. Reg. 30771‑01 (May 2, 2002). Regulation C was promulgated under the Home Mortgage Disclosure Act, 12 U.S.C. §§ 2801 et seq. ("HMDA").

The Federal Reserve Board previously adopted new home mortgage data collection regulations that, among other things:

  • Expand the coverage of non-depository lenders by adding a $25 million volume test;

  • Require lenders to report the spread between APR and the yield on comparable Treasury security for originated loans with a spread tentatively set at 3% for first liens and 5% for subordinate liens;

  • Require lenders to identify "high cost" loans subject to the Home Ownership Equity Protection Act ("HOEPA");

  • Conform the categories for reporting race and ethnicity to government-wide standards, permitting multiple racial designations and eliminating the option of a generic "other" designation; and

  • Add reporting requirements for certain preapproved programs.

By interim amendment to Appendix A of Regulation C, effective January 1, 2003, the Board is mandating the use of 2000 census data (rather than 1990 census data) in HMDA disclosures and aggregate disclosure statements.

The Board has not yet taken final action on several related topics:

  • The appropriate threshold for reporting of the spread between APR and yield on Treasury securities (discussed above);

  • Whether lien status (first, subordinate, unsecured) should be reported on applications and loans; and

  • Whether lenders should be required to ask an applicant’s ethnicity/race/sex in phone applications. The Board has indicated that if this amendment is adopted, it may be made effective January 1, 2003 as it does not appear to require substantial change to institutions’ data systems.

If we can help you with your home mortgage disclosure compliance or if you would like to discuss the broader potential impact of this regulation on the fair lending issues being faced by the consumer financial services industry generally, or if you would like a copy of any relevant materials, please do not hesitate to call us.

*Jean is an attorney and Mike is a partner with Dreher Tomkies LLP Jean is the Managing Editor of the Firm’s Residential Mortgage Loan Digest and her direct dial number is 614-628-1606. Both Jean and Mike can be reached by calling 614-628-8000.