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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules

BUREAU OF CONSUMER FINANCIAL
PROTECTION
12 CFR Part 1003
[Docket No. CFPB–2019–0021]
RIN 3170–AA76

Home Mortgage Disclosure
(Regulation C)
Bureau of Consumer Financial
Protection.
ACTION: Proposed rule with request for
public comment.
AGENCY:

The Bureau of Consumer
Financial Protection (Bureau) is
proposing two alternatives to amend
Regulation C to increase the threshold
for reporting data about closed-end
mortgage loans so that institutions
originating fewer than either 50 closedend mortgage loans, or alternatively 100
closed-end mortgage loans, in either of
the two preceding calendar years would
not have to report such data as of
January 1, 2020. The proposed rule
would also adjust the threshold for
reporting data about open-end lines of
credit by extending to January 1, 2022,
the current temporary threshold of 500
open-end lines of credit and setting the
threshold at 200 open-end lines of credit
upon the expiration of the proposed
extension of the temporary threshold.
The Bureau is also proposing to
incorporate into Regulation C the
interpretations and procedures from the
interpretive and procedural rule that the
Bureau issued on August 31, 2018, and
to implement further section 104(a) of
the Economic Growth, Regulatory
Relief, and Consumer Protection Act.
DATES: Comments on the proposed rule
must be received on or before June 12,
2019, except that comments on the
Paperwork Reduction Act analysis in
part VIII of the Supplementary
Information must be received on or
before July 12, 2019.
ADDRESSES: You may submit responsive
information and other comments,
identified by Docket No. CFPB–2019–
0021 or RIN 3170–AA76, by any of the
following methods:
• Federal eRulemaking Portal: http://
www.regulations.gov. Follow the
instructions for submitting comments.
• Email: 2019-NPRMHMDAThresholds@cfpb.gov. Include
Docket No. CFPB–2019–0021 or RIN
3170–AA76 in the subject line of the
message.
• Mail: Comment Intake, Bureau of
Consumer Financial Protection, 1700 G
Street NW, Washington, DC 20552.
• Hand Delivery/Courier: Comment
Intake, Bureau of Consumer Financial

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SUMMARY:

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Protection, 1700 G Street NW,
Washington, DC 20552.
Instructions: The Bureau encourages
the early submission of comments. All
submissions should include the agency
name and docket number or Regulatory
Information Number (RIN) for this
rulemaking. Because paper mail in the
Washington, DC area and at the Bureau
is subject to delay, commenters are
encouraged to submit comments
electronically. In general, all comments
received will be posted without change
to http://www.regulations.gov. In
addition, comments will be available for
public inspection and copying at 1700
G Street NW, Washington, DC 20552, on
official business days between the hours
of 10:00 a.m. and 5:00 p.m. Eastern
Time. You can make an appointment to
inspect the documents by telephoning
202–435–7275.
All comments, including attachments
and other supporting materials, will
become part of the public record and
subject to public disclosure. Proprietary
information or sensitive personal
information, such as account numbers
or Social Security numbers, or names of
other individuals, should not be
included. Comments will not be edited
to remove any identifying or contact
information.
FOR FURTHER INFORMATION CONTACT:
Jaydee DiGiovanni or Shaakira GoldRamirez, Counsels; or Amanda Quester
or Alexandra Reimelt, Senior Counsels,
Office of Regulations, at 202–435–7700
or https://
reginquiries.consumerfinance.gov/. If
you require this document in an
alternative electronic format, please
contact CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Summary
Regulation C, 12 CFR part 1003,
implements the Home Mortgage
Disclosure Act (HMDA), 12 U.S.C. 2801
through 2810, and includes institutional
and transactional coverage thresholds
that determine whether financial
institutions are required to collect,
record, and report any HMDA data on
closed-end mortgage loans or open-end
lines of credit (collectively, coverage
thresholds).1 In the Economic Growth,
Regulatory Relief, and Consumer
Protection Act (EGRRCPA),2 Congress
added partial exemptions from HMDA’s
requirements that exempt certain
insured depository institutions and
1 HMDA requires financial institutions to collect,
record, and report data. To simplify review of this
document, the Bureau generally refers herein to the
obligation to report data instead of listing all of
these obligations in each instance.
2 Public Law 115–174, 132 Stat. 1296 (2018).

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insured credit unions from reporting
some but not all HMDA data for certain
transactions. The proposed rule both
adjusts Regulation C’s institutional and
transactional coverage thresholds and
implements the new, separate
EGRRCPA partial exemptions.3
Coverage thresholds adjustments: In
an October 2015 final rule (2015 HMDA
Rule), the Bureau established
institutional and transactional coverage
thresholds in Regulation C, and these
thresholds affect whether a financial
institution needs to report any
information under HMDA for a
transaction.4 The 2015 HMDA Rule set
the closed-end threshold at 25 loans in
each of the two preceding calendar
years, and the open-end threshold at
100 open-end lines of credit in each of
the two preceding calendar years. In
2017, the Bureau temporarily increased
the open-end threshold to 500 open-end
lines of credit for two years (calendar
years 2018 and 2019). The proposed
rule provides two alternatives that
would permanently raise the closed-end
institutional and transactional coverage
threshold to either 50 or 100 closed-end
mortgage loans in each of the preceding
two calendar years. The proposed rule
would also extend to January 1, 2022,
the current temporary threshold of 500
open-end lines of credit for open-end
institutional and transactional coverage.
Once that temporary extension expires,
the proposed rule would set the openend threshold permanently at 200 openend lines of credit in each of the
preceding two calendar years. The
Bureau is proposing that the change to
the closed-end coverage threshold and
the temporary extension of the open-end
coverage threshold would take effect on
January 1, 2020, and the increase in the
open-end coverage threshold to 200
open-end lines of credit would take
effect on January 1, 2022.
Implementation of partial
exemptions: The proposed rule also
3 When amending commentary, the Office of the
Federal Register requires reprinting of certain
subsections being amended in their entirety rather
than providing more targeted amendatory
instructions. The sections of regulatory text and
commentary included in this document show the
language of those sections if the Bureau adopts its
changes as proposed. In addition, the Bureau is
releasing an unofficial, informal redline to assist
industry and other stakeholders in reviewing the
changes that it is proposing to make to the
regulatory text and commentary of Regulation C.
This redline can be found on the Bureau’s
regulatory implementation page for the HMDA Rule
at https://www.consumerfinance.gov/policycompliance/guidance/hmda-implementation/. If
any conflicts exist between the redline and the text
of Regulation C or this proposal, the documents
published in the Federal Register and the Code of
Federal Regulations are the controlling documents.
4 Home Mortgage Disclosure (Regulation C), 80 FR
66128 (Oct. 28, 2015).

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules
implements the partial exemptions from
HMDA’s requirements that the
EGRRCPA recently added to HMDA. In
August 2018, the Bureau issued an
interpretive and procedural rule to
implement and clarify the EGRRCPA
amendments to HMDA (2018 HMDA
Rule).5 The 2018 HMDA Rule clarifies
that insured depository institutions and
insured credit unions covered by a
partial exemption have the option of
reporting exempt data fields as long as
they report all data fields within any
exempt data point for which they report
data; clarifies that only loans and lines
of credit that are otherwise HMDA
reportable count toward the thresholds
for the partial exemptions; clarifies
which of the data points in Regulation
C are covered by the partial exemptions;
designates a non-universal loan
identifier for partially exempt
transactions for institutions that choose
not to report a universal loan identifier;
and clarifies the exception to the partial
exemptions for insured depository
institutions with less than satisfactory
examination histories under the
Community Reinvestment Act of 1977
(CRA). The proposed rule incorporates
into Regulation C these interpretations
and procedures, with minor
adjustments, by adding new § 1003.3(d)
relating to the partial exemptions and
making various amendments to the data
compilation requirements in § 1003.4.
The proposed rule further implements
the EGRRCPA by addressing certain
additional interpretive issues relating to
the partial exemptions that the 2018
HMDA Rule did not specifically
address, such as how to determine
whether a partial exemption applies to
a transaction after a merger or
acquisition. The Bureau is proposing
that the amendments implementing the
EGRRCPA would take effect on January
1, 2020.

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II. Background
A. HMDA and Regulation C
HMDA requires certain depository
institutions and for-profit nondepository
institutions to report 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). The
purposes of HMDA are to provide the
public with loan data that can be used:
(i) To help determine whether financial
institutions are serving the housing
5 Partial Exemptions from the Requirements of the
Home Mortgage Disclosure Act Under the Economic
Growth, Regulatory Relief, and Consumer
Protection Act (Regulation C), 83 FR 45325 (Sept.
7, 2018).

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needs of their communities; (ii) to assist
public officials in distributing publicsector investment so as to attract private
investment to areas where it is needed;
and (iii) to assist in identifying possible
discriminatory lending patterns and
enforcing antidiscrimination statutes.6
Prior to enactment of the Dodd-Frank
Wall Street Reform and Consumer
Protection Act (Dodd-Frank Act),
Regulation C required reporting of 22
data points and allowed for optional
reporting of reasons an institution
denied an application.7
B. Dodd-Frank Act
In 2010, Congress enacted the DoddFrank Act, which amended HMDA and
transferred HMDA rulemaking authority
and other functions from the Board of
Governors of the Federal Reserve
System (Board) to the Bureau.8 Among
other changes, the Dodd-Frank Act
expanded the scope of information
relating to mortgage applications and
loans that institutions must compile,
maintain, and report under HMDA.
Specifically, the Dodd-Frank Act
amended HMDA section 304(b)(4) by
adding one new data point, the age of
loan applicants and mortgagors. The
Dodd-Frank Act also added new HMDA
section 304(b)(5) and (6), which requires
the following additional new data
points: Information relating to the total
points and fees payable at origination
(total loan costs or total points and fees);
the difference between the annual
percentage rate (APR) associated with
the loan and a benchmark rate or rates
for all loans (rate spread); 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 on the loan;
the presence of contract terms allowing
non-amortizing payments; the channel
through which the application was
made; and the credit scores of
applicants and mortgagors.9 New
HMDA section 304(b)(6) in addition
authorizes the Bureau to require, ‘‘as [it]
may determine to be appropriate,’’ a
unique identifier that identifies the loan
originator, a universal loan identifier
(ULI), and the parcel number that
corresponds to the real property pledged
as collateral for the mortgage loan.10
6 12

CFR 1003.1.
used in this proposed rule, the term ‘‘data
point’’ refers to items of information that entities
are required to compile and report, generally listed
in separate paragraphs in Regulation C. Some data
points are reported using multiple data fields.
8 Public Law 111–203, 124 Stat. 1376, 1980,
2035–38, 2097–101 (2010).
9 Dodd-Frank Act section 1094(3), amending
HMDA section 304(b), 12 U.S.C. 2803(b).
10 Id.
7 As

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New HMDA section 304(b)(5)(D) and
(6)(J) further provides the Bureau with
the authority to mandate reporting of
‘‘such other information as the Bureau
may require.’’ 11
C. 2015 HMDA Rule
In October 2015, the Bureau issued
the 2015 HMDA Rule implementing the
Dodd-Frank Act amendments to
HMDA.12 Most of the 2015 HMDA Rule
took effect on January 1, 2018.13 The
2015 HMDA Rule implemented the new
data points specified in the Dodd-Frank
Act,14 added a number of additional
data points pursuant to the Bureau’s
discretionary authority under HMDA
section 304(b)(5) and (6),15 and made
revisions to certain pre-existing data
points to clarify their requirements,
provide greater specificity in reporting,
and align certain data points more
closely with industry data standards,16
among other changes.
The 2015 HMDA Rule requires some
financial institutions to report data on
certain dwelling-secured, open-end
lines of credit, including home-equity
lines of credit. Prior to the 2015 HMDA
Rule, Regulation C allowed, but did not
require, reporting of home-equity lines
of credit.
The 2015 HMDA Rule also
established institutional coverage
thresholds based on loan volume that
limit the definition of ‘‘financial
institution’’ to include only those
institutions that either originated at
least 25 closed-end mortgage loans in
each of the two preceding calendar
years or originated at least 100 open-end
lines of credit in each of the two
preceding calendar years.17 The 2015
11 Id.
12 80

FR 66128 (Oct. 28, 2015).
at 66128, 66256–58.
14 The following 12 data points in 12 CFR
1003.4(a) implement specific provisions in HMDA
section 304(b)(5)(A) through (C) or (b)(6)(A) through
(I): ULI (1003.4(a)(1)(i)); property address
(1003.4(a)(9)(i)); rate spread (1003.4(a)(12)); credit
score (1003.4(a)(15)); total loan costs or total points
and fees (1003.4(a)(17)); prepayment penalty term
(1003.4(a)(22)); loan term (1003.4(a)(25));
introductory rate period (1003.4(a)(26)); nonamortizing features (1003.4(a)(27)); property value
(1003.4(a)(28)); application channel (1003.4(a)(33));
and mortgage loan originator identifier
(1003.4(a)(34)). Id.
15 For example, the 2015 HMDA Rule added a
requirement to report debt-to-income ratio in
§ 1003.4(a)(23). Id. at 66218–20.
16 For example, the 2015 HMDA Rule replaced
property type with number of total units and
construction method in § 1003.4(a)(5) and (31). Id.
at 66180–81, 66227. It also requires disaggregation
of ethnicity and race information in
§ 1003.4(a)(10)(i). Id. at 66187–94.
17 Id. at 66148–50, 66309 (codified at 12 CFR
1003.2(g)(1)(v)). The 2015 HMDA Rule excludes
certain transactions from the definition of covered
loans, and those excluded transactions do not count
towards the threshold. Id.
13 Id.

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HMDA Rule separately established
transactional coverage thresholds that
are part of the test for determining
which loans are excluded from coverage
and were designed to work in tandem
with the institutional coverage
thresholds.18
D. 2017 HMDA Rule and December 2017
Statement

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In April 2017, the Bureau issued a
notice of proposed rulemaking to
address certain technical errors in the
2015 HMDA Rule, ease the burden of
reporting certain data requirements, and
clarify key terms to facilitate
compliance with Regulation C.19 In July
2017, the Bureau issued a notice of
proposed rulemaking (July 2017 HMDA
Proposal) to increase temporarily the
2015 HMDA Rule’s open-end coverage
threshold of 100 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 to commence collecting or
reporting data on their open-end lines of
credit until January 1, 2020.20 In August
2017, the Bureau issued the 2017
HMDA Rule, which, inter alia,
temporarily increased the open-end
threshold to 500 open-end lines of
credit for calendar years 2018 and
2019.21 In doing so, the Bureau
indicated that the two-year period
would allow time for the Bureau to
decide, through an additional
rulemaking, whether any permanent
adjustments to the open-end threshold
are needed.22
Recognizing the significant systems
and operations challenges needed to
adjust to the revised regulation, the
Bureau issued a statement in December
2017 (December 2017 Statement)
indicating that, for HMDA data
collected in 2018 and reported in 2019,
the Bureau does not intend to require
data resubmission unless data errors are
18 Id. at 66173, 66310, 66322 (codified at 12 CFR
1003.3(c)(11) and (12)).
19 Technical Corrections and Clarifying
Amendments to the Home Mortgage Disclosure
(Regulation C) October 2015 Final Rule, 82 FR
19142 (Apr. 25, 2017).
20 Home Mortgage Disclosure (Regulation C)
Temporary Increase in Institutional and
Transactional Coverage Thresholds for Open-End
Lines of Credit, 82 FR 33455 (July 20, 2017).
21 Home Mortgage Disclosure (Regulation C), 82
FR 43088 (Sept. 13, 2017).
22 Id. at 43095. The 2017 HMDA Rule also, among
other things, replaced ‘‘each’’ with ‘‘either’’ in
§ 1003.3(c)(11) and (12) to correct a drafting error
and to ensure that the exclusion provided in that
section mirrors the loan-volume threshold for
financial institutions in § 1003.2(g). Id. at 43100,
43102.

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material.23 The December 2017
Statement also explained that the
Bureau does not intend to assess
penalties with respect to errors in data
collected in 2018 and reported in
2019.24 As explained in the statement,
any supervisory examinations of 2018
HMDA data would be diagnostic to help
institutions identify compliance
weaknesses and would credit good-faith
compliance efforts. In its December
2017 Statement, the Bureau indicated
that it intended to engage in a
rulemaking to reconsider various
aspects of the 2015 HMDA Rule, such as
the institutional and transactional
coverage tests and the rule’s
discretionary data points. The Board,
the Federal Deposit Insurance
Corporation (FDIC), the National Credit
Union Administration (NCUA), and the
Office of the Comptroller of the
Currency (OCC) released similar
statements relating to their supervisory
examinations.25
E. EGRRCPA and 2018 HMDA Rule
On May 24, 2018, the President
signed into law the EGRRCPA.26 Section
104(a) of the EGRRCPA amends HMDA
section 304(i) by adding partial
exemptions from HMDA’s requirements
for certain insured depository
23 Bureau of Consumer Fin. Prot., ‘‘Statement
with Respect to HMDA Implementation’’ (Dec. 21,
2017), https://files.consumerfinance.gov/f/
documents/cfpb_statement-with-respect-to-hmdaimplementation_122017.pdf.
24 The statement also indicated that collection
and submission of the 2018 HMDA data will
provide financial institutions an opportunity to
identify any gaps in their implementation of
amended Regulation C and make improvements in
their HMDA compliance management systems for
future years. Id.
25 As part of its spring 2018 Call for Evidence
series of Requests for Information, the Bureau
issued a Request for Information Regarding the
Bureau’s Adopted Regulations and New
Rulemaking Authorities, 83 FR 12286 (Mar. 21,
2018) (RFI on Adopted Regulations) and a Request
for Information Regarding the Bureau’s Inherited
Regulations and Inherited Rulemaking Authorities,
83 FR 12881 (Mar. 26, 2018). The RFI on Adopted
Regulations did not request feedback on the 2015
HMDA Rule nor that rule’s subsequent amendments
because the Bureau had previously announced in
the December 2017 Statement that it intended to
engage in a rulemaking process to reconsider the
2015 HMDA Rule. However, as noted below in the
section-by-section analysis of § 1003.2(g)(1)(v) in
part IV, the Bureau received a few comments
relating to HMDA in response to the RFI on
Adopted Regulations. The Bureau has considered
these comments as well as other input it has
received from stakeholders through its efforts to
monitor and support industry implementation of
the 2015 HMDA Rule and the 2017 HMDA Rule in
developing this proposal and the Advance Notice
of Proposed Rulemaking that the Bureau released
simultaneously with this proposal. The Advance
Notice of Proposed Rulemaking (FR Doc. 2019–
08979) published in the Federal Register on May
8, 2019.
26 Public Law 115–174, 132 Stat. 1296 (2018).

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institutions and insured credit unions.27
New HMDA section 304(i)(1) provides
that the requirements of HMDA section
304(b)(5) and (6) shall not apply with
respect to closed-end mortgage loans of
an insured depository institution or
insured credit union if it originated
fewer than 500 closed-end mortgage
loans in each of the two preceding
calendar years. New HMDA section
304(i)(2) provides that the requirements
of HMDA section 304(b)(5) and (6) shall
not apply with respect to open-end lines
of credit of an insured depository
institution or insured credit union if it
originated fewer than 500 open-end
lines of credit in each of the two
preceding calendar years.
Notwithstanding the new partial
exemptions, new HMDA section
304(i)(3) provides that an insured
depository institution must comply with
HMDA section 304(b)(5) and (6) if it has
received a rating of ‘‘needs to improve
record of meeting community credit
needs’’ during each of its two most
recent examinations or a rating of
‘‘substantial noncompliance in meeting
community credit needs’’ on its most
recent examination under section
807(b)(2) of the CRA.28
On August 31, 2018, the Bureau
issued an interpretive and procedural
rule (2018 HMDA Rule) to implement
and clarify section 104(a) of the
EGRRCPA and effectuate the purposes
of the EGRRCPA and HMDA.29 The
2018 HMDA Rule clarifies that insured
depository institutions and insured
credit unions covered by a partial
exemption have the option of reporting
exempt data fields as long as they report
all data fields within any exempt data
point for which they report data;
clarifies that only loans and lines of
credit that are otherwise HMDA
reportable count toward the thresholds
27 For purposes of HMDA section 104, the
EGRRCPA provides that the term ‘‘insured credit
union’’ has the meaning given the term in section
101 of the Federal Credit Union Act, 12 U.S.C.
1752, and the term ‘‘insured depository institution’’
has the meaning given the term in section 3 of the
Federal Deposit Insurance Act, 12 U.S.C. 1813.
28 12 U.S.C. 2906(b)(2).
29 83 FR 45325 (Sept. 7, 2018). Prior to issuing the
2018 HMDA Rule, the Bureau, the Board, the FDIC,
the NCUA, and the OCC released statements on July
5, 2018, reiterating or referring to their December
2017 compliance statements and providing
information about formatting and submission of
2018 loan/application registers. See, e.g., Bureau of
Consumer Fin. Prot., ‘‘Statement on the
Implementation of the Economic Growth,
Regulatory Relief, and Consumer Protection Act
Amendments to the Home Mortgage Disclosure
Act’’ (July 25, 2018), https://
www.consumerfinance.gov/about-us/newsroom/
bureau-consumer-financial-protection-issuesstatement-implementation-economic-growthregulatory-relief-and-consumer-protection-actamendments-home-mortgage-disclosure-act/.

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for the partial exemptions; clarifies
which of the data points in Regulation
C are covered by the partial exemptions;
designates a non-universal loan
identifier for partially exempt
transactions for institutions that choose
not to report a ULI; and clarifies the
exception to the partial exemptions for
insured depository institutions with less
than satisfactory CRA examination
histories. The 2018 HMDA Rule also
explains that, because the EGRRCPA
does not provide a specific effective
date for section 104(a) and because there
are no other statutory indications that
section 104(a) becomes effective upon
regulatory action or some other event or
condition, the best interpretation is that
section 104(a) took effect when the
EGRRCPA became law on May 24, 2018.
In the 2018 HMDA Rule, the Bureau
stated that it anticipated that, at a later
date, it would initiate a notice-andcomment rulemaking to incorporate the
interpretations and procedures into
Regulation C and further implement the
EGRRCPA. This proposal commences
that rulemaking. The Bureau also issued
concurrently an Advance Notice of
Proposed Rulemaking to solicit
comment, data, and information from
the public about the data points that the
2015 HMDA Rule added to Regulation
C or revised to require additional
information and Regulation C’s coverage
of certain business- or commercialpurpose transactions. The Advance
Notice of Proposed Rulemaking (FR
Doc. 2019–08979) published in the
Federal Register on May 8, 2019.
F. HMDA Coverage Under Current
Regulation C
The Bureau’s estimates of HMDA
coverage and the sources used in
deriving those estimates are explained
in detail in the Bureau’s analysis under
Dodd-Frank Act section 1022(b) in part
VI below.30 As explained in more detail
in part VI.E.3 and table 3 below, the
Bureau estimates that currently there are
about 4,960 financial institutions
required to report their closed-end
mortgage loans and applications under
HMDA. The Bureau estimates that
approximately 4,263 of these current
reporters are depository institutions and
approximately 697 are non-depository
institutions. The Bureau estimates that
together, these financial institutions
originated about 7.0 million closed-end
mortgage loans in calendar year 2017.
The Bureau estimates that among those
4,960 financial institutions that are
currently required to report closed-end
mortgage loans under HMDA, about
3,300 insured depository institutions
30 See

infra part VI.D.1 & n.155.

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and insured credit unions are partially
exempt for closed-end mortgage loans
under the EGRRCPA and the 2018
HMDA Rule, and thus are not required
to report a subset of the data points
currently required by Regulation C for
these transactions.
As explained in more detail in part
VI.E.4 and table 4 below, under the
temporary 500 open-end line of credit
coverage threshold set in the 2017
HMDA Rule, the Bureau estimates that
currently there are about 333 financial
institutions required to report about
1.23 million open-end lines of credit
under HMDA. Of these institutions,
approximately 318 are depository
institutions and approximately 15 are
nondepository institutions. None of
these 333 institutions are partially
exempt.
In comparison, if the open-end
coverage threshold adjusts to 100 on
January 1, 2020 pursuant to the 2017
HMDA Rule, the Bureau estimates that
the number of reporters would be about
1,014, who in total originate about 1.41
million open-end lines of credit. The
Bureau estimates that approximately
972 of these open-end reporters would
be depository institutions and
approximately 42 would be
nondepository institutions. The Bureau
estimates that, among the 1,014
financial institutions that would be
required to report open-end lines of
credit under a threshold of 100, about
618 insured depository institutions and
insured credit unions are partially
exempt for open-end lines of credit
under the EGRRCPA and the 2018
HMDA Rule, and thus would not be
required to report a subset of the data
points currently required by Regulation
C for these transactions.
III. Legal Authority
The Bureau is issuing this proposal
pursuant to its authority under the
Dodd-Frank Act and HMDA. Section
1061 of the Dodd-Frank Act transferred
to the Bureau the ‘‘consumer financial
protection functions’’ previously vested
in certain other Federal agencies,
including the Board.31 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.’’ 32
Section 1022(b)(1) of the Dodd-Frank
31 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.
32 12 U.S.C. 5581(a)(1)(A).

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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.’’ 33 Both HMDA and title X of
the Dodd-Frank Act are Federal
consumer financial laws.34 Accordingly,
the Bureau has authority to issue
regulations to implement HMDA.
HMDA section 305(a) broadly
authorizes the Bureau to prescribe such
regulations as may be necessary to carry
out HMDA’s purposes.35 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.36
IV. Section-by-Section Analysis
Section 1003.2

Definitions

2(g) Financial Institution
Regulation C requires financial
institutions to report HMDA data.
Section 1003.2(g) defines financial
institution for purposes of Regulation C
and sets forth Regulation C’s
institutional coverage criteria for
depository financial institutions and
nondepository financial institutions.37
In the 2015 HMDA Rule, the Bureau
adjusted the institutional coverage
criteria under Regulation C so that
depository institutions and
nondepository institutions are required
to report HMDA data if they: (1)
Originated at least 25 closed-end
mortgage loans or 100 open-end lines of
credit in each of the two preceding
calendar years, and (2) meet all of the
other applicable criteria for reporting. In
the 2017 HMDA Rule, the Bureau
amended § 1003.2(g) and related
commentary to increase temporarily
from 100 to 500 the number of open-end
originations required to trigger reporting
responsibilities.38 For the reasons
discussed below, the Bureau proposes
(1) to amend §§ 1003.2(g)(1)(v)(A) and
33 12

U.S.C. 5512(b)(1).
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).
35 12 U.S.C. 2804(a).
36 Id.
37 12 CFR 1003.2(g)(1) (definition of depository
financial institution); § 1003.2(g)(2) (definition of
nondepository financial institution).
38 82 FR 43088, 43095 (Sept. 13, 2017).
34 Dodd-Frank

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(g)(2)(ii)(A) and 1003.3(c)(11) and
related commentary to raise the closedend coverage threshold to either 50 or
100 closed-end mortgage loans, and (2)
to amend §§ 1003.2(g)(1)(v)(B) and
(g)(2)(ii)(B) and 1003.3(c)(12) and
related commentary to extend to January
1, 2022, the current temporary open-end
coverage threshold of 500 open-end
lines of credit and then to set the
threshold permanently at 200 open-end
lines of credit beginning in calendar
year 2022. The Bureau is also seeking
comment on whether other closed- and
open-end coverage thresholds may be
appropriate. These proposed changes
are discussed below in the order in
which they appear in the proposed
regulation text and commentary.
In the 2015 HMDA Rule, the Bureau
adopted the thresholds for certain
depository institutions in § 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 in the
judgment of the Bureau 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 Rule, the Bureau found
that the exception in § 1003.2(g)(1) is
necessary and proper to effectuate the
purposes of and facilitate compliance
with HMDA. The Bureau found that the
provision, by reducing burden on
financial institutions and establishing a
consistent loan-volume test applicable
to all financial institutions, would
facilitate compliance with HMDA’s
requirements.39 Additionally, as
discussed in the 2015 HMDA Rule, the
Bureau adopted the thresholds for
certain nondepository institutions in
§ 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 number of mortgage
loans.40 Pursuant to its authority under
HMDA section 305(a), and for the
reasons discussed below, the Bureau
believes that the proposed threshold
changes in § 1003.2(g)(1) and (2) would
be necessary and proper to effectuate
the purposes of HMDA and facilitate
compliance with HMDA by reducing
39 80
40 Id.

FR 66128, 66150 (Oct. 28, 2015).
at 66153.

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burden and establishing a consistent
loan-volume test.
2(g)(1) Depository Financial Institution
2(g)(1)(v)
2(g)(1)(v)(A)
Closed-End Mortgage Loan Threshold
for Institutional Coverage of Depository
Institutions
HMDA and its implementing
regulation, Regulation C, require certain
depository institutions (banks, savings
associations, and credit unions) to
report 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). In the 2015 HMDA Rule,
the Bureau added the 25 closed-end
coverage threshold to the preexisting
regulatory coverage scheme for
depository institutions.41 In adopting
this threshold, the Bureau stated that it
believed that the institutional coverage
criteria should balance the burden on
financial institutions of reporting
HMDA data against the value of the data
reported and that a threshold should be
set that did not impair HMDA’s ability
to achieve its purposes but also did not
impose burden on institutions if their
data are of limited value.42
In the 2015 HMDA Rule, the Bureau
also stated that in adopting the 25
closed-end coverage threshold, it would
meaningfully reduce burden by
relieving an estimated 1,400 depository
institutions, or 22 percent of depository
institutions that previously reported
HMDA data, of their obligations to
report HMDA data on closed-end
mortgage loans.43 The Bureau
acknowledged that it would be possible
to maintain reporting of a significant
percentage of the national mortgage
market with a closed-end coverage
threshold set higher than 25 loans
annually and that data reported by some
institutions that would satisfy the 25
closed-end coverage threshold may not
be as useful for statistical analysis as

data reported by institutions with much
higher loan volumes.44 However, the
Bureau determined that a higher closedend coverage threshold would have a
material negative impact on the
availability of data about patterns and
trends at the local level and the data
about local communities are essential to
achieve HMDA’s purposes.45 The
Bureau concluded that, if it were to set
the closed-end coverage threshold
higher than 25, the resulting loss of data
at the local level would substantially
impede the public’s and public officials’
ability to understand access to credit in
their communities.46
However, since issuing the 2015
HMDA Rule and 2017 HMDA Rule, the
Bureau has heard concerns that lowervolume institutions continue to
experience significant burden at the 25
closed-end coverage threshold.47
Various industry stakeholders have
advocated for an increase to the
coverage threshold in order to reduce
burden on additional lower-volume
financial institutions. For example,
although the 2015 HMDA Rule was
outside the scope of the Bureau’s 2018
Request for Information Regarding the
Bureau’s Adopted Regulations and New
Rulemaking Authorities (RFI on
Adopted Regulations),48 several
depository institutions recommended in
that context that the Bureau use its
exemption authority to increase the 25loan closed-end coverage threshold and
stated that the costs associated with
HMDA reporting and its impact on the
operations of lower-volume financial
institutions do not justify the small
amount of data such institutions would
report. The closed-end coverage
threshold should not be so high as to
impair HMDA’s ability to achieve its
purposes; however, the threshold
should not be so low that institutions
bear the burden of reporting data that
would be of limited value. In light of the
recent concerns expressed by industry
stakeholders regarding the considerable
burden associated with reporting the
44 Id.

41 Prior

to the 2015 HMDA Rule, a bank, savings
association, or credit union was covered under
Regulation C if: (1) On the preceding December 31,
it satisfied an asset-size threshold; (2) on the
preceding December 31, it had a home or branch
office in a Metropolitan Statistical Area (MSA); (3)
during the previous calendar year, it originated at
least one home purchase loan or refinancing of a
home purchase loan secured by a first lien on a oneto four-unit dwelling; and (4) the institution is
federally insured or regulated, or the mortgage loan
referred to in item (3) was insured, guaranteed, or
supplemented by a Federal agency or intended for
sale to the Federal National Mortgage Association
or the Federal Home Loan Mortgage Corporation. 12
CFR 1003.2 (2016).
42 80 FR 66128, 66147 (Oct. 28, 2015).
43 Id. at 66148, 66277.

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at 66147.

45 Id.
46 Id.

at 66148.
Bureau temporarily raised the threshold for
open-end lines of credit in the 2017 HMDA Rule
because of concerns that the Bureau may have
underestimated in the 2015 HMDA Rule the
number of institutions that would be required to
report open-end lines of credit under the threshold
adopted and that it also may have underestimated
the cost of reporting. However, the Bureau declined
to raise the threshold for closed-end mortgage loans
and stated that in developing the 2015 HMDA Rule,
it had robust data to make a determination about
the number of transactions that would be reported
at the 25 closed-end coverage threshold as well as
the one-time and ongoing costs to industry. 82 FR
43088, 43095–96 (Sept. 13, 2017).
48 83 FR 12286, 12288 (Mar. 21, 2018).
47 The

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules
new data points required by the 2015
HMDA Rule on closed-end mortgage
loans, the Bureau is reconsidering
whether the current 25-loan closed-end
coverage threshold for depository
institutions appropriately balances the
benefits of the HMDA data reported by
lower-volume depository institutions in
furthering HMDA’s purposes with the
burden on such institutions associated
with reporting closed-end data. The
Bureau believes that increasing the
closed-end coverage threshold may
provide meaningful burden relief for
lower-volume depository institutions
without reducing substantially the data
reported under HMDA. Accordingly,
based on its evaluation of more recent
available data, the Bureau is proposing
two alternative increases to the closedend coverage threshold and seeking
comment on whether either of these
alternatives, or some other alternative,
would more appropriately balance the
benefits and burdens of covering
institutions based on their closed-end
lending.
The Bureau recognizes that in the
EGRRCPA, Congress provided a partial
exemption to institutions that would be
affected by this proposed increase to the
threshold so that the benefit in terms of
reduced burden would be less than it
would have been absent the EGRRCPA.
Even so, the Bureau believes that, for
the depository institutions that would
be relieved of all reporting obligations
under either of the alternatives in this
proposal, the burden reduction would
be substantial and would outweigh the
limited value of their data in achieving
HMDA’s purposes. The Bureau has also
heard feedback suggesting that—
consistent with its own estimates—a
modest increase in the closed-end
coverage threshold likely would have
very little impact on the overall HMDA
data, because the amount of data
reported by the lower-volume
depository institutions that would be
excluded at such a higher threshold is
insignificant as compared to the total
HMDA data reported annually. The
Bureau now believes a higher closedend coverage threshold may more
appropriately balance the burden on
lower-volume depository institutions
while at the same time maintaining
sufficient reporting to achieve HMDA’s
purposes.
As discussed below, the Bureau is
proposing two alternatives to the closedend coverage threshold. These proposed
alternatives would maintain a uniform
loan-volume threshold for depository
and nondepository institutions.49
49 For a discussion on the proposed closed-end
coverage threshold for nondepository institutions,

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Alternative 1 proposes to set the closedend coverage threshold at 50 while
Alternative 2 proposes to set the closedend coverage threshold at 100. The
Bureau reviewed multiple data sources,
including recent HMDA data 50 and
Reports of Condition and Income (Call
Reports) and developed estimates for
each proposal as described below.51
Alternative 1: Threshold Set at 50
The Bureau estimates that if the
closed-end coverage threshold were
increased from 25 to 50 loans,
approximately 3,518 out of
approximately 4,263 depository
institutions covered under the current
rule (or approximately 83 percent)
would continue to be required to report
HMDA data on closed-end mortgage
loans. Approximately 745 depository
institutions covered under the current
rule (or approximately 17 percent)
would be relieved of their HMDA
reporting responsibilities for closed-end
mortgage loans. Further, the Bureau
estimates that, with the proposed
increase from 25 to 50 loans in the
closed-end coverage threshold, about 99
percent of total originations of closedend mortgage loans reported by
depository institutions under the
current Regulation C coverage criteria,
or approximately 3.54 million closedend mortgage loan originations under
the current market conditions, would
continue to be reported.
The Bureau noted in the 2015 HMDA
Rule that any loan-volume threshold
will affect individual markets
differently, depending on the extent to
which smaller creditors service
individual markets and the market share
of those creditors. In the 2015 HMDA
Rule, the Bureau examined the extent to
which varying thresholds would cause a
loss of data at the census tract level. For
this proposal the Bureau also reviewed
estimates at varying closed-end coverage
thresholds to examine the potential
effect on available data at the census
tract level.52 The Bureau estimates that,
see the section-by-section analysis of
§ 1003.2(g)(2)(ii)(A) below.
50 As discussed further in the analysis under
Dodd-Frank Act section 1022(b) in part VI, note
155, these estimates are based on HMDA data
collected in 2016 and 2017 and other sources. The
Bureau intends to review the 2018 HMDA data
more closely in connection with this rulemaking
once the 2018 submissions are more complete.
51 The estimates described in each alternative
proposal in this section cover only depository
institutions. Estimates for nondepository
institutions are described in the section-by-section
analysis of § 1003.2(g)(2)(ii)(A). For estimates that
are comprehensive of depository and nondepository
institutions, see part VI.E.3 below.
52 The estimates of the effect on reportable HMDA
data at the census tract level comprise both
depository institutions and nondepository

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with the proposed increase to the
closed-end coverage threshold from 25
to 50, just under 300 out of
approximately 74,000 total census
tracts, or less than one-half of 1 percent
of the total number of census tracts,
would lose at least 20 percent of
reportable HMDA data on closed-end
mortgage loans relative to the current
threshold.53 With respect to low-tomoderate income census tracts, the
Bureau estimates that relative to the
current threshold, there would be at
least a 20 percent loss of reportable
HMDA data on closed-end mortgage
loans in less than 1 percent of such
tracts if the closed-end coverage
threshold were increased from 25 to the
proposed 50. In addition, the Bureau
examined the effects on rural census
tracts and estimates that relative to the
current threshold, there would be at
least a 20 percent loss of reportable
HMDA data on closed-end mortgage
loans in less than one-half of 1 percent
of such tracts.
Ongoing cost reduction from proposed
Alternative 1: Threshold set at 50. The
proposed increase in the closed-end
coverage threshold from 25 to 50 would
relieve institutions that originate
between 25 and 49 closed-end mortgage
loans of the ongoing costs associated
with reporting such loans that they
might otherwise incur if the closed-end
coverage threshold remained at the
current 25. The Bureau estimates that
the proposed increase in the closed-end
coverage threshold to 50 would result in
aggregate savings on the operational
costs associated with reporting closedend mortgage loans of approximately
$2.2 million per year.54
Therefore, the Bureau believes that if
the closed-end coverage threshold were
raised from 25 to the proposed 50, the
loss in data from these depository
institutions and for this relatively small
number of census tracts may be justified
by the significant reduction in
compliance costs for the approximately
745 lower-volume depository
institutions. The effect of a closed-end coverage
threshold set at 100 on reportable HMDA data at the
census tract level is discussed in Alternative 2
below.
53 The Bureau estimates that at least 80 percent
of reportable HMDA data would be retained in over
73,500 tracts. In certain tracts, substantially more
than 80 percent of reportable HMDA data would be
retained.
54 These cost estimates reflect the combined
ongoing reduction in costs for depository and
nondepository institutions. These estimates also
take into account the enactment of the EGRRCPA,
which created partial exemptions from HMDA’s
requirements that certain insured depository
institutions and insured credit unions may now
use. See part VI.E.3 below for a more
comprehensive analysis on cost estimates.

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institutions that would no longer be
required to report HMDA data.
Alternative 2: Threshold Set at 100
The Bureau estimates that if the
closed-end coverage threshold were
increased from 25 to 100 loans,
approximately 2,581 out of about 4,263
depository institutions covered under
the current rule (or approximately 61
percent) would continue to be required
to report HMDA data on closed-end
mortgage loans. Approximately 1,682
depository institutions covered under
the current rule (or approximately 39
percent) would be relieved of their
HMDA reporting responsibilities with
respect to closed-end mortgage loans.
The Bureau estimates that with this
proposed increase to the closed-end
coverage threshold, approximately 96
percent of total originations of closedend mortgage loans reported by
depository institutions under the
current coverage criteria, or
approximately 3.43 million closed-end
mortgage loan originations under the
current market conditions, would
continue to be reported.
With respect to the potential effect on
available data at the census tract level,
the Bureau estimates that if the closedend coverage threshold were increased
from 25 to the proposed 100, there
would be a loss of at least 20 percent of
reportable HMDA data in about 1,100
out of approximately 74,000 total census
tracts, or 1.5 percent of the total number
of census tracts, relative to the current
threshold.55 For low-to-moderate
income census tracts, the Bureau
estimates that if the closed-end coverage
threshold were increased from 25 to the
proposed 100, there would be at least a
20 percent loss of reportable HMDA
data in 3 percent of such tracts if the
closed-end coverage threshold were set
at the proposed 100. In addition, the
Bureau examined the effects on rural
census tracts and estimates that relative
to the current threshold, there would be
at least a 20 percent loss of reportable
HMDA data in less than 3 percent of
such tracts.
Ongoing cost reduction from proposed
Alternative 2: Threshold set at 100. The
proposed increase in the closed-end
coverage threshold from 25 to 100
would relieve institutions that originate
between 25 and 99 closed-end mortgage
loans of the ongoing costs associated
with reporting such loans that they
might otherwise incur if the closed-end
coverage threshold remained at the
55 The Bureau estimates that at least 80 percent
of reportable HMDA data would be retained in
approximately 73,000 tracts. In certain tracts,
substantially more than 80 percent of reportable
HMDA data would be retained.

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current 25. The Bureau estimates that
the proposed increase in the closed-end
coverage threshold to 100 would result
in aggregate savings on the operational
costs associated with reporting closedend mortgage loans of approximately
$8.1 million per year.56
Therefore, the Bureau believes that if
the closed-end coverage threshold were
set at the proposed 100 the loss in data
from these depository institutions and
for this relatively small number of
census tracts, although greater than at
the proposed 50 closed-end coverage
threshold, may be justified by the
significant reduction in compliance
costs for the approximately 1,682 lowervolume depository institutions that
would no longer be required to report
HMDA data relative to the current
threshold.
Estimates for Other Closed-End
Coverage Thresholds
The Bureau also generated estimates
for closed-end coverage thresholds
higher than the ones in the proposed
alternatives. These estimates reflect that
the decrease in the number of
depository institutions that would be
required to report HMDA data and the
resulting decrease in the HMDA data
that would be reported becomes more
pronounced at thresholds higher than
100. For example, if the closed-end
coverage threshold were increased from
25 to 250 loans, the Bureau estimates
that approximately 1,413 out of
approximately 4,263 depository
institutions would continue to report
HMDA data and approximately 2,850
depository institutions, or
approximately 67 percent of depository
institutions covered under the current
rule, would be relieved of their HMDA
reporting responsibilities. The Bureau
estimates that with an increase in the
closed-end coverage threshold from 25
to 250, approximately 90 percent of total
originations of closed-end mortgage
loans reported by depository
institutions under the current coverage
criteria, or approximately 3.21 million
closed-end mortgage loan originations
under the current market conditions,
would continue to be reported.
Further, if the closed-end coverage
threshold were increased from 25 to 500
loans, the Bureau estimates that
approximately 798 out of 4,263
56 These cost estimates reflect the combined
ongoing reduction in costs for depository and
nondepository institutions. These estimates also
take into account the enactment of the EGRRCPA,
which created partial exemptions from HMDA’s
requirements that certain insured depository
institutions and insured credit unions may now
use. See part VI.E.3 below for a more
comprehensive analysis on cost estimates.

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depository institutions would continue
to be required to report HMDA data and
approximately 3,465 depository
institutions, or approximately 81
percent of depository institutions
covered under the current coverage
criteria, would be relieved of their
HMDA reporting responsibilities. The
Bureau estimates that with an increase
in the closed-end coverage threshold to
500, approximately 83 percent of total
originations of closed-end mortgage
loans reported by depository
institutions under the current
Regulation C coverage criteria, or
approximately 2.97 million closed-end
mortgage loan originations under the
current market conditions, would
continue to be reported.
The Bureau’s estimates also reflect
that the effect on data available at the
census tract level would become more
pronounced at closed-end mortgage loan
coverage thresholds above 100. For
example, the Bureau estimates that
increasing the closed-end coverage
threshold from 25 to 250 loans would
result in a loss of at least 20 percent of
reportable HMDA data on closed-end
mortgage loans in over 4,000 out of
approximately 74,000 total census
tracts, or 5.4 percent of the total number
census tracts. Of the approximately
4,000 census tracts where there would
be a loss of at least 20 percent of
reportable HMDA data on closed-end
mortgage loans at such threshold, about
14 percent are rural tracts 57 and just
over 8 percent are low-to-moderate
income tracts. Further, the Bureau
estimates that increasing the closed-end
coverage threshold from 25 to 500 loans
would result in a loss of at least 20
percent of reportable HMDA data on
closed-end mortgage loans in
approximately 11,000 out of
approximately 74,000 total census
tracts, or 14.9 percent of the total
number of census tracts. Of the
approximately 11,000 census tracts
where there would be a loss of at least
20 percent of reportable HMDA data on
closed-end mortgage loans at such
threshold, about 32 percent are rural
tracts and about 17 percent are low-tomoderate income tracts.
The Bureau is not proposing these
higher thresholds because of concerns
that the resulting reduction in HMDA’s
overall coverage of the mortgage market
may affect the usefulness of the HMDA
data. For example, a reduction in
57 As discussed in part VI.F.2 below, recent
research suggests that financial institutions that
serve rural areas are generally not HMDA reporters.
HMDA data do, however, contain information about
some covered loans involving properties in rural
areas and these higher thresholds would thus result
in decreased information on such lending activity.

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HMDA data may affect bank regulators’
and the public’s ability to use HMDA
data to evaluate a depository
institution’s performance under the
CRA. HMDA data are also used for
identifying possible discriminatory
lending patterns and potential
violations of antidiscrimination statutes,
such as the Equal Credit Opportunity
Act and Fair Housing Act, including
through redlining analyses, which aim
to compare lenders and their peers. As
noted in the 2015 HMDA Rule, data
about local communities is essential to
achieve HMDA’s purposes.58 Among
other things, public officials,
community advocates, and researchers
use HMDA data to analyze access to
credit at the neighborhood level and to
target programs to assist underserved
communities and consumers.59 A
reduction in HMDA’s overall coverage
of the mortgage market could thus
reduce the usefulness of HMDA data for
identifying opportunities for public and
private investment, and for assessing
whether lenders are meeting the
housing needs of their communities.60
Therefore, the Bureau believes that if
the closed-end coverage threshold were
increased from 25 loans to a level above
100 loans, the more notable decrease in
the number of institutions required to
report HMDA data and the loss of
reportable HMDA data, particularly at
the local level, available to serve
HMDA’s purposes may not be justified
by the significant reduction in
compliance costs for the depository
institutions that would no longer be
required to report HMDA data at such
higher thresholds.

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Request for Feedback
For the reasons discussed above, the
Bureau proposes to increase the closedend coverage threshold for depository
institutions in § 1003.2(g)(1)(v)(A) from
25 to 50 in Alternative 1 or from 25 to
100 in Alternative 2, and to make
conforming amendments to comments
(2)(g)–1 and –5. The Bureau seeks
comment on whether the data that
would be reported at thresholds of 50 or
100 closed-end mortgage loans would
achieve the purposes of HMDA.61 The
58 80 FR 66128, 66147 (Oct. 28, 2015). The 2015
HMDA Rule explained that public officials,
community advocates, and researchers rely on
HMDA data to analyze access to credit at the
neighborhood level and to target programs to assist
underserved communities and consumers. It
explained that, for example, local and state officials
have used HMDA data to identify and target relief
to localities impacted by high-cost lending or
discrimination. Id.
59 Id. at 66280.
60 Id. at 66276.
61 As originally adopted, HMDA identifies its
purposes as providing the public and public

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Bureau also seeks comment on whether
the value of the data that would be
reported by institutions that originate
between 25 and 50 closed-end mortgage
loans, or alternatively between 25 and
100 closed-end mortgage loans, is
outweighed by the burden on those
institutions of reporting HMDA data and
undergoing examinations to validate the
accuracy of their submissions. The
Bureau seeks comment on these
alternative proposals as well as any
other closed-end coverage threshold,
including any threshold significantly
above 100, that would more
appropriately balance the burden of
reporting with the value of the data
reported to achieving the purposes of
HMDA. Specifically, the Bureau seeks
comment on: (1) How the proposed
increase to the closed-end coverage
threshold to 50, 100, or another number
would affect the number of depository
institutions required to report data on
closed-end mortgage loans; (2) the
significance of the data that would not
be available for achieving HMDA’s
purposes as a result of the proposed
increase to the closed-end coverage
threshold to 50, 100, or another number,
including (a) whether, and under what
circumstances, the proposed increase
would prevent public officials and the
public from understanding if depository
institutions excluded by the proposed
50, 100, or another closed-end coverage
threshold are serving the needs of their
community, (b) whether, and under
what circumstances, the proposed
increase to the closed-end coverage
threshold to 50, 100, or another number
would negatively impact the ability of
public officials to make determinations
with respect to the distribution of public
sector investments in a manner
designed to improve the private
investment environment, and (c)
whether, and under what
circumstances, the proposed 50, 100, or
another number for the closed-end
coverage threshold would exclude data
that would be valuable for identifying
possible fair lending violations or
enforcing antidiscrimination laws; and
(3) the reduction in burden that would
result from the proposed increase for
institutions that would not be required
to report (addressing separately the
burden reduction for depository
officials with information to help determine
whether financial institutions are serving the
housing needs of the communities in which they
are located, and assisting public officials in their
determination of the distribution of public sector
investments in a manner designed to improve the
private investment environment. Following
Congress’s expansion of HMDA, the Board
recognized a third purpose of identifying possible
discriminatory lending patterns and enforcing
antidiscrimination statutes.

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institutions that are eligible for the
EGRRCPA’s partial exemption for
closed-end mortgage loans and the
burden reduction for depository
institutions that are not).
2(g)(1)(v)(B)
Background on Reporting Data
Concerning Open-End Lines of Credit
Under the 2015 HMDA Rule and the
2017 HMDA Rule
By its terms, the definition of
‘‘mortgage loan’’ in HMDA covers all
loans secured by residential real
property and home improvement loans
whether open- or closed-end.62
However, home-equity lines of credit
were uncommon in the 1970s and early
1980s when Regulation C was first
issued, and the Board’s definition
covered only closed-end loans. In 2000,
in response to the increasing importance
of open-end lending in the housing
market, the Board proposed to revise
Regulation C to require mandatory
reporting of all home-equity lines of
credit, which were optionally
reported.63 However, the Board’s 2002
final rule left open-end reporting
voluntary, as the Board determined that
the benefits of mandatory reporting
relative to other then proposed changes
(such as collecting information about
higher-priced loans) did not justify the
increased burden.64
As discussed in the 2015 HMDA Rule,
open-end mortgage lending continued to
increase in the years following the
Board’s 2002 final rule, particularly in
areas with high home-price
appreciation.65 In light of that
development and the role that open-end
lines of credit played in contributing to
the financial crisis,66 the Bureau
decided in the 2015 HMDA Rule to
require reporting of dwelling-secured,
consumer purpose open-end lines of
credit,67 concluding that doing so was a
62 HMDA

section 303(2), 12 U.S.C. 2802(2).
FR 78656, 78659–60 (Dec. 15, 2000). In
1988, the Board had amended Regulation C to
permit, but not require, financial institutions to
report certain home-equity lines of credit. 53 FR
31683, 31685 (Aug. 19, 1988).
64 67 FR 7222, 7225 (Feb. 15, 2002).
65 80 FR 66128, 66160 (Oct. 28, 2015).
66 Id. As the Bureau explained in the 2015 HMDA
Rule, research indicated that some real estate
investors used open-end, home-secured lines of
credit to purchase non-owner occupied properties,
which correlated with higher first-mortgage defaults
and home-price depreciation during the financial
crisis. Id. In the years leading up to the crisis, such
home-equity lines of credit often were made and
fully drawn more or less simultaneously with firstlien home purchase loans, essentially creating high
loan-to-value home purchase transactions that were
not visible in the HMDA dataset. Id.
67 The Bureau also required reporting of
applications for, and originations of, dwelling63 65

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reasonable interpretation of ‘‘mortgage
loan’’ in HMDA and necessary and
proper to effectuate the purposes of
HMDA and prevent evasions thereof.68
As noted in the 2015 HMDA 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
their open-end lending volume.69 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.70 In seeking to draw
such a line, the Bureau acknowledged
that it was handicapped by the lack of
available data concerning open-end
lending.71 This created challenges both
in estimating the distribution of openend origination volume across financial
institutions and in estimating the onetime and ongoing costs that institutions
of various sizes would incur in
reporting data on open-end lending.
To estimate the one-time and ongoing
costs of reporting data under HMDA in
the 2015 HMDA 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’’ (highcomplexity); ‘‘tier 2’’ (moderatecomplexity); and ‘‘tier 3’’ (lowcomplexity).72 The Bureau then sought
secured commercial-purpose lines of credit for
home purchase, home improvement, or refinancing
purposes. Id. at 66171.
68 Id. at 66157–62. 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 investment so
as to attract private investment to areas where it is
needed, and to assist in identifying possible
discriminatory lending patterns and enforcing
antidiscrimination statutes. The Bureau believes
that collecting information about all dwellingsecured, consumer-purpose open-end lines of credit
serves these purposes.
69 80 FR 66128, 66161 (Oct. 28, 2015).
70 Id. at 66149.
71 Id.
72 Id. at 66261, 66269–70. In the 2015 HMDA Rule
and the 2017 HMDA Rule, the Bureau assigned
financial institutions to tiers by adopting cutoffs
based on the estimated open-end line of credit
volume. Id. at 66285; 82 FR 43088, 43128 (Sept. 13,
2017). Specifically, the Bureau assumed the lenders
that originated fewer than 200 but more than 100
open-end lines of credit were tier 3 (low-

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to estimate one-time and ongoing costs
for a representative institution in each
tier.73
The Bureau recognized in the 2015
HMDA Rule that the one-time cost of
reporting open-end lines of credit could
be substantial because most financial
institutions had not reported open-end
lines of credit 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.74 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 they may process
open-end lines of credit on the same
system and in the same business unit as
closed-end mortgage loans, their onetime 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.75
The Bureau acknowledged in the 2015
HMDA Rule that ongoing costs for openend 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.76
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.77 Thus, using the ongoing
cost estimates developed for closed-end
reporting, the Bureau estimated that for
a representative tier 1 institution the
ongoing operational costs would be
$273,000 per year; for a representative
tier 2 institution $43,400 per year; and
for a representative tier 3 institution
complexity) open-end reporters; lenders that
originate between 200 and 7,000 open-lines of
credit were tier 2 (moderate-complexity) open-end
reporters; and lenders that originated more than
7,000 open-end lines of credit were tier 1 (highcomplexity) open-end reporters. 80 FR 66128,
66285 (Oct. 28, 2015); 82 FR 43088, 43128 (Sept.
13, 2017). As explained below in part VI.D.1, for
purposes of this proposal, the Bureau has used a
more precise methodology to assign eligible
financial institutions to tiers 2 and 3 for their openend reporting, which relies on constraints relating
to the estimated numbers of impacted institutions
and loan/application register records for the
applicable provision.
73 80 FR 66128, 66264–65 (Oct. 28, 2015); see also
id. at 66284.
74 Id. at 66264; see also id. at 66284–85.
75 Id. at 66265; see also id. at 66284.
76 Id. at 66285.
77 Id.

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$8,600 per year.78 These translated into
costs per HMDA record of
approximately $9, $43, and $57
respectively.79 The Bureau
acknowledged that, precisely because
no good source of publicly available
data exists concerning open-end lines of
credit, it was difficult to predict the
accuracy of the Bureau’s cost estimates
but also stated its belief that these
estimates were reasonably reliable.80
Drawing on all of these estimates, the
Bureau decided in the 2015 HMDA Rule
to establish an open-end coverage
threshold that would require
institutions that originate 100 or more
open-end lines of credit in each of the
two preceding calendar years to report
data on such lines of credit. The Bureau
estimated that this threshold would
avoid imposing the burden of
establishing mandatory open-end
reporting on approximately 3,000
predominantly smaller-sized
institutions with low-volume open-end
lending 81 and would require reporting
by 749 financial institutions, all but 24
of which would also report data on their
closed-end mortgage lending.82 The
Bureau explained that it believed this
threshold appropriately balanced the
benefits and burdens of covering
institutions based on their open-end
mortgage lending.83 However, as
discussed in the 2017 HMDA Rule, the
Bureau lacked robust data for the
estimates that it used to establish the
open-end threshold in the 2015 HMDA
Rule.84
The 2017 HMDA Rule explained that,
between 2013 and 2017, the number of
dwelling-secured open-end lines of
credit financial institutions originated
had increased by 36 percent.85 The
Bureau noted that, to the extent
institutions that had been originating
fewer than 100 open-end lines of credit
shared in that growth, the number of
institutions at the margin that would be
required to report under an open-end
threshold of 100 lines of credit would
78 Id.

at 66264, 66286.

79 Id.
80 Id.

at 66162.
The estimate of the number of institutions
that would be excluded from reporting open-end
lines of credit by the transactional coverage
threshold was relative to the number that would
have been covered under the Bureau’s proposal that
led to the 2015 HMDA 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).
82 80 FR 66128, 66281 (Oct. 28, 2015).
83 Id. at 66162.
84 82 FR 43088, 43094 (Sept. 13, 2017).
85 Id.
81 Id.

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules
also increase.86 Additionally, in the
2017 HMDA Rule, the Bureau explained
that information received by the Bureau
since issuing the 2015 HMDA Rule had
caused the Bureau to question its
assumption that certain low-complexity
institutions 87 process home-equity lines
of credit on the same data platforms as
closed-end mortgages, on which the
Bureau based its assumption that the
one-time costs for these institutions
would be minimal.88 After issuing the
2015 HMDA Rule, the Bureau had heard
anecdotes suggesting that one-time costs
to begin reporting open-end lines of
credit could be as high as $100,000 for
such institutions.89 The Bureau likewise
had heard anecdotes 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 than the Bureau had
estimated.90
Based on this information 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 Rule,
the Bureau proposed in 2017 to increase
temporarily the open-end threshold to
500 for two years, until January 1,
2020.91 This temporary increase was
intended to allow for additional data
collection and assessment as to what
threshold would best balance the
benefits and burdens of covering
institutions based on their open-end
mortgage lending. The Bureau finalized
the proposal after notice and comment
in the 2017 HMDA Rule.92
Since the Bureau issued the 2017
HMDA Rule, various trade associations
and smaller financial institutions have
urged the Bureau to increase
permanently the open-end line of credit
coverage threshold in order to reduce
the burden on smaller institutions. For
example, some Federal credit unions
suggested in response to the Bureau’s
March 2018 RFI on Adopted
Regulations that the Bureau consider
increasing both the open- and closedend thresholds that trigger the
applicability of HMDA requirements to
credit unions.
86 Id.

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87 See
88 82

supra notes 72–75 and accompanying text.
FR 43088, 43094 (Sept. 13, 2017).

89 Id.
90 Id.
91 82

FR 33455 (July 20, 2017).
FR 43088 (Sept. 13, 2017). Comments
received on the July 2017 HMDA Proposal to
change temporarily the open-end threshold are
discussed in the 2017 HMDA Rule. Id. at 43094–
95.
92 82

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Open-End Line of Credit Threshold for
Institutional Coverage of Depository
Institutions
As explained above, the 2015 HMDA
Rule established an institutional
coverage threshold in § 1003.2(g) for
open-end lines of credit of at least 100
open-end lines of credit in each of the
two preceding calendar years.93 In the
2017 HMDA Rule, the Bureau amended
§ 1003.2(g)(1)(v)(B) and comments 2(g)–
3 and –5, effective January 1, 2018, to
increase temporarily the open-end
threshold from 100 to 500 and, effective
January 1, 2020, to restore a permanent
threshold of 100.94 For the reasons
discussed below, the Bureau now
proposes to amend § 1003.2(g)(1)(v)(B)
and comments 2(g)–3 and –5, effective
January 1, 2020, to extend until January
1, 2022, the temporary open-end
institutional coverage threshold for
depository institutions of 500 open-end
lines of credit. When this temporary
threshold expires, the Bureau is
proposing to set a permanent threshold
at 200 open-end lines of credit. The
Bureau is also proposing conforming
changes to the institutional coverage
threshold for nondepository institutions
in § 1003.2(g)(2)(ii)(B) and to the
transactional coverage threshold in
§ 1003.3(c)(12), as discussed below.
Several developments since the
Bureau issued the 2015 HMDA Rule
have affected the Bureau’s analyses of
the costs and benefits associated with
the open-end line of credit coverage
threshold. As the 2017 HMDA Rule
explained, the Bureau is concerned that,
in establishing a 100-loan threshold for
open-end lines of credit in the 2015
HMDA Rule, it may have
underestimated the number of
institutions that would be covered and
93 The 2015 HMDA Rule established
complementary thresholds that determine whether
a financial institution is required to report data on
closed-end mortgage loans or open-end lines of
credit, respectively. 80 FR 66128, 66146, 66149,
66162 (Oct. 28, 2015). The 2017 HMDA Rule
corrected a drafting error to ensure the institutional
coverage threshold and the transactional coverage
threshold were complementary. 82 FR 43088,
43100, 43102 (Sept. 13, 2017). These institutional
and transactional coverage thresholds are distinct
from the thresholds for the EGRRCPA partial
exemptions in proposed § 1003.3(d)(2) and (3).
94 82 FR 43088, 43094 (Sept. 13, 2017). In the
2015 HMDA Rule and 2017 HMDA Rule, the
Bureau declined to retain optional reporting of
open-end lines of credit, after concluding that
improved visibility into this 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. Id. at 43095; 80 FR
66128, 66160–61 (Oct. 28, 2015). However,
Regulation C as amended by the 2017 HMDA Rule
permits voluntary reporting by financial institutions
that do not meet the open-end threshold. 12 CFR
1003.3(c)(12).

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the reporting burden on smaller covered
institutions. In the 2017 HMDA Rule,
the Bureau noted that there had been a
36 percent increase in the number of
dwelling-secured open-end lines of
credit originated between 2013 (the
most recent data cited by the Bureau for
its analysis of the 2015 HMDA Rule)
and 2016.95 The number of dwellingsecured open-end line of credit
originations in 2018 was again
approximately 36 percent higher than
the number of such originations in
2013.96 Table 4 in the Bureau’s analysis
under Dodd-Frank Act section 1022(b)
in part VI.E.4 below provides the
Bureau’s updated coverage estimates for
reporting thresholds of 100, 200, and
500 open-end lines of credit.97 As
explained in more detail in part VI.E.4,
the Bureau’s updated coverage estimates
indicate that the total number of
institutions exceeding the open-end
coverage threshold of 100 open-end
lines of credit in 2018 would be
approximately 1,014, which is
significantly higher than the estimate of
749 in the 2015 HMDA Rule that was
based on 2013 data.98
As explained in more detail in part VI
below, the estimates the Bureau used in
the 2015 HMDA Rule may understate
the burden that open-end reporting
would impose on smaller institutions if
they were required to begin reporting on
January 1, 2020. For example, in
developing the one-time cost estimates
for open-end lines of credit in the 2015
HMDA Rule, the Bureau had envisioned
that there would be cost sharing
between the line of business that
conducts open-end lending and the line
of business that conducts closed-end
lending at the corporate level, as the
implementation of open-end reporting
that became mandatory under the 2015
HMDA Rule would coincide with the
implementation of the changes to
closed-end reporting under the 2015
HMDA Rule. However, this type of cost
95 82 FR 43088, 43094 (Sept. 13, 2017) (citing July
2017 HMDA Proposal, 82 FR 33455, 33459 (July 20,
2017)).
96 Experian-Oliver Wyman Market Intelligence
Reports show that in 2013 there were 1.14 million
home-equity lines of credit originated. Experian &
Oliver Wyman, 2015 Q1 Experian-Oliver Wyman
Market Intelligence Report: Home Equity Lines
Report, at 6 fig. 1 (2015). In 2018 that number grew
to 1.555 million. Experian & Oliver Wyman, 2018
Q4 Experian-Oliver Wyman Market Intelligence
Report: Home Equity Lines Report, at 6 fig. 1 (2019).
97 As discussed further in the analysis under
Dodd-Frank Act section 1022(b) in part VI, in note
172 below, the Bureau’s analyses in this proposal
are based on HMDA data collected in 2016 and
2017 and other sources. The Bureau intends to
review the 2018 HMDA data more closely in
connection with this rulemaking once the 2018
submissions are more complete.
98 82 FR 43088, 43094 (Sept. 13, 2017).

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sharing is less likely now since financial
institutions have already implemented
almost all of the closed-end reporting
changes required under the 2015 HMDA
Rule.
Another development since the
Bureau finalized the 2015 HMDA Rule
is the enactment of the EGRRCPA,
which created partial exemptions from
HMDA’s requirements that certain
insured depository institutions and
insured credit unions may now use.99
The partial exemption for open-end
lines of credit under the EGRRCPA
relieves certain insured depository
institutions and insured credit unions
that originated fewer than 500 open-end
mortgage loans in each of the two
preceding calendar years of the
obligation to report many of the data
points generally required by Regulation
C.100 The partial exemptions are
available to the vast majority of the
financial institutions that would be
excluded by the proposed increases in
the open-end coverage threshold.101 The
EGRRCPA has thus changed the costs
and benefits associated with different
possible coverage thresholds, as
discussed in more detail below.
The Bureau has considered the
appropriate open-end threshold in light
of these developments and believes that
the proposed changes to the open-end
threshold would reduce one-time and
ongoing costs and provide other
benefits, while still providing
significant market coverage. These
considerations are discussed in turn
below, and additional explanation of the
Bureau’s cost estimates is provided in
the Bureau’s analysis under Dodd-Frank
Act section 1022(b) in part VI.E.4
below.102
One-time cost reduction from
proposed threshold of 200. The Bureau’s
proposed increase of the open-end
coverage threshold to 200 open-end
lines of credit after the proposed
temporary extension expires in 2022
would avoid imposing one-time costs of
reporting open-end lines of credit on
institutions originating between 100 and
199 open-end lines of credit. The
Bureau estimates that setting the
coverage threshold at 200 rather than
100 would exclude 401 institutions
from reporting open-end lines of credit
starting in 2022. According to the
Bureau’s estimates, about 391 of those
401 financial institutions are low99 Public

Law 115–174, 132 Stat. 1296 (2018).
the section-by-section analysis of
§ 1003.3(d) in part IV above.
101 See infra part VI.E.4.
102 As explained in part VI below, the Bureau
derived these estimates using estimates of savings
for open-end lines of credit for representative
financial institutions.
100 See

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complexity tier 3 open-end reporters,
about 10 are moderate-complexity tier 2
open-end reporters, and none are highcomplexity tier 1 reporters.103
The Bureau recognizes that many
financial institutions, especially larger
and more complex institutions, process
applications for open-end lines of credit
in their consumer lending departments
using procedures, policies, and data
systems that are separate from those
used for closed-end loans. Some
institutions that would have to report
with a threshold of 100 after the
proposed extension of the temporary
threshold of 500 expires in 2022 do not
currently report open-end lines of
credit. These institutions might have to
develop completely new reporting
infrastructures to comply with
mandatory reporting if the threshold of
100 lines of credit were to take effect.
As a result, these institutions would
incur one-time costs to create processes
and systems for open-end lines of credit
in addition to the one-time costs to
modify processes and systems used for
other mortgage products. As explained
in part VI below, the Bureau estimates
that increasing the open-end coverage
threshold from 100 to 200 starting in
2022 would result in an aggregate
savings of about $3.8 million in avoided
one-time costs associated with open-end
lines of credit.
Ongoing cost reduction from proposed
threshold of 200. The proposed increase
of the open-end coverage threshold from
100 to 200 starting in 2022 would
permanently relieve institutions that
originate between 100 and 199 open-end
lines of credit of the ongoing costs
associated with reporting open-end
lines of credit that they might otherwise
incur if the 2017 HMDA Rule’s
permanent threshold of 100 were to take
effect. The Bureau estimates that the
proposed increase in the permanent
threshold would result in aggregate
savings on the operational costs
associated with open-end lines of credit
of about $2.1 million per year starting in
2022.
Benefits of two-year extension. The
proposed two-year extension of the
temporary coverage threshold of 500
open-end lines of credit would ensure
that any institutions that would be
required to report under the proposed
threshold of 200 open-end lines of
credit but that are not required to report
under the current temporary threshold
of 500 would have time to adapt their
systems and prepare for compliance.
The Bureau estimates that there are 280
103 For an explanation of the Bureau’s
assumptions in assigning institutions to tiers 1, 2,
and 3, see supra note 72 and infra part VI.D.1.

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institutions that fall within this
category. Industry stakeholders
provided feedback in connection with
the 2015 HMDA Rule and the 2017
HMDA Rule indicating that they
strongly prefer a long implementation
period when coverage changes result in
new institutions having open-end
reporting obligations under HMDA. The
Bureau believes that the two-year
extension of the temporary threshold of
500 lines of credit would provide any
newly covered institutions with
sufficient time to revise and update
policies and procedures, implement any
necessary systems changes, and train
staff before the proposed threshold of
200 lines of credit would take effect in
2022.
The proposed extension of the
temporary coverage threshold would
also provide the Bureau with additional
time to assess how a requirement to
report open-end lines of credit would
affect institutions whose origination
volume falls just above the proposed
threshold of 200 open-end lines of
credit. The Bureau is reviewing HMDA
data on open-end lines of credit
submitted in 2019 by financial
institutions that originated 500 or more
open-end lines of credit in 2016 and
2017 and invites comment on financial
institutions’ experiences with collecting
and reporting these open-end data. The
Bureau will also continue to monitor
HMDA data in the future. A two-year
temporary extension of the current
coverage threshold would ensure the
Bureau has time to consider further the
open-end data submitted for 2018 and
2019 and any additional information
stakeholders provide before any
permanent threshold established
through this rulemaking takes effect.
The proposed extension of the
temporary coverage threshold would
also relieve institutions that originate
between 100 and 499 open-end lines of
credit of ongoing costs associated with
reporting open-end lines of credit over
the next two years. In total, the Bureau
estimates that extending the temporary
open-end coverage threshold for two
years would reduce operational costs for
institutions by about $5.6 million per
year in the years 2020 and 2021.
Effect on market coverage. While the
proposed permanent and temporary
threshold increases would reduce
market coverage, information about a
sizeable portion of the market would
still be available in the next two years
under the proposed temporary threshold
of 500 and thereafter under the
proposed threshold of 200. The Bureau
has used multiple data sources,
including credit union Call Reports, Call
Reports for banks and thrifts, HMDA

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data, and Consumer Credit Panel data,
in order to develop updated estimates
for this proposal about open-end
originations for institutions that are
active in the market and to assess the
impact of various thresholds on the
numbers of institutions which report
and the number of loans about which
they report under various scenarios.104
Based on this information, the Bureau
estimates that, as of 2018,
approximately 613 financial institutions
originated at least 200 open-end lines of
credit in both of the two preceding
years, as compared to approximately
333 financial institutions that originated
at least 500 open-end lines of credit in
both of the two preceding years, and
about 1,014 financial institutions that
originated at least 100 open-end lines of
credit in both of the two preceding
years.105 Under the temporary 500-loan
open-end threshold, the Bureau
estimates about 1.23 million lines of
credit or approximately 78 percent of
origination volume would reported by
about 5 percent of all institutions in the
open-end line of credit market.106 Under
a permanent 200-loan open-end
threshold, the Bureau estimates about
1.34 million lines of credit or
approximately 84 percent of origination
volume would be reported by
approximately 9 percent of all
institutions in the open-end line of
credit market.107 As compared to a 100loan threshold, the 200-loan threshold
would reduce the number of institutions
reporting by approximately 40 percent
(from 1,014 to 613), while reducing
coverage of originations by
approximately 5 percentage points from
approximately 89 percent to 84 percent.
Extending the temporary threshold of
500 open-end lines of credit for two
years and raising the open-end
threshold from 100 to 200 after the
temporary threshold expires in 2022
would decrease visibility into the openend line of credit market relative to the
visibility that would be obtained if the
Bureau were to allow the 100-loan
threshold to take effect on January 1,
2020. However, the effect of these
threshold increases would be limited,
104 Because collection of data on open-end lines
of credit only became mandatory starting in 2018
under the 2015 HMDA Rule and 2017 HMDA Rule,
no single data source exists as of the time of this
proposal that can accurately capture the number of
originations of open-end lines of credit in the entire
market and by lenders. For information about the
HMDA data used in updating the Bureau estimates,
see infra note 172.
105 See infra part VI.E.4 at Table 4 for estimates
of coverage among all lenders that are active in the
open-end line of credit market at various open-end
coverage thresholds.
106 Id.
107 Id.

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because the EGRRCPA now provides a
partial exemption that exempts almost
all of the institutions that the proposed
increases would affect from any
obligation to report many of the data
points generally required by Regulation
C for their open-end lines of credit. In
light of the EGRRCPA’s partial
exemption from reporting certain data
for open-end lines of credit for certain
insured depository institutions and
insured credit unions, increasing the
open-end line of credit coverage
threshold to 500 temporarily and to 200
permanently would result in a much
smaller loss of data than the Bureau
anticipated when it adopted a
permanent threshold of 100 open-end
lines of credit in the 2015 HMDA Rule
or when it revisited the open-end line
of credit coverage threshold in the 2017
HMDA Rule. The Bureau believes that
the limited decrease in visibility
occasioned by the proposed adjustments
to the open-end threshold would appear
to be justified by the benefits discussed
above of reducing the burden on smaller
institutions. This burden reduction is
greater than the Bureau anticipated in
the 2015 HMDA Rule, because the
number of institutions affected and the
costs per institution associated with
reporting are higher than anticipated, as
explained above and in part VI below.
The Bureau now proposes to set the
open-end line of credit coverage
threshold at 200 after a two-year
extension of the temporary increase.
Using a threshold of 200 as compared to
100 loans would better balance the
benefits and burdens of covering
institutions based on their open-end
mortgage lending. As noted above, the
Bureau is particularly interested in
comments on how a requirement to
report open-end lines of credit would
affect institutions whose origination
volume falls just above the proposed
threshold of 200 open-end lines of
credit.
For the reasons discussed above, the
Bureau proposes to amend
§ 1003.2(g)(1)(v)(B) and comments 2(g)–
3 and –5, to set the open-end
institutional coverage threshold for
depository institutions at 500, effective
January 1, 2020, and at 200, effective
January 1, 2022. The Bureau seeks
comment on whether it should extend
the temporary institutional coverage
threshold of 500 open-end lines of
credit as proposed and, if so, for how
long. The Bureau also seeks comment
on whether to increase permanently the
open-end institutional coverage
threshold when the proposed temporary
extension expires and, if so, whether a
threshold of 200 or another threshold

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would most appropriately balance the
benefits and burdens of covering
institutions based on their open-end
lending beginning in 2022. The Bureau
also seeks comment specifically on: (1)
How the proposed temporary and
permanent increases would affect the
number of financial institutions
required to report data on open-end
lines of credit; (2) the significance of the
data that would not be available as a
result of the proposed temporary and
permanent increases (including (a)
whether, and under what
circumstances, the proposed temporary
and permanent increases would prevent
public officials and the public from
understanding if financial institutions
excluded by the proposed temporary
and permanent increases are serving the
needs of their community, (b) whether,
and under what circumstances, the
proposed temporary and permanent
increases would negatively impact the
ability of public officials to make
determinations with respect to the
distribution of public sector investments
in a manner designed to improve the
private investment environment, and (c)
whether, and under what
circumstances, the proposed temporary
and permanent increases would exclude
data that would be valuable for
identifying possible fair lending
violations or enforcing
antidiscrimination laws); and (3) the
reduction in burden that would result
from the proposed temporary and
permanent increases for institutions that
would not be required to report their
open-end lines of credit (addressing
separately the burden reduction for
institutions that are eligible for the
EGRRCPA’s partial exemption for openend lines of credit and for institutions
that are not).
2(g)(2) Nondepository Financial
Institution
2(g)(2)(ii)(A)
Closed-End Mortgage Loan Threshold
for Institutional Coverage of
Nondepository Institutions
HMDA extends reporting
responsibilities to certain nondepository
institutions, defined as any person
engaged for profit in the business of
mortgage lending other than a bank,
savings association, or credit union.108
HMDA section 309(a) authorizes the
Bureau to adopt an exemption for
covered nondepository institutions that
are comparable within their respective
industries to banks, savings
associations, and credit unions with $10
108 HMDA section 303(5) (defining ‘‘other lending
institutions’’).

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million or less in assets in the previous
fiscal year.109 Regulation C implements
HMDA’s coverage criteria for
nondepository institutions in
§ 1003.2(g)(2). The Bureau revised the
coverage criteria for nondepository
institutions in the 2015 HMDA Rule by
requiring such institutions to report
HMDA data if they met the statutory
location test and exceeded either the
closed-end or open-end line of credit
coverage thresholds.110
HMDA sections 303(3)(B) and 303(5)
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. As the Bureau stated in the
2015 HMDA Rule, the Bureau
interpreted 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.111 In the 2015 HMDA
Rule, the Bureau interpreted ‘‘engaged
for profit in the business of mortgage
lending’’ to include nondepository
institutions that originated at least 25
closed-end mortgage loans or 100 openend lines of credit in each of the two
preceding calendar years. Due to the
questions raised about potential risks
posed to applicants and borrowers by
nondepository institutions and the lack
of other publicly available data sources
about nondepository institutions, the
Bureau believed that requiring
additional nondepository institutions to
report HMDA data would better
effectuate HMDA’s purposes. The
Bureau estimated in 2015 that these
changes could result in HMDA coverage
for up to an additional 450
nondepository institutions. The Bureau
stated in the 2015 HMDA Rule its belief
that it was important to increase
visibility into the lending practices of
nondepository institutions because of
their history of making riskier loans
than depository institutions, including
their role in the financial crisis and lack
of available data about the mortgage
lending practices of lower-volume
nondepository institutions. The Bureau
109 HMDA

section 309(a), 12 U.S.C. 2808(a).
to the 2015 HMDA Rule, for-profit
nondepository institutions that met the location test
only had to report if: (1) In the preceding calendar
year, the institution originated home purchase
loans, including refinancings of home purchase
loans, that equaled either at least 10 percent of its
loan-origination volume, measured in dollars, or at
least $25 million; and (2) On the preceding
December 31, the institution had total assets of
more than $10 million, counting the assets of any
parent corporation; or in the preceding calendar
year, the institution originated at least 100 home
purchase loans, including refinancings of home
purchase loans. 12 CFR 1003.2 (2017).
111 80 FR 66128, 66153 (Oct. 28, 2015) (citing 54
FR 51356, 51358–59 (Dec. 15, 1989)).

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110 Prior

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also stated that expanded coverage of
nondepository institutions would
ensure more equal visibility into the
practices of nondepository institutions
and depository institutions.
Since issuing the 2015 Final Rule and
2017 HMDA Rule, the Bureau has heard
concerns that lower-volume institutions
continue to experience significant
burden at a 25 closed-end coverage
threshold.112 Various industry
stakeholders have advocated for an
increase to the closed-end coverage
threshold in order to reduce burden on
additional lower-volume financial
institutions. In light of the concerns
raised by industry stakeholders, the
Bureau is considering whether a higher
closed-end coverage threshold would
more appropriately cover nondepository
institutions that are ‘‘engaged for profit
in the business of mortgage lending’’
and maintain sufficient visibility into
the lending practices of such
institutions. The Bureau believes that
increasing the closed-end coverage
threshold may provide meaningful
burden relief for lower-volume
nondepository institutions without
reducing substantially the data reported
under HMDA, and more appropriately
exclude lower-volume mortgage lenders.
Therefore, the Bureau seeks comment
on whether an increase to this threshold
would more appropriately balance the
benefits and burdens of covering lowervolume nondepository institutions
based on their closed-end lending.
As discussed below, the Bureau is
proposing two alternatives to the closedend mortgage loan coverage threshold.
These proposals would maintain a
uniform closed-end coverage threshold
for depository and nondepository
institutions.113 Alternative 1 proposes to
set the closed-end coverage threshold at
50 while Alternative 2 proposes to set
the closed-end coverage threshold at
100. The Bureau reviewed multiple data
sources, including recent HMDA
data 114 and Call Reports and developed
112 The Bureau temporarily raised the threshold
for open-end lines of credit in the 2017 HMDA Rule
because of concerns that the Bureau may have
underestimated in the 2015 HMDA Rule the
number of institutions that would be required to
report open-end lines of credit under the threshold
adopted and that it also may have underestimated
the cost of reporting. However, the Bureau declined
to raise the threshold for closed-end mortgage loans
and stated that in developing the 2015 HMDA Rule,
it had robust data to make a determination about
the number of transactions that would be reported
at the 25 closed-end coverage threshold as well as
the one-time and ongoing costs to industry. 82 FR
43088, 43095–96 (Sept. 13, 2017).
113 For a discussion on the proposed closed-end
coverage threshold for depository institutions, see
the section-by-section analysis of
§ 1003.2(g)(1)(v)(A) above.
114 For further discussion of the recent HMDA
data used, see infra note 155.

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estimates for each proposal as described
below.
Alternative 1: Threshold Set at 50
The Bureau estimates that if the
closed-end coverage threshold were
increased from 25 to 50 loans,
approximately 683 out of about 697
nondepository institutions covered
under the current rule (or approximately
98 percent) would continue to be
required to report HMDA data on
closed-end mortgage loans.
Approximately 14 nondepository
institutions covered under the current
rule (or approximately 2 percent) would
be relieved of their HMDA reporting
responsibilities on closed-end mortgage
loans. Further, the Bureau estimates that
with this proposed increase to the
closed-end coverage threshold, over 99
percent of total originations of closedend mortgage loans reported by
nondepository institutions under the
current coverage criteria, or
approximately 3.44 million closed-end
mortgage loan originations under the
current market conditions, would
continue to be reported. The loss of data
from these approximately 14
nondepository institutions would
amount to an estimated 1,000 closedend mortgage loan originations or less
than one-half of 1 percent of closed-end
mortgage loan originations reportable
under the current market conditions.
At the census tract level the Bureau
estimates that, as noted above in the
section-by section analysis of
§ 1003.2(g)(1)(v)(A), increasing the
closed-end coverage threshold from 25
to the proposed 50 loans for both
depository and nondepository
institutions would result in a loss of at
least 20 percent of reportable HMDA
data in just under 300 out of
approximately 74,000 total census
tracts, or less than one-half of 1 percent
of the total number of census tracts.115
With respect to low-to-moderate income
census tracts, the Bureau estimates if the
closed-end threshold were increased
from 25 to 50 loans, there would be at
least a 20 percent loss of reportable
HMDA data in less than 1 percent of
such tracts. In addition, the Bureau
examined the effects of an increase in
the closed-end threshold from 25 to 50
loans and estimates that such a change
would result in at least a 20 percent loss
115 The estimates of the effect on reportable
HMDA data at the census tract level comprise both
depository institutions and nondepository
institutions. The Bureau estimates that at least 80
percent of reportable HMDA data would be retained
in over 73,500 tracts. In certain tracts, substantially
more than 80 percent of reportable HMDA data
would be retained.

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules
of reportable HMDA data in less than
one-half of 1 percent of such tracts.
Therefore, the Bureau believes that it
is reasonable to interpret ‘‘engaged for
profit in the business of mortgage
lending’’ to include nondepository
institutions that originated at least 50
closed-end mortgage loans in each of the
two preceding calendar years. The
Bureau believes that the proposed
increase to the closed-end coverage
threshold for nondepository institutions
would effectuate the purposes of HMDA
by ensuring significant coverage of
nondepository mortgage lending, while
facilitating compliance with HMDA by
reducing burden on smaller institutions
and excluding nondepository
institutions that are not engaged for
profit in the business of mortgage
lending. The Bureau believes that the
reasons provided for the proposed
changes to the closed-end coverage
threshold for depository institutions in
the section-by-section analysis of
§ 1003.2(g)(1)(v)(A) above apply to the
threshold for nondepository institutions
as well. Additionally, the proposed
increase to the closed-end coverage
threshold would promote consistency
by subjecting nondepository institutions
to the same threshold that applies to
depository institutions.

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Alternative 2: Threshold Set at 100
The Bureau estimates that if the
closed-end mortgage loan threshold
were increased from 25 to 100,
approximately 661 out of about 697
nondepository institutions covered
under the current rule (or approximately
95 percent) would continue to be
required to report HMDA data on
closed-end mortgage loans.
Approximately 36 nondepository
institutions covered under the current
rule (or approximately 5 percent) would
be relieved of their HMDA reporting
responsibilities on closed-end mortgage
loans. In terms of the effect on the total
number of originations, the Bureau
estimates that with an increase in the
closed-end mortgage threshold from 25
to the proposed 100 loans, over 99
percent of total originations of closedend mortgage loans reported by
nondepository institutions under the
current Regulation C coverage criteria,
or approximately 3.44 million closedend mortgage loan originations under
the current market conditions, would
continue to be reported. The loss of data
from these approximately 36
nondepository institutions would
amount to about 3,000 closed-end
mortgage originations under the current
market conditions, or less than 1
percent of closed-end mortgage loan

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originations reportable under the
current market conditions.
With respect to the potential effect on
available data at the census tract level
and as noted above in the section-by
section analysis of § 1003.2(g)(1)(v)(A),
the Bureau estimates that if the closedend coverage threshold were increased
from 25 to the proposed 100, there
would be a loss of at least 20 percent of
reportable HMDA data in about 1,100
out of approximately 74,000 total census
tracts, or 1.5 percent of the total number
of census tracts.116 For low-to-moderate
income census tracts, the Bureau
estimates that if the closed-end
threshold were increased from 25 to 100
loans, there would be a loss of at least
20 percent of reportable HMDA data in
approximately 3 percent of such tracts.
In addition, the Bureau examined the
effects on rural census tracts and
estimates that relative to the current
threshold, there would be at least a 20
percent loss of reportable HMDA data in
less than 3 percent of such tracts.
Therefore, the Bureau believes that it
is reasonable to interpret ‘‘engaged for
profit in the business of mortgage
lending’’ to include nondepository
institutions that originated at least 100
closed-end mortgage loans in each of the
two preceding calendar years. The
Bureau believes that the proposed
increase to the closed-end coverage
threshold for nondepository institutions
would effectuate the purposes of HMDA
by ensuring significant coverage of
nondepository mortgage lending, while
facilitating compliance with HMDA by
reducing burden on smaller institutions
and excluding nondepository
institutions that are not engaged for
profit in the business of mortgage
lending. The Bureau believes that the
reasons provided for the proposed
changes to the closed-end coverage
threshold for depository institutions in
the section-by-section analysis of
§ 1003.2(g)(1)(v)(A) above apply to the
threshold for nondepository institutions
as well. Additionally, the proposed
increase to the threshold would promote
consistency by subjecting nondepository
institutions to the same threshold that
applies to depository institutions.
Estimates for Other Closed-End
Coverage Thresholds
The Bureau also generated estimates
for closed-end coverage thresholds
higher than those in the proposed
alternatives. Similar to the estimates for
depository institutions, these estimates
116 The Bureau estimates that at least 80 percent
of reportable HMDA data would be retained in
approximately 73,000 tracts. In certain tracts,
substantially more than 80 percent of reportable
HMDA data would be retained.

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reflect that the decrease in the number
of nondepository institutions that would
be required to report HMDA data
becomes more pronounced at thresholds
higher than 100. Moreover, such
thresholds would decrease visibility
into nondepository institutions relative
to the coverage criteria that pre-dated
the 2015 HMDA Rule.117 For example,
if the closed-end coverage threshold
were increased from 25 to 250 loans, the
Bureau estimates that approximately
573 out of about 697 nondepository
institutions would continue to be
required to report HMDA data and
approximately 124 nondepository
institutions, or about 18 percent of
nondepository institutions covered
under the current rule, would be
relieved of their HMDA reporting
responsibilities. The Bureau estimates
that with an increase in the closed-end
coverage threshold to 250, about 99
percent of total originations of closedend mortgage loans reported by
nondepository institutions under the
current Regulation C coverage criteria,
or approximately 3.42 million closedend mortgage loan originations under
the current market conditions, would
continue to be reported.
Further, if the closed-end coverage
threshold were increased from 25 to 500
loans, for example, the Bureau estimates
that approximately 477 out of about 697
nondepository institutions would
continue to be required to report HMDA
data and approximately 220
nondepository institutions, or about 32
percent of nondepository institutions
covered under the current coverage
criteria, would be relieved of their
HMDA reporting responsibilities. The
Bureau estimates that with an increase
of the closed-end coverage threshold to
500, about 98 percent of total
originations of closed-end mortgage
loans reported by nondepository
institutions under the current
Regulation C coverage criteria, or
approximately 3.38 million closed-end
mortgage loan originations under the
current market conditions, would
continue to be reported.
The Bureau’s estimates also reflect
that the effect on data available at the
117 The Bureau noted in the 2015 HMDA Rule
that any closed-end reporting threshold set at 100
loans would not provide enhanced insight into
lending practices of nondepository institutions and
that a threshold above 100 closed-end mortgage
loans would decrease visibility into nondepository
institutions’ practices. At the time, the Bureau
explained its belief that, due to the questions raised
about potential risks posed to applicants and
borrowers by nondepository institutions and the
lack of other publicly available data sources about
nondepository institutions, requiring additional
nondepository institutions to report HMDA data
will better effectuate HMDA’s purposes. 80 FR
66128, 66153, 66281 (Oct. 28, 2015).

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census tract level would become more
pronounced at closed-end mortgage loan
coverage thresholds above 100. For
example, the Bureau estimates that
increasing the closed-end coverage
threshold from 25 to 250 would result
in a loss of at least 20 percent of
reportable HMDA data in over 4,000 out
of approximately 74,000 total census
tracts, or 5.4 percent of the total number
census tracts. Of the approximately
4,000 census tracts where there would
be a loss of at least 20 percent of
reportable HMDA data at such
threshold, about 14 percent are rural
tracts and just over 8 percent are lowto-moderate income tracts. Further, the
Bureau estimates that increasing the
closed-end coverage threshold from 25
to 500 would result in a loss of at least
20 percent of reportable HMDA data in
approximately 11,000 out of
approximately 74,000 total census
tracts, or 14.9 percent of the total
number census tracts. Of the
approximately 11,000 census tracts
where there would be a loss of at least
20 percent of reportable HMDA data at
such threshold, about 32 percent are
rural tracts and about 17 percent are
low-to-moderate income tracts.
Although the estimates for these
higher closed-end coverage thresholds
reflect that a high percentage of total
originations of closed-end mortgage
loans would continue to be reported by
nondepository institutions, the Bureau
believes that the decrease in coverage of
nondepository institutions relative to
the level of coverage that pre-dated the
2015 HMDA Rule could make it more
difficult for the public and public
officials to analyze whether lowervolume nondepository institutions are
serving the housing needs of their
communities. Therefore, the Bureau
believes that if the closed-end coverage
threshold were increased to a level
above 100 loans, the loss of visibility
into nondepository lending and the loss
of reportable HMDA data at the census
tract level available to serve HMDA’s
purposes may not be justified by the
significant reduction in compliance
costs for the nondepository institutions
that would no longer be required to
report HMDA data at such higher
thresholds.
Request for Feedback
For the reasons discussed above, the
Bureau proposes to increase the closedend mortgage loan-volume threshold in
§ 1003.2(g)(2)(ii)(A) from 25 to 50 in
Alternative 1, or from 25 to 100 in
Alternative 2, and to make conforming
amendments to comments 2(g)–1 and
–5. The Bureau requests comment on
the proposed changes to the closed-end

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coverage threshold for institutional
coverage of nondepository institutions
in § 1003.2(g)(2)(ii)(A).
Specifically, the Bureau solicits
feedback on the proposed increase,
including comments on: (1) How the
proposed increase to the closed-end
coverage threshold to 50, 100, or
another number, including any
threshold significantly above 100,
would affect the number of
nondepository financial institutions
required to report data on closed-end
mortgage loans; (2) the significance of
the data that would not be available as
a result of the proposed increase to the
closed-end coverage threshold to 50,
100, or another number, including (a)
whether, and under what
circumstances, the proposed increase
would prevent public officials and the
public from understanding if
nondepository financial institutions
excluded by the proposed 50, 100, or
another closed-end coverage threshold
are serving the needs of their
community, (b) whether, and under
what circumstances, the proposed
increase to the closed-end coverage
threshold to 50, 100, or another number
would negatively impact the ability of
public officials to make determinations
with respect to the distribution of public
sector investments in a manner
designed to improve the private
investment environment, and (c)
whether, and under what
circumstances, the proposed increase to
the closed-end coverage threshold
would exclude data that would be
valuable for identifying possible fair
lending violations or enforcing
antidiscrimination laws; and (3) the
reduction in burden that would result
from the proposed increase to the
closed-end coverage threshold for
institutions that would not be required
to report.
2(g)(2)(ii)(B)
Open-End Line of Credit Threshold for
Institutional Coverage of Nondepository
Institutions
The 2015 HMDA Rule established a
coverage threshold of 100 open-end
lines of credit in § 1003.2(g)(2)(ii)(B) as
part of the definition of nondepository
financial institution. As discussed in
more detail in the section-by-section
analysis of § 1003.2(g)(1)(v)(B) above,
the 2017 HMDA Rule amended
§§ 1003.2(g)(1)(v)(B) and (g)(2)(ii)(B) and
1003.3(c)(12) and related commentary to
raise temporarily the open-end coverage
threshold to 500 loans for calendar years
2018 and 2019.118 For the reasons
118 82

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discussed in the section-by-section
analysis of § 1003.2(g)(1)(v)(B), and to
ensure the thresholds are consistent for
depository and nondepository
institutions, the Bureau is now
proposing to extend to January 1, 2022,
Regulation C’s temporary open-end
threshold of 500 open-end lines of
credit for institutional and transactional
coverage of both depository and
nondepository institutions and then set
the threshold at 200 open-end lines of
credit upon the expiration in 2022 of the
proposed extension of the temporary
threshold. The Bureau is therefore
proposing to set the open-end line of
credit threshold for institutional
coverage of nondepository institutions
in § 1003.2(g)(2)(ii)(B) at 500 effective
January 1, 2020, and then at 200
effective January 1, 2022. These changes
would conform to the changes that the
Bureau is proposing with respect to the
open-end threshold for institutional
coverage for depository institutions in
§ 1003.2(g)(1)(v)(B) and the openthreshold for transactional coverage in
§ 1003.3(c)(12).
The Bureau believes that these
proposed changes to the threshold in
§ 1003.2(g)(2)(ii)(B) would effectuate the
purposes of HMDA by ensuring
significant coverage of nondepository
mortgage lending, while facilitating
compliance with HMDA by reducing
burden on smaller institutions and
excluding nondepository institutions
that are not engaged for profit in the
business of mortgage lending. The
Bureau believes that the reasons
provided for the proposed changes to
the open-end threshold for depository
institutions in the section-by-section
analysis of § 1003.2(g)(1)(v)(B) above
apply to the threshold for nondepository
institutions as well. Additionally, the
proposed changes to the threshold in
§ 1003.2(g)(2)(ii)(B) would promote
consistency by subjecting nondepository
institutions to the same threshold that
applies to the depository institutions
that make up the bulk of the open-end
line of credit market. According to the
Bureau’s estimates, nondepository
institutions account for only a small
percentage of the institutions and loans
in the open-end line of credit market.119
Table 4 in the Bureau’s analysis under
Dodd-Frank Act section 1022(b) in part
VI.E.4 below provides coverage
estimates for nondepository institutions
at the current temporary threshold of
500 open-end lines of credit that the
Bureau proposes to extend and at the
proposed threshold of 200 open-end
lines of credit that would take effect
when the temporary threshold expires.
119 See

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules
The Bureau requests comment on the
proposed changes to the open-end line
of credit threshold for institutional
coverage of nondepository institutions
in § 1003.2(g)(2)(ii)(B).
Section 1003.3 Exempt Institutions
and Excluded and Partially Exempt
Transactions
3(c) Excluded Transactions

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3(c)(11)
As adopted in the 2015 HMDA Rule,
§ 1003.3(c)(11) provides an exclusion
from the requirement to report closedend mortgage loans for institutions that
did not originate at least 25 closed-end
mortgage loans in each of the two
preceding calendar years. This
transactional coverage threshold was
intended to complement a closed-end
mortgage loan reporting threshold
included in the definition of financial
institution in § 1003.2(g). The 2017
HMDA Rule replaced ‘‘each’’ with
‘‘either’’ in § 1003.3(c)(11) to correct a
drafting error and to ensure that the
exclusion provided in that section
mirrors the loan-volume threshold for
financial institutions in § 1003.2(g).120
For the reasons discussed in the sectionby-section analysis of § 1003.2(g), the
Bureau is now proposing to increase
Regulation C’s closed-end threshold for
institutional and transactional coverage
from 25 to 50 under Alternative 1 and
from 25 to 100 under Alternative 2.
Therefore, the Bureau proposes to
increase the closed-end threshold for
transactional coverage from 25 to 50
under Alternative 1 in § 1003.3(c)(11)
and comments 3(c)(11)–1 and –2, and
from 25 to 100 under Alternative 2 in
§ 1003.3(c)(11) and comments 3(c)(11)–
1 and –2. This proposed change would
conform to the related changes the
Bureau is proposing with respect to the
closed-end threshold for institutional
coverage in § 1003.2(g).
3(c)(12)
As adopted in the 2015 HMDA 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 transactional coverage
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 2017 HMDA Rule
replaced ‘‘each’’ with ‘‘either’’ in
§ 1003.3(c)(12) to correct a drafting error
and to ensure that the exclusions
120 82

FR 43088, 43100 (Sept. 13, 2017).

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provided in that section mirror the loanvolume thresholds for financial
institutions in § 1003.2(g).121 As
discussed in more detail in the sectionby-section analysis of § 1003.2(g), in the
2017 HMDA Rule the Bureau also
amended §§ 1003.2(g) and 1003.3(c)(12)
and related commentary to raise
temporarily the open-end threshold in
those provisions to 500 loans for
calendar years 2018 and 2019.122 For
the reasons discussed in the section-bysection analysis of § 1003.2(g), the
Bureau is now proposing to extend to
January 1, 2022, Regulation C’s current
temporary open-end threshold for
institutional and transactional coverage
of 500 open-end lines of credit and then
to set the threshold at 200 open-end
lines of credit upon the expiration of the
proposed extension of the temporary
threshold. The Bureau therefore
proposes to adjust the open-end line of
credit threshold for transactional
coverage in § 1003.3(c)(12) and
comments 3(c)(12)–1 and –2 to 500
effective January 1, 2020, and to 200
effective January 1, 2022.123 These
changes would conform to the changes
that the Bureau is proposing with
respect to the open-end threshold for
institutional coverage in § 1003.2(g).
3(d) Partially Exempt Transactions
Section 104(a) of the EGRRCPA
amended HMDA section 304(i) by
adding partial exemptions from
HMDA’s requirements that apply to
certain transactions of eligible insured
depository institutions and insured
credit unions. In the 2018 HMDA Rule,
the Bureau implemented and clarified
HMDA section 304(i) by addressing a set
of interpretive and procedural questions
relating to the partial exemptions.
Proposed § 1003.3(d) and related
commentary would incorporate the
partial exemptions and the
interpretations and procedures from the
2018 HMDA Rule into Regulation C and
further implement HMDA section 304(i)
by addressing additional questions that
have arisen with respect to the partial
exemptions.124
121 82

FR 43088, 43102 (Sept. 13, 2017).
at 43095.
123 The proposal would also make minor changes
to an example in comment 3(c)(12)–1 effective
January 1, 2020, to conform to the proposed change
to the closed-end coverage threshold that is
discussed in the section-by-section analysis of
§ 1003.2(g)(1)(v)(A) above.
124 This proposed rule includes related
amendments in § 1003.4 and its commentary
referencing § 1003.3(d) that are discussed in the
section-by-section analysis of § 1003.4. The Filing
Instructions Guide for HMDA Data Collected in
2019 (2019 FIG) provides guidance to financial
institutions on how to indicate in their HMDA
submissions if they are invoking a partial
exemption. See Fed. Fin. Insts. Examination
122 Id.

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Proposed § 1003.3(d)(1) sets forth
definitions relating to the partial
exemptions, including a definition of
optional data that delineates which data
points are covered by the partial
exemptions. Proposed § 1003.3(d)(2)
and (3) provides the general tests for
when the partial exemptions apply for
closed-end mortgage loans and openend lines of credit, respectively.
Proposed § 1003.3(d)(4) addresses
voluntary reporting of data that are
covered by a partial exemption for a
partially exempt transaction. Proposed
§ 1003.3(d)(5) relates to the nonuniversal loan identifier that financial
institutions must report for a partially
exempt transaction if a ULI is not
provided. Proposed § 1003.3(d)(6)
implements the statutory exception to
the partial exemptions for insured
depository institutions with certain less
than satisfactory examination histories
under the CRA. Each of these
paragraphs and related commentary are
discussed in more detail below.
The loan thresholds added by the
EGRRCPA to HMDA section 304(i)
resemble in many respects the loan
thresholds that determine institutional
and transactional coverage in Regulation
C. For example, both sets of thresholds
relate to originations (rather than
applications or purchases) and apply
separately to closed-end mortgage loans
and open-end lines of credit. In light of
these similarities, the Bureau has used
the institutional and transactional
coverage thresholds in existing
Regulation C as a model in interpreting
certain aspects of the partial exemption
thresholds in both the 2018 HMDA Rule
and this proposed rule. The Bureau
recognizes that there are advantages to
industry stakeholders and others from
using consistent language to describe
similar requirements and therefore has
used language in the proposed rule that
parallels language in existing Regulation
C wherever appropriate.
Proposed comments 3(d)–1 through
–5 address certain issues relating to the
partial exemptions that the 2018 HMDA
Rule does not specifically discuss.
Proposed comments 3(d)–1 through –3
explain how to determine whether a
partial exemption applies to a
transaction after a merger or acquisition.
Proposed comment 3(d)–1 describes the
application of the partial exemption
thresholds to a surviving or newly
formed institution. Proposed comment
3(d)–2 describes how CRA examination
history is handled in the event of a
Council (FFIEC), ‘‘Filing Instructions Guide for
HMDA Data Collected in 2019,’’ at 21–54 (Oct.
2018), https://s3.amazonaws.com/cfpb-hmdapublic/prod/help/2019-hmda-fig.pdf.

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules

merger or acquisition for purposes of
proposed § 1003.3(d)(6), which
implements the exception to the partial
exemptions for certain less than
satisfactory CRA examination histories
in HMDA section 304(i)(3). Proposed
comment 3(d)–3 describes the
applicability of partial exemptions
during the calendar year of a merger or
acquisition and provides various
examples. These proposed comments
are modeled closely on existing
comments 2(g)–3 and –4, which explain
how to determine whether an institution
satisfies the definition of financial
institution in § 1003.2(g) after a merger
or acquisition.
Proposed comment 3(d)–4 relates to
whether activities with respect to a
particular closed-end mortgage loan or
open-end line of credit constitute an
origination for purposes of the partial
exemption loan thresholds. Given the
similarities between the coverage
thresholds currently in Regulation C 125
and the partial exemption thresholds
under the EGRRCPA, the Bureau
believes that the same guidance for
determining whether activities
constitute an origination that applies for
purposes of the coverage thresholds in
Regulation C’s definition of financial
institution should apply with respect to
the partial exemption thresholds.
Consistent with the approach taken in
existing comment 2(g)–5 for the
definition of financial institution,
proposed comment 3(d)–4 refers to
comments 4(a)–2 through –4 for
guidance on this issue in the context of
the partial exemptions.
Proposed comment 3(d)–5 addresses
questions about whether a financial
institution that does not itself meet the
requirements for a partial exemption
can claim an exemption if an affiliate or
parent company meets the
requirements. It clarifies that a financial
institution that is not itself an insured
credit union or an insured depository
institution 126 is not eligible for a partial
exemption under § 1003.3(d)(2) and (3),
even if it is owned by or affiliated with
an insured credit union or an insured
depository institution. This approach is
consistent with HMDA section 304(i)(1)
and (2), which by its terms applies
‘‘[w]ith respect to an insured depository
institution or insured credit union’’ as
defined in HMDA section 304(o). To
clarify further the EGRRCPA’s partial
exemptions, the proposed comment also
125 See 12 CFR 1003.2(g)(1)(v) and (g)(2)(ii) and
1003.3(c)(11) and (12).
126 For purposes of this proposed comment,
insured credit union and insured depository
institution are defined in proposed § 1003.3(d)(1)(i)
and (ii), which, as explained below, mirrors how
those terms are defined in HMDA section 304(o).

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provides an example describing when a
subsidiary of an insured credit union or
insured depository institution could
claim a partial exemption under
§ 1003.3(d) for its closed-end mortgage
loans.
The Bureau requests comment on
these proposed additions and the other
proposed provisions of § 1003.3(d) that
are discussed below, including whether
these amendments appropriately
implement section 104(a) of the
EGRRCPA and whether there are any
additional issues under the EGRRCPA
that the Bureau should address in
Regulation C.
3(d)(1)
Proposed § 1003.3(d)(1) and proposed
comment 3(d)(1)(iii)–1 define terms
related to the partial exemptions for
purposes of proposed § 1003.3(d).
Proposed § 1003.3(d)(1)(i) defines the
term ‘‘insured credit union’’ to mean an
insured credit union as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752), and proposed
§ 1003.3(d)(1)(ii) defines the term
‘‘insured depository institution’’ to
mean an insured depository institution
as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813).
These definitions are consistent with
the way HMDA section 304(o) defines
the two terms for purposes of HMDA
section 304.
Proposed § 1003.3(d)(1)(iii) and
proposed comment 3(d)(1)(iii)–1 define
the term ‘‘optional data’’ for purposes of
proposed § 1003.3(d). For the reasons
discussed below, proposed
§ 1003.3(d)(1)(iii) generally defines
optional data as the data identified in
§ 1003.4(a)(1)(i), (a)(9)(i), and (a)(12),
(15) through (30), and (32) through (38).
Proposed comment 3(d)(1)(iii)–1
explains that the definition of optional
data in § 1003.3(d)(1)(iii) identifies the
data that are covered by the partial
exemptions for certain transactions of
insured depository institutions and
insured credit unions under § 1003.3(d).
It also clarifies that, if a transaction is
not partially exempt under
§ 1003.3(d)(2) or (3), a financial
institution must collect, record, and
report optional data as otherwise
required under part 1003.
The EGRRCPA added partial
exemptions to HMDA section 304(i),
and the definition of optional data in
proposed § 1003.3(d)(1)(iii) specifies the
data points covered by the partial
exemptions. As the 2018 HMDA Rule
explains, if a transaction qualifies for
one of the EGRRCPA’s partial
exemptions, HMDA section 304(i)
provides that the requirements of
HMDA section 304(b)(5) and (6) shall

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not apply. In the 2018 HMDA Rule, the
Bureau interpreted the requirements of
HMDA section 304(b)(5) and (6) to
include the 26 data points listed in
Table 1 in the 2018 HMDA Rule, which
are found in § 1003.4(a)(1)(i), (a)(9)(i),
and (a)(12), (15) through (30), and (32)
through (38).
The Dodd-Frank Act added HMDA
section 304(b)(5) and (6), which requires
reporting of certain data points and
provides the Bureau discretion to
require additional data points.127 In the
2015 HMDA Rule, the Bureau
implemented the new data points
specified in the Dodd-Frank Act
(including those added in HMDA
section 304(b)(5) and (6)), added a
number of additional data points
pursuant to the Bureau’s discretionary
authority, and made revisions to certain
pre-existing data points to clarify their
requirements, provide greater specificity
in reporting, and align certain data
points more closely with industry data
standards.
As explained in the 2018 HMDA Rule,
the Bureau interprets the requirements
127 HMDA section 304(b)(5) requires disclosure of
the number and dollar amount of mortgage loans
grouped according to measurements of:
• The total points and fees payable at origination
in connection with the mortgage as determined by
the Bureau;
• The difference between the APR associated
with the loan and a benchmark rate or rates for all
loans;
• The term in months of any prepayment penalty
or other fee or charge payable on repayment of some
portion of principal or the entire principal in
advance of scheduled payments; and
• Such other information as the Bureau may
require.
HMDA section 304(b)(6) requires disclosure of
the number and dollar amount of mortgage loans
and completed applications grouped according to
measurements of:
• The value of the real property pledged or
proposed to be pledged as collateral;
• The actual or proposed term in months of any
introductory period after which the rate of interest
may change;
• The presence of contractual terms or proposed
contractual terms that would allow the mortgagor
or applicant to make payments other than fully
amortizing payments during any portion of the loan
term;
• The actual or proposed term in months of the
mortgage loan;
• The channel through which application was
made;
• As the Bureau may determine to be
appropriate, a unique identifier that identifies the
loan originator as set forth in section 5102 of this
title;
• As the Bureau may determine to be
appropriate, a universal loan identifier;
• As the Bureau may determine to be
appropriate, the parcel number that corresponds to
the real property pledged or proposed to be pledged
as collateral;
• The credit score of mortgage applicants and
mortgagors, in such form as the Bureau may
prescribe; and
• Such other information as the Bureau may
require.

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules
of HMDA section 304(b)(5) and (6) for
purposes of HMDA section 304(i) to
include the 12 data points that the
Bureau added to Regulation C in the
2015 HMDA Rule to implement data
points specifically identified in HMDA
section 304(b)(5)(A) through (C) or
(b)(6)(A) through (I), which are the
following: ULI; property address; rate
spread; credit score; total loan costs or
total points and fees; prepayment
penalty term; loan term; introductory
rate period; non-amortizing features;
property value; application channel;
and mortgage loan originator
identifier.128 As the 2018 HMDA Rule
explains, the Bureau also interprets the
requirements of HMDA section 304(b)(5)
and (6) to include the 14 data points
that were not found in Regulation C
prior to the Dodd-Frank Act and that the
Bureau required in the 2015 HMDA
Rule citing its discretionary authority
under HMDA section 304(b)(5)(D) and
(b)(6)(J). Specifically, these data points
are the following: The total origination
charges associated with the loan; the
total points paid to the lender to reduce
the interest rate of the loan (discount
points); the amount of lender credits;
the interest rate applicable at closing or
account opening; the debt-to-income
ratio; the ratio of the total amount of
debt secured by the property to the
value of the property (combined loan-tovalue ratio); for transactions involving
manufactured homes, whether the loan
or application is or would have been
secured by a manufactured home and
land or by a manufactured home and
not land (manufactured home secured
property type); the land property
interest for loans or applications related
to manufactured housing (manufactured
home land property interest); the
number of individual dwellings units
that are income-restricted pursuant to
Federal, State, or local affordable
housing programs (multifamily
affordable units); information related to
the automated underwriting system
used in evaluating an application and
the result generated by the automated
underwriting system; whether the loan
is a reverse mortgage; whether the loan
is an open-end line of credit; whether
the loan is primarily for a business or
commercial purpose; and the reasons for
denial of a loan application, which were
optionally reported under the Board’s
rule but became mandatory in the 2015
HMDA Rule.129 The 2018 HMDA Rule
indicates that insured depository
institutions and insured credit unions
128 12 CFR 1003.4(a)(1)(i), (a)(9)(i), and (a)(12),
(15), (17), (22), (25) through (28), and (33) and (34).
129 12 CFR 1003.4(a)(16), (18) through (21), (23)
and (24), (29) and (30), (32), and (35) through (38).

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need not report these 26 data points for
transactions that qualify for a partial
exemption, unless otherwise required
by their regulator.130
As the 2018 HMDA Rule explains, the
Bureau interprets the requirements of
HMDA section 304(b)(5) and (6) not to
include four other data points that are
similar or identical to data points added
to Regulation C by the Board and that
the Bureau re-adopted in the 2015
HMDA Rule: Lien status of the subject
property; whether the loan is subject to
the Home Ownership and Equity
Protection Act of 1994 (HOEPA);
construction method for the dwelling
related to the subject property; and the
total number of individual dwelling
units contained in the dwelling related
to the loan (number of units).131 The
2015 HMDA Rule did not alter the preexisting Regulation C HOEPA status and
lien status data requirements.132
Construction method and total units,
together, replaced the pre-existing
Regulation C property type data point;
the information required by the new
data points is very similar to what the
Board required, but institutions now
must report the precise number of units
rather than categorizing dwellings into
one- to four-family dwellings and
multifamily dwellings.133
The Board adopted its versions of
these data points before HMDA section
304(b)(5) and (6) was added to HMDA
by the Dodd-Frank Act, pursuant to
HMDA authority that pre-existed
section 304(b)(5) and (6). Although the
Bureau cited HMDA section 304(b)(5)
and (6) as additional support for these
four data points in the 2015 HMDA
Rule, the Bureau relied on HMDA
section 305(a), which pre-dates the
Dodd-Frank Act and independently
provides legal authority for their
adoption.134 Given that these data
130 Financial institutions regulated by the OCC
are required to report reasons for denial on their
HMDA loan/application registers pursuant to 12
CFR 27.3(a)(1)(i) and 128.6. Similarly, pursuant to
regulations transferred from the Office of Thrift
Supervision, certain financial institutions
supervised by the FDIC are required to report
reasons for denial on their HMDA loan/application
registers. 12 CFR 390.147.
131 12 CFR 1003.4(a)(5), (13) and (14), and (31).
132 The 2015 HMDA Rule extended the
requirement to report lien status to purchased loans
and no longer requires reporting of information
about unsecured loans. 80 FR 66128, 66201 (Oct.
28, 2015).
133 Prior to 2018, Regulation C required reporting
of property type as one- to four-family dwelling
(other than manufactured housing), manufactured
housing, or multifamily dwelling, whereas the
current rule requires reporting of whether the
dwelling is site-built or a manufactured home,
together with the number of individual dwelling
units.
134 80 FR 66128, 66180–81, 66199–201, 66227
(Oct. 28, 2015).

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points were not newly added by the
Dodd-Frank Act or the Bureau, the
Bureau concluded in the 2018 HMDA
Rule that the EGRRCPA’s amendments
to HMDA section 304 do not affect
them.135
The requirements of HMDA section
304(b)(5) and (6), and thus the partial
exemptions, also do not include 17
other data points included in the 2015
HMDA Rule that are similar or identical
to pre-existing Regulation C data points
established by the Board and that were
not required by HMDA section 304(b)(5)
and (6) or promulgated by the Bureau
using discretionary authority under
HMDA section 304(b)(5)(D) and (b)(6)(J).
These are: The Legal Entity Identifier
(which replaced the pre-existing
respondent identifier); application date;
loan type; loan purpose; preapproval;
occupancy type; loan amount; action
taken; action taken date; State; county;
census tract; ethnicity; race; sex;
income; and type of purchaser.136
Additionally, the requirements of
HMDA section 304(b)(5) and (6), and
thus the partial exemptions, do not
include age because the Dodd-Frank Act
added that requirement instead to
HMDA section 304(b)(4).137
Consistent with the scope of the new
partial exemptions as explained in the
2018 HMDA Rule, the proposed general
definition of optional data in
§ 1003.3(d)(1)(iii) encompasses 26 of the
48 data points currently set forth in
Regulation C.
For ease of reference throughout
§ 1003.3(d), proposed § 1003.3(d)(1)(iv)
defines partially exempt transaction as a
covered loan or application that is
partially exempt under § 1003.3(d)(2) or
(3).
3(d)(2)
HMDA section 304(i)(1) provides that
the requirements of HMDA section
304(b)(5) and (6) shall not apply with
respect to closed-end mortgage loans of
an insured depository institution or
insured credit union if it originated
fewer than 500 closed-end mortgage
loans in each of the two preceding
calendar years. Proposed § 1003.3(d)(2)
and proposed comment 3(d)(2)–1
implement this provision. Proposed
135 This interpretation is consistent with the
EGRRCPA’s legislative history, which suggests that
Congress was focused on relieving regulatory
burden associated with the Dodd-Frank Act. See,
e.g., 164 Cong. Rec. S1423–24 (daily ed. Mar. 7,
2018) (statement of Sen. Crapo), S1529–30
(statement of Sen. McConnell), S1532–33 (statement
of Sen. Cornyn), S1537–39 (statement of Sen.
Lankford), S1619–20 (statement of Sen. Cornyn).
136 12 CFR 1003.4(a)(1)(ii), (a)(2) through (4) and
(6) through (8), (a)(9)(ii), and (a)(10) and (11) and
1003.5(a)(3).
137 Dodd-Frank Act section 1094(3)(A)(i).

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§ 1003.3(d)(2) states that, except as
provided in § 1003.3(d)(6), an insured
depository institution or insured credit
union that, in each of the two preceding
calendar years, originated fewer than
500 closed-end mortgage loans that are
not excluded from part 1003 pursuant to
§ 1003.3(c)(1) through (10) or (c)(13) is
not required to collect, record, or report
optional data as defined in
§ 1003.3(d)(1)(iii) for applications for
closed-end mortgage loans that it
receives, closed-end mortgage loans that
it originates, and closed-end mortgage
loans that it purchases.
The EGRRCPA and HMDA do not
define the term ‘‘closed-end mortgage
loan’’ for purposes of HMDA section
304(i). They also do not specify whether
the term includes loans that would
otherwise not be subject to HMDA
reporting under Regulation C, such as
loans used primarily for agricultural
purposes.138 The Bureau explained in
the 2018 HMDA Rule that the term
‘‘closed-end mortgage loan’’ as used in
HMDA section 304(i) is best interpreted
to include only those closed-end
mortgage loans that would otherwise be
reportable under HMDA. This
interpretation is consistent with how
loans are counted for purposes of the
thresholds in Regulation C’s existing
institutional and transactional coverage
provisions, which are independent of
the new partial exemptions and
unaffected by the EGRRCPA.139
Accordingly, in the 2018 HMDA Rule,
the Bureau interpreted the term ‘‘closedend mortgage loan’’ to include any
closed-end mortgage loan as defined in
§ 1003.2(d) that is not excluded from
Regulation C pursuant to § 1003.3(c)(1)
through (10) or (c)(13). Proposed
§ 1003.3(d)(2) would incorporate that
interpretation into Regulation C.
Proposed comment 3(d)(2)–1 provides
an illustrative example of how the
138 12

CFR 1003.3(c)(9).
discussed above in the section-by-section
analysis of §§ 1003.2(g) and 1003.3(c), the current
definition of ‘‘depository financial institution’’ in
§ 1003.2(g)(1)(v) is limited to institutions that either
(1) originated in each of the two preceding calendar
years at least 25 closed-end mortgage loans that are
not excluded from Regulation C pursuant to
§ 1003.3(c)(1) through (10) or (c)(13); or (2)
originated in each of the two preceding calendar
years at least 500 open-end lines of credit that are
not excluded from Regulation C pursuant to
§ 1003.3(c)(1) through (10). See also 12 CFR
1003.3(c)(11), (12) (excluding closed-end mortgage
loans from the requirements of Regulation C if the
financial institution originated fewer than 25
closed-end mortgage loans in either of the two
preceding calendar years, and excluding open-end
lines of credit from the requirements of Regulation
C if the financial institution originated fewer than
500 open-end lines of credit in either of the two
preceding calendar years). The threshold of 500
open-end lines of credit for institutional and
transactional coverage in Regulation C is temporary.

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closed-end partial exemption threshold
works. For the reasons stated in the
section-by-section analysis of
§ 1003.3(d) above, proposed comment
3(d)(2)–1 also provides a cross-reference
to comments 4(a)–2 through –4 for
guidance about the activities that
constitute an origination.
3(d)(3)
HMDA section 304(i)(2) provides that
the requirements of HMDA section
304(b)(5) and (6) shall not apply with
respect to open-end lines of credit of an
insured depository institution or
insured credit union if it originated
fewer than 500 open-end lines of credit
in each of the two preceding calendar
years. Proposed § 1003.3(d)(3) and
proposed comment 3(d)(3)–1 implement
this provision. Proposed § 1003.3(d)(3)
provides that, except as provided in
§ 1003.3(d)(6), an insured depository
institution or insured credit union that,
in each of the two preceding calendar
years, originated fewer than 500 openend lines of credit that are not excluded
from part 1003 pursuant to
§ 1003.3(c)(1) through (10) is not
required to collect, record, report, or
disclose optional data as defined in
§ 1003.3(d)(1)(iii) for 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.
The EGRRCPA and HMDA do not
define the term ‘‘open-end line of
credit’’ for purposes of HMDA section
304(i). They also do not specify whether
the term includes lines of credit that
would otherwise not be subject to
HMDA reporting under Regulation C,
such as loans used primarily for
agricultural purposes.140 The Bureau
explained in the 2018 HMDA Rule its
belief that the term ‘‘open-end line of
credit’’ as used in HMDA section 304(i)
is best interpreted to include only those
open-end lines of credit that would
otherwise be reportable under HMDA.
This interpretation is consistent with
how lines of credit are counted for
purposes of the thresholds in Regulation
C’s existing institutional and
transactional coverage provisions,
which are independent of the new
partial exemptions and unaffected by
the EGRRCPA. Accordingly, in the 2018
HMDA Rule, the Bureau interpreted the
term ‘‘open-end line of credit’’ to
include any open-end line of credit as
defined in § 1003.2(o) that is not
excluded from Regulation C pursuant to
§ 1003.3(c)(1) through (10). Proposed
140 See

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§ 1003.3(d)(3) would incorporate that
interpretation into Regulation C.
Proposed comment 3(d)(3)–1 provides
a cross-reference to § 1003.3(c)(12) and
comments 3(c)(12)–1 and –2, which
provide an exclusion for certain openend lines of credit from Regulation C
and permit voluntary reporting of such
transactions under certain
circumstances. While the temporary
threshold of 500 open-end lines of
credit is in place for institutional and
transactional coverage, all of the openend lines of credit that are covered by
the partial exemption for open-end lines
of credit in HMDA section 304(i)(2) are
completely excluded from the
requirements of part 1003 under current
§§ 1003.2(g)(1)(v) and 1003.3(c)(12). For
the reasons stated in the section-bysection analysis of § 1003.3(d) above,
proposed comment 3(d)(3)–1 also
provides a cross-reference to comments
4(a)–2 through –4 for guidance about the
activities that constitute an origination.
3(d)(4)
Some data points required under
Regulation C are reported using
multiple data fields, such as the
property address data point, which
consists of street address, city, State,
and Zip Code data fields. The 2018
HMDA Rule provides that insured
depository institutions and insured
credit unions covered by a partial
exemption have the option of reporting
exempt data fields as long as they report
all data fields within any exempt data
point for which they report data.
Proposed § 1003.3(d)(4) and proposed
comments 3(d)(4)–1 to –3 and 3(d)(4)(i)–
1 would incorporate this aspect of the
2018 HMDA Rule into Regulation C and
provide additional clarity regarding
voluntary reporting of the property
address data point.
As the 2018 HMDA Rule explains,
whether a partial exemption applies to
an institution’s lending activity for a
particular calendar year depends on an
institution’s origination activity in each
of the preceding two years and, in some
cases, cannot be determined until just
before data collection must begin for
that particular calendar year. For
example, whether a partial exemption
applies to closed-end mortgage loans for
which final action is taken in 2020
depends on the number of closed-end
mortgage loans originated by the
insured depository institution or
insured credit union in 2018 and 2019.
Thus, an insured depository institution
or insured credit union might not know
until the end of 2019 what information
it needs to collect in 2020 and report in
2021. Some insured depository
institutions and insured credit unions

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eligible for a partial exemption under
the EGRRCPA may therefore find it less
burdensome to report all of the data,
including the exempt data points, than
to separate the exempt data points from
the required data points and exclude the
exempt data points from their
submissions.141 Even when insured
depository institutions and insured
credit unions have had time to adjust
their systems to implement the partial
exemptions, some may still find it less
burdensome to report data covered by a
partial exemption, especially if their
loan volumes tend to fluctuate just
above or below the threshold from year
to year. The Bureau concluded in the
2018 HMDA Rule that section 104(a) is
best interpreted as permitting optional
reporting of data covered by the
EGRRCPA’s partial exemptions. Section
104(a) provides that certain
requirements do not apply to affected
institutions but does not prohibit those
affected institutions from voluntarily
reporting data. This interpretation is
consistent not only with the statutory
text but also with the apparent
congressional intent to reduce burden
on certain institutions. Accordingly, the
Bureau interpreted the EGRRCPA in the
2018 HMDA Rule to permit insured
depository institutions and insured
credit unions voluntarily to report data
that are covered by the partial
exemptions.
Aspects of the Bureau’s current
HMDA platform used for receiving
HMDA submissions, including edit
checks 142 performed on incoming
141 The Bureau recognized in the 2018 HMDA
Rule that this might be particularly true with
respect to data submission in 2019, as collection of
2018 data was already underway when the
EGRRCPA took effect, and system changes
implementing the new partial exemptions may take
time to complete. In the 2018 HMDA Rule, the
Bureau interpreted the EGRRCPA to apply to data
that are collected or reported under HMDA on or
after May 24, 2018. Because data collected from
January 1, 2018, to May 23, 2018, would not be
reported until early 2019, the EGRRCPA relieves
insured depository institutions and insured credit
unions that are eligible for a partial exemption of
the obligation to report certain data in 2019 that
may have been collected before May 24, 2018. If
optional reporting of data covered by a partial
exemption were not permitted, such institutions
would have had to remove exempt data previously
collected before submitting their 2018 data in early
2019, a process that could have been burdensome
for some institutions.
142 The HMDA edit checks are rules to assist filers
in checking the accuracy of HMDA data prior to
submission. The 2019 FIG, a compendium of
resources to help financial institutions file HMDA
data collected in 2019 with the Bureau in 2020,
explains that there are four types of edit checks:
Syntactical, validity, quality, and macro quality.
Table 2 (Loan/Application Register) in the 2019 FIG
identifies the data fields currently associated with
each data point. See FFIEC, ‘‘Filing Instructions
Guide for HMDA Data Collected in 2019,’’ at 15–
65 (Oct. 2018), https://s3.amazonaws.com/cfpbhmda-public/prod/help/2019-hmda-fig.pdf.

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submissions, are set up with the
expectation that HMDA reporters will
provide data for an entire data point
when data are reported for any data
field within that data point. The Bureau
explained in the 2018 HMDA Rule that
adjusting the HMDA platform to accept
submissions in which affected
institutions report some, but not all,
data fields in a data point covered by a
partial exemption for a specific
transaction would increase operational
complexity and costs associated with
changing the HMDA edits in the Filing
Instructions Guide for HMDA Data
Collected. Doing so would result in a
less efficient implementation and
submission process for the Bureau,
HMDA reporters, their vendors, and
other key stakeholders. Accordingly, the
Bureau indicated in the 2018 HMDA
Rule that the HMDA platform would
continue to accept submissions of a data
field that is covered by a partial
exemption under the EGRRCPA for a
specific loan or application as long as
insured depository institutions and
insured credit unions that choose to
voluntarily report the data include all
other data fields that the data point
comprises.
Proposed § 1003.3(d)(4) incorporates
the voluntary reporting interpretations
and procedures from the 2018 HMDA
Rule into Regulation C. Since issuing
the 2018 HMDA Rule, the Bureau has
also received questions relating to
voluntary reporting of property address
under § 1003.4(a)(9)(i) because the
property address data point under
§ 1003.4(a)(9)(i) is covered by the partial
exemptions and includes State as a data
field, and State is also a separate data
point under § 1003.4(a)(9)(ii)(A) that is
not covered by the partial exemptions.
To address possible confusion, the
Bureau has included additional detail in
proposed § 1003.3(d)(4) and proposed
comment 3(d)(4)(i)–1 about voluntary
reporting of property address.
Proposed § 1003.3(d)(4) provides that
a financial institution eligible for a
partial exemption under § 1003.3(d)(2)
or (3) may collect, record, and report
optional data as defined in
§ 1003.3(d)(1)(iii) for a partially exempt
transaction as though the institution
were required to do so, provided that: (i)
If the institution reports the street
address, city name, or Zip Code for the
property securing a covered loan, or in
the case of an application, proposed to
secure a covered loan pursuant to
§ 1003.4(a)(9)(i), it reports all data that
would be required by § 1003.4(a)(9)(i) if
the transaction were not partially
exempt; and (ii) If the institution reports
any data for the transaction pursuant to
§ 1003.4(a)(15), (16), (17), (27), (33), or

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(35), it reports all data that would be
required by § 1003.4(a)(15), (16), (17),
(27), (33), or (35), respectively, if the
transaction were not partially exempt.
Proposed comment 3(d)(4)–1 provides
an example of voluntary reporting that
is permitted under proposed
§ 1003.3(d)(4). Proposed comment
3(d)(4)–2 addresses how financial
institutions may handle partially
exempt transactions within the same
loan/application register. It explains
that a financial institution may collect,
record, and report optional data for
some partially exempt transactions
under § 1003.3(d) in the manner
specified in § 1003.3(d)(4), even if it
does not collect, record, and report
optional data for other partially exempt
transactions under § 1003.3(d).
Proposed comment 3(d)(4)–3
addresses how to handle a transaction
that is partially exempt pursuant to
§ 1003.3(d) and for which a particular
requirement to report optional data is
not applicable to the transaction. The
proposed comment explains that, in that
circumstance, the insured depository
institution or insured credit union
complies with the particular
requirement by reporting either that the
transaction is exempt from the
requirement or that the requirement is
not applicable.143 It also explains that
an institution is considered as reporting
data in a data field for purposes of
§ 1003.3(d)(4)(i) and (ii) if it reports not
applicable for that data field for a
partially exempt transaction. The
proposed comment also provides
examples.
Proposed comment 3(d)(4)(i)–1
explains that, if an institution eligible
for a partial exemption under
§ 1003.3(d)(2) or (3) reports the street
address, city name, or Zip Code for a
partially exempt transaction pursuant to
§ 1003.4(a)(9)(i), it reports all data that
would be required by § 1003.4(a)(9)(i) if
the transaction were not partially
exempt, including the State. The
proposed comment also explains that an
insured depository institution or
insured credit union that reports the
State pursuant to § 1003.4(a)(9)(ii) or
comment 4(a)(9)(ii)–1 for a partially
exempt transaction without reporting
any other data required by
§ 1003.4(a)(9)(i) is not required to report
the street address, city name, or Zip
Code pursuant to § 1003.4(a)(9)(i). The
Bureau believes that this proposed
comment would help to clarify that,
even though State is a property address
143 As noted above, the 2019 FIG provides
guidance to financial institutions on how to
indicate in their HMDA submissions if they are
invoking a partial exemption. See supra note 124.

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data field under § 1003.4(a)(9)(i),
reporting State does not trigger the
requirement to report other property
address data fields under
§ 1003.3(d)(4)(i), because State is also a
stand-alone data point under
§ 1003.4(a)(9)(ii)(A) that is not covered
by the partial exemptions.

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3(d)(5)
Pursuant to HMDA section 304(i),
insured depository institutions and
insured credit unions are not required to
report a ULI for partially exempt
transactions.144 To ensure that partially
exempt transactions can be identified in
the HMDA data, the 2018 HMDA Rule
requires financial institutions to provide
a non-universal loan identifier (NULI)
that meets certain requirements for any
partially exempt transaction for which
they do not report a ULI. For the reasons
that follow, proposed § 1003.3(d)(5) and
proposed comments 3(d)(5)–1 and –2
would incorporate the NULI
requirements from the 2018 HMDA Rule
into Regulation C, with minor
adjustments for clarity.
In the 2015 HMDA Rule, the Bureau
interpreted ULI as used in HMDA
section 304(b)(6)(G) to mean an
identifier that is unique within the
industry and required that the ULI
include the Legal Entity Identifier of the
institution that assigned the ULI.
Although the EGRRCPA exempts certain
transactions from the ULI requirement,
loans and applications must be
identifiable in the HMDA data to ensure
proper HMDA submission, processing,
and compliance.145 The EGRRCPA did
not change this baseline component of
data reporting, which pre-dates the
Dodd-Frank Act’s HMDA amendments
and existed under Regulation C prior to
the 2015 HMDA Rule. Accordingly,
while insured depository institutions
and insured credit unions do not have
to report a ULI for a partially exempt
transaction, they must continue to
provide certain information so that each
loan and application they report for
HMDA purposes is identifiable. The
ability to identify individual loans and
applications is necessary to facilitate
efficient and orderly submission of
HMDA data and communications
between the institution, the Bureau, and
other applicable regulators. For
144 Prior to the passage of the Dodd-Frank Act, the
Board required reporting of an identifying number
for the loan or application but did not require that
the identifier be universal. HMDA section
304(b)(6)(G) requires reporting of, ‘‘as the Bureau
may determine to be appropriate, a universal loan
identifier.’’
145 HMDA requires that covered loans and
applications be ‘‘itemized in order to clearly and
conspicuously disclose’’ the applicable data for
each loan or application. 12 U.S.C. 2803(a)(2).

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example, identification of loans and
applications is necessary to ensure that
it is possible to address problems
identified when edit checks are done
upon submission or questions that arise
when HMDA submissions are otherwise
reviewed by regulators.
To ensure the orderly administration
of the HMDA program, proposed
§ 1003.3(d)(5) and proposed comments
3(d)(5)–1 and –2 would incorporate the
NULI requirements of the 2018 HMDA
Rule into Regulation C with minor
adjustments. As the 2018 HMDA Rule
explains, a NULI does not need to be
unique within the industry and
therefore does not need to include a
Legal Entity Identifier as the ULI does.
A check digit is not required as part of
a NULI, as it is for a ULI under
§ 1003.4(a)(1)(i)(C), but may be
voluntarily included in a NULI
provided that the NULI, including the
check digit, does not exceed 22
characters. Beyond these important
differences, there are a number of
similarities between the requirements
for the ULI and those for the NULI. To
the extent that NULI requirements
resemble requirements for the ULI, the
Bureau has attempted to conform
proposed § 1003.3(d)(5) and its
proposed commentary to the
corresponding text of existing
§ 1003.4(a)(1)(i) and its commentary for
ease of reference and consistency.
Proposed § 1003.3(d)(5) provides that,
if, pursuant to § 1003.3(d)(2) or (3), a
financial institution does not report a
ULI pursuant to § 1003.4(a)(1)(i) for an
application for a covered loan that it
receives, a covered loan that it
originates, or a covered loan that it
purchases, the financial institution shall
assign and report a NULI. It further
provides that, to identify the covered
loan or application, the NULI must be
composed of up to 22 characters, which:
• May be letters, numerals, or a
combination of letters and numerals;
• Must be unique within the annual
loan/application register in which the
covered loan or application is included;
and
• Must not include any information
that could be used to directly identify
the applicant or borrower.
Proposed comment 3(d)(5)–1 explains
the requirement that the NULI must be
unique within the annual loan/
application register in which the
covered loan or application is included.
Proposed comment 3(d)(5)–2 clarifies
the scope of information that could be
used to directly identify the applicant or
borrower for purposes of
§ 1003.3(d)(5)(iii), using the same
language that appears in comment
4(a)(1)(i)–2 with respect to the ULI.

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The proposed rule’s requirements for
the NULI are consistent with those in
the 2018 HMDA Rule. However, the
2018 HMDA Rule states that the NULI
must be ‘‘unique within the insured
depository institution or credit union,’’
whereas proposed § 1003.3(d)(5)(ii)
states that the NULI must be ‘‘unique
within the annual loan/application
register in which the covered loan or
application is included.’’ This
adjustment and similar adjustments that
appear in proposed comment 3(d)(5)–1
are intended to clarify that the NULI
must be unique within a financial
institution’s yearly HMDA submission
but the NULI does not need to be unique
across reporting years. For the same
reason, the proposed rule does not
incorporate the portion of the 2018
HMDA Rule stating that a financial
institution may not use a NULI
previously reported if the institution
reinstates or reconsiders an application
that was reported in a prior calendar
year.146 Thus, the proposed rule would
allow a financial institution to use the
same NULI for a partially exempt
transaction in its 2021 loan/application
register that the institution used for a
different partially exempt transaction in
its 2020 loan/application register.
Because final action on an application
may be taken in a different year than the
year in which a NULI is assigned (for
example, for applications received late
in the year), insured depository
institutions and insured credit unions
may opt not to reassign NULIs that they
have assigned previously in order to
ensure that all NULIs included in their
annual loan/application register are
unique within that annual loan/
application register.
The Bureau recognizes that some
insured depository institutions and
insured credit unions may prefer to
report a ULI for partially exempt
transactions even if they are not
required to do so. As explained in the
2018 HMDA Rule and in the section-bysection analysis of § 1003.3(d)(4) above
and of § 1003.4(a)(1)(i) below, voluntary
reporting of ULIs for partially exempt
transactions is permissible under the
EGRRCPA, and no NULI is required if
a ULI is provided.
3(d)(6)
Notwithstanding the EGRRCPA’s
partial exemptions, new HMDA section
304(i)(3) provides that an insured
depository institution shall comply with
HMDA section 304(b)(5) and (6) if the
insured depository institution has
received a rating of ‘‘needs to improve
record of meeting community credit
146 83

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needs’’ during each of its two most
recent examinations or a rating of
‘‘substantial noncompliance in meeting
community credit needs’’ on its most
recent examination under section
807(b)(2) of the CRA. To implement this
provision, proposed § 1003.3(d)(6)
provides that § 1003.3(d)(2) and (3) do
not apply to an insured depository
institution that, as of the preceding
December 31, had received a rating of
‘‘needs to improve record of meeting
community credit needs’’ during each of
its two most recent examinations or a
rating of ‘‘substantial noncompliance in
meeting community credit needs’’ on its
most recent examination under section
807(b)(2) of the CRA.
As the Bureau explained in the 2018
HMDA Rule, the EGRRCPA does not
specify the date as of which an insured
depository institution’s two most recent
CRA examinations must be assessed for
purposes of the exception in HMDA
section 304(i)(3). In the 2018 HMDA
Rule, the Bureau interpreted HMDA
section 304(i)(3) to require that this
assessment be made as of December 31
of the preceding calendar year. This
timing is consistent with the timing for
assessing Regulation C’s asset-size
threshold and requirement that a
financial institution have a home or
branch office located in a Metropolitan
Statistical Area (MSA), which are both
assessed as of the preceding December
31.147 It also ensures that financial
institutions can determine before they
begin collecting information in any
given calendar year whether they are
eligible for a partial exemption for
information collected for certain
transactions in that year. Proposed
§ 1003.3(d)(6) would incorporate this
interpretation into Regulation C.
Proposed comment 3(d)(6)–1 explains
that the preceding December 31 means
the December 31 preceding the current
calendar year. It includes the same
example that was provided in the 2018
HMDA Rule to illustrate how the
exception works, with minor wording
changes for clarity.

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Section 1003.4 Compilation of
Reportable Data
4(a) Data Format and Itemization
Section 1003.4(a) requires financial
institutions to collect specific data about
covered loans, applications for covered
loans, and purchases of covered loans.
The EGRRCPA provides partial
exemptions from this requirement for
certain transactions of insured
depository institutions and insured
credit unions. To conform to the
147 12 CFR 1003.2(g)(1)(i) and (ii) and (g)(2)(i);
comment 2(g)–1.

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EGRRCPA, the Bureau proposes to
amend the introductory paragraph of
§ 1003.4(a) to indicate that the
requirement to collect the data
identified in § 1003.4(a) is applicable
except as specified in proposed
§ 1003.3(d), which implements the new
partial exemptions. The proposed rule
would also make a similar change to
comment 4(a)–1. The Bureau requests
comment on these proposed
amendments and the other proposed
amendments to § 1003.4(a) relating to
the partial exemptions that are
discussed below, including whether
these amendments would appropriately
implement section 104(a) of the
EGRRCPA and whether there are any
additional issues under the EGRRCPA
that the Bureau should address in
§ 1003.4(a).
4(a)(1)(i)
Section 1003.4(a)(1)(i) generally
requires a financial institution to assign
and report a ULI for the covered loan or
application that can be used to identify
and retrieve the covered loan or
application file. As explained in the
2018 HMDA Rule and the section-bysection analysis of § 1003.3(d)(5) above,
a financial institution is not required to
assign and report a ULI for a partially
exempt transaction if it instead assigns
and reports a NULI. The Bureau
therefore proposes to amend
§ 1003.4(a)(1)(i) to indicate that, for a
partially exempt transaction under
§ 1003.3(d), the data collected shall
include either a ULI or a NULI as
described in § 1003.3(d)(5), and that a
financial institution does not need to
assign and report a ULI for a partially
exempt transaction for which a NULI is
assigned and reported under
§ 1003.3(d).
The Bureau also proposes to amend
comment 4(a)(1)(i)–3 to indicate that the
requirement to report the same ULI that
was previously assigned or reported for
purchased covered loans does not apply
if the purchase of the covered loan is a
partially exempt transaction under
§ 1003.3(d). Because the partial
exemptions are only available to insured
depository institutions that are not
disqualified by their CRA examination
histories and insured credit unions for
certain transactions as set forth in
§ 1003.3(d), it is possible that a financial
institution’s purchase of a covered loan
that was partially exempt when
originated would not be a partially
exempt transaction and that the
purchasing financial institution would
therefore need to assign a ULI. Comment
4(a)(1)(i)–3 would therefore clarify that
a financial institution that purchases a
covered loan and is ineligible for a

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partial exemption with respect to the
purchased covered loan must assign a
ULI and record and submit it in its loan/
application register pursuant to
§ 1003.5(a)(1) if the financial institution
that originated the loan did not assign
a ULI. Consistent with the 2018 HMDA
Rule, the proposed amendment to
comment 4(a)(1)(i)–3 would clarify that
this may occur, for example, if the loan
was assigned a NULI under
§ 1003.3(d)(5) rather than a ULI by the
loan originator.
The Bureau also proposes to amend
comment 4(a)(1)(i)–4 to clarify the
example provided in that comment of
how ULIs are assigned if a financial
institution reconsiders an application
that was reported in a prior calendar
year. The amendments clarify that the
example assumes that the financial
institution reported a ULI rather than a
NULI in 2020 for the initial denied
application and that the financial
institution then made an origination
that is not partially exempt when it
reconsidered in 2021 the previously
denied application.
The Bureau also proposes to add a
new comment 4(a)(1)(i)–6 explaining
that, for a partially exempt transaction
under § 1003.3(d), a financial institution
may report a ULI or a NULI. The
proposed comment cross-references
§ 1003.3(d)(5) and comments 3(d)(5)–1
and –2 for guidance on the NULI. The
Bureau believes that these proposed
changes would help clarify financial
institutions’ responsibilities in assigning
identifiers to partially exempt
transactions.
4(a)(1)(ii)
Section 1003.4(a)(1)(ii) generally
requires financial institutions to collect
the date the application was received or
the date shown on the application form.
Comment 4(a)(1)(ii)–3 explains that, if,
within the same calendar year, an
applicant asks a financial institution to
reinstate a counteroffer that the
applicant previously did not accept (or
asks the institution to reconsider an
application that was denied, withdrawn,
or closed for incompleteness), the
institution may treat that request as the
continuation of the earlier transaction
using the same ULI or as a new
transaction with a new ULI. The Bureau
believes that it is appropriate to apply
the same approach with respect to
NULIs. The Bureau is therefore
proposing to amend comment
4(a)(1)(ii)–3 to reference both ULIs and
NULIs.
4(a)(9)
Section 1003.4(a)(9) generally requires
a financial institution to report the

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property address of the location of the
property securing a covered loan or, in
the case of an application, proposed to
secure a covered loan (property
address), as well as the State, the
county, and in some cases the census
tract of the property if the property is
located in an MSA or Metropolitan
Division (MD) in which the financial
institution has a home or branch office,
or if the institution is subject to
§ 1003.4(e). Comment 4(a)(9)–2
addresses situations involving multiple
properties with more than one property
taken as security. The comment
explains that, if an institution is
required to report specific information
about the property identified in
§ 1003.4(a)(9) by another section of
Regulation C such as, for example,
§ 1003.4(a)(29) or (30), the institution
reports the information that relates to
the property identified in § 1003.4(a)(9).
The Bureau proposes to amend
comment 4(a)(9)–2 to clarify that, in this
circumstance, if the transaction is
partially exempt under § 1003.3(d) and
no data are reported pursuant to
§ 1003.4(a)(9), the institution reports the
information that relates to the property
that the institution would have
identified in § 1003.4(a)(9) if the
transaction were not partially exempt.
This would mean that, for a partially
exempt transaction in which more than
one property is taken as security and no
data are reported under § 1003.4(a)(9), a
financial institution should choose one
of the properties taken as a security that
contains a dwelling and provide
information about that property if the
institution is required to report specific
information about the property
identified in § 1003.4(a)(9) by one or
more other sections of Regulation C. The
Bureau believes that this proposed
amendment would assist financial
institutions in applying comment
4(a)(9)–2 to partially exempt
transactions.

than assumptions, purchased covered
loans, and reverse mortgages. To
implement the EGRRCPA’s partial
exemptions, the proposed rule would
amend comment 4(a)(12)–7 to provide
that § 1003.4(a)(12) does not apply to
transactions that are partially exempt
under proposed § 1003.3(d).
4(a)(15)
Section 1003.4(a)(15) generally
requires financial institutions to report
the credit score or scores relied on in
making the credit decision and
information about the scoring model
used to generate each score. To
implement the EGRRCPA’s partial
exemptions, the proposed rule would
amend comment 4(a)(15)–1 to clarify
that the requirement to report the credit
score or scores relied on in making the
credit decision and information about
the scoring model used to generate each
score does not apply to transactions that
are partially exempt under proposed
§ 1003.3(d).
4(a)(16)
Section 1003.4(a)(16) generally
requires financial institutions to report
the principal reason(s) for denial of an
application. To implement the
EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(16)–4 to clarify that the requirement
to report the principal reason(s) for
denial of an application does not apply
to transactions that are partially exempt
under proposed § 1003.3(d).

4(a)(9)(i)
Section 1003.4(a)(9)(i) generally
requires a financial institution to report
the property address. To implement the
EGRRCPA’s partial exemptions, the
Bureau proposes to amend comment
4(a)(9)(i)–1 to clarify that the
requirement to report property address
does not apply to partially exempt
transactions under § 1003.3(d).

4(a)(17)
Section 1003.4(a)(17) generally
requires that, for covered loans subject
to Regulation Z § 1026.43(c), a financial
institution shall report the amount of
total loan costs if a disclosure is
provided for the covered loan pursuant
to Regulation Z § 1026.19(f), or the total
points and fees charged in connection
with the covered loan if the covered
loan is not subject to the disclosure
requirements in Regulation Z
§ 1026.19(f). To implement the
EGRRCPA’s partial exemptions, the
proposed rule would amend comments
4(a)(17)(i)–1 and (ii)–1 to clarify that the
requirement to report total loan costs or
total points and fees, as applicable, does
not apply to transactions that are
partially exempt under proposed
§ 1003.3(d).

4(a)(12)
Section 1003.4(a)(12) generally
requires a financial institution to report
the rate spread for covered loans and
applications that are approved but not
accepted, and that are subject to
Regulation Z, 12 CFR part 1026, other

4(a)(18)
Section 1003.4(a)(18) generally
requires financial institutions to report,
for covered loans subject to the
disclosure requirements in Regulation Z
§ 1026.19(f), the total of all borrowerpaid origination charges. To implement

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the EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(18)–1 to clarify that the requirement
to report borrower-paid origination
charges does not apply to transactions
that are partially exempt under
proposed § 1003.3(d).
4(a)(19)
Section 1003.4(a)(19) generally
requires 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. To
implement the EGRRCPA’s partial
exemptions, the proposed rule would
amend comment 4(a)(19)–1 to clarify
that the requirement to report discount
points does not apply to transactions
that are partially exempt under
proposed § 1003.3(d).
4(a)(20)
Section 1003.4(a)(20) generally
requires financial institutions to report,
for covered loans subject to the
disclosure requirements in Regulation Z
§ 1026.19(f), the amount of lender
credits. To implement the EGRRCPA’s
partial exemptions, the proposed rule
would amend comment 4(a)(20)–1 to
clarify that the requirement to report
lender credits does not apply to
transactions that are partially exempt
under proposed § 1003.3(d).
4(a)(21)
Section 1003.4(a)(21) generally
requires financial institutions to report
the interest rate applicable to the
approved application or to the covered
loan at closing or account opening. To
implement the EGRRCPA’s partial
exemptions, the proposed rule would
amend comment 4(a)(21)–1 to clarify
that the requirement to report interest
rate does not apply to transactions that
are partially exempt under proposed
§ 1003.3(d).
4(a)(22)
Section 1003.4(a)(22) generally
requires financial institutions to report
the term in months of any prepayment
penalty for covered loans or
applications subject to Regulation Z, 12
CFR part 1026. To implement the
EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(22)–1 to clarify that the requirement
to report the term of any prepayment
penalty does not apply to transactions
that are partially exempt under
proposed § 1003.3(d).
4(a)(23)
Section 1003.4(a)(23) generally
requires financial institutions to report

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the ratio of the applicant’s or borrower’s
total monthly debt to the total monthly
income relied on in making the credit
decision (debt-to-income ratio). To
implement the EGRRCPA’s partial
exemptions, the proposed rule would
amend comment 4(a)(23)–1 to clarify
that the requirement to report the debtto-income ratio does not apply to
transactions that are partially exempt
under proposed § 1003.3(d).
4(a)(24)
Section 1003.4(a)(24) generally
requires 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 (combined loan-to-value
ratio). To implement the EGRRCPA’s
partial exemptions, the proposed rule
would amend comment 4(a)(24)–1 to
clarify that the requirement to report the
combined loan-to-value ratio does not
apply to transactions that are partially
exempt under proposed § 1003.3(d).
4(a)(25)
Section 1003.4(a)(25) generally
requires financial institutions to report
the scheduled number of months after
which the legal obligation will mature
or terminate or would have matured or
terminated (loan term). To implement
the EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(25)–5 to clarify that the requirement
to report loan term does not apply to
transactions that are partially exempt
under proposed § 1003.3(d).

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4(a)(26)
Section 1003.4(a)(26) generally
requires financial institutions to report
the number of months, or proposed
number of months in the case of an
application, from the closing or account
opening until the first date the interest
rate may change. To implement the
EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(26)–1 to clarify that the requirement
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 does not apply
to transactions that are partially exempt
under proposed § 1003.3(d).
4(a)(27)
Section 1003.4(a)(27) generally
requires financial institutions to report
contractual features that would allow
payments other than fully amortizing
payments. To implement the
EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(27)–1 to clarify that the requirement

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to report contractual features that would
allow payments other than fully
amortizing payments does not apply to
transactions that are partially exempt
under proposed § 1003.3(d).
4(a)(28)
Section 1003.4(a)(28) generally
requires financial institutions to report
the value of the property securing the
covered loan or, in the case of an
application, proposed to secure the
covered loan relied on in making the
credit decision. To implement the
EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(28)–1 to clarify that the requirement
to report the property value relied on in
making the credit decision does not
apply to transactions that are partially
exempt under proposed § 1003.3(d).
4(a)(29)
Section 1003.4(a)(29) generally
requires financial institutions to report
whether a covered loan or application is
or would have been secured by a
manufactured home and land or by a
manufactured home and not land. To
implement the EGRRCPA’s partial
exemptions, the proposed rule would
amend comment 4(a)(29)–4 to clarify
that the requirement to report whether
a covered loan or application is or
would have been secured by a
manufactured home and land or by a
manufactured home and not land does
not apply to transactions that are
partially exempt under proposed
§ 1003.3(d).
4(a)(30)
Section 1003.4(a)(30) generally
requires financial institutions to report
whether the applicant or borrower owns
the land on which a manufactured home
is or will be located through a direct or
indirect ownership interest or leases the
land through a paid or unpaid leasehold
interest. To implement the EGRRCPA’s
partial exemptions, the proposed rule
would amend comment 4(a)(30)–6 to
clarify that the requirement to report
ownership or leasing information on the
manufactured home land property
interest does not apply to transactions
that are partially exempt under
proposed § 1003.3(d).
4(a)(32)
Section 1003.4(a)(32) generally
requires financial institutions to report
information on the number of
individual dwelling units in
multifamily dwellings that are incomerestricted pursuant to Federal, State, or
local affordable housing programs. To
implement the EGRRCPA’s partial
exemptions, the proposed rule would

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amend comment 4(a)(32)–6 to clarify
that the requirement to report
information on the number of
individual dwelling units in
multifamily dwellings that are incomerestricted pursuant to Federal, State, or
local affordable housing programs does
not apply to transactions that are
partially exempt under proposed
§ 1003.3(d).
4(a)(33)
Section 1003.4(a)(33) generally
requires financial institutions to report
whether the applicant or borrower
submitted the application for the
covered loan directly to the financial
institution and whether the obligation
arising from the covered loan was, or in
the case of an application, would have
been initially payable to the financial
institution. To implement the
EGRRCPA’s partial exemptions, the
proposed rule would amend comments
4(a)(33)(i)–1 and 4(a)(33)(ii)–1 to clarify
that the requirement for financial
institutions to report whether the
applicant or borrower submitted the
application for the covered loan directly
to the financial institution and whether
the obligation arising from the covered
loan was, or in the case of an
application, would have been initially
payable to the financial institution, does
not apply to transactions that are
partially exempt under proposed
§ 1003.3(d).
4(a)(34)
Section 1003.4(a)(34) generally
requires financial institutions to report
the unique identifier assigned by the
Nationwide Mortgage Licensing System
and Registry (NMLSR ID) for the
mortgage loan originator. To implement
the EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(34)–1 to clarify that the requirement
for financial institutions to report the
NMLSR ID does not apply to
transactions that are partially exempt
under proposed § 1003.3(d).
4(a)(35)
Section 1003.4(a)(35) generally
requires financial institutions to report
the name of the automated underwriting
system (AUS) used by the financial
institution to evaluate the application
and the result generated by that AUS.
To implement the EGRRCPA’s partial
exemptions, the proposed rule would
amend comment 4(a)(35)–1 to clarify
that the requirement for financial
institutions to report the name of the
AUS used to evaluate the application
and the result generated by that AUS
does not apply to transactions that are

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partially exempt under proposed
§ 1003.3(d).
4(a)(37)
Section 1003.4(a)(37) requires
financial institutions to identify
whether the covered loan or the
application is for an open-end line of
credit. To implement the EGRRCPA’s
partial exemptions, the proposed rule
would amend comment 4(a)(37)–1 to
clarify that the requirement for financial
institutions to identify whether the
covered loan or the application is for an
open-end line of credit does not apply
to transactions that are partially exempt
under proposed § 1003.3(d).

4(e) Data Reporting for Banks and
Savings Associations That Are Required
To Report Data on Small Business,
Small Farm, and Community
Development Lending Under CRA
Section 1003.4(e) provides that banks
and savings associations that are
required to report data on small
business, small farm, and community
development lending under regulations
that implement the CRA shall also
collect the information required by
§ 1003.4(a)(9) for property located
outside MSAs and MDs in which the
institution has a home or branch office,
or outside any MSA. Section 1003.4(e)
requires collection only of the
information required by
§ 1003.4(a)(9)(ii) regarding the location
of the property by State, county, and
census tract because § 1003.4(a)(9)(i)
itself requires collection of property
address regardless of whether the
property is located in an MSA or MD.148
The proposed rule would amend
§ 1003.4(e) by changing the cross-

V. Effective Dates for Proposed Rule
The Bureau proposes that the
amendments included in this proposal
take effect in stages, as provided in the
proposed amendatory instructions
below. The Bureau proposes that the
proposed amendments that incorporate
the interpretations and procedures from
the 2018 HMDA Rule into Regulation C
and further implement section 104(a) of
the EGRRCPA take effect on January 1,
2020. This would allow stakeholders to
benefit without significant delay from
the additional certainty and clarity that
the Regulation C amendments will
provide regarding the EGRRCPA partial
exemptions that are already in effect.149
The Bureau proposes that the
proposed adjustment to the closed-end
threshold for institutional and
transactional coverage take effect on
January 1, 2020. Making this adjustment
at the beginning of the calendar year
would assist lenders in complying with
data collection requirements, and
making this adjustment at the beginning
of 2020 would result in a decrease
sooner in the significant compliance
burden associated with data reporting
for closed-end mortgage loans than if
the adjustment were to be made in 2021
or later years. The Bureau proposes that
the proposed temporary threshold of
500 open-end lines of credit for
institutional and transactional coverage
take effect on January 1, 2020. This
effective date corresponds to the date
when the initial temporary open-end
coverage threshold established in the
2017 HMDA Rule is otherwise set to
expire. The Bureau proposes that the
threshold of 200 open-end lines of
credit for institutional and transactional
coverage take effect when the proposed
temporary threshold expires on January
1, 2022, to allow affected institutions
time to prepare to begin reporting and
to provide the Bureau with additional

148 When the Board added § 1003.4(e) to
Regulation C, the property address information that
is now specified in § 1003.4(a)(9)(i) was not yet
required. See 80 FR 66128, 66186 (Oct. 28, 2015)
(noting that § 1003.4(e) predates the 2015 HMDA
Rule, which added the property address
requirement now in § 1003.4(a)(9)(i)).

149 As noted, many of the proposed amendments
would merely incorporate into Regulation C
provisions of the EGRRCPA and the 2018 HMDA
Rule that are already in effect. If the proposed rule
is finalized, compliance with such amendments
prior to the proposed rule’s effective date would not
violate Regulation C.

4(a)(38)
Section 1003.4(a)(38) requires
financial institutions to identify
whether the covered loan is, or the
application is for a covered loan that
will be, made primarily for a business
or commercial purpose. To implement
the EGRRCPA’s partial exemptions, the
proposed rule would amend comment
4(a)(38)–1 to clarify that the requirement
for financial institutions to identify
whether the covered loan is, or the
application is for a covered loan that
will be, made primarily for a business
or commercial purpose does not apply
to transactions that are partially exempt
under proposed § 1003.3(d).

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reference from § 1003.4(a)(9) to
§ 1003.4(a)(9)(ii) in order to clarify that
§ 1003.4(e) only relates to the
information required by
§ 1003.4(a)(9)(ii) without making any
substantive changes. The Bureau
believes that this proposed clarification
of § 1003.4(e) would assist financial
institutions and other stakeholders by
making it clear that § 1003.4(e) does not
require reporting of property address
information required by § 1003.4(a)(9)(i)
when a partial exemption applies.

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time to assess how a requirement to
report open-end lines of credit would
affect institutions whose origination
volume falls just above the proposed
threshold of 200 open-end lines of
credit.
The Bureau solicits comment on the
proposed effective dates.
VI. Dodd-Frank Act Section 1022(b)
Analysis of Proposed Rule
The Bureau is considering the
potential benefits, costs, and impacts of
this proposed rule.150 The Bureau
requests comment on the preliminary
discussion presented below as well as
submissions of additional data that
could inform the Bureau’s consideration
of the benefits, costs, and impacts of this
proposed rule. In developing this
proposed rule, the Bureau has consulted
with or offered to consult with the
prudential regulators (the Board, the
FDIC, the NCUA, and the OCC), the
Department of Agriculture, the
Department of Housing and Urban
Development (HUD), the Department of
Justice, the Department of the Treasury,
the Department of Veterans Affairs, the
Federal Housing Finance Agency, the
Federal Trade Commission, and the
Securities and Exchange Commission
regarding, among other things,
consistency with any prudential,
market, or systemic objectives
administered by such agencies.
As discussed in greater detail
elsewhere throughout this
supplementary information, in this
proposed rulemaking the Bureau is
proposing to incorporate into Regulation
C, which implements HMDA, the
interpretations and procedures from the
2018 HMDA Rule and to implement
further section 104(a) of the EGRRCPA.
The Bureau is also proposing to amend
Regulation C, effective January 1, 2020,
to increase the threshold for reporting
data about closed-end mortgage loans to
either 50 or 100 originated closed-end
mortgage loans in each of the two
preceding years. The Bureau in addition
is proposing to amend Regulation C to
extend for a period of two additional
years the current data reporting
threshold of 500 open-end lines of
credit and then to set that threshold at
200 open-end lines of credit beginning
in calendar year 2022. As a result,
financial institutions originating fewer
150 Specifically, 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 and 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.

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than 500 open-end lines of credit in
either of the preceding two years but at
least 200 open-end lines of credit in
each of the two preceding years would
not be required to collect such data until
calendar year 2022 and financial
institutions originating fewer than 200
open-end lines of credit in either of the
preceding two years would be excluded
from reporting data on open-end lines of
credit.

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A. Provisions To Be Analyzed
The proposal contains regulatory or
commentary language (proposed
provisions). The discussion below
considers the benefits, costs, and
impacts of the following major proposed
provisions to:
1. Incorporate the interpretations and
procedures from the 2018 HMDA Rule
into Regulation C and further
implement section 104(a) of the
EGRRCPA, which grants eligible
financial institutions partial exemptions
from HMDA’s requirements for certain
transactions;
2. Increase the threshold for reporting
data about closed-end mortgage loans
from 25 to 50 or 100 originations in each
of the two preceding calendar years; and
3. Extend for a period of two years,
specifically calendar years 2020 and
2021, the current data reporting
threshold of 500 open-end lines of
credit in each of the two preceding
calendar years and permanently set the
threshold for reporting data about openend lines of credit at 200 open-end lines
of credit in each of the two preceding
calendar years starting in calendar year
2022.
With respect to each major proposed
provision, the discussion considers the
benefits, costs, and impacts to
consumers and covered persons. The
discussion also addresses certain
alternative provisions that were
considered by the Bureau in the
development of this proposed rule. The
Bureau requests comment on the
consideration of the potential benefits,
costs, and impacts of this proposed rule.
B. Baselines for Consideration of Costs
and Benefits
The Bureau has discretion in any
rulemaking to choose an appropriate
scope of analysis with respect to
potential benefits, costs, and impacts
and an appropriate baseline. Each of the
three sets of provisions included in this
proposed rule are distinct from the
others and hence the Bureau has chosen
a different baseline for each of the three
provisions: (1) To avoid double
counting the impacts assessed for each
of the three sets of provisions, and (2)
to provide the clearest exposition of the

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effects of the Bureau’s actions in this
proposed rule and in implementing the
EGRRCPA in the 2018 HMDA Rule.
However, summed together, the impact
estimates for each of the three sets of
provisions as analyzed in this part form
the total estimated impact for the
proposed rule corresponding to a
baseline where the 2015 HMDA Rule
and the 2017 HMDA Rule were in effect
but prior to the EGRRCPA.
The first set of provisions under
consideration would incorporate the
interpretations and procedures from the
2018 HMDA Rule into Regulation C and
further implement section 104(a) of the
EGRRCPA, which grants eligible
financial institutions partial exemptions
from HMDA’s requirements for certain
transactions. In the analysis under
section 1022(b) of the Dodd-Frank Act
in the 2018 HMDA Rule, the Bureau
adopted a post-statute baseline to assess
the impact of the 2018 HMDA Rule
because that rule merely interprets and
provides guidance regarding what
Congress required in section 104(a) of
the EGRRCPA and provides procedures
related to applying those
requirements.151 By contrast, the Bureau
is proposing in this rulemaking to use
its legislative rulemaking authority to
amend Regulation C to implement the
statutory provisions. For the
consideration of benefits and costs of
the first set of provisions in this
proposed rule, the Bureau is therefore
using a pre-statute baseline, i.e.,
evaluating the benefits, costs, and
impacts of the provisions implementing
the EGRRCPA as compared to the state
of the world prior to when the
EGRRCPA took effect. The Bureau
believes such a pre-statute baseline
provides the public and the Bureau a
more complete picture of the impacts of
the EGRRCPA changes that were
implemented by the Bureau’s 2018
HMDA Rule and would be further
implemented by the relevant provisions
in this proposed rule.
The second set of provisions in this
proposed rule would increase the
closed-end loan coverage threshold from
25 originations to either 50 or 100
originations in each of the two
preceding calendar years. Because the
EGRRCPA predates this proposed
provision, and the burden reduction
from this provision, if adopted, would
151 The Bureau has discretion in any rulemaking
to choose an appropriate scope of analysis with
respect to potential benefits, costs, and impacts and
an appropriate baseline. In the 2018 HMDA Rule,
the Bureau noted that it anticipated an upcoming
notice-and-comment rulemaking and expected that
the accompanying analysis under Dodd-Frank Act
section 1022(b) would assess the benefits, costs, and
impacts of the statute as well as the implementing
regulation. 83 FR 45325, 45332 n.57 (Sept. 7, 2018).

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be in addition to, and would not replace
the burden reduction for financial
institutions already implemented under
the EGRRCPA, the Bureau believes the
appropriate baseline for this provision is
a post-EGRRCPA world in which
eligible financial institutions under the
EGRRCPA are already partially exempt
from the reporting of certain data points
for closed-end mortgages.
The third set of provisions in this
proposed rule would extend for two
years, until January 1, 2022, the current
temporary threshold for reporting data
about open-end lines of credit of 500
open-end lines of credit in each of the
two preceding calendar years, and set
the permanent threshold for reporting
data about open-end lines of credit at
200 open-end lines of credit in each of
the two preceding calendar years when
the temporary threshold expires. In the
2017 HMDA Rule, the Bureau granted
two-year temporary relief (specifically,
for 2018 and 2019) for financial
institutions that originate fewer than
500 open-end lines of credit in either of
the two preceding calendar years. The
2017 HMDA Rule provides that, absent
any future rulemaking, the open-end
coverage threshold will revert to 100
open-end lines of credit, as in the 2015
HMDA Rule, starting in 2020. This
proposed rule proposes to extend the
current temporary coverage threshold
for open-end lines of credit of 500 for
two more years (specifically, 2020 and
2021) and then set the coverage
threshold for open-end lines of credit at
200 permanently.
Meanwhile, the EGRRCPA’s partial
exemption for open-end lines of credit
of eligible insured depository
institutions and insured credit unions
took effect on May 24, 2018. Because the
temporary increase in the open-end
coverage threshold adopted in the 2017
HMDA Rule would automatically expire
without this or other rulemaking effort
and some insured depository
institutions and insured credit unions
are now eligible for a partial exemption
for open-end lines of credit, for the
consideration of benefits and costs of
this provision the Bureau is adopting a
baseline in which the open-end
coverage threshold starting in year 2020
is reset at 100 open-end lines of credit
in each of the two preceding calendar
years with some depository institutions
and credit unions partially exempt
under the EGRRCPA.
C. Coverage of the Proposed Rule
Each set of proposed provisions
applies to certain financial institutions
and relieves these financial institutions
from HMDA’s requirements for either all
or certain data points regarding closed-

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end mortgage loans or open-end lines of
credit that they originate or purchase, or
for which they receive applications, as
described further in each section below.
In short, the implementation of the
EGRRCPA would affect certain insured
depository institutions and insured
credit unions with origination volumes
below certain thresholds, while the rest
of the proposed rule would affect all
financial institutions below certain
thresholds and not just insured
depository institutions and insured
credit unions.
D. Basic Approach of the Bureau’s
Consideration of Benefits and Costs and
Data Limitations
This discussion relies on data that the
Bureau has obtained from industry,
other regulatory agencies, and publicly
available sources. However, as
discussed further below, the Bureau’s
ability to fully quantify the potential
costs, benefits, and impacts of this
proposed rule is limited in some
instances by a scarcity of necessary data.
1. Benefits to Covered Persons
This proposed rule relates to which
financial institutions, transactions, and
data points are exempted or excluded
from HMDA’s reporting requirements.
All three sets of provisions in this
proposed rule are designed to reduce
the regulatory burdens on covered
persons while maintaining sufficient
HMDA data to serve the statute’s
purposes. Therefore, the benefits of
these proposed provisions to covered
persons are mainly the reduction of the
costs to covered persons relative to the
compliance costs the covered persons

would have to incur under each
baseline scenario. The costs to covered
persons and others derive from the
diminished availability of data to
address the statutory purposes of
HMDA.
The Bureau’s 2015 HMDA Rule, as
well as the 2014 proposed rule for the
2015 HMDA Rule and the material
provided to the Small Business Review
Panel leading to the 2015 HMDA Rule,
presented a basic framework of
analyzing compliance costs for HMDA
reporting, including ongoing costs and
one-time costs of financial institutions.
Based on the Bureau’s study of the
HMDA compliance process and costs,
with the help of additional information
gathered and verified through the Small
Business Review Panel process, the
Bureau classified the operational
activities that financial institutions use
for HMDA data collection and reporting
into 18 discrete compliance ‘‘tasks’’
which can be grouped into four
‘‘primary tasks.’’ 152 Recognizing that
the cost per loan of complying with
HMDA’s requirements differs by
financial institution, the Bureau further
identified seven key dimensions of
compliance operations that were
significant drivers of compliance costs,
including 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. The Bureau found that financial
institutions tended to have similar
levels of complexity in compliance
operations across all seven dimensions.
For example, if a given financial
institution had less system integration,

then it tended to use less automation
and less complex tools for geocoding.
Financial institutions generally did not
use less complex approaches on one
dimension and more complex
approaches on another. The small entity
representatives validated this
perspective during the Small Business
Review Panel meeting convened under
the Small Business Regulatory
Enforcement Fairness Act.153
The Bureau realizes that costs vary by
institution due to many factors, such as
size, operational structure, and product
complexity, and that this variance exists
on a continuum that is impossible to
fully represent. To consider costs in a
practical and meaningful way, in the
2015 HMDA Rule the Bureau adopted
an approach that focused on three
representative tiers of financial
institutions. In particular, to capture the
relationships between operational
complexity and compliance cost, the
Bureau used these seven dimensions to
define three broadly representative
financial institutions according to the
overall level of complexity of their
compliance operations. Tier 1 denotes a
representative financial institution with
the highest level of complexity, tier 2
denotes a representative financial
institution with a moderate level of
complexity, and tier 3 denotes a
representative financial institution with
the lowest level of complexity. For each
tier, the Bureau developed a separate set
of assumptions and cost estimates.
Table 1 below provides an overview
of all three representative tiers across
the seven dimensions of compliance
operations: 154

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TABLE 1—TYPES OF HMDA REPORTERS 1
Tier 3 FIs tend to . . .

Tier 2 FIs tend to . . .

Tier 1 FIs tend to . . .

Systems ..........................

Enter data in Excel LAR Formatting
Tool.

Use LOS and HMS; Submit data via
the HMDA Platform.

Integration .......................

(None) ................................................

Have forward integration (LOS to
HMS).

Automation ......................

Manually enter data into LAR Formatting Tool; review and verify
edits in the HMDA Platform.

LAR file produced by HMS; review
edits in HMS and HMDA platform;
verify edits via HMDA Platform.

Use multiple LOS, central SoR,
HMS; Submit data via the HMDA
Platform.
Have backward and forward integration; Integration with public HMDA
APIs.
LAR file produced by HMS; high automation compiling file and reviewing edits; verify edits via the
HMDA platform.

152 These tasks include: (1) Data collection:
Transcribing data, resolving reportability questions,
and transferring data to HMDA Management System
(HMS); (2) Reporting and resubmission: Geocoding,
standard annual edit and internal checks,
researching questions, resolving question responses,
checking post-submission edits, filing postsubmission documents, creating modified loan/
application register, distributing modified loan/
application register, distributing disclosure
statement, and using vendor HMS software; (3)
Compliance and internal audits: Training, internal
audits, and external audits; and (4) HMDA-related

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exams: Examination preparation and examination
assistance.
153 See Bureau of Consumer Fin. Prot., ‘‘Final
Report of the Small Business Review Panel on the
CFPB’s Proposals Under Consideration for the
Home Mortgage Disclosure Act (HMDA)
Rulemaking’’ 22, 37 (Apr. 24, 2014), http://
files.consumerfinance.gov/f/201407_cfpb_report_
hmda_sbrefa.pdf.
154 The Bureau notes this description has taken
into account the operational improvements the
Bureau has implemented regarding HMDA
reporting since issuing the 2015 HMDA Rule and

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differs slightly from the original taxonomy in the
2015 HMDA Rule that reflected the technology at
the time of the study.

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TABLE 1—TYPES OF HMDA REPORTERS 1—Continued
Tier 3 FIs tend to . . .

Tier 2 FIs tend to . . .

Tier 1 FIs tend to . . .

Geocoding .......................

Use FFIEC tool (manual) ..................

Use batch processing ........................

Completeness Checks ....

Check in HMDA Platform only ..........

Edits ................................

Use FFIEC Edits only ........................

Use LOS, which includes completeness checks.
Use FFIEC and customized edits .....

Use batch processing with multiple
sources.
Use multiple stages of checks.

Compliance Program ......

Have a joint compliance and audit office.

Have basic internal and external accuracy audit.

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1 FI

Use FFIEC and customized edits run
multiple times.
Have in-depth accuracy and fair
lending audit.

is ‘‘financial institution’’; LOS is ‘‘Loan Origination System’’; HMS is ‘‘HMDA Data Management Software’’; SoR is ‘‘System of Record.’’

For a representative institution in
each tier, in the 2015 HMDA Rule, the
Bureau produced a series of estimates of
the costs of compliance, including the
ongoing costs that financial institutions
incurred prior to the implementation of
the 2015 HMDA Rule, and the changes
to the ongoing costs due to the 2015
HMDA Rule. The Bureau further
provided the breakdown of the changes
to the ongoing costs due to each major
provision in the 2015 HMDA Rule,
which includes the changes to the scope
of the institutional coverage, the change
to the scope of the transactional
coverage, the revisions to the existing
data points (as before the 2015 HMDA
Rule) and the addition of new data
points by the 2015 HMDA Rule.
For the impact analysis in this
proposed rule, the Bureau is utilizing
the cost estimates provided in the 2015
HMDA Rule for the representative
financial institution in each of the three
tiers, with some updates, mainly to
reflect the inflation rate, and in the case
of the set of provisions implementing
the partial exemptions under the
EGRRCPA, to align the partially exempt
data points (and data fields used to
report these data points) with the cost
impact analyses discussed in the impact
analyses for the 2015 HMDA Rule. The
Bureau’s analyses below also take into
account the operational improvements
that have been implemented by the
Bureau regarding HMDA reporting since
the issuance of the 2015 HMDA Rule.
The details of such analyses are
contained in the following sections
addressing all three major sets of
provisions of this proposed rule. The
Bureau emphasizes that through the
issuance of this proposal it is soliciting
information relating to the costs
financial institutions incurred in
collecting and reporting 2018 data in
compliance with the 2015 HMDA Rule
and that such information may be
valuable in estimating costs in the
Dodd-Frank Act section 1022(b) analysis
issued with the final rule.
The next step of the Bureau’s
consideration of the reduction of costs

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for covered persons involved
aggregating the institution-level
estimates of the cost reduction under
each set of proposed provisions up to
the market-level. This aggregation
required estimates of the total number of
potentially impacted financial
institutions and the total number of
loan/application register records by
those potentially impacted institutions.
The Bureau used a wide range of data
in conducting this task, including recent
HMDA data,155 Call Reports, and
Consumer Credit Panel data. These
analyses were challenging, because no
single data source provided complete
coverage of all the financial institutions
that could be impacted and because
there is varying data quality among the
different sources.
To perform the aggregation, the
Bureau mapped the potentially
impacted financial institutions to the
three tiers described above. For each of
the three major proposed provisions
analyzed, the Bureau assumed none of
the proposed changes would affect the
high-complexity tier 1 reporters. The
Bureau then assigned the potentially
impacted financial institutions to either
tier 2 or tier 3. In doing so, the Bureau
relied on two constraints: (1) The
155 The majority of the analyses in this section
were conducted prior to the official submission
deadline of the 2018 HMDA data on March 1, 2019.
As of the date of the issuance of this proposed rule,
the modified HMDA aggregate file is not ready for
public release, as the Bureau is still processing the
2018 HMDA loan/application register submissions
and checking data quality. Some financial
institutions are continuing to revise and resubmit
their 2018 HMDA data, and the modified loan/
application register for 2018, which was first made
public on March 29, 2019, will be updated on a
rolling basis for resubmissions and subject to
change. The Bureau intends to review the 2018
HMDA data more closely in connection with this
rulemaking once the 2018 submissions are more
complete. The most recent year of HMDA data the
Bureau has used for these analyses is from the 2017
HMDA data. The Bureau notes the market may
fluctuate from year to year and the Bureau’s
rulemaking is not geared towards such transitory
changes on an annual basis. The Bureau does not
expect large differences from these estimates had
the 2018 HMDA data been used for this cost-benefit
analysis, because the Bureau has considered past
years’ data and taken into account other market data
in its estimates.

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estimated number of impacted
institutions in tiers 2 and 3, combined,
must equal the estimated number of
impacted institutions for the applicable
provision, and (2) the number of loan/
application register records submitted
annually by the impacted financial
institutions in tiers 2 and 3, combined,
must equal the estimated number of
loan/application register records for the
applicable provision. As in the 2015
HMDA Rule, the Bureau assumed for
closed-end reporting that a
representative low-complexity, tier 3
financial institution has 50 closed-end
mortgage loan HMDA loan/application
register records per year and a
representative tier 2 financial institution
has 1,000 closed-end mortgage loan
HMDA loan/application register records
per year. Similarly, the Bureau assumed
for open-end reporting that a
representative low-complexity, tier 3
financial institution has 150 open-end
HMDA loan/application register records
per year and a representative tier 2
financial institution has 1,000 open-end
HMDA loan/application register records
per year. Constraining the total number
of impacted institutions and the number
of impacted loan/application register
records across tier 2 and tier 3 to the
aggregate estimates thus enables the
Bureau to calculate the approximate
numbers of impacted institutions in
tiers 2 and 3 for each set of
provisions.156
Multiplying the impact estimates for
representative financial institutions in
each tier by the estimated number of
impacted institutions, the Bureau
arrived at the market-level estimates.
2. Costs to Covered Persons
In general all three sets of provisions
in this proposed rule, if adopted, would
reduce the ongoing costs associated
with HMDA reporting for the affected
covered persons. The set of provisions
relating to the open-end thresholds
would also delay for two additional
years the one-time costs that excluded
156 See

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institutions would otherwise incur if the
500 open-end coverage threshold were
restored to 100 open-end lines of credit
in 2020 absent this proposed rule. Those
proposed provisions would also
ultimately remove the one-time costs for
excluded institutions that originated
fewer than 200 open-end lines of credit
but more than 100 open-end lines of
credit in either of the two preceding
calendar years starting in 2022. In the
interim, it is possible that to adapt to the
rule, covered persons may incur certain
one-time costs. Such one-time costs are
mostly related to training and system
changes in covered persons’ HMDA
reporting/loan origination systems.
Based on the Bureau’s outreach to
industry, however, the Bureau believes
that such one-time costs are fairly small.

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3. Benefits to Consumers
Having generated estimates of the
changes in ongoing costs and one-time
costs to covered financial institutions,
the Bureau then can attempt to estimate
the potential pass-through of such cost
reduction from these institutions to
consumers, which could benefit
consumers. According to economic
theory, in a perfectly competitive
market where financial institutions are
profit maximizers, the affected financial
institutions would pass on to consumers
the marginal, i.e., variable, cost savings
per application or origination, and
absorb the one-time and increased fixed
costs of complying with the rule. The
Bureau estimated in the 2015 HMDA
Rule the impacts on the variable costs
of the representative financial
institutions in each tier due to various
provisions of that rule. Similarly, the
estimates of the pass-through effect from
covered persons to consumers due to
the provisions under this proposed rule
are based on the relevant estimates of
the changes to the variable costs in the
2015 HMDA Rule with some updates.
The Bureau notes that the market
structure in the consumer mortgage
lending markets may differ from that of
a perfectly competitive market in which
case the pass-through to the consumers
would most likely be smaller than the
pass-through under the perfect
competition assumption. The Bureau
seeks additional comments on the
potential pass-through from financial
institutions to consumers due to the
reduction in reporting costs.

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4. Cost to Consumers
HMDA is a sunshine statute. The
purposes of HMDA are to provide the
public with loan data that can be used:
(i) To help determine whether financial
institutions are serving the housing
needs of their communities; (ii) to assist
public officials in distributing publicsector investment so as to attract private
investment to areas where it is needed;
and (iii) to assist in identifying possible
discriminatory lending patterns and
enforcing antidiscrimination statutes.157
The provisions in this proposed rule, if
adopted, would lessen the reporting
requirements for eligible financial
institutions by either completely
relieving them of the obligation to report
all data points related to closed-end
mortgage loans or open-end lines of
credit or by implementing the partial
exemptions from reporting certain data
points for certain transactions for some
covered persons as provided by the
EGRRCPA. As a sunshine statute
regarding data reporting and disclosure,
most of the benefits of HMDA are
realized indirectly. With less data
required to be collected and reported
under HMDA, the HMDA data available
to serve HMDA’s statutory purposes
would decline.158 However, to quantify
the reduction of such benefits to
consumers presents substantial
challenges. The Bureau seeks comment
on the magnitude of the loss of HMDA
benefits from these changes to the
available data and/or methodologies for
measuring these effects.
Because quantifying and monetizing
benefits of HMDA to consumers would
require identifying all possible uses of
HMDA data, establishing causal links to
the resulting public benefits, and then
157 12

CFR 1003.1(b).
changes in this proposal would generally
either relieve financial institutions from their
reporting requirements under Regulation C or
implement the reduction in the data fields required
to be reported for certain transactions of certain
financial institutions as provided by the EGRRCPA.
The data fields covered by the EGRRCPA include
information about the type of loans and the types
of borrowers applying for and being granted credit,
which can help determine whether financial
institutions are serving the housing needs of their
communities and assist in identifying possible
discriminatory lending patterns and enforcing
antidiscrimination statutes. Similarly, raising the
reporting thresholds so that fewer institutions
report data would reduce the public information
regarding whether financial institutions are serving
the needs of their communities. To the extent that
these data are used for other purposes, the loss of
data could result in other costs.
158 The

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quantifying the magnitude of these
benefits, the Bureau mostly presented
qualitative analyses regarding HMDA
benefits in the 2015 HMDA Rule. For
instance, quantification would require
measuring the impact of increased
transparency on financial institution
behavior, the need for public and
private investment, the housing needs of
communities, the number of financial
institutions potentially engaging in
discriminatory or predatory behavior,
and the number of consumers currently
being unfairly disadvantaged and the
level of quantifiable damage from such
disadvantage. Similarly for the impact
analyses of this proposed rule, the
Bureau is unable to readily quantify the
loss of some of the HMDA benefits to
consumers with precision, both because
the Bureau does not have the data to
quantify all HMDA benefits and because
the Bureau is not able to assess
completely how this proposed rule will
reduce those benefits.
In light of these data limitations, the
discussion below generally provides a
qualitative consideration of the costs,
i.e., the potential loss of HMDA benefits
to consumers from the proposed rule.
The Bureau seeks comment on the
appropriateness of the approach
described above, including additional
data relevant to the benefits and costs to
consumers and covered persons.
E. Potential Benefits and Costs to
Consumers and Covered Persons
1. Overall Summary
In this section, the Bureau presents a
concise, high-level table summarizing
the benefits and costs considered in the
remainder of the discussion. This table
is not intended to capture all details and
nuances that are provided both in the
rest of the analysis and in the sectionby-section discussion above, but rather
to provide an overview of the major
benefits and costs of the proposed rule,
including the provisions to be analyzed,
the baseline chosen for each set of
provisions, the sub-provisions to be
analyzed, the actual or proposed
implementation dates of the subprovisions, the annual savings on the
operational costs of covered persons due
to the sub-provision, the changes to the
one-time costs of covered persons due to
the sub-provision, and generally how
the proposed provisions affect HMDA’s
benefits.

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Scope of the Provisions
The proposed rule would incorporate
the 2018 HMDA Rule into Regulation C
and further implement the EGRRCPA
provision that adds partial exemptions
from HMDA’s requirements for certain
insured depository institutions and
insured credit unions.159 With respect
to closed-end mortgage loans, HMDA
section 304(i)(1) as amended by the
EGRRCPA provides that, if an insured
depository institution or insured credit
union originated fewer than 500 closedend mortgage loans in each of the two
preceding calendar years, the insured
depository institution or insured credit
union is generally exempt from
reporting certain data points on the
closed-end mortgage loans that it would
have otherwise reported under HMDA.
Similarly, with respect to open-end
lines of credit, HMDA section 304(i)(1)
159 For purposes of HMDA section 104, the
EGRRCPA provides that the term ‘‘insured credit
union’’ has the meaning given the term in section
101 of the Federal Credit Union Act, 12 U.S.C.
1752, and the term ‘‘insured depository institution’’
has the meaning given the term in section 3 of the
Federal Deposit Insurance Act, 12 U.S.C. 1813.

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as amended by the EGRRCPA provides
that, if an insured depository institution
or insured credit union originated fewer
than 500 open-end lines of credit in
each of the two preceding calendar
years, the insured depository institution
or insured credit union is generally
exempt from reporting certain data
points on the open-end lines of credit
that it would have otherwise reported
under HMDA.160
For the closed-end mortgage loans,
after applying all current HMDA
reporting requirements, including
Regulation C’s existing complete
exclusion for institutions that originated
fewer than 25 closed-end mortgage
loans in either of the two preceding
calendar years, the Bureau estimates
that section 104(a) of the EGRRCPA, as
implemented by the 2018 HMDA Rule
and further implemented by this
proposed rule, provides a partial
160 Notwithstanding the new partial exemptions,
new HMDA section 304(i)(3) provides that an
insured depository institution must comply with
HMDA section 304(b)(5) and (6) if it has received
a rating of ‘‘needs to improve record of meeting
community credit needs’’ during each of its two
most recent examinations or a rating of ‘‘substantial
noncompliance in meeting community credit
needs’’ on its most recent examination under
section 807(b)(2) of the CRA.

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exemption with respect to collection,
recording, and reporting of 2018 HMDA
data to approximately 3,300
institutions.161 As a point of reference,
5,852 institutions reported 2017 HMDA
data. The Bureau estimates that the
insured depository institutions and
insured credit unions that are eligible
for a partial exemption for some or all
of their covered loans and applications
consist of about 56 percent of all
reporting institutions, and 63 percent of
all depository institutions and credit
unions that reported HMDA data for
2017. The Bureau estimates that the
total number of closed-end mortgage
loans originated by these partially
161 To generate this estimate, the Bureau first
identified all depository institutions (including
credit unions) that met all reporting requirements
and reported 2017 HMDA data in 2018. From this
set of depository institutions, the Bureau then
excluded all depository institutions that do not
have to report 2018 HMDA data in 2019 because
they originated fewer than 25 closed-end mortgage
loans in either 2016 or 2017. Of the remaining
depository institutions, approximately 3,300
originated fewer than 500 closed-end mortgage
loans in each of 2016 and 2017. For purposes of this
estimate, the Bureau assumes that these institutions
are insured, do not have a less than satisfactory
CRA examination history, and thus estimates that
they are partially exempt.

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exempt institutions would be about
531,000 per year.
For the open-end lines of credit, the
2017 HMDA Rule grants a complete
exclusion for two years (specifically,
2018 and 2019) for open-end lines of
credit for all institutions that originated
fewer than 500 open-end lines of credit
in either of the two preceding calendar
years. As such, insured depository
institutions or insured credit unions
that originated fewer than 500 open-end
lines of credit in each of the two
preceding calendar years and are
partially exempt under the EGRRCPA
are already completely excluded from
HMDA’s requirements for open-end
lines of credit during 2018 and 2019
under the 2017 HMDA Rule. In other
words, for the years 2018 to 2019, the
partial exemption regarding open-end
lines of credit under the EGRRCPA
would have no immediate effects given
the 2017 HMDA Rule.
The 2017 HMDA Rule provides that,
absent any future rulemaking, the openend coverage threshold will revert to
100 open-end lines of credit as
established in the 2015 HMDA Rule,
starting in 2020. Therefore, with the
2017 HMDA Rule and pre-EGRRCPA as
the baseline, the effects of the EGRRCPA
on open-end reporting would manifest
starting in 2020. The Bureau estimates
that, by 2020, about 595 insured
depository institutions or credit unions
would have been required to report
open-end lines of credit at the 100 openend coverage threshold and are eligible
for a partial exemption under the
EGRRCPA. This is before this proposed
rule’s proposal to extend the coverage
threshold for open-end lines of credit at
500 for calendar years 2020 and 2021
and set the coverage threshold for openend lines of credit at 200 starting in
2022, which is analyzed separately in
another section.
Benefits to Covered Persons

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Partial Exemption for Closed-End
Mortgage Loans
The partial exemption for closed-end
mortgage loans in the EGRRCPA that
would be implemented by this proposed
rule conveys a direct benefit to the
covered persons who are eligible for
such exemption by reducing the
ongoing costs of having to report certain
data points that were previously
required.
The Bureau’s 2015 HMDA Rule and
2017 HMDA Rule, which define the
rules under the baseline for the analyses
of this set of provisions, require
financial institutions to report a total of
48 data points beginning with the data
collected in 2018 and reported in 2019.

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These data points contain 110 data
fields.162 The EGRRCPA grants partial
exemptions for certain transactions of
eligible financial institutions from
reporting 26 of the 48 data points,
which consist of 54 of the 110 data
fields. Because this proposed rule
would require insured depository
institutions and insured credit unions to
provide a NULI if they opt not to report
a ULI for a partially exempt transaction,
the actual reduction in the number of
data fields that financial institutions
need to report for partially exempt
transactions would be 53. In addition,
even though property address is a
partially exempt data point, financial
institutions must still report the State in
which the property that secures the
covered loan (or, in the case of an
application, is proposed to secure the
loan) is located for partially exempt
transactions, because State is an
individual data point that is not exempt
under the EGRRCPA in addition to
being one of the data fields associated
with property address, which is exempt
under the EGRRCPA. Therefore the total
number of data fields that the eligible
covered person must report for a
partially exempt transaction would be
reduced by 52.
With the exception of denial reasons
(which were previously optionally
reported prior to the 2015 HMDA Rule,
except that certain financial institutions
supervised by the OCC and the FDIC
were required to report denial reasons)
and rate spread, all of the data points
(and data fields) that are partially
exempt under the EGRRCPA as
implemented by the 2018 HMDA Rule
and this proposal correspond to data
points (and data fields) that the Bureau
added to the HMDA reporting as
mandated by the Dodd-Frank Act or
with the Bureau’s discretionary
authority granted under the Dodd-Frank
Act.163
The analysis under section 1022(b) of
the Dodd-Frank Act in the 2015 HMDA
Rule noted that the Bureau was adding
50 new data fields with new data points
that previously did not exist under
Regulation C. To estimate the costs that
financial institutions would incur in
collecting and reporting these data, the
Bureau used a cost-accounting, casestudy methodology which involved an
extensive set of interviews with
162 See FFIEC, ‘‘Filing Instructions Guide for
HMDA Data Collected in 2019,’’ at 13–65 (Oct.
2018), https://s3.amazonaws.com/cfpb-hmdapublic/prod/help/2019-hmda-fig.pdf.
163 On the other hand, as explained in the sectionby-section analysis of § 1003(d)(1)(i) in part IV
above, age and number of units are not partially
exempt under the EGRRCPA even though they were
added to Regulation C in the 2015 HMDA Rule.

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financial institutions and their vendors
through which the Bureau identified 18
component tasks involved in collecting
and reporting HMDA data and estimated
the number of person-hours required
and the costs of each task for
institutions of various levels of
complexity. The Bureau augmented this
information through the Small Business
Review Panel process and through
notice and comment on its proposed
cost estimates, as well as through a
review of academic literature and public
data. Based on the information gathered
in this process, the Bureau estimated
that the impact of the additional 50 data
fields on annual operational costs of
covered person for closed-end reporting
would be approximately $2,100,
$10,900, and $31,000 per year for
representative tier 3, tier 2, and tier 1
financial institutions, respectively, after
accounting for the operational
improvements that the Bureau was
planning to implement regarding how
the Bureau receives and processes
submitted data.164 Since issuing the
2015 HMDA Rule, the Bureau has
modernized the HMDA submission
system, improved its regulatory HMDA
help functions, and made other
operational changes that were initially
discussed in the impact analyses of the
2015 HMDA Rule. The Bureau has not
obtained new information with respect
to the component tasks or costs set forth
in the 2015 HMDA Rule. Therefore, it is
reasonable to adopt these cost estimates,
which reflect the operational
improvements described in the 2015
HMDA Rule, with certain adjustments
that reflect the newly proposed rule. To
do so, the Bureau takes the 2015
estimates on the annual ongoing costs
associated with the new additional data
points added in the 2015 HMDA Rule,
prorates the amount to account for the
reduced number of data fields required
due to the EGRRCPA partial
exemptions, adjusts those for inflation,
and arrives at a set of estimates for the
savings on the operational costs due to
the partial exemptions for representative
firms in each of the three tiers.165
164 For example, the Bureau planned to create a
web-based submission tool with automated edit
checks and to otherwise streamline the submission
and editing process to make it more efficient for
filers. In addition, the Bureau planned to
consolidate the outlets for assistance, provide
implementation support, and improve points of
contact processes for help inquiries. These changes
were implemented in 2018 for the 2017 filing year.
The Bureau has received feedback from reporting
entities on the new systems, which generally
indicate substantial costs savings.
165 The Bureau used a wage rate of $33 per hour
in its 2015 HMDA Rule impact analyses, which is
the national average wage for compliance officers
based on the National Compensation Survey from
the Bureau of Labor Statistics in May 2014. The

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Specifically the Bureau estimates that
the savings on annual operational costs
from not reporting the 52 data fields for
closed-end mortgage loans that are
exempt under the EGRRCPA and this
proposed rule would be approximately
$2,300, $11,900, and $33,900 per year
for representative tier 3, tier 2, and tier
1 financial institutions that are eligible
for the partial exemption. The Bureau
specifically requests information
relating to the costs financial
institutions incurred in collecting and
reporting 2018 data in compliance with
the 2015 HMDA Rule that may be
valuable in estimating costs in the
Dodd-Frank Act section 1022(b) analysis
issued with the final rule.
In the 2015 HMDA Rule, the Bureau
assumed a representative lowcomplexity, tier 3 financial institution
that reports closed-end mortgage loans
had 50 HMDA loan/application register
records per year, a representative
medium-complexity, tier 2 financial
institution had 1,000 HMDA loan/
application register records per year,
while a high-complexity, tier 1 financial
institution had 50,000 HMDA loan/
application register records per year.
The partial exemption for closed-end
mortgage loans granted under the
EGRRCPA and implemented by this
proposed rule only applies to insured
depository institutions and insured
credit unions that originated less than
500 closed-end mortgage loans in each
of the two preceding calendar years
prior to the HMDA collection year.
Given that and the Bureau’s
characterization of representative
financial institutions in the three tiers,
the Bureau believes that none of the tier
1 institutions are partially exempt for
closed-end reporting. Some of the
estimated 3,300 partially exempt
covered persons would be lowcomplexity/tier 3 institutions, while
some would belong to tier 2. The Bureau
estimates that approximately 2,640
institutions eligible for the partial
exemption from closed-end reporting
are similar to the representative tier 3
financial institutions and approximately
660 eligible institutions belong to tier 2.
Based on these counts, the Bureau
estimates that the aggregate savings in
ongoing costs for covered persons due to
the EGRRCPA’s partial exemption from
closed-end reporting would be
approximately $13.9 million annually.
May 2017 National Compensation Survey reported
an average wage rate for compliance officers of
$34.39. The Bureau has used a wage rate of $34 for
the impact analyses for the proposed rule.

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Partial Exemption for Open-End Lines
of Credit
Starting in 2020,166 absent the
changes to the open-end coverage
threshold in this proposal, which will
be analyzed separately, the partial
exemption for open-end lines of credit
in the EGRRCPA that would be
implemented by this proposed rule
would convey a direct benefit to
covered persons who are eligible for
such exemption by reducing the
ongoing costs of having to report certain
data points that were previously
required.
In the impact analysis of the 2015
HMDA Rule, the Bureau estimated that,
accounting for the Bureau’s planned
operational improvements, the
estimated impact of the 2015 HMDA
Rule on ongoing operational costs on
open-end reporters would be
approximately $8,600, $43,400, and
$273,000 per year, for representative
low-, moderate-, and high-complexity
financial institutions, respectively. The
Bureau takes such 2015 estimates on the
annual ongoing costs associated with
open-end reporting, prorates the amount
to account for the reduced number of
data fields required due to the
EGRRCPA partial exemption, adjusts
those for inflation, and arrives at a set
of estimates for the savings on the
operational costs of reporting
information on open-end lines of credit
due to the partial exemption for
representative firms in each of the three
tiers. Specifically the Bureau estimates
that the impact on the savings on annual
operational costs from not reporting the
52 data fields for open-end mortgage
loans that are exempt under the
EGRRCPA would be approximately
$4,500, $22,800, and $144,000 per year
for representative tier 3, tier 2, and tier
1 open-end reporting financial
institutions that are eligible for the
partial exemption.
The Bureau estimates that, absent the
changes to the open-end coverage in this
proposal, about 595 financial
institutions would be partially exempt
from reporting certain data points on
open-end lines of credit under the
EGRRCPA. According to the Bureau’s
estimates, about 545 of those 595
partially-exempt open-end reporters are
low-complexity tier 3 open-end
reporters, about 50 are moderatecomplexity tier 2 open-end reporters,
and none are high-complexity tier 1
reporters. Using these estimates, the
166 As noted above, for the years 2018 and 2019,
the partial exemption regarding open-end lines of
credit would have no immediate effects given the
temporary coverage threshold of 500 open-end lines
of credit established in the 2017 HMDA Rule.

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21003

Bureau estimates that by granting a
partial exemption to most insured
depository institutions and insured
credit unions that originate fewer than
500 open-end lines of credit in each of
two preceding years, absent the
proposed changes in the open-end
coverage threshold in this proposal that
would take effect starting in 2020, the
EGRRCPA would provide an aggregate
reduction in operational costs
associated with open-end lines of credit
for eligible financial institutions of
about $3.6 million per year. The Bureau
notes that these impacts would not
begin until 2020, given the temporary
provisions in the 2017 HMDA Rule.
Costs to Covered Persons
It is possible that, like any new
regulation or revision to the existing
regulations, financial institutions would
incur certain one-time costs adapting to
the changes of the proposed rule. Based
on the Bureau’s early outreach to
stakeholders, the Bureau understands
that most such one-time costs would
result from interpreting and
implementing the regulatory changes,
but not from purchasing software
upgrades or turning off the existing
reporting functionality that the eligible
institutions already built or purchased
prior to the EGRRCPA taking effect.
The Bureau seeks comment on any
costs to eligible financial institutions
associated with the proposals relating to
the incorporation of the EGRRCPA into
Regulation C.
Benefits to Consumers
Having generated estimates of the
reduction in ongoing costs for closedend mortgage loans on financial
institutions due to the EGRRCPA partial
exemption for closed-end mortgage
loans implemented in this proposed
rule, the Bureau can estimate the
potential pass-through of such cost
reduction from these institutions to
consumers,167 which could benefit
consumers. According to economic
theory, in a perfectly competitive
market where financial institutions are
profit maximizers, the affected financial
institutions would pass on to consumers
the marginal, i.e., variable, cost savings
per application or origination, and
167 Note that throughout this cost-benefit analysis,
the Bureau discusses such pass-through in order to
present a complete picture of the benefits that are
the result of the proposal. However, such passthrough from the financial institution to consumers
as a result of the proposal is a direct flow from the
savings to the financial institutions, and should not
be interpreted as a gain in addition to the savings
to the financial institutions from a general
equilibrium perspective for the calculation of total
social benefit.

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absorb the one-time and increased fixed
costs of complying with the rule.
The Bureau estimated in the 2015
HMDA Rule that the 50 data fields of
the new data points required under the
2015 HMDA Rule would add variable
costs per application for closed-end
mortgage loans of approximately $22 for
a representative tier 3 financial
institution, $0.62 for a representative
tier 2 financial institution, and $0.05 for
a representative tier 1 financial
institution.168 As explained above, the
partial exemption in the EGRRCPA and
this proposed rule will reduce the
number of data fields that have to be
reported by 52 and almost all those
partially exempt data fields correspond
to data fields for new data points added
by the 2015 HMDA Rule. Adjusting
these figures to account for the
difference in the number of the data
fields that are partially exempt under
the EGRRCPA and the number of data
fields of new data points added by the
2015 HMDA Rule, and adjusting for
inflation, the Bureau estimates that the
partial exemption under the EGRRCPA
and this proposed rule would reduce
the variable cost per closed-end
mortgage loan application for a
representative tier 3 financial institution
by about $24 and for a representative
tier 2 financial institution by about
$0.68. This potential reduction in the
expense facing consumers when
applying for a closed-end mortgage will
be amortized over the life of the loan
and represents a very small decrease in
the cost of a mortgage loan. Therefore,
the Bureau does not anticipate any
material effect on credit access in the
long or short term if financial
institutions pass on these cost savings to
consumers.
Similarly, having generated estimates
of the reduction in ongoing costs for
open-end mortgage loans on financial
institutions due to the EGRRCPA partial
exemption for open-end lines of credit
implemented in this proposed rule, the
Bureau can estimate the potential passthrough of such cost reduction from
these institutions to consumers, which
could benefit consumers.
The Bureau estimated in the 2015
HMDA Rule that the rule would
increase variable costs by $41.50 per
open-end line of credit application for
representative low-complexity
institutions and $6.20 per open-end line
of credit application for representative
moderate-complexity institutions.
Accounting for the difference in the
number of the data fields that are
partially exempt under the EGRRCPA
and the total number of data fields that
168 80

FR 66128, 66291 (Oct. 28, 2015).

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comprise all data points under the 2015
HMDA Rule, and adjusting for inflation,
the Bureau estimates that the partial
exemption under the EGRRCPA and this
proposed rule would reduce the variable
cost per open-end line of credit
application for a representative tier 3
financial institution by about $22 and
for a representative tier 2 financial
institution by about $3. These savings
on the variable costs by the partiallyexempt open-end reporters could
potentially be passed through to
consumers, under the assumption of a
perfectly competitive market with profit
maximizing firms. These expenses will
be amortized over the life of a loan and
represent a very small amount relative
to the cost of a mortgage loan. The
Bureau notes that the market structure
in the consumer mortgage lending
market may differ from that of a
perfectly competitive market in which
case the pass-through to the consumers
would most likely be smaller than the
pass-through under the perfect
competition assumption. Therefore, the
Bureau does not anticipate any material
effect on credit access in the long or
short term even if financial institutions
pass on these reduced costs to
consumers.
Costs to Consumers
The partial exemptions under the
EGRRCPA and further implemented
through this proposed rule remove the
reporting requirements for 26 data
points for certain transactions of eligible
insured depository institutions and
insured credit unions. As a result,
regulators, public officials, and
members of the public will lose some
insights into the credit offered by these
partially exempt institutions and overall
credit in the communities they serve.
The decreased insight into partially
exempt financial institutions may lead
to adverse outcomes for some
consumers. For instance, some of the
exempt data points could have helped
the regulators and public officials better
understand the type of funds that are
flowing from lenders to consumers and
the needs of consumers for mortgage
credit. Additionally, some exempt data
points could improve the processes
used to identify possible discriminatory
lending patterns and enforce
antidiscrimination statutes. In addition,
without the exempt data regarding, for
example, underwriting and pricing,
some lenders with low fair lending risk
may be initially misidentified as high
risk, potentially increasing their
associated compliance burden. Finally,
to the extent that some covered persons
may use the information reported by
other financial institutions for market

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research purposes, the partial
exemptions may potentially lead to less
vigorous competition from these
institutions.
3. Provisions To Increase the ClosedEnd Coverage Threshold
Scope of the Provisions
This proposal would increase the
thresholds for reporting data about
closed-end mortgage loans so that
financial institutions originating fewer
than either 50 closed-end mortgage
loans, or alternatively 100 closed-end
mortgage loans, in either of the two
preceding calendar years would be
excluded from HMDA’s requirements
for closed-end mortgage loans starting in
2020.
The 2015 HMDA Rule requires
institutions that originated at least 25
closed-end mortgage loans in each of the
two preceding calendar years and meet
all other reporting criteria to report their
closed-end mortgage applications and
loans. The EGRRCPA provides a partial
exemption for insured depository
institutions and insured credit unions
that originated fewer than 500 closedend mortgage loans in each of the two
preceding years. This proposed rule
contains provisions that incorporate the
2018 HMDA Rule into Regulation C and
further implement the EGRRCPA. The
previous section in this impact analysis
specifically addresses the partial
exemptions under the EGRRCPA. This
section considers increasing the closedend loan coverage threshold to either 50
or 100 so that only financial institutions
that originated at least 50 or 100 closedend mortgage loans in each of the two
preceding years must report data on
their closed-end mortgage applications
and loans under HMDA.
Using data from various sources,
including past HMDA submissions, Call
Reports, Credit Union Call Reports,
Summary of Deposits, and the National
Information Center (NIC), the Bureau
applied all current HMDA reporting
requirements, including Regulation C’s
existing complete regulatory exclusion
for institutions that originated fewer
than 25 closed-end mortgage loans in
either of the two preceding calendar
years, and estimates that currently there
are about 4,960 financial institutions
required to report their closed-end
mortgage loans and applications under
HMDA. Together, these financial
institutions originated about 7.0 million
closed-end mortgage loans in calendar
year 2017. The Bureau observes that the
total number of financial institutions
that were engaged in closed-mortgage
lending in 2017, regardless of whether
they met all HMDA reporting criteria, is

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about 12,700, and the total number of
closed-end mortgage originations in
2017 was about 8.2 million. In other
words, under the current 25 closed-end
loan coverage threshold, about 39
percent of all mortgage lenders are
required to report HMDA data, and they
account for about 85.6 percent of all
closed-end mortgage originations in the
country. The Bureau estimates that
among those 4,960 financial institutions
that are currently required to report
closed-end mortgage loans under
HMDA, about 3,300 insured depository
institutions and insured credit unions
are partially exempt for closed-end
mortgage loans under the EGRRCPA and
the 2018 HMDA Rule, and thus are not
required to report a subset of the data
points currently required by Regulation
C for these transactions.
Alternative 1: 50 Closed-End Coverage
Threshold
The Bureau estimates that if the
closed-end loan coverage threshold
were increased to 50, under one of the
two options proposed in this proposed
rule, the total number of financial
institutions that would be required to
report closed-end mortgages would drop

to about 4,200, a decrease of about 760
financial institutions compared to the
current level. These 760 newly excluded
institutions originated about 37,000
closed-end mortgage loans in 2017.
There would be about 6.98 million
closed-end mortgage originations
reported under the 50 closed-end loan
coverage threshold, which would
account for about 85.1 percent of all
closed-end mortgage loan originations
in the entire mortgage market.
The Bureau further estimates that all
but about 20 169 of the 760 newly
excluded closed-end mortgage reporters
under the proposed 50 closed-end loan
coverage threshold would be eligible for
a partial exemption for closed-end
mortgage loans as provided by the
EGRRCPA and the 2018 HMDA Rule.
Alternative 2: 100 Closed-End Coverage
Threshold
The Bureau estimates that if the
closed-end loan coverage threshold
were increased to 100, as another of the
two options proposed in this proposed
rule, the total number of financial
institutions that would be required to
report closed-end mortgages would drop
to about 3,240, a decrease of about 1,720
financial institutions compared to the

current level. These 1,720 newly
excluded institutions originated about
147,000 closed-end mortgage loans in
2017. There would be about 6.87
million closed-end mortgage loan
originations reported under the 100
closed-end loan coverage threshold,
which would account for about 83.7
percent of all closed-end mortgage
originations in the entire mortgage
market.
The Bureau further estimates that all
but about 50 of the 1,720 newly
excluded closed-end mortgage loan
reporters that would be excluded under
the proposed 100 closed-end coverage
threshold would be eligible for a partial
exemption for closed-end mortgage
loans as provided by the EGRRCPA and
the 2018 HMDA Rule.
Table 3 below shows the Bureau’s
estimates of the number of closed-end
reporters that would be required to
report under various potential
thresholds, and the number of closedend originations reported by these
financial institutions, both in total and
broken down by the type of financial
institution and HMDA submission
agency as was done in the 2015 HMDA
Rule.170

TABLE 3
Closed-End Reporting Threshold
Agency
>=25

>=50

>=100

Number of Reporting Financial Institutions by Submission Agency
Total .............................................................................................................................................
CFPB ...........................................................................................................................................
FDIC .............................................................................................................................................
FRS ..............................................................................................................................................
NCUA ...........................................................................................................................................
OCC .............................................................................................................................................
HUD .............................................................................................................................................

4,960
107
1,769
441
1,329
617
697

4,201
105
1,442
378
1,073
520
683

3,242
101
1,039
298
764
379
661

6,982
1,693
748
258
548
295
3,439

6,872
1,669
713
250
519
283
3,437

Number of Reported Loans (in 1000’s) by Submission Agency

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Total .............................................................................................................................................
CFPB ...........................................................................................................................................
FDIC .............................................................................................................................................
FRS ..............................................................................................................................................
NCUA ...........................................................................................................................................
OCC .............................................................................................................................................
HUD .............................................................................................................................................

169 Those financial institutions either had a
closed-end loan origination volume of 500 or more
in at least one of the preceding two calendar years
or are not insured depository institutions or insured
credit unions, and therefore are not eligible for a
partial exemption for closed-end mortgage loans as
provided by the EGRRCPA and the 2018 HMDA
Rule.
170 Regulation C applies to financial institutions
as defined in § 1003.2(g) and requires a financial

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institution to submit data to the appropriate Federal
agency for the financial institution. See 12 CFR
1003.1(c); 1003.5(a). (Nondepository institutions
generally designate HUD as their appropriate
Federal agency, while depository institutions and
their subsidiaries designate one of the other federal
regulators as their appropriate Federal agency.) For
more information about determining the
appropriate Federal agency for a financial
institution, see § 1003.5(a)(4). The numbers in

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7,019
1,693
763
260
562
300
3,440

tables 3 and 4 reflect the estimated number of
institutions that would designate each agency as
their appropriate Federal agency for data
submission under Regulation C (see
§ 1003.5(a)(3)(iv)). These tables are limited to that
narrow purpose and do not attempt to determine
whether any of these institutions may otherwise be
subject to the rulemaking, supervisory, or
enforcement authorities of multiple regulators.

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Benefits to Covered Persons
The complete exclusion from closedend mortgage reporting for institutions
that originated fewer than 50 or 100
closed-end mortgage loans in either of
the two preceding calendar years, as
proposed in this proposed rule, would
convey a direct benefit to the covered
persons who are eligible for such
exclusion by reducing the ongoing costs
of having to report closed-end mortgage
loans and applications that were
previously required.
In the impact analysis of the 2015
HMDA Rule, prior to the adoption of the
changes in the 2015 HMDA Rule and
implementation of the Bureau’s
operational improvements, the Bureau
estimated that the annual operational
costs for financial institutions of
reporting under HMDA were
approximately $2,500 for a
representative low-complexity financial
institution with a loan/application
register size of 50 records; $35,600 for
a representative moderate-complexity
financial institution with a loan/
application register size of 1,000
records; and $313,000 for a
representative high-complexity financial
institution with a loan/application
register size of 50,000 records. The
Bureau estimated that accounting for the
operational improvements, the net
impact of the 2015 HMDA Rule on
ongoing operational costs for closed-end
reporters would be approximately
$1,900, $7,800, and $20,000 171 per year,
for representative low-, moderate-, and
high-complexity financial institutions,
respectively. This means that with all
components of the 2015 HMDA Rule
implemented and accounting for the
Bureau’s operational improvements, the
estimated annual operational costs for
closed-end mortgage reporting would be
approximately $4,400 for a
representative tier 3 reporter, $43,400
for a representative tier 2 reporter, and
$333,000 for a representative tier 1
reporter. Updating these numbers with
inflation, the Bureau estimates that if a
financial institution is required to report
under the 2015 HMDA Rule and is not
partially exempt under the EGRRCPA,
i.e., it must report all data points
specified in Regulation C for its closedend mortgage loans, the savings on the
annual operational costs from not
reporting any closed-end mortgage data
if it were completely excluded under
one of two proposed loan thresholds,
171 This does not include the costs of quarterly
reporting for financial institutions that have annual
origination volume greater than 60,000. Those
quarterly reporters are all high-complexity tier 1
institutions, and the Bureau estimates none of the
quarterly reporters would be excluded under this
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would be approximately $4,500 for a
representative low-complexity tier 3
institution, $44,700 for a representative
moderate-complexity tier 2 institution,
and $343,000 for a representative highcomplexity tier 1 institution. On the
other hand, as explained in the previous
section, the Bureau estimates that had a
financial institution been eligible for a
partial exemption on its closed-end
mortgage loans under the EGRRCPA and
2018 HMDA Rule, the annual savings in
the ongoing costs from the partial
exemption alone would be
approximately $2,300 for a
representative tier 3 institution, $11,900
for a representative tier 2 institution and
$33,900 for a representative tier 1
institution. Therefore, the Bureau
estimates that if a financial institution is
required to report under the 2015
HMDA Rule, but is partially exempt
under the EGRRCPA, i.e., it only needs
to report a subset of all Regulation C
data points for its closed-end mortgage
loans, the savings in the annual
operational costs from not reporting any
closed-end mortgage data, if it is
completely excluded, would be
approximately $2,200 for a
representative low-complexity tier 3
institution, $32,800 for a representative
moderate-complexity tier 2 institution,
and $309,000 for a representative highcomplexity tier 1 institution. These
estimates have already been adjusted for
inflation.
Alternative 1: 50 Closed-End Coverage
Threshold
Using the methodology discussed
above in part VI.D.1, the Bureau
estimates that with the proposed 50
closed-end coverage threshold, about
760 institutions would be completely
excluded from reporting closed-end
mortgage data compared to the current
level. All but about 20 of these 760
institutions would be eligible for a
partial exemption under the EGRRCPA
and the 2018 HMDA Rule.
The Bureau estimates that, of the
approximately 740 financial institutions
that are (1) required to report closed-end
mortgages under the 2015 HMDA Rule,
(2) partially exempt under the
EGRRCPA, and (3) completely excluded
under the proposed 50 loan threshold,
about 727 are similar to the
representative low-complexity tier 3
institution and about 13 are similar to
the representative moderate-complexity
tier 2 institution. Of the approximately
20 remaining financial institutions that
are required to report closed-end
mortgages under the 2015 HMDA Rule
and are not partially exempt under the
EGRRCPA but would be completely
excluded under the proposed 50 closed-

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end coverage threshold, about 19 are
similar to the representative lowcomplexity tier 3 institution and only
one is similar to the representative
moderate-complexity tier 2 institution.
Based on the estimates of the savings
of annual ongoing costs for closed-end
reporting per representative institution,
grouped by whether or not it is partially
exempt for closed-end reporting under
the EGRRCPA, and the estimated tier
distribution of these institutions that
would be excluded under the proposed
50 closed-end loan coverage threshold,
the Bureau estimates that, the total
savings in annual ongoing costs from
HMDA reporting by fully excluded
institutions that are already partially
exempt under the EGRRCPA would be
about $2 million, and the total savings
in the annual ongoing costs from HMDA
reporting by fully excluded firms that
previously were not eligible for a partial
exemption under the EGRRCPA would
be about $140,000. Together the annual
savings in the operational costs of firms
excluded under the proposed 50 closedend loan coverage threshold would be
about $2.2 million.
Alternative 2: 100 Closed-End Coverage
Threshold
Using methodology discussed above
in part VI.D.1, the Bureau estimates that
with the proposed 100 closed-end
coverage threshold, about 1,720
institutions would be completely
excluded from reporting closed-end
mortgage data compared to the current
level. All but about 50 of the 1,720
would be eligible for the partial
exemption for closed-end mortgage
loans under the EGRRCPA and the 2018
HMDA Rule.
The Bureau estimates that, of the
approximately 1,670 institutions that
are (1) required to report closed-end
mortgage loans under the 2015 HMDA
Rule, (2) partially exempt under the
EGRRCPA, and (3) completely excluded
under the proposed 100 closed-end
coverage threshold, about 1,540 are
similar to the representative lowcomplexity tier 3 institution and about
130 are similar to the representative
moderate-complexity tier 2 institution.
Of the approximately 50 remaining
institutions that are required to report
closed-end mortgage data under the
2015 HMDA Rule and are not partially
exempt under the EGRRCPA but would
be completely excluded under the
proposed 100 closed-end coverage
threshold, about 45 are similar to the
representative low-complexity tier 3
institution and only five are similar to
the representative moderate-complexity
tier 2 institution.

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Based on the estimates of the savings
of annual ongoing costs for closed-end
reporting per representative institution,
grouped by whether or not it is partially
exempt under the EGRRCPA, and the
estimated tier distribution of these
financial institutions that would be
excluded under the proposed 100
closed-end loan coverage threshold, the
Bureau estimates that, the total savings
in the annual ongoing costs from HMDA
reporting by excluded firms that are
already partially exempt for closed-end
mortgage loans under the EGRRCPA
would be about $7.7 million, and the
total savings in the annual ongoing costs
from HMDA reporting by fully excluded
firms that are not eligible for a partial
exemption under the EGRRCPA would
be about $400,000. Together the annual
savings in the operational costs of firms
newly excluded under the proposed 100
closed-end coverage threshold would be
about $8.1 million.

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Costs to Covered Persons
It is possible that, like any new
regulation or revision to an existing
regulation, financial institutions would
incur certain one-time costs adapting to
the changes to the regulation. Based on
the Bureau’s early outreach to
stakeholders, the Bureau understands
that most of these one-time costs
consists of interpreting and
implementing the regulatory changes
and not from purchasing software
upgrades or turning off the existing
reporting functionality that the newly
excluded institutions already built or
purchased prior to the new changes
taking effect.
The Bureau seeks comments on any
costs to institutions that would be
newly excluded under either of the
alternative proposed increases to the
closed-end coverage threshold.
Benefits to Consumers
Having generated estimates of the
reduction in ongoing costs on covered
financial institutions due to the
proposed increase in the closed-end
loan coverage threshold, the Bureau
then attempts to estimate the potential
pass-through of such cost reduction
from these institutions to consumers,
which could benefit consumers.
According to economic theory, in a
perfectly competitive market where
financial institutions are profit
maximizers, the affected financial
institutions would pass on to consumers
the marginal, i.e., variable, cost savings
per application or origination, and
absorb the one-time and increased fixed
costs of complying with the rule.
The Bureau estimated in the 2015
HMDA Rule that the final rule would

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increase variable costs by $23 per
closed-end mortgage application for
representative low-complexity
institutions and $0.20 per closed-end
mortgage application for representative
moderate-complexity institutions. The
Bureau estimated that prior to the 2015
HMDA Rule, the variable costs of
HMDA reporting were about $18 per
closed-end mortgage application for
representative low-complexity
institutions, $6 per closed-end mortgage
application for representative moderatecomplexity institutions, and $3 per
closed-end mortgage application for
representative high-complexity
institutions. Adjusting for inflation, the
Bureau estimates the savings on the
variable cost per closed-end application
for a representative tier 3 financial
institution that is not partially exempt
under the EGRRCPA but excluded from
closed-end reporting under this
proposal would be about $42 per
application; the savings on the variable
cost per application for a representative
tier 2 financial institution that is not
partially exempt under the EGRRCPA
but excluded from closed-end reporting
under this proposal would be about
$6.40 per application.
The Bureau estimates that the partial
exemption for closed-end mortgage
loans under the EGRRCPA for eligible
insured depository institutions and
insured credit unions would reduce the
variable costs of HMDA reporting by
approximately $24 per closed-end
mortgage application for representative
low-complexity institutions, $0.68 per
closed-end mortgage application for
representative moderate-complexity
institutions, and $0.05 per closed-end
mortgage application for representative
high-complexity institutions. The
savings on the variable cost per
application for a representative tier 3
financial institution that is partially
exempt under the EGRRCPA and fully
excluded from closed-end reporting
under this proposal would be about
$18.30 per application. The savings on
the variable cost per application for a
representative tier 2 financial institution
that is partially exempt under the
EGRRCPA and fully excluded from
closed-end reporting under this
proposal would be about $5.70 per
application. These are the cost
reductions that excluded institutions
under this proposed rule might pass
through to their consumers and
assuming the market is perfectly
competitive. This potential reduction in
the expense consumers face when
applying for a mortgage would be
amortized over the life of the loan and
would represent a very small amount

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relative to the cost of a mortgage loan.
The Bureau notes that the market
structure in the consumer mortgage
lending market may differ from that of
a perfectly competitive market in which
case the pass-through to the consumers
would most likely be smaller than the
pass-through under the perfect
competition assumption. Therefore, the
Bureau does not anticipate any material
effect on credit access in the long or
short term if financial institutions pass
on these cost savings to consumers.
Costs to Consumers
The proposed increase to the closedend coverage threshold would relieve
eligible financial institutions from the
reporting requirements for all closedend mortgage loans and applications. As
a result, HMDA data on these
institutions’ closed-end mortgage loans
and applications would no longer be
available to regulators, public officials,
and members of the public. The
decreased insight into excluded
institutions may lead to adverse
outcomes for some consumers. For
instance, HMDA data, if reported, could
help regulators and public officials
better understand the type of funds that
are flowing from lenders to consumers
and consumers’ needs for mortgage
credit. The data may also help improve
the processes used to identify possible
discriminatory lending patterns and
enforce antidiscrimination statutes.
The Bureau recognizes that the costs
to consumers would be higher if the
closed-end coverage threshold were
increased to 100 loans rather than if it
were increased to 50 loans, but
currently lacks sufficient data to
quantify such loss other than the
estimated numbers of covered loans and
covered institutions under the two
alternative proposed thresholds, as
reported in Table 3. The Bureau seeks
comment on the costs to consumers
associated with the proposed alternative
increases to the closed-end coverage
threshold.
4. Provisions To Increase the Open-End
Coverage Threshold
Scope of the Provisions
The proposed rule would extend the
temporary open-end coverage threshold
of 500 open-end lines of credit for two
additional years (2020 and 2021), and
permanently set the threshold for
reporting data about open-end lines of
credit at 200 open-end lines of credit in
each of the preceding two calendar
years starting in 2022.
The 2015 HMDA Rule generally
requires financial institutions that
originated at least 100 open-end lines of

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credit in each of the two preceding years
to report data about their open-end lines
of credit and applications. The 2017
HMDA Rule temporarily increased the
open-end coverage threshold to 500 for
two years, meaning only financial
institutions that originated at least 500
open-end lines of credit in each of the
two preceding years are subject to
HMDA’s requirements for their openend lines of credit for 2018 and 2019.
The EGRRCPA generally provides a
partial exemption for insured depository
institutions and insured credit unions
that originated less than 500 open-end
lines of credit in each of the two
preceding years. However, for 2018 and
2019, all insured depository institutions
and insured credit unions that are
granted a partial exemption for openend lines of credit by the EGRRCPA are
fully excluded from HMDA’s
requirements for their open-end lines of
credit by the 2017 HMDA Rule. Absent
any further changes via a rulemaking
process, according to the 2015 HMDA
Rule and the 2017 HMDA Rule, starting
in 2020 the open-end coverage
threshold will adjust to 100, and
institutions that exceed the coverage
threshold of 100 open-end lines of
credit will be able to use the

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EGRRCPA’s open-end partial exemption
if they originated less than 500 openend lines of credit in each of the two
preceding years. Thus, the appropriate
baseline for the consideration of benefits
and costs of the proposed changes to the
open-end coverage threshold, including
the two-year extension of the temporary
threshold of 500 open-end lines of
credit and then setting the permanent
threshold at 200 starting in 2022, is a
situation starting in 2020 in which the
open-end coverage threshold is set at
100 for each of two preceding years and
the partial exemption with a threshold
of 500 open-end lines of credit applies.
Because collection of data on openend lines of credit only became
mandatory starting in 2018 under the
2015 HMDA Rule and 2017 HMDA
Rule, no single data source exists as of
the time of this proposal that can
accurately report the number of
originations of open-end lines of credit
in the entire market and by lender.172
172 As discussed supra note 155, the most recent
year of HMDA data the Bureau has used for these
analyses is the 2017 HMDA data. The Bureau
intends to review the 2018 HMDA data more
closely in connection with this rulemaking once the
2018 submissions are more complete. The 2018
HMDA data is the first year where open-end lines

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The Bureau therefore has used multiple
data sources, including credit union
Call Reports, Call Reports for banks and
thrifts, HMDA data, and Consumer
Credit Panel data, to develop estimates
about open-end originations for lenders
that offer open-end lines of credit and
assess the impact of various thresholds
on the numbers of reporters and market
coverage under various scenarios.173
The Table below provides estimates of
coverage among all lenders that are
active in the open-end line of credit
market at various open-end coverage
thresholds broken down by submission
agency as was done in the 2015 HMDA
Rule.174
of credit were required to be reported, unlike in
previous years when open-end lines of credit were
reported only voluntarily. Even so, the Bureau does
not expect large differences from these estimates
had the 2018 HMDA data been used for this costbenefit analysis, because the Bureau has taken into
account other market data in its estimates.
173 In general, credit union Call Reports provide
the number of originations of open-end lines of
credit secured by real estate but exclude lines of
credit in the first-lien status. Call Reports for banks
and thrifts report only the balance of the homeequity lines of credit at the end of the reporting
period but not the number of originations in the
period.
174 See supra note 170.

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The Bureau estimates that there were
about 1.59 million open-end lines of
credit originated in 2017 by about 6,615
lenders. Under the temporary 500 openend line of credit coverage threshold set
in the 2017 HMDA Rule, there would be
about 1.23 million open-end lines of
credit reported by about 333 financial
institutions. This would represent about
77.4 percent of all originations and 5
percent of all lenders in the open-end
line of credit market. In comparison, if
the open-end coverage threshold were
set at 100, the Bureau estimates that the
number of reporters would be about
1,014, who in total originate about 1.41

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million open-end lines of credit,
representing about 88.7 percent of all
originations and 15.3 percent of all
lenders in the market. In other words, if
the coverage threshold is increased to
500 for another two years (in 2020 and
2021) as proposed by this proposed rule,
in comparison to the default baseline
where the threshold is set at 100 in
2020, the Bureau estimates that the
number of institutions affected would
be about 681, who in total originated
about 177,000 open-end lines of credit.
Among those 681 open-end lines of
credit lenders, the Bureau estimates that
about 618 already qualify for a partial

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exemption for their open-end lines of
credit under the EGRRCPA and in total
they originate about 136,000 open-end
lines of credit.
If the permanent open-end line of
credit coverage threshold is set at 200,
for 2022 and beyond, as proposed, the
Bureau estimates there would be about
1.34 million open-end lines of credit
reported by about 613 reporters. In
terms of market coverage, this would
represent about 84.2 percent of all
originations and 9.2 percent of all
lenders in the open-end line of credit
market. In other words, if the coverage
threshold is increased to 200 for year

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2022 and beyond as proposed, in
comparison to a baseline threshold set
at 100, the Bureau estimates that 401
reporters, who in total originated about
69,000 open-end lines of credit, would
be affected. Among the 401 institutions
that the 200 loan threshold would
completely exclude, the Bureau
estimates that about 378 already qualify
for a partial exemption for their openend lines of credit under the EGRRCPA
and in total they originate about 61,000
open-end lines of credit.
Benefits to Covered Persons
The proposed extension of the
temporary open-end coverage threshold
of 500 for two additional years, as
compared to having the threshold adjust
to 100, conveys a direct benefit to
covered persons that originated fewer
than 500 open-end lines of credit in
either of the two preceding years but
originated no less than 100 open-end
lines of credit in each of the two
preceding years in reducing the ongoing
costs associated with open-end lines of
credit during 2020 and 2021.
In the impact analysis of the 2015
HMDA Rule, the Bureau estimated that,
accounting for Bureau’s planned
operational improvements, the ongoing
operational costs on open-end reporters
for all data points required under the
2015 HMDA Rule would be
approximately $8,600, $43,400, and
$273,000 per year, for representative
low-, moderate-, and high-complexity
financial institutions, respectively.
Adjusting for inflation, this is
equivalent to approximately $8,800,
$44,700, and $281,100 per year
currently. On the other hand,
accounting for the reduced number of
required data points and inflation, the
Bureau now estimates that the ongoing
costs of open-end reporting would be
about $4,300, $21,900, and $138,000 per
year, for representative low-, moderate, and high-complexity financial
institutions, respectively that are
eligible for a partial exemption for openend lines of credit under the EGRRCPA.
The Bureau estimates that, with the
proposed coverage threshold increased
to 500 as compared to reverting to 100
for 2020 and 2021, about 681 financial
institutions would be excluded from
reporting open-end lines of credit
during the two years. About 618 of those
681 financial institutions would be
eligible for the partial exemption for
open-end lines of credit under the
EGRRCPA and further implemented by
the 2018 HMDA Rule and this proposed
rule if adopted, and about 63 of them
would not have been eligible for the
partial exemption for open-end lines of
credit because in one of the preceding

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two years their open-end origination
volume exceeded 500. Of the 618
institutions that are already eligible for
a partial exemption under the EGRRCPA
but would be fully excluded for two
additional years from open-end
reporting by this proposed rule, the
Bureau estimates that about 567 are lowcomplexity tier 3 open-end reporters,
about 51 are moderate-complexity tier 2
open-end reporters, and none are highcomplexity tier 1 reporters. In addition,
of the 63 institutions that are not
eligible for the partial exemption under
the EGRRCPA but would be fully
excluded for two additional years from
open-end reporting by this proposed
rule, the Bureau estimates that about 26
are low-complexity tier 3 open-end
reporters, about 37 are moderatecomplexity tier 2 open-end reporters,
and none are high-complexity tier 1
reporters. Using the estimates of savings
on ongoing costs for open-end lines of
credit for representative financial
institutions, grouped by whether the
lender is already eligible for the partial
exemption under the EGRRCPA, as
described above, the Bureau estimates
that by extending the temporary 500
open-end coverage threshold for two
years, the eligible financial institutions
that are already partially exempt under
the EGRRCPA would receive an
aggregate reduction in operational cost
associated with open-end lines of credit
of about $3.5 million per year in the
years 2020 and 2021, while the eligible
financial institutions that are not
already partially exempt under the
EGRRCPA would receive an aggregate
reduction in operational cost associated
with open-end lines of credit of about
$2.1 million per year in the years 2020
and 2021. In total extending the 500
loan threshold for two additional years
would result in operational cost savings
of about $5.6 million per year in the
years 2020 and 2021.
The proposed increase of the
permanent open-end coverage threshold
to 200 open-end lines of credit in each
of the two preceding calendar years
starting in 2022, as compared to having
the threshold adjust to 100, conveys a
direct benefit to covered persons that
originated fewer than 200 open-end
lines of credit in either of the two
preceding years but originated no less
than 100 open-end lines of credit in
each of the two preceding years in
reducing the ongoing costs of having to
report their open-end lines of credit.
The Bureau estimates that, with the
proposed coverage threshold increased
to 200 as compared to reverting to 100
starting in 2022, about 401 financial
institutions would be excluded from
reporting open-end lines of credit

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starting in 2022. About 378 of those 401
financial institutions are eligible for the
partial exemption for open-end lines of
credit under the EGRRCPA, and about
23 of them are not eligible for the partial
exemption for open-end lines of credit
because in one of the preceding two
years its open-end origination volume
exceeded 500. Of the 378 institutions
that are already partially exempt under
the EGRRCPA but would be fully
excluded from open-end reporting
starting in 2022 under the proposal, the
Bureau estimates that about 373 are lowcomplexity tier 3 open-end reporters,
about five are moderate-complexity tier
2 open-end reporters, and none are
high-complexity tier 1 reporters. In
addition, of the 23 institutions that are
not eligible for the partial exemption
under the EGRRCPA but would be fully
excluded from open-end reporting
starting in 2022 by this proposed rule,
the Bureau estimates that about 18 are
low-complexity tier 3 open-end
reporters, about five are moderatecomplexity tier 2 open-end reporters,
and none are high-complexity tier 1
reporters. Using the estimates of savings
on ongoing costs for open-end lines of
credit for representative financial
institutions, grouped by whether the
lender is already eligible for the partial
exemption under the EGRRCPA, as
described above, the Bureau estimates
that by raising the open-end coverage
threshold to 200 open-end lines of
credit starting in 2022, the eligible
financial institutions that are already
partially exempt under the EGRRCPA
would receive an aggregate reduction in
operational cost associated with openend lines of credit of about $1.7 million
per year starting in 2022, while the
eligible financial institutions that are
not already partially exempt under the
EGRRCPA would receive an aggregate
reduction in operational cost associated
with open-end lines of credit of about
$38,000 per year starting in 2022. In
total, increasing the open-end threshold
from 100 to 200 would result in savings
on the operational costs associated with
open-end lines of credit of about $2.1
million per year starting in 2022.
The proposed increase of the openend coverage threshold to 200 starting
in calendar year 2022, as compared to
having the threshold adjust to 100,
would also convey a direct benefit to
covered persons that originated fewer
than 200 open-end lines of credit in
either of the two preceding years but
originated no less than 100 open-end
lines of credit in each of the two
preceding years in removing the onetime costs of having to report their
open-end lines of credit, had the

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reporting threshold adjusted to 100
according to the 2017 HMDA Rule.
It is the Bureau’s understanding that
most of the financial institutions that
were temporarily excluded for 2018 and
2019 under the 2017 HMDA rule have
not fully prepared for open-end
reporting because they are waiting for
the Bureau to decide on the open-end
reporting threshold that would apply
after the temporary threshold of 500
loans expires in 2020. Under the
baseline in this impact analysis, absent
this proposed rule, those financial
institutions would have to start
reporting their open-end lines of credit
starting in 2020, and hence incur onetime costs to create processes and
systems for open-end lines of credit.
The proposed extension of the 500
open-end coverage threshold for 2020
and 2021 in this proposal would delay
incurrence of such one-time costs for
two more years. If the second proposal
to increase the open-end threshold to
200 starting in 2022 is not finalized,
financial institutions that originated
fewer than 200 open-end lines of credit
in either of the two preceding years but
originated no less than 100 open-end
lines of credit in each of the two
preceding years would eventually incur
one-time costs of having to report their
open-end lines of credit, once the
reporting threshold reverted to the
permanent threshold of 100.
As noted in the 2015 HMDA Rule, the
Bureau recognizes that many financial
institutions, especially larger and more
complex institutions, process
applications for open-end lines of credit
in their consumer lending departments
using procedures, policies, and data
systems separate from those used for
closed-end loans.
In the 2015 HMDA Rule, the Bureau
assumed that the one-time costs for
reporting information on open-end lines
of credit required under the Rule would
be roughly equal to 50 percent of the
one-time costs of reporting information
on closed-end mortgages. This translates
to one-time costs of about $400,000 and
$125,000 for open-end reporting for
representative high- and moderatecomplexity financial institutions,
respectively, that will be required to
report open-end lines of credit while
also reporting closed-end mortgage
loans. This assumption accounted for
the fact that reporting open-end lines of
credit will require some new systems,
extra start-up training, and new
compliance procedures and manuals,
while recognizing that some fixed, onetime costs would need to be incurred
anyway in making systemic changes to
bring institutions into compliance with
Regulation C and could be shared with

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closed-end lines of business. The
assumption was consistent with the
Bureau’s estimate that an overwhelming
majority of open-end reporters would
also be reporting simultaneously closedend mortgage loans and applications. In
the 2015 HMDA Rule, the Bureau also
assumed that the additional one-time
costs of open-end reporting would be
relatively low for low-complexity
financial institutions because they are
less reliant on information technology
systems for HMDA reporting and may
process open-end lines of credit on the
same system and in the same business
unit as closed-end mortgage loans.
Therefore, for low-complexity financial
institutions, the Bureau had assumed
that the additional one-time cost created
by open-end reporting is minimal and is
derived mostly from new training and
procedures adopted for the overall
changes in the 2015 HMDA Rule.
In the proposal leading to the 2015
HMDA Rule, the Bureau had asked for
public comments and specific data
regarding the one-time cost of reporting
open-end lines of credit. Although some
commenters provided generic feedback
on the additional burden of reporting
data on these products, very few
provided specific estimates of the
potential one-time costs of reporting
open-end lines of credit. Since issuing
the 2015 HMDA Rule, the Bureau has
heard anecdotal reports that one-time
costs to begin reporting information on
open-end lines of credit could be higher
than the Bureau’s estimates in the 2015
HMDA Rule. The Bureau has reviewed
the 2015 estimates and believes that the
one-time cost estimates for open-end
lines of credit provided in 2015, if
applied to this proposed rule, would
most likely be underestimates, for two
reasons.
First, in developing the one-time cost
estimates for open-end lines of credit in
the 2015 HMDA Rule, the Bureau had
envisioned that there would be cost
sharing between the line of business
that conducts open-end lending and the
line of business that conducts closedend lending at the corporate level, as the
implementation of open-end reporting
that became mandatory under the 2015
HMDA Rule would coincide with the
implementation of the changes to
closed-end reporting under the 2015
HMDA Rule. For instance, the resources
of the corporate compliance department
and information technology department
could be shared and utilized
simultaneously across different lines of
business within the same lender in its
efforts to set up processes and systems
adapting to the 2015 HMDA Rule.
Therefore the Bureau assumed the onetime cost due to open-end reporting

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would be about one-half of the one-time
costs due to closed-end reporting, in
order to both reasonably count for the
costs for open-end lines of credit and
avoid double counting. However, the
circumstances have somewhat changed
due to the 2017 HMDA Rule and would
be changed further under this proposed
rule. The 2017 HMDA Rule temporarily
increased the open-end lines of credit
threshold from 100 to 500 for two years.
This proposal would further extend the
temporary threshold of 500 for two
additional years. Thus, there would be
a considerable lag between the
implementation of closed-end reporting
changes under the 2015 HMDA Rule
and the implementation of mandatory
open-end reporting for those open-end
lenders that have been temporarily
excluded under the 2017 HMDA Rule
and would be excluded for two more
years under the proposal, but would be
required to comply with HMDA’s
requirements for their open-end lines of
credit starting in 2022 with the
proposed 200 origination threshold
taking effect. As a result, the efficiency
gain from one-time cost sharing between
the closed-end and open-end reporting
that was envisioned in the cost-benefit
analysis of the 2015 HMDA Rule likely
would not be applicable, if some of the
temporarily excluded open-end
reporters under the 2017 HMDA Rule
and the proposal were to start preparing
for open-end reporting several years
after the implementation of closed-end
changes. Therefore the Bureau now
believes the one-time costs of starting
reporting information on open-end lines
of credit, if the financial institution is to
start reporting open-end lines of credit
in 2022 and beyond, would be higher
than the Bureau’s initial estimates of
one-time costs of open-end reporting
provided in the HMDA 2015 Rule. For
this impact analysis, hence the Bureau
assumes for a representative tier 2 openend reporters, the one-time costs of
starting open-end reporting in 2022
would be approximately equal to the
one-time cost estimate for closed-end
reporting that Bureau estimated in the
2015 HMDA Rule, instead of being
about one half of the one-time cost
estimate for closed-end reporting. This
translates to about $250,000 per
representative tier 2 open-end reporter,
instead of $125,000 as the Bureau
estimated in the 2015 HMDA Rule
regarding the one-time costs of openend reporting. This is the case
regardless whether the open-end
reporters also report closed-end
mortgage loans under HMDA. The
Bureau notes that the tier 2 financial
institutions that would be permanently

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excluded from open-end reporting
under this proposal would no longer
have to incur such one-time costs, if it
is adopted.
Secondly, the delay in open-end
reporting for those tier 3 financial
institutions that originated between 100
and 499 open-end lines of credit in
either of the two preceding years as the
result of the 2017 HMDA Rule would
mean that, those institution would have
to restart the training process for staff
directly responsible for open-end data
collection reporting and update
compliance procedures and manuals, if
the open-end threshold is set to 100
starting in 2020, and incur a one-time
cost. In the 2015 HMDA Rule, the
Bureau estimated the total one-time cost
estimate for low-complexity financial
institutions would be approximately
$3,000 regardless of whether the
financial institution reports open-end
lines of credit. Under this proposal, the
Bureau assumes that the low-complexity
financial institutions that would be
completely excluded from open-end
reporting hence would be able to avoid
incurring a one-time cost of about
$3,000.
The Bureau estimates that, with the
proposed coverage threshold increased
to 200 starting in 2022 as compared to
reverting to 100, about 401 more
institutions would be excluded from
reporting open-end lines of credit
starting in 2022. About 391 of those 401
institutions are low-complexity tier 3
open-end reporters, about 10 are
moderate-complexity tier 2 open-end
reporters, and none are high-complexity
tier 1 reporters. Using the estimates of
savings on one-time costs for open-end
lines of credit for representative
financial institutions discussed above,
the Bureau estimates that with the
proposed increase in the open-end
coverage threshold to 200 starting in
2022, the eligible institutions would
receive an aggregate savings in avoided
one-time cost associated with open-end
lines of credit of about $3.8 million.

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Costs To Covered Persons
It is possible that, like any new
regulation or revision to the existing
regulations, financial institutions may
incur certain one-time costs adapting to
the changes to the regulation. Based on
the Bureau’s early outreach to
stakeholders, the Bureau understands
that most of such one-time costs would
result from interpreting and
implementing the regulatory changes,
but not from purchasing software
upgrades or turning off the existing
reporting functionality that the eligible
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prior to the new changes taking its
effect.
The Bureau seeks comment on the
costs and benefits to institutions that
would be excluded pursuant to the
proposed increases to the open-end
coverage threshold.
Benefits to Consumers
Having generated estimates of the
reduction in ongoing costs on covered
financial institutions due to the
proposed temporary increase in the
open-end coverage threshold, the
Bureau then attempts to estimate the
potential pass-through of such cost
reduction from the lenders to
consumers, which could benefit
consumers. According to economic
theory, in a perfectly competitive
market where financial institutions are
profit maximizers, the affected financial
institutions would pass on to consumers
the marginal, i.e. variable, cost savings
per application or origination, and
absorb the one-time and increased fixed
costs of complying with the rule.
The Bureau estimated in the 2015
HMDA Rule that the rule would
increase variable costs by $41.50 per
open-end line of credit application for
representative low-complexity
institutions and $6.20 per open-end line
of credit application for representative
moderate-complexity institutions. These
savings on variable costs by the
excluded open-end reporters could
potentially be passed through to the
consumers, if the market is perfectly
competitive. These expenses will be
amortized over the life of a loan and
represent a negligible reduction in the
cost of a mortgage loan. The Bureau
notes that the market structure in the
consumer mortgage lending market may
differ from that of a perfectly
competitive market in which case the
pass-through to the consumers would
most likely be smaller than the passthrough under the perfect competition
assumption. Therefore, the Bureau does
not anticipate any material effect on
credit access in the long or short term
even if financial institutions pass on
these reduced costs to consumers.
Costs to Consumers
The proposed extension of the
temporary coverage threshold of 500 for
open-end lines of credit for 2020 and
2021 and setting the proposed
permanent open-end threshold at 200
starting in 2022 would reduce the openend data submitted under HMDA. As a
result, HMDA data on these institutions’
open-end loans and applications would
no longer be available to regulators,
public officials, and members of the
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affected financial institutions may lead
to adverse outcomes for some
consumers. For instance, reporting data
on open-end line of credit applications
and originations and on certain
demographic characteristics of
applicants and borrowers could help the
regulators and public officials better
understand the type of funds that are
flowing from lenders to consumers and
consumers’ need for mortgage credit.
Open-end line of credit data that may be
relevant to underwriting decisions may
also help improve the processes used to
identify possible discriminatory lending
patterns and enforce antidiscrimination
statutes.
F. Potential Specific Impacts of the
Proposed Rule
1. Depository Institutions and Credit
Unions With $10 Billion or Less in Total
Assets, as Described in Section 1026
As discussed above, the proposed rule
would incorporate the interpretations
and procedures from the 2018 HMDA
Rule into Regulation C and further
implement section 104(a) of the
EGRRCPA, which grants eligible
financial institutions partial exemptions
from HMDA’s requirements for certain
transactions; increase the threshold for
reporting data about closed-end
mortgage loans from 25 to either 50 or
100 originations in both of the
preceding two calendar years; and
extend for a period of two years the
current temporary threshold for
reporting data about open-end lines of
credit of 500 open-end lines of credit
and increase the permanent threshold
for reporting data about open-end lines
of credit from 100 to 200 open-end lines
of credit in both of the preceding two
calendar years starting in 2022.
All three sets of proposed provisions
focus on burden reduction for smaller
institutions. Therefore, the Bureau
believes that the benefits of this
proposed rule to depository institutions
and credit unions with $10 billion or
less in total assets will be similar to the
benefit to creditors as a whole, as
discussed above.
Specifically the Bureau estimates that
the reduction in annual operational
costs from the partial exemption for
closed-end reporting under the
EGRRCPA and further implemented by
the 2018 HMDA Rule and this proposed
rule if adopted would be approximately
$2,300, $11,900, and $33,900 per year
for representative tier 3, tier 2, and tier
1 depository institutions and credit
unions with $10 billion or less in total
assets that are eligible for the partial
exemptions of closed-end reporting. The
Bureau estimates that all but about eight

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of the approximately 3,300 institutions
that are eligible for the partial
exemption from closed-end reporting
are small depository institutions or
credit unions with assets at or below
$10 billion. About 2,672 of the partiallyexempt closed-end reporting small
depository institutions or credit unions
are low-complexity tier 3 closed-end
reporters, with the rest being moderatecomplexity tier 2 closed-end reporters,
and none are high-complexity tier 1
reporters. Based on these calculations,
the Bureau estimates that the aggregate
savings on ongoing costs for these
institutions would be approximately
$13.5 million annually.
The Bureau estimates that the
reduction in annual operational costs
starting in calendar year 2020 from the
partial exemption from open-end
reporting under the EGRRCPA, absent
the proposed open-end threshold
changes, would be approximately
$4,500, $22,800, and $144,000 per year
for representative tier 3, tier 2, and tier
1 depository institutions and credit
unions with $10 billion or less in total
assets that are eligible for the partial
exemptions of open-end reporting. The
Bureau estimates that about 578 out of
the 595 financial institutions that would
be partially exempt from reporting
certain data points on open-end lines of
credit under the EGRRCPA are small
depository institutions or credit unions
with assets at or below $10 billion.
According to the Bureau’s estimates,
about 531 of those 578 partially-exempt
small depository institutions or credit
union are low-complexity tier 3 openend reporters, about 47 are moderatecomplexity tier 2 open-end reporters,
and none are high-complexity tier 1
reporters. Based on these counts, the
Bureau estimates that the aggregate
savings on ongoing costs for these small
depository institutions or credit unions
due to the partial exemption from openend reporting would be approximately
$3.5 million annually, starting in
calendar year 2020.
For the closed-end coverage threshold
proposed provision, the Bureau
estimates that for depository institutions
and credit unions with $10 billion in
assets or less that would have been
required to report under the 2015
HMDA Rule, and are not partially
exempt under the EGRRCPA, the
savings on the annual operational costs
from being excluded from closed-end
reporting under the proposal would be
approximately $4,500 for a
representative low-complexity tier 3
institution, $44,700 for a representative
moderate-complexity tier 2 institution,
and $343,000 for a representative highcomplexity tier 1 institution that fall

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below the proposed coverage threshold
of either 50 or 100, whichever is
adopted in the final rule. For depository
institutions and credit unions with $10
billion in assets or less that would have
been required to report under the 2015
HMDA Rule, but are partially exempt
under the EGRRCPA, the savings on the
annual operational costs from not
reporting any closed-end mortgage data
under the proposal, would be
approximately $2,200 for a
representative low-complexity tier 3
institution, $32,800 for a representative
moderate-complexity tier 2 institution,
and $309,000 for a representative highcomplexity tier 1 institution. The
Bureau estimates that about 738 of the
approximately 760 institutions that
would be excluded from the proposed
50 loan closed-end reporting threshold
are small depository institutions or
credit unions with assets at or below
$10 billion, and all but one of them are
already partially exempt under the
EGRRCPA and 2018 HMDA Rule. About
724 of them are similar to representative
low-complexity tier 3 institution, with
the rest being moderate-complexity tier
2 institutions. Combined, the annual
saving on operational costs for
depository institutions and credit
unions with $10 billion or less in assets
newly excluded under the proposed 50
closed-end threshold would be about
$1.9 million. Similarly, the Bureau
estimates that about 1,666 of the
approximately 1,720 institutions that
would be excluded from the proposed
alternative 100 loan closed-end
reporting threshold are small depository
institutions or credit unions with assets
at or below $10 billion, and all but two
of them are already partially exempt
under the EGRRCPA and 2018 HMDA
Rule. About 1,573 of them are similar to
representative low-complexity tier 3
institution, with the rest being
moderate-complexity tier 2 institutions.
Combined, the annual saving on
operational costs for depository
institutions and credit unions with $10
billion or less in assets newly excluded
under the proposed 100 closed-end
threshold would be about $4.8 million.
For the proposed open-end coverage
threshold provision, the Bureau
estimates that for depository institutions
and credit unions with $10 billion in
assets or less that would not have to
report open-end lines of credit under
the proposal, the reduction in annual
ongoing operational costs for the
excluded institutions not eligible for the
partial exemption for open-end lines of
credit under the EGRRCPA would be
approximately $8,800, $44,700, and
$28,100 per year, for representative low-

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, moderate-, and high-complexity
financial institutions, respectively, and
the reduction in annual ongoing
operational costs for excluded
institutions already partially exempt for
open-end lines of credit under the
EGRRCPA would be approximately
$4,300, $21,900, and $138,000 annually,
for representative low-, moderate-, and
high-complexity financial institutions,
respectively. The Bureau estimates that
about 633 of the approximately 681
institutions that would be temporarily
excluded from open-end reporting in
2020 and 2021 under this proposed rule
are small depository institutions or
credit unions with assets at or below
$10 billion, and about 578 of them are
already partially exempt under the
EGRRCPA. Combined, the Bureau
estimates that the annual saving on
operational costs for depository
institutions and credit unions with $10
billion or less in assets receiving the
temporary exclusion for open-end
reporting for two additional years under
the proposed rule would be about $5
million per year in the years 2020 and
2021. Similarly, the Bureau estimates
that about 378 of the approximately 400
institutions that would be excluded
from open-end reporting starting in
2022 under the proposal are small
depository institutions or credit unions
with assets at or below $10 billion, and
about 372 of them are already partially
exempt under the EGRRCPA. Combined,
the Bureau estimates that the annual
saving on operational costs for
depository institutions and credit
unions with $10 billion or less in assets
receiving the temporary exclusion for
open-end reporting for two additional
years under this proposed rule would be
about $1.9 million per year starting in
2022. Using the estimates of savings on
one-time costs for open-end lines of
credit for representative financial
institutions discussed above, the Bureau
further estimates that by increasing the
open-end coverage threshold to 200
starting in 2022, the eligible depository
institutions and credit unions with $10
billion or less in assets would receive an
aggregate savings in avoided one-time
cost associated with open-end lines of
credit of about $3.8 million.
2. Impact of the Proposed Provisions on
Consumers in Rural Areas
The proposed provisions will not
directly impact consumers in rural
areas. However, as with all consumers,
consumers in rural areas may be
impacted indirectly. This would occur if
financial institutions serving rural areas
are HMDA reporters (in which case the
proposal will lead to decreased
information in rural areas) and if these

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institutions pass on some or all of the
cost reduction to consumers (in which
case, some consumers could benefit).
Recent research suggests that financial
institutions that primarily serve rural
areas are generally not HMDA
reporters.175 The Housing Assistance
Council (HAC) suggests that the current
asset and geographic coverage criteria
already in place disproportionately
exempt small lenders operating in rural
communities. For example, HAC uses
2009 Call Report data to show that
approximately 700 FDIC-insured
lending institutions had assets totaling
less than the HMDA institutional
coverage threshold and were
headquartered in rural communities.
These institutions, which would not be
HMDA reporters, may represent one of
the few sources of credit for many rural
areas. Research by economists at the
Board also suggests that HMDA’s
coverage of rural areas is limited,
especially areas further from MSAs.176 If
a large portion of the rural housing
market is serviced by financial
institutions that are already not HMDA
reporters, any indirect impact of the
proposed changes on consumers in rural
areas would be limited, as the proposed
changes directly involve none of those
financial institutions.
However, although some research
suggests that HMDA currently does not
cover a significant number of financial
institutions serving the rural housing
market, HMDA data do contain
information for some covered loans
involving properties in rural areas.
These data can be used to estimate the
number of HMDA reporters servicing
rural areas, and the number of
consumers in rural areas that might
potentially be affected by the proposed
changes to Regulation C. For this
analysis, the Bureau uses non-MSA
areas as a proxy for rural areas, with the
understanding that portions of MSAs
and non-MSAs may contain urban and
rural territory and populations. In 2017,
5,207 HMDA reporters reported
applications or purchased loans for
property located in geographic areas
outside of an MSA. In total, these 5,207
financial institutions reported 1,794,248
applications or purchased loans for
properties in non-MSA areas. This
175 See, e.g., Keith Wiley, ‘‘What Are We Missing?
HMDA Asset-Excluded Filers,’’ Hous. Assistance
Council (2011), http://ruralhome.org/storage/
documents/smallbanklending.pdf; Lance George &
Keith Wiley, ‘‘Improving HMDA: A Need to Better
Understand Rural Mortgage Markets,’’ Hous.
Assistance Council (2010), http://
www.ruralhome.org/storage/documents/
notehmdasm.pdf.
176 See Robert B. Avery et al., ‘‘Opportunities and
Issues in Using HMDA Data,’’ 29 J. of Real Est. Res.
352 (2007).

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number provides an upper-bound
estimate of the number of consumers in
rural areas that could be impacted
indirectly by the proposed changes. In
general, individual financial institutions
report small numbers of covered loans
from non-MSAs, as approximately 72
percent reported fewer than 100 covered
loans from non-MSAs.
Following microeconomic principles,
the Bureau believes that financial
institutions will pass on reduced
variable costs to future mortgage
applicants, but absorb one-time costs
and increased fixed costs if financial
institutions are profit maximizers and
the market is perfectly competitive.177
The Bureau defines variable costs as
costs that depend on the number of
applications received. Based on initial
outreach efforts, the following five
operational steps affect variable costs:
Transcribing data, resolving
reportability questions, transferring data
to an HMS, geocoding, and researching
questions. The primary impact of the
proposed rule on these operational steps
is a reduction in time spent per task.
Overall, the Bureau estimates that the
impact of the proposed rule on variable
costs per application is to reduce
variable costs by no more than $42 for
a representative tier 3 financial
institution, $6 for a representative tier 2
financial institution, and $3 for a
representative tier 1 financial
institution.178 The 5,507 financial
institutions that serviced rural areas
could attempt to pass these reduced
variable costs on to all future mortgage
customers, including the estimated 1.8
million consumers from rural areas.
Amortized over the life of the loan, this
expense would represent a negligible
reduction in the cost of a mortgage loan.
The Bureau notes that the market
structure in the consumer mortgage
lending market may differ from that of
a perfectly competitive market in which
case the pass-through to the consumers
would most likely be smaller than the
pass-through under the perfect
competition assumption. Therefore, the
Bureau does not anticipate any material
adverse effect on credit access in the
long or short term even if these financial
institutions pass on these reduced costs
to consumers.
177 If markets are not perfectly competitive or
financial institutions are not profit maximizers then
what financial institutions pass on may differ. For
example, they may attempt to pass on one-time
costs and increases in fixed costs, or they may not
be able to pass on variable costs.
178 These cost estimates represent the highest
estimates among the estimates presented in
previous sections and form the upper bound of
possible savings.

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Given the differences between rural
and non-rural markets in structure,
demand, supply, and competition level,
consumers in rural areas may
experience benefits and costs from the
proposed rule that are different than
those experienced by consumers in
general. To the extent that the impacts
of the proposal on creditors differ by
type of creditor, this may affect the costs
and benefits of the proposal on
consumers in rural areas. The Bureau
will further consider the impact of the
proposed rule on consumers in rural
areas. The Bureau therefore asks
interested parties to provide data,
research results, and other factual
information on the impact of the
proposed rule on consumers in rural
areas. For example, this would include
any evidence and supporting
information indicating that access to
credit would increase or the cost of
credit would fall.
G. Additional Analysis Being
Considered and Request for Information
The Bureau will further consider the
benefits, costs and impacts of the
proposed provisions and additional
alternatives before finalizing the
proposed rule. As noted above, there are
a number of areas where additional
information would allow the Bureau to
better estimate the benefits, costs, and
impacts of this proposed rule and more
fully inform the rulemaking. The Bureau
asks interested parties to provide
comment or data on various aspects of
the proposed rule, as detailed in the
section-by-section analysis.
VII. Regulatory Flexibility Act Analysis
The Regulatory Flexibility Act 179 as
amended by the Small Business
Regulatory Enforcement Fairness Act of
1996 180 (RFA) requires each agency to
consider the potential impact of its
regulations on small entities, including
small businesses, small governmental
units, and small not-for-profit
organizations.181 The RFA defines a
‘‘small business’’ as a business that
meets the size standard developed by
179 Public

Law 96–354, 94 Stat. 1164 (1980).
Law 104–21, section 241, 110 Stat. 847,
864–65 (1996).
181 5 U.S.C. 601–612. The term ‘‘ ‘small
organization’ means any not-for-profit enterprise
which is independently owned and operated and is
not dominant in its field, unless an agency
establishes [an alternative definition under notice
and comment].’’ 5 U.S.C. 601(4). The term ‘‘ ‘small
governmental jurisdiction’ means governments of
cities, counties, towns, townships, villages, school
districts, or special districts, with a population of
less than fifty thousand, unless an agency
establishes [an alternative definition after notice
and comment].’’ 5 U.S.C. 601(5).
180 Public

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the Small Business Administration
pursuant to the Small Business Act.182
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.183 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.184
As discussed above, this proposal
would incorporate the interpretations
and procedures from the 2018 HMDA
Rule into Regulation C and further
implement section 104(a) of the
EGRRCPA, which grants eligible
financial institutions partial exemptions
from HMDA’s requirements for certain
transactions; it would increase the
threshold for reporting data about
closed-end mortgage loans from 25 to 50
or 100 originations in each of the two
preceding calendar years; and it would
extend the temporary threshold of 500
open-end lines of credit for reporting
data about open-end lines of credit for
two years and then would set the
permanent open-end threshold at 200
when the proposed temporary threshold
expires. The section 1022(b)(2) analysis
above describes how, if adopted, this
proposal would reduce the costs and
burdens on covered persons, including
small entities. Additionally, as
described in the analysis above, a small
entity that is in compliance with the law
at such time when this proposal might
be adopted would not need to take any
additional action to remain in
compliance other than choosing to
switch off all or parts of reporting
systems and functions. Based on these
considerations, the proposed rule would
not have a significant economic impact
on any small entities.
Accordingly, the undersigned hereby
certifies that this proposed rule, if
adopted, would not have a significant
economic impact on a substantial
number of small entities. Thus, neither
an IRFA nor a small business review
panel is required for this proposal. The
Bureau requests comments on this
analysis and any relevant data.
182 5 U.S.C. 601(3). The Bureau may establish an
alternative definition after consulting with the
Small Business Administration and providing an
opportunity for public comment. Id.
183 5 U.S.C. 601–612.
184 5 U.S.C. 609.

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VIII. 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 approval from the Office of
Management and Budget (OMB) 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 proposed rule would amend 12
CFR part 1003 (Regulation C), which
implements HMDA. The Bureau’s OMB
control number for Regulation C is
3170–0008. This proposed rule would
revise the information collection
requirements contained in Regulation C
that are currently approved by OMB
under that OMB control number as
follows: (1) The proposed rule would
adjust Regulation C’s institutional and
transactional coverage thresholds, and
(2) implement the new, separate
EGRRCPA partial exemptions that apply
to some HMDA reporting requirements.
The proposed rule contains revised
information collection requirements
regarding:
12 CFR 1003.4 et seq. Reporting,
Recordkeeping, and Disclosure
Requirements
The collections of information
contained in this proposed rule, and
identified as such, have been submitted
to OMB for review under section
3507(d) of the PRA. A complete
description of the information collection
requirements, including the burden
estimate methods, is provided in the
information collection request (ICR) that
the Bureau has submitted to OMB under
the requirements of the PRA. Please
send your comments to the Office of
Information and Regulatory Affairs,
OMB, Attention: Desk Officer for the
Bureau of Consumer Financial
Protection. Send these comments by
email to oira_submission@omb.eop.gov
or by fax to 202–395–6974. If you wish
to share your comments with the
Bureau, please send a copy of these
comments to the Bureau at PRA_
Comments@cfpb.gov. The ICR submitted
to OMB requesting approval under the
PRA for the information collection
requirements contained herein is
available at www.regulations.gov as well
as OMB’s public-facing docket at
www.reginfo.gov.
Title of Collection: Home Mortgage
Disclosure Act (Regulation C).
OMB Control Number: 3170–0008.

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Type of Review: Revision of a
currently approved information
collection.
Affected Public: Private Sector.
Estimated Number of Respondents:
105.
Estimated Total Annual Burden
Hours: 1,290,000.
Comments are invited on: (a) Whether
the collection of information is
necessary for the proper performance of
the functions of the Bureau, including
whether the information will have
practical utility; (b) the accuracy of the
Bureau’s estimate of the burden of the
collection of information, including the
validity of the methods and the
assumptions used; (c) ways to enhance
the quality, utility, and clarity of the
information to be collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Comments submitted in response to this
document will be summarized and/or
included in the request for OMB
approval. All comments will become a
matter of public record. If applicable,
the notice of final rulemaking will
display the control number assigned by
OMB to any information collection
requirements proposed herein and
adopted in the final rule.
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 proposes to amend 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.
[The following amendments would be
effective January 1, 2020, further amending
the part as amended at September 13, 2017,
at 82 FR 43088, effective January 1, 2020.]

2. Section 1003.2 is amended by
revising paragraphs (g)(1)(v) and
(g)(2)(ii) to read as follows:

■

§ 1003.2

*

Definitions.

*
*
(g) * * *
(1) * * *

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Alternative 1—Paragraphs (g)(1)(v) and
(g)(2)(ii)
(v) Meets at least one of the following
criteria:
(A) In each of the two preceding
calendar years, originated at least 50
closed-end mortgage loans that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (c)(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) Meets at least one of the following
criteria:
(A) In each of the two preceding
calendar years, originated at least 50
closed-end mortgage loans that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (c)(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).

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Alternative 2—Paragraphs (g)(1)(v) and
(g)(2)(ii)
(v) Meets at least one of the following
criteria:
(A) In each of the two preceding
calendar years, originated at least 100
closed-end mortgage loans that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (c)(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) Meets at least one of the following
criteria:
(A) In each of the two preceding
calendar years, originated at least 100
closed-end mortgage loans that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (c)(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. Section 1003.3 is amended by
revising the section heading and
paragraphs (c)(11) and (12) and adding
paragraph (d) to read as follows:
§ 1003.3 Exempt institutions and excluded
and partially exempt transactions.

*

*
*
(c) * * *

*

*

Alternative 1—Paragraph (c)(11)
(11) A closed-end mortgage loan, if
the financial institution originated fewer

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than 50 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;
Alternative 2—Paragraph (c)(11)
(11) A closed-end mortgage loan, if
the financial institution originated fewer
than 100 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
*
*
*
*
*
(d) Partially exempt transactions. (1)
For purposes of this paragraph (d), the
following definitions apply:
(i) Insured credit union means an
insured credit union as defined in
section 101 of the Federal Credit Union
Act (12 U.S.C. 1752).

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(ii) Insured depository institution
means an insured depository institution
as defined in section 3 of the Federal
Deposit Insurance Act (12 U.S.C. 1813).
(iii) Optional data means the data
identified in § 1003.4(a)(1)(i), (a)(9)(i),
and (a)(12), (15) through (30), and (32)
through (38).
(iv) Partially exempt transaction
means a covered loan or application that
is partially exempt under paragraph
(d)(2) or (3) of this section.
(2) Except as provided in paragraph
(d)(6) of this section, an insured
depository institution or insured credit
union that, in each of the two preceding
calendar years, originated fewer than
500 closed-end mortgage loans that are
not excluded from this part pursuant to
paragraphs (c)(1) through (10) or
paragraph (c)(13) of this section is not
required to collect, record, or report
optional data as defined in paragraph
(d)(1)(iii) of this section for applications
for closed-end mortgage loans that it
receives, closed-end mortgage loans that
it originates, and closed-end mortgage
loans that it purchases.
(3) Except as provided in paragraph
(d)(6) of this section, an insured
depository institution or insured credit
union that, in each of the two preceding
calendar years, originated fewer than
500 open-end lines of credit that are not
excluded from this part pursuant to
paragraphs (c)(1) through (10) of this
section is not required to collect, record,
or report optional data as defined in
paragraph (d)(1)(iii) of this section for
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.
(4) A financial institution eligible for
a partial exemption under paragraph
(d)(2) or (3) of this section may collect,
record, and report optional data as
defined in paragraph (d)(1)(iii) of this
section for a partially exempt
transaction as though the institution
were required to do so, provided that:
(i) If the institution reports the street
address, city name, or Zip Code for the
property securing a covered loan, or in
the case of an application, proposed to
secure a covered loan pursuant to
§ 1003.4(a)(9)(i), it reports all data that
would be required by § 1003.4(a)(9)(i) if
the transaction were not partially
exempt;
(ii) If the institution reports any data
for the transaction pursuant to
§ 1003.4(a)(15), (16), (17), (27), (33), or
(35), it reports all data that would be
required by § 1003.4(a)(15), (16), (17),
(27), (33), or (35), respectively, if the
transaction were not partially exempt.
(5) If, pursuant to paragraph (d)(2) or
(3) of this section, a financial institution

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules
does not report a universal loan
identifier (ULI) pursuant to
§ 1003.4(a)(1)(i) for an application for a
covered loan that it receives, a covered
loan that it originates, or a covered loan
that it purchases, the financial
institution shall assign and report a nonuniversal loan identifier (NULI). The
NULI must be composed of up to 22
characters to identify the covered loan
or application, which:
(i) May be letters, numerals, or a
combination of letters and numerals;
(ii) Must be unique within the annual
loan/application register in which the
covered loan or application is included;
and
(iii) Must not include any information
that could be used to directly identify
the applicant or borrower.
(6) Paragraphs (d)(2) and (3) of this
section do not apply to an insured
depository institution that, as of the
preceding December 31, had received a
rating of ‘‘needs to improve record of
meeting community credit needs’’
during each of its two most recent
examinations or a rating of ‘‘substantial
noncompliance in meeting community
credit needs’’ on its most recent
examination under section 807(b)(2) of
the Community Reinvestment Act of
1977 (12 U.S.C. 2906(b)(2)).
■ 4. Section 1003.4 is amended by
revising paragraphs (a) introductory
text, (a)(1)(i) introductory text, and (e) to
read as follows:

financial institution shall assign and
report a ULI that:
*
*
*
*
*
(e) Data reporting for banks and
savings associations that are required to
report data on small business, small
farm, and community development
lending under CRA. 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 of 1977
(12 U.S.C. 2901 et seq.) shall also collect
the information required by paragraph
(a)(9)(ii) of this section for property
located outside MSAs and MDs in
which the institution has a home or
branch office, or outside any MSA.
*
*
*
*
*
■ 5. In supplement I to part 1003:
■ a. Under Section 1003.2—Definitions,
revise 2(g) Financial Institution.
■ b. Revise the heading to Section
1003.3.
■ c. Under Section 1003.3:
■ i. Revise Paragraph 3(c)(11) and
Paragraph 3(c)(12).
■ iii. Add 3(d) Partially exempt
transactions after Paragraph 3(c)(13).
■ d. Under Section 1003.4—
Compilation of Reportable Data, revise
4(a) Data Format and Itemization.
The revisions and addition read as
follows:

§ 1003.4

*

Compilation of reportable data.

(a) Data format and itemization. A
financial institution shall collect data
regarding applications for covered loans
that it receives, covered loans that it
originates, and covered loans that it
purchases for each calendar year. A
financial institution shall collect data
regarding requests under a preapproval
program, as defined in § 1003.2(b)(2),
only if the preapproval request is
denied, is approved by the financial
institution but not accepted by the
applicant, or results in the origination of
a home purchase loan. Except as
provided in § 1003.3(d), the data
collected shall include the following
items:
(1)(i) A universal loan identifier (ULI)
or, for a partially exempt transaction
under § 1003.3(d), either a ULI or a nonuniversal loan identifier (NULI) as
described in § 1003.3(d)(5) for the
covered loan or application that can be
used to identify and retrieve the covered
loan or application file. Except for a
purchased covered loan or application
described in paragraphs (a)(1)(i)(D) and
(E) of this section or a partially exempt
transaction for which a NULI is assigned
and reported under § 1003.3(d), the

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Supplement I to Part 1003—Official
Interpretations
*

*

*

*

Section 1003.2—Definitions

*

*

*

*

*

2(g) Financial Institution
Alternative 1—Paragraph 2(g)–1
1. Preceding calendar year and preceding
December 31. The definition of financial
institution refers both to the preceding
calendar year and the preceding December
31. These terms refer to the calendar year and
the December 31 preceding the current
calendar year. For example, in 2020, the
preceding calendar year is 2019 and the
preceding December 31 is December 31,
2019. Accordingly, in 2020, Financial
Institution A satisfies the asset-size threshold
described in § 1003.2(g)(1)(i) if its assets
exceeded the threshold specified in comment
2(g)–2 on December 31, 2019. Likewise, in
2020, Financial Institution A does not meet
the loan-volume test described in
§ 1003.2(g)(1)(v)(A) if it originated fewer than
50 closed-end mortgage loans during either
2018 or 2019.
Alternative 2—Paragraph 2(g)–1
1. Preceding calendar year and preceding
December 31. The definition of financial
institution refers both to the preceding
calendar year and the preceding December
31. These terms refer to the calendar year and
the December 31 preceding the current

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21017

calendar year. For example, in 2020, the
preceding calendar year is 2019 and the
preceding December 31 is December 31,
2019. Accordingly, in 2020, Financial
Institution A satisfies the asset-size threshold
described in § 1003.2(g)(1)(i) if its assets
exceeded the threshold specified in comment
2(g)–2 on December 31, 2019. Likewise, in
2020, Financial Institution A does not meet
the loan-volume test described in
§ 1003.2(g)(1)(v)(A) if it originated fewer than
100 closed-end mortgage loans during either
2018 or 2019.
2. [Reserved]
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.
4. Merger or acquisition—coverage for
calendar year of merger or acquisition. The
scenarios described below illustrate a
financial institution’s responsibilities for the
calendar year of a merger or acquisition. For
purposes of these illustrations, a ‘‘covered
institution’’ means a financial institution, as
defined in § 1003.2(g), that is not exempt
from reporting under § 1003.3(a), and ‘‘an
institution that is not covered’’ means either
an institution that is not a financial
institution, as defined in § 1003.2(g), or an
institution that is exempt from reporting
under § 1003.3(a).
i. Two institutions that are not covered
merge. The surviving or newly formed
institution meets all of the requirements
necessary to be a covered institution. No data
collection is required for the calendar year of
the merger (even though the merger creates
an institution that meets all of the
requirements necessary to be a covered
institution). When a branch office of an
institution that is not covered is acquired by
another institution that is not covered, and
the acquisition results in a covered
institution, no data collection is required for
the calendar year of the acquisition.
ii. A covered institution and an institution
that is not covered merge. The covered
institution is the surviving institution, or a
new covered institution is formed. For the
calendar year of the merger, data collection
is required for covered loans and
applications handled in the offices of the
merged institution that was previously
covered and is optional for covered loans and

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Federal Register / Vol. 84, No. 92 / Monday, May 13, 2019 / Proposed Rules

applications handled in offices of the merged
institution that was previously not covered.
When a covered institution acquires a branch
office of an institution that is not covered,
data collection is optional for covered loans
and applications handled by the acquired
branch office for the calendar year of the
acquisition.
iii. A covered institution and an institution
that is not covered merge. The institution
that is not covered is the surviving
institution, or a new institution that is not
covered is formed. For the calendar year of
the merger, data collection is required for
covered loans and applications handled in
offices of the previously covered institution
that took place prior to the merger. After the
merger date, data collection is optional for
covered loans and applications handled in
the offices of the institution that was
previously covered. When an institution
remains not covered after acquiring a branch
office of a covered institution, data collection
is required for transactions of the acquired
branch office that take place prior to the
acquisition. Data collection by the acquired
branch office is optional for transactions
taking place in the remainder of the calendar
year after the acquisition.
iv. Two covered institutions merge. The
surviving or newly formed institution is a
covered institution. Data collection is
required for the entire calendar year of the
merger. The surviving or newly formed
institution files either a consolidated
submission or separate submissions for that
calendar year. When a covered institution
acquires a branch office of a covered
institution, data collection is required for the
entire calendar year of the merger. Data for
the acquired branch office may be submitted
by either institution.

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Alternative 1—Paragraph 2(g)–5
5. Originations. Whether an institution is a
financial institution depends in part on
whether the institution originated at least 50
closed-end mortgage loans in each of the two
preceding calendar years or at least 500 openend 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).
Alternative 2—Paragraph 2(g)–5
5. Originations. Whether an institution is a
financial institution depends in part on
whether the institution originated at least 100
closed-end mortgage loans in each of the two
preceding calendar years or at least 500 openend 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).
6. Branches of foreign banks—treated as
banks. A Federal branch or a State-licensed
or insured branch of a foreign bank that
meets the definition of a ‘‘bank’’ under
section 3(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(a)) is a bank
for the purposes of § 1003.2(g).
7. Branches and offices of foreign banks
and other entities—treated as nondepository

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financial institutions. A Federal agency,
State-licensed agency, State-licensed
uninsured branch of a foreign bank,
commercial lending company owned or
controlled by a foreign bank, or entity
operating under section 25 or 25A of the
Federal Reserve Act, 12 U.S.C. 601 and 611
(Edge Act and agreement corporations) may
not meet the definition of ‘‘bank’’ under the
Federal Deposit Insurance Act and may
thereby fail to satisfy the definition of a
depository financial institution under
§ 1003.2(g)(1). An entity is nonetheless a
financial institution if it meets the definition
of nondepository financial institution under
§ 1003.2(g)(2).

*

*

*

*

*

Section 1003.3—Exempt Institutions and
Excluded and Partially Exempt Transactions

*

*

*

*

*

3(c) Excluded Transactions

*

*

*

*

*

Paragraph 3(c)(11)
Alternative 1—Paragraph 3(c)(11)–1
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 50 closed-end mortgage
loans in either of the two preceding calendar
years. For example, assume that a bank is a
financial institution in 2020 under
§ 1003.2(g) because it originated 600 openend lines of credit in 2018, 650 open-end
lines of credit in 2019, and met all of the
other requirements under § 1003.2(g)(1). Also
assume that the bank originated 30 and 45
closed-end mortgage loans in 2018 and 2019,
respectively. The open-end lines of credit
that the bank originated or purchased, or for
which it received applications, during 2020
are covered loans and must be reported,
unless they otherwise are excluded
transactions under § 1003.3(c). However, the
closed-end mortgage loans that the bank
originated or purchased, or for which it
received applications, during 2020 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.
Alternative 2—Paragraph 3(c)(11)–1
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 100 closed-end
mortgage loans in either of the two preceding
calendar years. For example, assume that a
bank is a financial institution in 2020 under
§ 1003.2(g) because it originated 600 openend lines of credit in 2018, 650 open-end
lines of credit in 2019, and met all of the
other requirements under § 1003.2(g)(1). Also
assume that the bank originated 75 and 90
closed-end mortgage loans in 2018 and 2019,
respectively. The open-end lines of credit
that the bank originated or purchased, or for
which it received applications, during 2020
are covered loans and must be reported,
unless they otherwise are excluded
transactions under § 1003.3(c). However, the
closed-end mortgage loans that the bank
originated or purchased, or for which it

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received applications, during 2020 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.
Alternative 1—Paragraph 3(c)(11)–2
2. Optional reporting. A financial
institution may report applications for,
originations of, or purchases of closed-end
mortgage loans that are excluded transactions
because the financial institution originated
fewer than 50 closed-end mortgage loans 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 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.
Alternative 2—Paragraph 3(c)(11)–2
2. Optional reporting. A financial
institution may report applications for,
originations of, or purchases of closed-end
mortgage loans that are excluded transactions
because the financial institution originated
fewer than 100 closed-end mortgage loans 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 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 2020 under
§ 1003.2(g) because it originated 100 closedend mortgage loans in 2018, 175 closed-end
mortgage loans in 2019, 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 2018 and 2019,
respectively. The closed-end mortgage loans
that the bank originated or purchased, or for
which it received applications, during 2020
are covered loans and must be reported,
unless they otherwise are excluded
transactions under § 1003.3(c). However, the
open-end lines of credit that the bank
originated or purchased, or for which it
received applications, during 2020 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,

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originations of, or purchases of open-end
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 open-end
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.

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*

*

*

*

*

3(d) Partially Exempt Transactions
1. Merger or acquisition—application of
partial exemption thresholds to surviving or
newly formed institution. After a merger or
acquisition, the surviving or newly formed
institution falls below the loan threshold
described in § 1003.3(d)(2) or (3) if it,
considering the combined lending activity of
the surviving or newly formed institution
and the merged or acquired institutions or
acquired branches, falls below the loan
threshold described in § 1003.3(d)(2) or (3).
For example, A and B merge. The surviving
or newly formed institution falls below the
loan threshold described in § 1003.3(d)(2) if
the surviving or newly formed institution, A,
and B originated a combined total of fewer
than 500 closed-end mortgage loans that are
not excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (13) in each of
the two preceding calendar years. Comment
3(d)–3 discusses eligibility for partial
exemptions during the calendar year of a
merger.
2. Merger or acquisition—Community
Reinvestment Act examination history. After
a merger or acquisition, the surviving or
newly formed institution is deemed to be
ineligible for the partial exemptions pursuant
to § 1003.3(d)(6) if either it or any of the
merged or acquired institutions received a
rating of ‘‘needs to improve record of meeting
community credit needs’’ during each of its
two most recent examinations or a rating of
‘‘substantial noncompliance in meeting
community credit needs’’ on its most recent
examination under section 807(b)(2) of the
Community Reinvestment Act of 1977 (12
U.S.C. 2906(b)(2)). Comment 3(d)–3.iii
discusses eligibility for partial exemptions
during the calendar year of a merger when an
institution that is eligible for a partial
exemption merges with an institution that is
ineligible for the partial exemption
(including, for example, an institution that is
ineligible for the partial exemptions pursuant
to § 1003.3(d)(6)) and the surviving or newly
formed institution is ineligible for the partial
exemption.
3. Merger or acquisition—applicability of
partial exemptions during calendar year of
merger or acquisition. The scenarios
described below illustrate the applicability of
partial exemptions under § 1003.3(d) during
the calendar year of a merger or acquisition.
For purposes of these illustrations,
‘‘institution’’ means a financial institution, as

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defined in § 1003.2(g), that is not exempt
from reporting under § 1003.3(a). Although
the scenarios below refer to the partial
exemption for closed-end mortgage loans
under § 1003.3(d)(2), the same principles
apply with respect to the partial exemption
for open-end lines of credit under
§ 1003.3(d)(3).
i. Assume two institutions that are eligible
for the partial exemption for closed-end
mortgage loans merge and the surviving or
newly formed institution meets all of the
requirements for the partial exemption. The
partial exemption for closed-end mortgage
loans applies for the calendar year of the
merger.
ii. Assume two institutions that are eligible
for the partial exemption for closed-end
mortgage loans merge and the surviving or
newly formed institution does not meet the
requirements for the partial exemption.
Collection of optional data for closed-end
mortgage loans is permitted but not required
for the calendar year of the merger (even
though the merger creates an institution that
does not meet the requirements for the partial
exemption for closed-end mortgage loans).
When a branch office of an institution that
is eligible for the partial exemption is
acquired by another institution that is
eligible for the partial exemption, and the
acquisition results in an institution that is
not eligible for the partial exemption, data
collection for closed-end mortgage loans is
permitted but not required for the calendar
year of the acquisition.
iii. Assume an institution that is eligible
for the partial exemption for closed-end
mortgage loans merges with an institution
that is ineligible for the partial exemption
and the surviving or newly formed
institution is ineligible for the partial
exemption. For the calendar year of the
merger, collection of optional data as defined
in § 1003.3(d)(1)(iii) for closed-end mortgage
loans is required for covered loans and
applications handled in the offices of the
merged institution that was previously
ineligible for the partial exemption. For the
calendar year of the merger, collection of
optional data for closed-end mortgage loans
is permitted but not required for covered
loans and applications handled in the offices
of the merged institution that was previously
eligible for the partial exemption. When an
institution that is ineligible for the partial
exemption for closed-end mortgage loans
acquires a branch office of an institution that
is eligible for the partial exemption,
collection of optional data for closed-end
mortgage loans is permitted but not required
for covered loans and applications handled
by the acquired branch office for the calendar
year of the acquisition.
iv. Assume an institution that is eligible for
the partial exemption for closed-end
mortgage loans merges with an institution
that is ineligible for the partial exemption
and the surviving or newly formed
institution is eligible for the partial
exemption. For the calendar year of the
merger, collection of optional data for closedend mortgage loans is required for covered
loans and applications handled in the offices
of the previously ineligible institution that
took place prior to the merger. After the

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merger date, collection of optional data for
closed-end mortgage loans is permitted but
not required for covered loans and
applications handled in the offices of the
institution that was previously ineligible for
the partial exemption. When an institution
remains eligible for the partial exemption for
closed-end mortgage loans after acquiring a
branch office of an institution that is
ineligible for the partial exemption,
collection of optional data for closed-end
mortgage loans is required for transactions of
the acquired branch office that take place
prior to the acquisition. Collection of
optional data for closed-end mortgage loans
by the acquired branch office is permitted but
not required for transactions taking place in
the remainder of the calendar year after the
acquisition.
4. Originations. Whether applications for
covered loans that an insured depository
institution or insured credit union receives,
covered loans that it originates, or covered
loans that it purchases are partially exempt
transactions under § 1003.3(d) depends, in
part, on whether the institution originated
fewer than 500 closed-end mortgage loans
that are not excluded from this part pursuant
to § 1003.3(c)(1) through (10) or (c)(13) in
each of the two preceding calendar years or
fewer than 500 open-end lines of credit that
are not excluded from this part pursuant to
§ 1003.3(c)(1) through (10) in each of the two
preceding calendar years. See comments
4(a)–2 through –4 for guidance about the
activities that constitute an origination for
purposes of § 1003.3(d).
5. Affiliates. A financial institution that is
not itself an insured credit union or an
insured depository institution as defined in
§ 1003.3(d)(1)(i) and (ii) is not eligible for the
partial exemptions under § 1003.3(d)(1)
through (3), even if it is owned by or
affiliated with an insured credit union or an
insured depository institution. For example,
an institution that is a subsidiary of an
insured credit union or insured depository
institution may not claim a partial exemption
under § 1003.3(d) for its closed-end mortgage
loans unless the subsidiary institution itself:
i. Is an insured credit union or insured
depository institution,
ii. In each of the two preceding calendar
years originated fewer than 500 closed-end
mortgage loans that are not excluded from
this part pursuant to § 1003.3(c)(1) through
(10) or (c)(13), and
iii. If the subsidiary is an insured
depository institution, had not received as of
the preceding December 31 a rating of ‘‘needs
to improve record of meeting community
credit needs’’ during each of its two most
recent examinations or a rating of
‘‘substantial noncompliance in meeting
community credit needs’’ on its most recent
examination under section 807(b)(2) of the
Community Reinvestment Act of 1977 (12
U.S.C. 2906(b)(2)).
Paragraph 3(d)(1)(iii)
1. Optional data. The definition of optional
data in § 1003.3(d)(1)(iii) identifies the data
that are covered by the partial exemptions for
certain transactions of insured depository
institutions and insured credit unions under
§ 1003.3(d). If a transaction is not partially
exempt under § 1003.3(d)(2) or (3), a

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financial institution must collect, record, and
report optional data as otherwise required
under this part.
Paragraph 3(d)(2)
1. General. Section 1003.3(d)(2) provides
that, except as provided in § 1003.3(d)(6), an
insured depository institution or insured
credit union that, in each of the two
preceding calendar years, originated fewer
than 500 closed-end mortgage loans that are
not excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (c)(13) is not
required to collect, record, or report optional
data as defined in § 1003.3(d)(1)(iii) for
applications for closed-end mortgage loans
that it receives, closed-end mortgage loans
that it originates, and closed-end mortgage
loans that it purchases. For example, assume
that an insured credit union is a financial
institution in 2020 under § 1003.2(g) and
originated, in 2018 and 2019 respectively,
100 and 200 closed-end mortgage loans that
are not excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (c)(13). The
closed-end mortgage loans that the insured
credit union originated or purchased, or for
which it received applications, during 2020
are not excluded transactions under
§ 1003.3(c)(11). However, due to the partial
exemption in § 1003.3(d)(2), the insured
credit union is not required to collect, record,
or report optional data as defined in
§ 1003.3(d)(1)(iii) for the closed-end mortgage
loans that it originated or purchased, or for
which it received applications, for which
final action is taken during 2020. See
comments 4(a)–2 through –4 for guidance
about the activities that constitute an
origination.
Paragraph 3(d)(3)
1. General. Section 1003.3(d)(3) provides
that, except as provided in § 1003.3(d)(6), an
insured depository institution or insured
credit union that, in each of the two
preceding calendar years, originated fewer
than 500 open-end lines of credit that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) is not required to
collect, record, or report optional data as
defined in § 1003.3(d)(1)(iii) for 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. See
§ 1003.3(c)(12) and comments 3(c)(12)–1 and
–2, which provide an exclusion for certain
open-end lines of credit from this part and
permit voluntary reporting of such
transactions under certain circumstances. See
also comments 4(a)–2 through –4 for
guidance about the activities that constitute
an origination.
Paragraph 3(d)(4)
1. General. Section 1003.3(d)(4) provides
that an insured depository institution or
insured credit union may collect, record, and
report optional data as defined in
§ 1003.3(d)(1)(iii) for a partially exempt
transaction as though the institution were
required to do so, provided that, if an
institution voluntarily reports any data
pursuant to any of the seven paragraphs
identified in § 1003.3(d)(4)(i) and (ii)
(§ 1003.4(a)(9)(i) and (a)(15), (16), (17), (27),
(33), and (35)), it also must report all other

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data for the covered loan or application that
would be required by that applicable
paragraph if the transaction were not
partially exempt. For example, an insured
depository institution or insured credit union
may voluntarily report the existence of a
balloon payment for a partially exempt
transaction pursuant to § 1003.4(a)(27), but, if
it does so, it must also report all other data
for the transaction that would be required by
§ 1003.4(a)(27) if the transaction were not
partially exempt (i.e., whether the transaction
has interest-only payments, negative
amortization, or other non-amortizing
features).
2. Partially exempt transactions within the
same loan/application register. A financial
institution may collect, record, and report
optional data for some partially exempt
transactions under § 1003.3(d) in the manner
specified in § 1003.3(d)(4), even if it does not
collect, record, and report optional data for
other partially exempt transactions under
§ 1003.3(d).
3. Exempt or not applicable. i. If a financial
institution would otherwise report that a
transaction is partially exempt pursuant to
§ 1003.3(d) and a particular requirement to
report optional data is not applicable to the
transaction, the insured depository
institution or insured credit union complies
with the particular requirement by reporting
either that the transaction is exempt from the
requirement or that the requirement is not
applicable. For example, assume that an
insured depository institution or insured
credit union originates a partially exempt
reverse mortgage. The requirement to report
lender credits is not applicable to reverse
mortgages, as comment 4(a)(20)–1 explains.
Accordingly, the institution could report
either exempt or not applicable for lender
credits for the reverse mortgage transaction.
ii. An institution is considered as reporting
data in a data field for purposes of
§ 1003.3(d)(4)(i) and (ii) when it reports not
applicable for that data field for a partially
exempt transaction. For example, assume an
insured depository institution or insured
credit union originates a covered loan that is
eligible for a partial exemption and is made
primarily for business or commercial
purposes. The requirement to report total
loan costs or total points and fees is not
applicable to loans made primarily for
business or commercial purposes, as
comments 4(a)(17)(i)–1 and (ii)–1 explain.
The institution can report not applicable for
both total loan costs and total points and
fees, or it can report exempt for both total
loan costs and total points and fees for the
loan. Pursuant to § 1003.3(d)(4)(ii), the
institution is not permitted to report not
applicable for total loan costs and report
exempt for total points and fees for the
business or commercial purpose loan.
Paragraph 3(d)(4)(i)
1. State. Section 1003.3(d)(4)(i) provides
that if an institution eligible for a partial
exemption under § 1003.3(d)(2) or (3) reports
the street address, city name, or Zip Code for
a partially exempt transaction pursuant to
§ 1003.4(a)(9)(i), it reports all data that would
be required by § 1003.4(a)(9)(i) if the
transaction were not partially exempt,
including the State. An insured depository

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institution or insured credit union that
reports the State pursuant to § 1003.4(a)(9)(ii)
or comment 4(a)(9)(ii)–1 for a partially
exempt transaction without reporting any
other data required by § 1003.4(a)(9)(i) is not
required to report the street address, city
name, or Zip Code pursuant to
§ 1003.4(a)(9)(i).
Paragraph 3(d)(5)
1. NULI—uniqueness. For a partially
exempt transaction under § 1003.3(d), a
financial institution may report a ULI or a
NULI. Section 1003.3(d)(5)(ii) requires an
insured depository institution or insured
credit union that assigns a NULI to a covered
loan or application to ensure that the
character sequence it assigns is unique
within the institution’s annual loan/
application register in which it appears. A
financial institution should assign only one
NULI to any particular covered loan or
application within each annual loan/
application register, and each NULI should
correspond to a single application and
ensuing loan within the annual loan/
application register in which the NULI
appears in the case that the application is
approved and a loan is originated. A
financial institution may use a NULI more
than once within an annual loan/application
register only if the NULI refers to the same
loan or application or a loan that ensues from
an application referred to elsewhere in the
annual loan/application register.
Refinancings or applications for refinancing
that are included in same annual loan/
application register as the loan that is being
refinanced should be assigned a different
NULI than the loan that is being refinanced.
An insured depository institution or insured
credit union with multiple branches must
ensure that its branches do not use the same
NULI to refer to multiple covered loans or
applications within the institution’s same
annual loan/application register.
2. NULI—privacy. Section 1003.3(d)(5)(iii)
prohibits an insured depository institution or
insured credit union from including
information in the NULI that could be used
to directly identify the applicant or borrower.
Information that could be used to directly
identify the applicant or borrower includes,
but is not limited to, the applicant’s or
borrower’s name, date of birth, Social
Security number, official government-issued
driver’s license or identification number,
alien registration number, government
passport number, or employer or taxpayer
identification number.
Paragraph 3(d)(6)
1. Preceding calendar year. Section
1003.3(d)(6) refers to the preceding December
31, which means the December 31 preceding
the current calendar year. For example, in
2020, the preceding December 31 is
December 31, 2019. Assume that, as of
December 31, 2019, an insured depository
institution received ratings of ‘‘needs to
improve record of meeting community credit
needs’’ during its two most recent
examinations under section 807(b)(2) of the
Community Reinvestment Act (12 U.S.C.
2906(b)(2)) in 2018 and 2014. Accordingly, in
2020, the insured depository institution’s
transactions are not partially exempt
pursuant to § 1003.3(d).

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Section 1003.4—Compilation of Reportable
Data
4(a) Data Format and Itemization
1. General. Except as otherwise provided
in § 1003.3, § 1003.4(a) describes a financial
institution’s obligation to collect data on
applications it received, on covered loans
that it originated, and on covered loans that
it purchased during the calendar year
covered by the loan/application register.
i. A financial institution reports these data
even if the covered loans were subsequently
sold by the institution.
ii. A financial institution reports data for
applications that did not result in an
origination but on which actions were taken–
for example, an application that the
institution denied, that it approved but that
was not accepted, that it closed for
incompleteness, or that the applicant
withdrew during the calendar year covered
by the loan/application register. A financial
institution is required to report data
regarding requests under a preapproval
program (as defined in § 1003.2(b)(2)) only if
the preapproval request is denied, results in
the origination of a home purchase loan, or
was approved but not accepted.
iii. If a financial institution acquires
covered loans in bulk from another
institution (for example, from the receiver for
a failed institution), but no merger or
acquisition of an institution, or acquisition of
a branch office, is involved, the acquiring
financial institution reports the covered loans
as purchased loans.
iv. A financial institution reports the data
for an application on the loan/application
register for the calendar year during which
the application was acted upon even if the
institution received the application in a
previous calendar year.
2. Originations and applications involving
more than one institution. Section 1003.4(a)
requires a financial institution to collect
certain information regarding applications for
covered loans that it receives and regarding
covered loans that it originates. The
following provides guidance on how to
report originations and applications
involving more than one institution. The
discussion below assumes that all of the
parties are financial institutions as defined
by § 1003.2(g). The same principles apply if
any of the parties is not a financial
institution. Comment 4(a)–3 provides
examples of transactions involving more than
one institution, and comment 4(a)–4
discusses how to report actions taken by
agents.
i. Only one financial institution reports
each originated covered loan as an
origination. If more than one institution was
involved in the origination of a covered loan,
the financial institution that made the credit
decision approving the application before
closing or account opening reports the loan
as an origination. It is not relevant whether
the loan closed or, in the case of an
application, would have closed in the
institution’s name. If more than one
institution approved an application prior to
closing or account opening and one of those
institutions purchased the loan after closing,
the institution that purchased the loan after
closing reports the loan as an origination. If

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a financial institution reports a transaction as
an origination, it reports all of the
information required for originations, even if
the covered loan was not initially payable to
the financial institution that is reporting the
covered loan as an origination.
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 if it made
a credit decision on the application or was
reviewing the application when the
application was withdrawn or closed for
incompleteness. 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
and reported an action taken on the same
application.
3. Examples—originations and
applications involving more than one
institution. The following scenarios illustrate
how an institution reports a particular
application or covered loan. The illustrations
assume that all of the parties are financial
institutions as defined by § 1003.2(g).
However, the same principles apply if any of
the parties is not a financial institution.
i. Financial Institution A received an
application for a covered loan from an
applicant and forwarded that application to
Financial Institution B. Financial Institution
B reviewed the application and approved the
loan prior to closing. The loan closed in
Financial Institution A’s name. Financial
Institution B purchased the loan from
Financial Institution A after closing.
Financial Institution B was not acting as
Financial Institution A’s agent. Since
Financial Institution B made the credit
decision prior to closing, Financial
Institution B reports the transaction as an
origination, not as a purchase. Financial
Institution A does not report the transaction.
ii. Financial Institution A received an
application for a covered loan from an
applicant and forwarded that application to
Financial Institution B. Financial Institution
B reviewed the application before the loan
would have closed, but the application did
not result in an origination because Financial
Institution B denied the application.
Financial Institution B was not acting as
Financial Institution A’s agent. Since
Financial Institution B made the credit
decision, Financial Institution B reports the
application as a denial. Financial Institution
A does not report the application. If, under
the same facts, the application was
withdrawn before Financial Institution B
made a credit decision, Financial Institution
B would report the application as withdrawn
and Financial Institution A would not report
the application.
iii. Financial Institution A received an
application for a covered loan from an
applicant and approved the application
before closing the loan in its name. Financial
Institution A was not acting as Financial
Institution B’s agent. Financial Institution B
purchased the covered loan from Financial
Institution A. Financial Institution B did not
review the application before closing.
Financial Institution A reports the loan as an
origination. Financial Institution B reports
the loan as a purchase.

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iv. Financial Institution A received an
application for a covered loan from an
applicant. If approved, the loan would have
closed in Financial Institution B’s name.
Financial Institution A denied the
application without sending it to Financial
Institution B for approval. Financial
Institution A was not acting as Financial
Institution B’s agent. Since Financial
Institution A made the credit decision before
the loan would have closed, Financial
Institution A reports the application.
Financial Institution B does not report the
application.
v. Financial Institution A reviewed an
application and made the credit decision to
approve a covered loan using the
underwriting criteria provided by a third
party (e.g., another financial institution,
Fannie Mae, or Freddie Mac). The third party
did not review the application and did not
make a credit decision prior to closing.
Financial Institution A was not acting as the
third party’s agent. Financial Institution A
reports the application or origination. If the
third party purchased the loan and is subject
to Regulation C, the third party reports the
loan as a purchase whether or not the third
party reviewed the loan after closing. Assume
the same facts, except that Financial
Institution A approved the application, and
the applicant chose not to accept the loan
from Financial Institution A. Financial
Institution A reports the application as
approved but not accepted and the third
party, assuming the third party is subject to
Regulation C, does not report the application.
vi. Financial Institution A reviewed and
made the credit decision on an application
based on the criteria of a third-party insurer
or guarantor (for example, a government or
private insurer or guarantor). Financial
Institution A reports the action taken on the
application.
vii. Financial Institution A received an
application for a covered loan and forwarded
it to Financial Institutions B and C. Financial
Institution A made a credit decision, acting
as Financial Institution D’s agent, and
approved the application. The applicant did
not accept the loan from Financial Institution
D. Financial Institution D reports the
application as approved but not accepted.
Financial Institution A does not report the
application. Financial Institution B made a
credit decision, approving the application,
the applicant accepted the offer of credit
from Financial Institution B, and credit was
extended. Financial Institution B reports the
origination. Financial Institution C made a
credit decision and denied the application.
Financial Institution C reports the
application as denied.
4. Agents. If a financial institution made
the credit decision on a covered loan or
application through the actions of an agent,
the institution reports the application or
origination. State law determines whether
one party is the agent of another. For
example, acting as Financial Institution A’s
agent, Financial Institution B approved an
application prior to closing and a covered
loan was originated. Financial Institution A
reports the loan as an origination.
5. Purchased loans. i. A financial
institution is required to collect data

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regarding covered loans it purchases. For
purposes of § 1003.4(a), a purchase includes
a repurchase of a covered loan, regardless of
whether the institution chose to repurchase
the covered loan or was required to
repurchase the covered loan because of a
contractual obligation and regardless of
whether the repurchase occurs within the
same calendar year that the covered loan was
originated or in a different calendar year. For
example, assume that Financial Institution A
originates or purchases a covered loan and
then sells it to Financial Institution B, who
later requires Financial Institution A to
repurchase the covered loan pursuant to the
relevant contractual obligations. Financial
Institution B reports the purchase from
Financial Institution A, assuming it is a
financial institution as defined under
§ 1003.2(g). Financial Institution A reports
the repurchase from Financial Institution B
as a purchase.
ii. In contrast, for purposes of § 1003.4(a),
a purchase does not include a temporary
transfer of a covered loan to an interim
funder or warehouse creditor as part of an
interim funding agreement under which the
originating financial institution is obligated
to repurchase the covered loan for sale to a
subsequent investor. Such agreements, often
referred to as ‘‘repurchase agreements,’’ are
sometimes employed as functional
equivalents of warehouse lines of credit.
Under these agreements, the interim funder
or warehouse creditor acquires legal title to
the covered loan, subject to an obligation of
the originating institution to repurchase at a
future date, rather than taking a security
interest in the covered loan as under the
terms of a more conventional warehouse line
of credit. To illustrate, assume Financial
Institution A has an interim funding
agreement with Financial Institution B to
enable Financial Institution B to originate
loans. Assume further that Financial
Institution B originates a covered loan and
that, pursuant to this agreement, Financial
Institution A takes a temporary transfer of the
covered loan until Financial Institution B
arranges for the sale of the covered loan to
a subsequent investor and that Financial
Institution B repurchases the covered loan to
enable it to complete the sale to the
subsequent investor (alternatively, Financial
Institution A may transfer the covered loan
directly to the subsequent investor at
Financial Institution B’s direction, pursuant
to the interim funding agreement). The
subsequent investor could be, for example, a
financial institution or other entity that
intends to hold the loan in portfolio, a GSE
or other securitizer, or a financial institution
or other entity that intends to package and
sell multiple loans to a GSE or other
securitizer. In this example, the temporary
transfer of the covered loan from Financial
Institution B to Financial Institution A is not
a purchase, and any subsequent transfer back
to Financial Institution B for delivery to the
subsequent investor is not a purchase, for
purposes of § 1003.4(a). Financial Institution
B reports the origination of the covered loan
as well as its sale to the subsequent investor.
If the subsequent investor is a financial
institution under § 1003.2(g), it reports a
purchase of the covered loan pursuant to

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§ 1003.4(a), regardless of whether it acquired
the covered loan from Financial Institution B
or directly from Financial Institution A.
Paragraph 4(a)(1)(i)
1. ULI—uniqueness. Section
1003.4(a)(1)(i)(B)(2) requires a financial
institution that assigns a universal loan
identifier (ULI) to each covered loan or
application (except as provided in
§ 1003.4(a)(1)(i)(D) and (E)) to ensure that the
character sequence it assigns is unique
within the institution and used only for the
covered loan or application. 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 in the case that
the application is approved and a loan is
originated. 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. A financial
institution may not report an application for
a covered loan in 2030 using the same ULI
that was reported for a covered loan that was
originated in 2020. Similarly, refinancings or
applications for refinancing should be
assigned a different ULI than the loan that is
being refinanced. A financial institution with
multiple branches must ensure that its
branches do not use the same ULI to refer to
multiple covered loans or applications.
2. ULI—privacy. Section
1003.4(a)(1)(i)(B)(3) prohibits a financial
institution from including information that
could be used to directly identify the
applicant or borrower in the identifier that it
assigns for the application or covered loan of
the applicant or borrower. Information that
could be used to directly identify the
applicant or borrower includes, but is not
limited to, the applicant’s or borrower’s
name, date of birth, Social Security number,
official government-issued driver’s license or
identification number, alien registration
number, government passport number, or
employer or taxpayer identification number.
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 unless
the purchase of the covered loan is a partially
exempt transaction under § 1003.3(d). 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 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 the purchase is not a
partially exempt transaction. 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 if the

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purchase is not a partially exempt
transaction. 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) and
Institution A assigned a ULI to the loan, then
unless the purchase is a partially exempt
transaction 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 and is ineligible for
a partial exemption with respect to the
purchased 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, the loan was originated by an
institution not required to report under this
part, or the loan was assigned a nonuniversal loan identifier (NULI) under
§ 1003.3(d)(5) rather than a ULI by the loan
originator.
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 that is not partially
exempt in its fourth-quarter 2020 data
submission, pursuant to § 1003.5(a)(1)(ii), but
then reconsiders the application, resulting in
an origination that is not partially exempt 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).
5. ULI—check digit. Section
1003.4(a)(1)(i)(C) requires that the two rightmost characters in the ULI represent the
check digit. Appendix C prescribes the

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requirements for generating a check digit and
validating a ULI.
6. NULI. For a partially exempt transaction
under § 1003.3(d), a financial institution may
report a ULI or a NULI. See § 1003.3(d)(5)
and comments 3(d)(5)–1 and –2 for guidance
on the NULI.
Paragraph 4(a)(1)(ii)
1. Application date—consistency. Section
1003.4(a)(1)(ii) requires that, in reporting the
date of application, a financial institution
report the date it received the application, as
defined under § 1003.2(b), or the date shown
on the application form. Although a financial
institution need not choose the same
approach for its entire HMDA submission, it
should be generally consistent (such as by
routinely using one approach within a
particular division of the institution or for a
category of loans). If the financial institution
chooses to report the date shown on the
application form and the institution retains
multiple versions of the application form, the
institution reports the date shown on the first
application form satisfying the application
definition provided under § 1003.2(b).
2. Application date—indirect application.
For an application that was not submitted
directly to the financial institution, the
institution may report the date the
application was received by the party that
initially received the application, the date the
application was received by the institution,
or the date shown on the application form.
Although an institution need not choose the
same approach for its entire HMDA
submission, it should be generally consistent
(such as by routinely using one approach
within a particular division of the institution
or for a category of loans).
3. Application date—reinstated
application. If, within the same calendar
year, an applicant asks a financial institution
to reinstate a counteroffer that the applicant
previously did not accept (or asks the
institution to reconsider an application that
was denied, withdrawn, or closed for
incompleteness), the institution may treat
that request as the continuation of the earlier
transaction using the same ULI or NULI or as
a new transaction with a new ULI or NULI.
If the institution treats the request for
reinstatement or reconsideration as a new
transaction, it reports the date of the request
as the application date. If the institution does
not treat the request for reinstatement or
reconsideration as a new transaction, it
reports the original application date.
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)
1. Purpose—statement of applicant. A
financial institution may rely on the oral or

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written statement of an applicant regarding
the proposed use of covered loan proceeds.
For example, a lender could use a check-box
or a purpose line on a loan application to
determine whether the applicant intends to
use covered loan proceeds for home
improvement purposes. If an applicant
provides no statement as to the proposed use
of covered loan proceeds and the covered
loan is not a home purchase loan, cash-out
refinancing, or refinancing, a financial
institution reports the covered loan as for a
purpose other than home purchase, home
improvement, refinancing, or cash-out
refinancing for purposes of § 1003.4(a)(3).
2. Purpose—refinancing and cash-out
refinancing. Section 1003.4(a)(3) requires a
financial institution to report whether a
covered loan is, or an application is for, a
refinancing or a cash-out refinancing. A
financial institution reports a covered loan or
an application as a cash-out refinancing if it
is a refinancing as defined by § 1003.2(p) and
the institution considered it to be a cash-out
refinancing in processing the application or
setting the terms (such as the interest rate or
origination charges) under its guidelines or
an investor’s guidelines. For example:
i. Assume a financial institution considers
an application for a loan product to be a
cash-out refinancing under an investor’s
guidelines because of the amount of cash
received by the borrower at closing or
account opening. Assume also that under the
investor’s guidelines, the applicant qualifies
for the loan product and the financial
institution approves the application,
originates the covered loan, and sets the
terms of the covered loan consistent with the
loan product. In this example, the financial
institution would report the covered loan as
a cash-out refinancing for purposes of
§ 1003.4(a)(3).
ii. Assume a financial institution does not
consider an application for a covered loan to
be a cash-out refinancing under its own
guidelines because the amount of cash
received by the borrower does not exceed a
certain threshold. Assume also that the
institution approves the application,
originates the covered loan, and sets the
terms of the covered loan consistent with its
own guidelines applicable to refinancings
other than cash-out refinancings. In this
example, the financial institution would
report the covered loan as a refinancing for
purposes of § 1003.4(a)(3).
iii. Assume a financial institution does not
distinguish between a cash-out refinancing
and a refinancing under its own guidelines,
and sets the terms of all refinancings without
regard to the amount of cash received by the
borrower at closing or account opening, and
does not offer loan products under investor
guidelines. In this example, the financial
institution reports all covered loans and
applications for covered loans that are
defined by § 1003.2(p) as refinancings for
purposes of § 1003.4(a)(3).
3. Purpose—multiple-purpose loan.
Section 1003.4(a)(3) requires a financial
institution to report the purpose of a covered
loan or application. If a covered loan is a
home purchase loan as well as a home
improvement loan, a refinancing, or a cashout refinancing, an institution complies with

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§ 1003.4(a)(3) by reporting the loan as a home
purchase loan. If a covered loan is a home
improvement loan as well as a refinancing or
cash-out refinancing, but the covered loan is
not a home purchase loan, an institution
complies with § 1003.4(a)(3) by reporting the
covered loan as a refinancing or a cash-out
refinancing, as appropriate. If a covered loan
is a refinancing or cash-out refinancing as
well as for another purpose, such as for the
purpose of paying educational expenses, but
the covered loan is not a home purchase
loan, an institution complies with
§ 1003.4(a)(3) by reporting the covered loan
as a refinancing or a cash-out refinancing, as
appropriate. See comment 4(a)(3)–2. If a
covered loan is a home improvement loan as
well as for another purpose, but the covered
loan is not a home purchase loan, a
refinancing, or cash-out refinancing, an
institution complies with § 1003.4(a)(3) by
reporting the covered loan as a home
improvement loan. See comment 2(i)–1.
4. Purpose—other. If a covered loan is not,
or an application is not for, a home purchase
loan, a home improvement loan, a
refinancing, or a cash-out refinancing, a
financial institution complies with
§ 1003.4(a)(3) by reporting the covered loan
or application as for a purpose other than
home purchase, home improvement,
refinancing, or cash-out refinancing. For
example, if a covered loan is for the purpose
of paying educational expenses, the financial
institution complies with § 1003.4(a)(3) by
reporting the covered loan as for a purpose
other than home purchase, home
improvement, refinancing, or cash-out
refinancing. Section 1003.4(a)(3) also
requires an institution to report a covered
loan or application as for a purpose other
than home purchase, home improvement,
refinancing, or cash-out refinancing if it is a
refinancing but, under the terms of the
agreement, the financial institution was
unconditionally obligated to refinance the
obligation subject to conditions within the
borrower’s control.
5. Purpose—business or commercial
purpose loans. If a covered loan primarily is
for a business or commercial purpose as
described in § 1003.3(c)(10) and comment
3(c)(10)–2 and is a home purchase loan,
home improvement loan, or a refinancing,
§ 1003.4(a)(3) requires the financial
institution to report the applicable loan
purpose. If a loan primarily is for a business
or commercial purpose but is not a home
purchase loan, home improvement loan, or a
refinancing, the loan is an excluded
transaction under § 1003.3(c)(10).
6. Purpose—purchased loans. For
purchased covered loans where origination
took place prior to January 1, 2018, a
financial institution complies with
§ 1003.4(a)(3) by reporting that the
requirement is not applicable.
Paragraph 4(a)(4)
1. Request under a preapproval program.
Section 1003.4(a)(4) requires a financial
institution to report whether an application
or covered loan involved a request for a
preapproval of a home purchase loan under
a preapproval program as defined by
§ 1003.2(b)(2). If an application or covered
loan did not involve a request for a

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preapproval of a home purchase loan under
a preapproval program as defined by
§ 1003.2(b)(2), a financial institution
complies with § 1003.4(a)(4) by reporting that
the application or covered loan did not
involve such a request, regardless of whether
the institution has such a program and the
applicant did not apply through that program
or the institution does not have a preapproval
program as defined by § 1003.2(b)(2).
2. Scope of requirement. A financial
institution reports that the application or
covered loan did not involve a preapproval
request for a purchased covered loan; an
application or covered loan for any purpose
other than a home purchase loan; an
application for a home purchase loan or a
covered loan that is a home purchase loan
secured by a multifamily dwelling; an
application or covered loan that is an openend line of credit or a reverse mortgage; or
an application that is denied, withdrawn by
the applicant, or closed for incompleteness.
Paragraph 4(a)(5)
1. Modular homes and prefabricated
components. Covered loans or applications
related to modular homes should be reported
with a construction method of site-built,
regardless of whether they are on-frame or
off-frame modular homes. Modular homes
comply with local or other recognized
buildings codes rather than standards
established by the National Manufactured
Housing Construction and Safety Standards
Act, 42 U.S.C. 5401 et seq. Modular homes
are not required to have HUD Certification
Labels under 24 CFR 3280.11 or data plates
under 24 CFR 3280.5. Modular homes may
have a certification from a State licensing
agency that documents compliance with
State or other applicable building codes. Onframe modular homes are constructed on
permanent metal chassis similar to those
used in manufactured homes. The chassis are
not removed on site and are secured to the
foundation. Off-frame modular homes
typically have floor construction similar to
the construction of other site-built homes,
and the construction typically includes
wooden floor joists and does not include
permanent metal chassis. Dwellings built
using prefabricated components assembled at
the dwelling’s permanent site should also be
reported with a construction method of sitebuilt.
2. Multifamily dwelling. For a covered loan
or an application for a covered loan related
to a multifamily dwelling, the financial
institution should report the construction
method as site-built unless the multifamily
dwelling is a manufactured home
community, in which case the financial
institution should report the construction
method as manufactured home.
3. Multiple properties. See comment
4(a)(9)–2 regarding transactions involving
multiple properties with more than one
property taken as security.
Paragraph 4(a)(6)
1. Multiple properties. See comment
4(a)(9)–2 regarding transactions involving
multiple properties with more than one
property taken as security.
2. Principal residence. Section 1003.4(a)(6)
requires a financial institution to identify

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whether the property to which the covered
loan or application relates is or will be used
as a residence that the applicant or borrower
physically occupies and uses, or will occupy
and use, as his or her principal residence. For
purposes of § 1003.4(a)(6), an applicant or
borrower can have only one principal
residence at a time. Thus, a vacation or other
second home would not be a principal
residence. However, if an applicant or
borrower buys or builds a new dwelling that
will become the applicant’s or borrower’s
principal residence within a year or upon the
completion of construction, the new dwelling
is considered the principal residence for
purposes of applying this definition to a
particular transaction.
3. Second residences. Section 1003.4(a)(6)
requires a financial institution to identify
whether the property to which the loan or
application relates is or will be used as a
second residence. For purposes of
§ 1003.4(a)(6), a property is a second
residence of an applicant or borrower if the
property is or will be occupied by the
applicant or borrower for a portion of the
year and is not the applicant’s or borrower’s
principal residence. For example, if a person
purchases a property, occupies the property
for a portion of the year, and rents the
property for the remainder of the year, the
property is a second residence for purposes
of § 1003.4(a)(6). Similarly, if a couple
occupies a property near their place of
employment on weekdays, but the couple
returns to their principal residence on
weekends, the property near the couple’s
place of employment is a second residence
for purposes of § 1003.4(a)(6).
4. Investment properties. Section
1003.4(a)(6) requires a financial institution to
identify whether the property to which the
covered loan or application relates is or will
be used as an investment property. For
purposes of § 1003.4(a)(6), a property is an
investment property if the borrower does not,
or the applicant will not, occupy the
property. For example, if a person purchases
a property, does not occupy the property, and
generates income by renting the property, the
property is an investment property for
purposes of § 1003.4(a)(6). Similarly, if a
person purchases a property, does not
occupy the property, and does not generate
income by renting the property, but intends
to generate income by selling the property,
the property is an investment property for
purposes of § 1003.4(a)(6). Section
1003.4(a)(6) requires a financial institution to
identify a property as an investment property
if the borrower or applicant does not or will
not occupy the property, even if the borrower
or applicant does not consider the property
as owned for investment purposes. For
example, if a corporation purchases a
property that is a dwelling under § 1003.2(f),
that it does not occupy, but that is for the
long-term residential use of its employees,
the property is an investment property for
purposes of § 1003.4(a)(6), even if the
corporation considers the property as owned
for business purposes rather than investment
purposes, does not generate income by
renting the property, and does not intend to
generate income by selling the property at
some point in time. If the property is for

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transitory use by employees, the property
would not be considered a dwelling under
§ 1003.2(f). See comment 2(f)–3.
5. Purchased covered loans. For purchased
covered loans, a financial institution may
report principal residence unless the loan
documents or application indicate that the
property will not be occupied as a principal
residence.
Paragraph 4(a)(7)
1. Covered loan amount—counteroffer. If
an applicant accepts a counteroffer for an
amount different from the amount for which
the applicant applied, the financial
institution reports the covered loan amount
granted. If an applicant does not accept a
counteroffer or fails to respond, the
institution reports the amount initially
requested.
2. Covered loan amount—application
approved but not accepted or preapproval
request approved but not accepted. A
financial institution reports the covered loan
amount that was approved.
3. Covered loan amount—preapproval
request denied, application denied, closed
for incompleteness or withdrawn. For a
preapproval request that was denied, and for
an application that was denied, closed for
incompleteness, or withdrawn, a financial
institution reports the amount for which the
applicant applied.
4. Covered loan amount—multiple-purpose
loan. A financial institution reports the entire
amount of the covered loan, even if only a
part of the proceeds is intended for home
purchase, home improvement, or refinancing.
5. Covered loan amount—closed-end
mortgage loan. For a closed-end mortgage
loan, other than a purchased loan, an
assumption, or a reverse mortgage, a financial
institution reports the amount to be repaid as
disclosed on the legal obligation. For a
purchased closed-end mortgage loan or an
assumption of a closed-end mortgage loan, a
financial institution reports the unpaid
principal balance at the time of purchase or
assumption.
6. Covered loan amount—open-end line of
credit. For an open-end line of credit, a
financial institution reports the entire
amount of credit available to the borrower
under the terms of the open-end plan,
including a purchased open-end line of
credit and an assumption of an open-end line
of credit, but not for a reverse mortgage openend line of credit.
7. Covered loan amount—refinancing. For
a refinancing, a financial institution reports
the amount of credit extended under the
terms of the new debt obligation.
8. Covered loan amount—home
improvement loan. A financial institution
reports the entire amount of a home
improvement loan, even if only a part of the
proceeds is intended for home improvement.
9. Covered loan amount—non-federally
insured reverse mortgage. A financial
institution reports the initial principal limit
of a non-federally insured reverse mortgage
as set forth in § 1003.4(a)(7)(iii).
Paragraph 4(a)(8)(i)
1. Action taken—covered loan originated.
A financial institution reports that the
covered loan was originated if the financial

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institution made a credit decision approving
the application before closing or account
opening and that credit decision results in an
extension of credit. The same is true for an
application that began as a request for a
preapproval that subsequently results in a
covered loan being originated. See comments
4(a)–2 through –4 for guidance on
transactions in which more than one
institution is involved.
2. Action taken—covered loan purchased.
A financial institution reports that the
covered loan was purchased if the covered
loan was purchased by the financial
institution after closing or account opening
and the financial institution did not make a
credit decision on the application prior to
closing or account opening, or if the financial
institution did make a credit decision on the
application prior to closing or account
opening, but is repurchasing the loan from
another entity that the loan was sold to. See
comment 4(a)–5. See comments 4(a)–2
through –4 for guidance on transactions in
which more than one financial institution is
involved.
3. Action taken—application approved but
not accepted. A financial institution reports
application approved but not accepted if the
financial institution made a credit decision
approving the application before closing or
account opening, subject solely to
outstanding conditions that are customary
commitment or closing conditions, but the
applicant or the party that initially received
the application fails to respond to the
financial institution’s approval within the
specified time, or the closed-end mortgage
loan was not otherwise consummated or the
account was not otherwise opened. See
comment 4(a)(8)(i)–13.
4. Action taken—application denied. A
financial institution reports that the
application was denied if it made a credit
decision denying the application before an
applicant withdraws the application or the
file is closed for incompleteness. See
comments 4(a)–2 through –4 for guidance on
transactions in which more than one
institution is involved.
5. Action taken—application withdrawn. A
financial institution reports that the
application was withdrawn when the
application is expressly withdrawn by the
applicant before the financial institution
makes a credit decision denying the
application, before the financial institution
makes a credit decision approving the
application, or before the file is closed for
incompleteness. A financial institution also
reports application withdrawn if the
financial institution provides a conditional
approval specifying underwriting or
creditworthiness conditions, pursuant to
comment 4(a)(8)(i)–13, and the application is
expressly withdrawn by the applicant before
the applicant satisfies all specified
underwriting or creditworthiness conditions.
A preapproval request that is withdrawn is
not reportable under HMDA. See § 1003.4(a).
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

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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.
7. Action taken—preapproval request
denied. A financial institution reports that
the preapproval request was denied if the
application was a request for a preapproval
under a preapproval program as defined in
§ 1003.2(b)(2) and the institution made a
credit decision denying the preapproval
request.
8. Action taken—preapproval request
approved but not accepted. A financial
institution reports that the preapproval
request was approved but not accepted if the
application was a request for a preapproval
under a preapproval program as defined in
§ 1003.2(b)(2) and the institution made a
credit decision approving the preapproval
request but the application did not result in
a covered loan originated by the financial
institution.
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.
10. Action taken—rescinded transactions.
If a borrower rescinds a transaction after
closing and before a financial institution is

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required to submit its loan/application
register containing the information for the
transaction under § 1003.5(a), the institution
reports the transaction as an application that
was approved but not accepted.
11. Action taken—purchased covered
loans. An institution reports the covered
loans that it purchased during the calendar
year. An institution does not report the
covered loans that it declined to purchase,
unless, as discussed in comments 4(a)–2
through –4, the institution reviewed the
application prior to closing, in which case it
reports the application or covered loan
according to comments 4(a)–2 through –4.
12. Action taken—repurchased covered
loans. See comment 4(a)–5 regarding
reporting requirements when a covered loan
is repurchased by the originating financial
institution.
13. Action taken—conditional approvals. If
an institution issues an approval other than
a commitment pursuant to a preapproval
program as defined under § 1003.2(b)(2), and
that approval is subject to the applicant
meeting certain conditions, the institution
reports the action taken as provided below
dependent on whether the conditions are
solely customary commitment or closing
conditions or if the conditions include any
underwriting or creditworthiness conditions.
i. Action taken examples. If the approval
is conditioned on satisfying underwriting or
creditworthiness conditions and they are not
met, the institution reports the action taken
as a denial. If, however, the conditions
involve submitting additional information
about underwriting or creditworthiness that
the institution needs to make the credit
decision, and the institution has sent a
written notice of incompleteness under
Regulation B, 12 CFR 1002.9(c)(2), and the
applicant did not respond within the period
of time specified in the notice, the institution
reports the action taken as file closed for
incompleteness. See comment 4(a)(8)(i)–6. If
the conditions are solely customary
commitment or closing conditions and the
conditions are not met, the institution reports
the action taken as approved but not
accepted. If all the conditions (underwriting,
creditworthiness, or customary commitment
or closing conditions) are satisfied and the
institution agrees to extend credit but the
covered loan is not originated, the institution
reports the action taken as application
approved but not accepted. If 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 institution reports the
action taken as application withdrawn. If all
underwriting and creditworthiness
conditions have been met, and the
outstanding conditions are solely customary
commitment or closing conditions and the
applicant expressly withdraws before the
covered loan is originated, the institution
reports the action taken as application
approved but not accepted.
ii. Customary commitment or closing
conditions. Customary commitment or
closing conditions include, for example: a
clear-title requirement, an acceptable
property survey, acceptable title insurance

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binder, clear termite inspection, a
subordination agreement from another
lienholder, and, where the applicant plans to
use the proceeds from the sale of one home
to purchase another, a settlement statement
showing adequate proceeds from the sale.
iii. Underwriting or creditworthiness
conditions. Underwriting or creditworthiness
conditions include, for example: conditions
that constitute a counter-offer, such as a
demand for a higher down-payment;
satisfactory debt-to-income or loan-to-value
ratios, a determination of need for private
mortgage insurance, or a satisfactory
appraisal requirement; or verification or
confirmation, in whatever form the
institution requires, that the applicant meets
underwriting conditions concerning
applicant creditworthiness, including
documentation or verification of income or
assets.
14. Action taken—pending applications.
An institution does not report any covered
loan application still pending at the end of
the calendar year; it reports that application
on its loan/application register for the year in
which final action is taken.
Paragraph 4(a)(8)(ii)
1. Action taken date—general. A financial
institution reports the date of the action
taken.
2. Action taken date—applications denied
and files closed for incompleteness. For
applications, including requests for a
preapproval, that are denied or for files
closed for incompleteness, the financial
institution reports either the date the action
was taken or the date the notice was sent to
the applicant.
3. Action taken date—application
withdrawn. For applications withdrawn, the
financial institution may report the date the
express withdrawal was received or the date
shown on the notification form in the case of
a written withdrawal.
4. Action taken date—approved but not
accepted. For a covered loan approved by an
institution but not accepted by the applicant,
the institution reports any reasonable date,
such as the approval date, the deadline for
accepting the offer, or the date the file was
closed. Although an institution need not
choose the same approach for its entire
HMDA submission, 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).
5. Action taken date—originations. For
covered loan originations, including a
preapproval request that leads to an
origination by the financial institution, an
institution generally reports the closing or
account opening date. For covered loan
originations that an institution acquires from
a party that initially received the application,
the institution reports either the closing or
account opening date, or the date the
institution acquired the covered loan from
the party that initially received the
application. If the disbursement of funds
takes place on a date later than the closing
or account opening date, the institution may
use the date of initial disbursement. For a
construction/permanent covered loan, the
institution reports either the closing or
account opening date, or the date the covered

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loan converts to the permanent financing.
Although an institution need not choose the
same approach for its entire HMDA
submission, 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).
Notwithstanding this flexibility regarding the
use of the closing or account opening date in
connection with reporting the date action
was taken, the institution must report the
origination as occurring in the year in which
the origination goes to closing or the account
is opened.
6. Action taken date—loan purchased. For
covered loans purchased, a financial
institution reports the date of purchase.
Paragraph 4(a)(9)
1. Multiple properties with one property
taken as security. If a covered loan is related
to more than one property, but only one
property is taken as security (or, in the case
of an application, proposed to be taken as
security), a financial institution reports the
information required by § 1003.4(a)(9) for the
property taken as or proposed to be taken as
security. A financial institution does not
report the information required by
§ 1003.4(a)(9) for the property or properties
related to the loan that are not taken as or
proposed to be taken as security. For
example, if a covered loan is secured by
property A, and the proceeds are used to
purchase or rehabilitate (or to refinance home
purchase or home improvement loans related
to) property B, the institution reports the
information required by § 1003.4(a)(9) for
property A and does not report the
information required by § 1003.4(a)(9) for
property B.
2. Multiple properties with more than one
property taken as security. If more than one
property is taken or, in the case of an
application, proposed to be taken as security
for a single covered loan, a financial
institution reports the covered loan or
application in a single entry on its loan/
application register and provides the
information required by § 1003.4(a)(9) for one
of the properties taken as security that
contains a dwelling. A financial institution
does not report information about the other
properties taken as security. If an institution
is required to report specific information
about the property identified in
§ 1003.4(a)(9), the institution reports the
information that relates to the property
identified in § 1003.4(a)(9) (or, if the
transaction is partially exempt under
§ 1003.3(d) and no data are reported pursuant
to § 1003.4(a)(9), the property that the
institution would have identified in
§ 1003.4(a)(9) if the transaction were not
partially exempt). For example, Financial
Institution A originated a covered loan that
is secured by both property A and property
B, each of which contains a dwelling.
Financial Institution A reports the loan as
one entry on its loan/application register,
reporting the information required by
§ 1003.4(a)(9) for either property A or
property B. If Financial Institution A elects
to report the information required by
§ 1003.4(a)(9) about property A, Financial
Institution A also reports the information
required by § 1003.4(a)(5), (6), (14), (29), and

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(30) related to property A. For aspects of the
entries that do not refer to the property
identified in § 1003.4(a)(9) (i.e., § 1003.4(a)(1)
through (4), (7), (8), (10) through (13), (15)
through (28), and (31) through (38)),
Financial Institution A reports the
information applicable to the covered loan or
application and not information that relates
only to the property identified in
§ 1003.4(a)(9).
3. Multifamily dwellings. A single
multifamily dwelling may have more than
one postal address. For example, three
apartment buildings, each with a different
street address, comprise a single multifamily
dwelling that secures a covered loan. For the
purposes of § 1003.4(a)(9), a financial
institution reports the information required
by § 1003.4(a)(9) in the same manner
described in comment 4(a)(9)–2.
4. Loans purchased from another
institution. The requirement to report the
property location information required by
§ 1003.4(a)(9) applies not only to applications
and originations but also to purchased
covered loans.
5. Manufactured home. If the site of a
manufactured home has not been identified,
a financial institution complies by reporting
that the information required by
§ 1003.4(a)(9) is not applicable.
Paragraph 4(a)(9)(i)
1. General. Except for partially exempt
transactions under § 1003.3(d),
§ 1003.4(a)(9)(i) requires a financial
institution to report the property address of
the location of the property securing a
covered loan or, in the case of an application,
proposed to secure a covered loan. The
address should correspond to the property
identified on the legal obligation related to
the covered loan. For applications that did
not result in an origination, the address
should correspond to the location of the
property proposed to secure the loan as
identified by the applicant. For example,
assume a loan is secured by a property
located at 123 Main Street, and the
applicant’s or borrower’s mailing address is
a post office box. The financial institution
should not report the post office box, and
should report 123 Main Street.
2. Property address—format. A financial
institution complies with the requirements in
§ 1003.4(a)(9)(i) by reporting the following
information about the physical location of
the property securing the loan.
i. Street address. When reporting the street
address of the property, a financial
institution complies by including, as
applicable, the primary address number, the
predirectional, the street name, street
prefixes and/or suffixes, the postdirectional,
the secondary address identifier, and the
secondary address, as applicable. For
example, 100 N Main ST Apt 1.
ii. City name. A financial institution
complies by reporting the name of the city in
which the property is located.
iii. State name. A financial institution
complies by reporting the two letter State
code for the State in which the property is
located, using the U.S. Postal Service official
State abbreviations.

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iv. Zip Code. A financial institution
complies by reporting the five or nine digit
Zip Code in which the property is located.
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)
1. General. A financial institution complies
by reporting the five-digit Federal
Information Processing Standards (FIPS)
numerical county code.
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)
1. General. Census tract numbers are
defined by the U.S. Census Bureau. A
financial institution complies with
§ 1003.4(a)(9)(ii)(C) if it uses the boundaries
and codes in effect on January 1 of the
calendar year covered by the loan/
application register that it is reporting.
2. Applications—census tract not provided.
When reporting an application, a financial
institution complies with § 1003.4(a)(9)(ii)(C)

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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)(i)
1. Applicant data—general. Refer to
appendix B to this part for instructions on
collection of an applicant’s ethnicity, race,
and sex.
2. Transition rule for applicant data
collected prior to January 1, 2018. If a
financial institution receives an application
prior to January 1, 2018, but final action is
taken on or after January 1, 2018, the
financial institution complies with
§ 1003.4(a)(10)(i) and (b) if it collects the
information in accordance with the
requirements in effect at the time the
information was collected. For example, if a
financial institution receives an application
on November 15, 2017, collects the
applicant’s ethnicity, race, and sex in
accordance with the instructions in effect on
that date, and takes final action on the
application on January 5, 2018, the financial
institution has complied with the
requirements of § 1003.4(a)(10)(i) and (b),
even though those instructions changed after
the information was collected but before the
date of final action. However, if, in this
example, the financial institution collected
the applicant’s ethnicity, race, and sex on or
after January 1, 2018, § 1003.4(a)(10)(i) and
(b) requires the financial institution to collect
the information in accordance with the
amended instructions.
Paragraph 4(a)(10)(ii)
1. Applicant data—completion by financial
institution. 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. For example,
if an applicant provides a date of birth of 01/
15/1970 on the application form that the
financial institution receives on 01/14/2015,
the institution reports 44 as the applicant’s
age.
2. Applicant data—co-applicant. If there
are no co-applicants, the financial institution
reports that there is no co-applicant. If there
is more than one co-applicant, the financial
institution reports the age only for the first
co-applicant listed on the application form.
A co-applicant may provide an absent coapplicant’s age on behalf of the absent coapplicant.
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.
4. Applicant data—non-natural person. A
financial institution complies with
§ 1003.4(a)(10)(ii) by reporting that the
requirement is not applicable if the applicant
or co-applicant is not a natural person (for
example, a corporation, partnership, or trust).
For example, for a transaction involving a
trust, a financial institution reports that the
requirement to report the applicant’s age is
not applicable if the trust is the applicant. On

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the other hand, if the applicant is a natural
person, and is the beneficiary of a trust, a
financial institution reports the applicant’s
age.
5. Applicant data—guarantor. For
purposes of § 1003.4(a)(10)(ii), if a covered
loan or application includes a guarantor, a
financial institution does not report the
guarantor’s age.
Paragraph 4(a)(10)(iii)
1. Income data—income relied on. When a
financial institution evaluates income as part
of a credit decision, it reports the gross
annual income relied on in making the credit
decision. For example, if an institution relies
on an applicant’s salary to compute a debtto-income ratio but also relies on the
applicant’s annual bonus to evaluate
creditworthiness, the institution reports the
salary and the bonus to the extent relied
upon. If an institution relies on only a
portion of an applicant’s income in its
determination, it does not report that portion
of income not relied on. For example, if an
institution, pursuant to lender and investor
guidelines, does not rely on an applicant’s
commission income because it has been
earned for less than 12 months, the
institution does not include the applicant’s
commission income in the income reported.
Likewise, if an institution relies on the
verified gross income of the applicant in
making the credit decision, then the
institution reports the verified gross income.
Similarly, if an institution relies on the
income of a cosigner to evaluate
creditworthiness, the institution includes the
cosigner’s income to the extent relied upon.
An institution, however, does not include the
income of a guarantor who is only
secondarily liable.
2. Income data—co-applicant. If two
persons jointly apply for a covered loan and
both list income on the application, but the
financial institution relies on the income of
only one applicant in evaluating
creditworthiness, the institution reports only
the income relied on.
3. Income data—loan to employee. A
financial institution complies with
§ 1003.4(a)(10)(iii) by reporting that the
requirement is not applicable for a covered
loan to, or an application from, its employee
to protect the employee’s privacy, even
though the institution relied on the
employee’s income in making the credit
decision.
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.

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5. Income data—credit decision not made.
Section 1003.4(a)(10)(iii) requires a financial
institution to report the gross annual income
relied on in processing the application if a
credit decision was not made. For example,
assume an institution received an application
that included an applicant’s self-reported
income, but the application was withdrawn
before a credit decision that would have
considered income was made. The financial
institution reports the income information
relied on in processing the application at the
time that the application was withdrawn or
the file was closed for incompleteness.
6. Income data—credit decision not
requiring consideration of income. A
financial institution complies with
§ 1003.4(a)(10)(iii) by reporting that the
requirement is not applicable if the
application did not or would not have
required a credit decision that considered
income under the financial institution’s
policies and procedures. For example, if the
financial institution’s policies and
procedures do not consider income for a
streamlined refinance program, the
institution reports that the requirement is not
applicable, even if the institution received
income information from the applicant.
7. Income data—non-natural person. A
financial institution reports that the
requirement is not applicable when the
applicant or co-applicant is not a natural
person (e.g., a corporation, partnership, or
trust). For example, for a transaction
involving a trust, a financial institution
reports that the requirement to report income
data is not applicable if the trust is the
applicant. On the other hand, if the applicant
is a natural person, and is the beneficiary of
a trust, a financial institution is required to
report the information described in
§ 1003.4(a)(10)(iii).
8. Income data—multifamily properties. A
financial institution complies with
§ 1003.4(a)(10)(iii) by reporting that the
requirement is not applicable when the
covered loan is secured by, or application is
proposed to be secured by, a multifamily
dwelling.
9. Income data—purchased loans. A
financial institution complies with
§ 1003.4(a)(10)(iii) by reporting that the
requirement is not applicable when reporting
a purchased covered loan for which the
institution chooses not to report the income.
10. Income data—rounding. A financial
institution complies by reporting the dollar
amount of the income in thousands, rounded
to the nearest thousand ($500 rounds up to
the next $1,000). For example, $35,500 is
reported as 36.
Paragraph 4(a)(11)
1. Type of purchaser—loan-participation
interests sold to more than one entity. A
financial institution that originates a covered
loan, and then sells it to more than one
entity, reports the ‘‘type of purchaser’’ based
on the entity purchasing the greatest interest,
if any. For purposes of § 1003.4(a)(11), if a
financial institution sells some interest or
interests in a covered loan but retains a
majority interest in that loan, it does not
report the sale.
2. Type of purchaser—swapped covered
loans. Covered loans ‘‘swapped’’ for

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mortgage-backed securities are to be treated
as sales; the purchaser is the entity receiving
the covered loans that are swapped.
3. Type of purchaser—affiliate institution.
For purposes of complying with
§ 1003.4(a)(11), the term ‘‘affiliate’’ means
any company that controls, is controlled by,
or is under common control with, another
company, as set forth in the Bank Holding
Company Act of 1956 (12 U.S.C. 1841 et
seq.).
4. Type of purchaser—private
securitizations. A financial institution that
knows or reasonably believes that the
covered loan it is selling will be securitized
by the entity purchasing the covered loan,
other than by one of the governmentsponsored enterprises, reports the purchasing
entity type as a private securitizer regardless
of the type or affiliation of the purchasing
entity. Knowledge or reasonable belief could,
for example, be based on the purchase
agreement or other related documents, the
financial institution’s previous transactions
with the purchaser, or the purchaser’s role as
a securitizer (such as an investment bank). If
a financial institution selling a covered loan
does not know or reasonably believe that the
purchaser will securitize the loan, and the
seller knows that the purchaser frequently
holds or disposes of loans by means other
than securitization, then the financial
institution should report the covered loan as
purchased by, as appropriate, a commercial
bank, savings bank, savings association, life
insurance company, credit union, mortgage
company, finance company, affiliate
institution, or other type of purchaser.
5. Type of purchaser—mortgage company.
For purposes of complying with
§ 1003.4(a)(11), a mortgage company means a
nondepository institution that purchases
covered loans and typically originates such
loans. A mortgage company might be an
affiliate or a subsidiary of a bank holding
company or thrift holding company, or it
might be an independent mortgage company.
Regardless, a financial institution reports the
purchasing entity type as a mortgage
company, unless the mortgage company is an
affiliate of the seller institution, in which
case the seller institution should report the
loan as purchased by an affiliate institution.
6. Purchases by subsidiaries. A financial
institution that sells a covered loan to its
subsidiary that is a commercial bank, savings
bank, or savings association, should report
the covered loan as purchased by a
commercial bank, savings bank, or savings
association. A financial institution that sells
a covered loan to its subsidiary that is a life
insurance company, should report the
covered loan as purchased by a life insurance
company. A financial institution that sells a
covered loan to its subsidiary that is a credit
union, mortgage company, or finance
company, should report the covered loan as
purchased by a credit union, mortgage
company, or finance company. If the
subsidiary that purchases the covered loan is
not a commercial bank, savings bank, savings
association, life insurance company, credit
union, mortgage company, or finance
company, the seller institution should report
the loan as purchased by other type of
purchaser. The financial institution should

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report the covered loan as purchased by an
affiliate institution when the subsidiary is an
affiliate of the seller institution.
7. Type of purchaser—bank holding
company or thrift holding company. When a
financial institution sells a covered loan to a
bank holding company or thrift holding
company (rather than to one of its
subsidiaries), it should report the loan as
purchased by other type of purchaser, unless
the bank holding company or thrift holding
company is an affiliate of the seller
institution, in which case the seller
institution should report the loan as
purchased by an affiliate institution.
8. Repurchased covered loans. See
comment 4(a)–5 regarding reporting
requirements when a covered loan is
repurchased by the originating financial
institution.
9. Type of purchaser—quarterly recording.
For purposes of recording the type of
purchaser within 30 calendar days after the
end of the calendar quarter pursuant to
§ 1003.4(f), a financial institution records that
the requirement is not applicable if the
institution originated or purchased a covered
loan and did not sell it during the calendar
quarter for which the institution is recording
the data. If the financial institution sells the
covered loan in a subsequent quarter of the
same calendar year, the financial institution
records the type of purchaser on its loan/
application register for the quarter in which
the covered loan was sold. If a financial
institution sells the covered loan in a
succeeding year, the financial institution
should not record the sale.
10. Type of purchaser—not applicable. A
financial institution reports that the
requirement is not applicable for applications
that were denied, withdrawn, closed for
incompleteness or approved but not accepted
by the applicant; and for preapproval
requests that were denied or approved but
not accepted by the applicant. A financial
institution also reports that the requirement
is not applicable if the institution originated
or purchased a covered loan and did not sell
it during that same calendar year.
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 mortgage loans that have
low-risk pricing characteristics. Other loan
pricing terms may include commonly used
indices, margins, and initial fixed-rate
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
website (http://www.ffiec.gov/hmda) and the
Bureau’s website (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),

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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 website and the
Bureau’s website 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 website and the Bureau’s website. 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.
4. Rate spread calculation—comparable
transaction. The rate spread calculation in
§ 1003.4(a)(12)(i) is defined by reference to a
comparable transaction, which is determined
according to the covered loan’s amortization
type (i.e., fixed- or variable-rate) and loan
term. For covered loans that are open-end
lines of credit, § 1003.4(a)(12)(i) requires a
financial institution to identify the most
closely comparable closed-end transaction.
The tables of average prime offer rates
published by the Bureau (see comment
4(a)(12)–2) provide additional detail about
how to identify the comparable transaction.
i. Fixed-rate transactions. For fixed-rate
covered loans, the term for identifying the
comparable transaction is the transaction’s
maturity (i.e., the period until the last
payment will be due under the closed-end
mortgage loan contract or open-end line of
credit agreement). If an open-end credit plan
has a fixed rate but no definite plan length,
a financial institution complies with

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§ 1003.4(a)(12)(i) by using a 30-year fixed-rate
loan as the most closely comparable closedend transaction. Financial institutions may
refer to the table on the FFIEC website
entitled ‘‘Average Prime Offer Rates-Fixed’’
when identifying a comparable fixed-rate
transaction.
ii. Variable-rate transactions. For variablerate covered loans, the term for identifying
the comparable transaction is the initial,
fixed-rate period (i.e., the period until the
first scheduled rate adjustment). For
example, five years is the relevant term for
a variable-rate transaction with a five-year,
fixed-rate introductory period that is
amortized over thirty years. Financial
institutions may refer to the table on the
FFIEC website entitled ‘‘Average Prime Offer
Rates-Variable’’ when identifying a
comparable variable-rate transaction. If an
open-end line of credit has a variable rate
and an optional, fixed-rate feature, a financial
institution uses the rate table for variable-rate
transactions.
iii. Term not in whole years. When a
covered loan’s term to maturity (or, for a
variable-rate transaction, the initial fixed-rate
period) is not in whole years, the financial
institution uses the number of whole years
closest to the actual loan term or, if the actual
loan term is exactly halfway between two
whole years, by using the shorter loan term.
For example, for a loan term of ten years and
three months, the relevant term is ten years;
for a loan term of ten years and nine months,
the relevant term is 11 years; for a loan term
of ten years and six months, the relevant term
is ten years. If a loan term includes an odd
number of days, in addition to an odd
number of months, the financial institution
rounds to the nearest whole month, or
rounds down if the number of odd days is
exactly halfway between two months. The
financial institution rounds to one year any
covered loan with a term shorter than six
months, including variable-rate covered
loans with no initial, fixed-rate periods. For
example, if an open-end covered loan has a
rate that varies according to an index plus a
margin, with no introductory, fixed-rate
period, the transaction term is one year.
iv. Amortization period longer than loan
term. If the amortization period of a covered
loan is longer than the term of the transaction
to maturity, § 1003.4(a)(12)(i) requires a
financial institution to use the loan term to
determine the applicable average prime offer
rate. For example, assume a financial
institution originates a closed-end, fixed-rate
loan that has a term to maturity of five years
and a thirty-year amortization period that
results in a balloon payment. The financial
institution complies with § 1003.4(a)(12)(i)
by using the five-year loan term.
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

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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 ratelock 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 fiveyear, fixed-rate introductory period. On June
15, the borrower decides to switch to a 30year, 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 fixedrate 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.
6. Compare the annual percentage rate to
the average prime offer rate. Section
1003.4(a)(12)(i) requires a financial
institution to compare the covered loan’s
annual percentage rate to the most recently
available average prime offer rate that was in
effect for the comparable transaction as of the
rate-set date. For purposes of
§ 1003.4(a)(12)(i), the most recently available

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rate means the average prime offer rate set
forth in the applicable table with the most
recent effective date as of the date the interest
rate was set. However, § 1003.4(a)(12)(i) does
not permit a financial institution to use an
average prime offer rate before its effective
date.
7. Rate spread—scope of requirement. If
the covered loan is an assumption, reverse
mortgage, a purchased loan, or is not subject
to Regulation Z, 12 CFR part 1026, a financial
institution complies with § 1003.4(a)(12) by
reporting that the requirement is not
applicable. If the application did not result
in an origination for a reason other than the
application was approved but not accepted
by the applicant, a financial institution
complies with § 1003.4(a)(12) by reporting
that the requirement is not applicable. For
partially exempt transactions under
§ 1003.3(d), an insured depository institution
or insured credit union is not required to
report the rate spread. See § 1003.3(d) and
related commentary.
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 open-end 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.
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

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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)(13)
1. HOEPA status—not applicable. If the
covered loan is not subject to the Home
Ownership and Equity Protection Act of
1994, as implemented in Regulation Z, 12
CFR 1026.32, a financial institution complies
with § 1003.4(a)(13) by reporting that the
requirement is not applicable. If an
application did not result in an origination,
a financial institution complies with
§ 1003.4(a)(13) by reporting that the
requirement is not applicable.
Paragraph 4(a)(14)
1. Determining lien status for applications
and covered loans originated and purchased.
i. Financial institutions are required to report

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lien status for covered loans they originate
and purchase and applications that do not
result in originations (preapproval requests
that are approved but not accepted,
preapproval requests that are denied,
applications that are approved but not
accepted, denied, withdrawn, or closed for
incompleteness). For covered loans
purchased by a financial institution, lien
status is determined by reference to the best
information readily available to the financial
institution at the time of purchase. For
covered loans that a financial institution
originates and applications that do not result
in originations, lien status is determined by
reference to the best information readily
available to the financial institution at the
time final action is taken and to the financial
institution’s own procedures. Thus, financial
institutions may rely on the title search they
routinely perform as part of their
underwriting procedures—for example, for
home purchase loans. Regulation C does not
require financial institutions to perform title
searches solely to comply with HMDA
reporting requirements. Financial institutions
may rely on other information that is readily
available to them at the time final action is
taken and that they reasonably believe is
accurate, such as the applicant’s statement on
the application or the applicant’s credit
report. For example, where the applicant
indicates on the application that there is a
mortgage on the property or where the
applicant’s credit report shows that the
applicant has a mortgage—and that mortgage
will not be paid off as part of the
transaction—the financial institution may
assume that the loan it originates is secured
by a subordinate lien. If the same application
did not result in an origination—for example,
because the application was denied or
withdrawn—the financial institution would
report the application as an application for a
subordinate-lien loan.
ii. Financial institutions may also consider
their established procedures when
determining lien status for applications that
do not result in originations. For example,
assume an applicant applies to a financial
institution to refinance a $100,000 first
mortgage; the applicant also has an open-end
line of credit for $20,000. If the financial
institution’s practice in such a case is to
ensure that it will have first-lien position—
through a subordination agreement with the
holder of the lien securing the open-end line
of credit—then the financial institution
should report the application as an
application for a first-lien covered loan.
2. Multiple properties. See comment
4(a)(9)–2 regarding transactions involving
multiple properties with more than one
property taken as security.
Paragraph 4(a)(15)
1. Credit score—relied on. Except for
purchased covered loans and partially
exempt transactions under § 1003.3(d),
§ 1003.4(a)(15) requires a financial institution
to report the credit score or scores relied on
in making the credit decision and
information about the scoring model used to
generate each score. A financial institution
relies on a credit score in making the credit
decision if the credit score was a factor in the
credit decision even if it was not a

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dispositive factor. For example, if a credit
score is one of multiple factors in a financial
institution’s credit decision, the financial
institution has relied on the credit score even
if the financial institution denies the
application because one or more
underwriting requirements other than the
credit score are not satisfied.
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 coapplicant 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

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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 coapplicant 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
co-applicant and that the financial institution
obtains or creates three credit scores for the
applicant and three credit scores for the coapplicant. 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 coapplicant.
4. Transactions for which no credit
decision was made. If a file was closed for
incompleteness or the application was
withdrawn before a credit decision was
made, the financial institution complies with
§ 1003.4(a)(15) by reporting that the
requirement is not applicable, even if the
financial institution had obtained or created
a credit score for the applicant or coapplicant. For example, if a file is closed for
incompleteness and is so reported in
accordance with § 1003.4(a)(8), the financial
institution complies with § 1003.4(a)(15) by
reporting that the requirement is not
applicable, even if the financial institution
had obtained or created a credit score for the
applicant or co-applicant. Similarly, if an
application was withdrawn by the applicant
before a credit decision was made and is so
reported in accordance with § 1003.4(a)(8),
the financial institution complies with
§ 1003.4(a)(15) by reporting that the
requirement is not applicable, even if the
financial institution had obtained or created
a credit score for the applicant or coapplicant.
5. Transactions for which no credit score
was relied on. If a financial institution makes
a credit decision without relying on a credit
score for the applicant or borrower, the
financial institution complies with
§ 1003.4(a)(15) by reporting that the
requirement is not applicable.
6. Purchased covered loan. A financial
institution complies with § 1003.4(a)(15) by
reporting that the requirement is not
applicable when the covered loan is a
purchased covered loan.
7. Non-natural person. When the applicant
and co-applicant, if applicable, are not
natural persons, a financial institution
complies with § 1003.4(a)(15) by reporting
that the requirement is not applicable.
Paragraph 4(a)(16)
1. Reason for denial—general. A financial
institution complies with § 1003.4(a)(16) by
reporting the principal reason or reasons it
denied the application, indicating up to four
reasons. The financial institution should
report only the principal reason or reasons it
denied the application, even if there are
fewer than four reasons. For example, if a

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financial institution denies the application
because of the applicant’s credit history and
debt-to-income ratio, the financial institution
need only report these two principal reasons.
The reasons reported must be specific and
accurately describe the principal reason or
reasons the financial institution denied the
application.
2. Reason for denial—preapproval request
denied. Section 1003.4(a)(16) requires a
financial institution to report the principal
reason or reasons it denied the application.
A request for a preapproval under a
preapproval program as defined by
§ 1003.2(b)(2) is an application. If a financial
institution denies a preapproval request, the
financial institution complies with
§ 1003.4(a)(16) by reporting the reason or
reasons it denied the preapproval request.
3. Reason for denial—adverse action model
form or similar form. If a financial institution
chooses to provide the applicant the reason
or reasons it denied the application using the
model form contained in appendix C to
Regulation B (Form C–1, Sample Notice of
Action Taken and Statement of Reasons) or
a similar form, § 1003.4(a)(16) requires the
financial institution to report the reason or
reasons that were specified on the form by
the financial institution, which includes
reporting the ‘‘Other’’ reason or reasons that
were specified on the form by the financial
institution, if applicable. If a financial
institution chooses to provide a disclosure of
the applicant’s right to a statement of specific
reasons using the model form contained in
appendix C to Regulation B (Form C–5,
Sample Disclosure of Right to Request
Specific Reasons for Credit Denial) or a
similar form, or chooses to provide the denial
reason or reasons orally under Regulation B,
12 CFR 1002.9(a)(2)(ii), the financial
institution complies with § 1003.4(a)(16) by
entering the principal reason or reasons it
denied the application.
4. Reason for denial—scope of
requirement. A financial institution complies
with § 1003.4(a)(16) by reporting that the
requirement is not applicable if the action
taken on the application, pursuant to
§ 1003.4(a)(8), is not a denial. For example,
a financial institution complies with
§ 1003.4(a)(16) by reporting that the
requirement is not applicable if the loan is
originated or purchased by the financial
institution, or the application or preapproval
request was approved but not accepted, or
the application was withdrawn before a
credit decision was made, or the file was
closed for incompleteness. For partially
exempt transactions under § 1003.3(d), an
insured depository institution or insured
credit union is not required to report the
principal reason or reasons it denied an
application. See § 1003.3(d) and related
commentary.
Paragraph 4(a)(17)(i)
1. Total loan costs—scope of requirement.
Section 1003.4(a)(17)(i) does not require
financial institutions to report the total loan
costs for applications, or for transactions not
subject to Regulation Z, 12 CFR 1026.43(c),
and 12 CFR 1026.19(f), such as open-end
lines of credit, reverse mortgages, or loans or
lines of credit made primarily for business or
commercial purposes. In these cases, a

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financial institution complies with
§ 1003.4(a)(17)(i) by reporting that the
requirement is not applicable to the
transaction. For partially exempt transactions
under § 1003.3(d), an insured depository
institution or insured credit union is not
required to report the total loan costs. See
§ 1003.3(d) and related commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective
date. For purchased covered loans subject to
this reporting requirement for which
applications were received by the selling
entity prior to the effective date of Regulation
Z, 12 CFR 1026.19(f), a financial institution
complies with § 1003.4(a)(17)(i) by reporting
that the requirement is not applicable to the
transaction.
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:
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)(17)(ii)
1. Total points and fees—scope of
requirement. Section 1003.4(a)(17)(ii) does
not require financial institutions to report the
total points and fees for transactions not
subject to Regulation Z, 12 CFR 1026.43(c),

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such as open-end lines of credit, reverse
mortgages, or loans or lines of credit made
primarily for business or commercial
purposes, or for applications or purchased
covered loans. In these cases, a financial
institution complies with § 1003.4(a)(17)(ii)
by reporting that the requirement is not
applicable to the transaction. For partially
exempt transactions under § 1003.3(d), an
insured depository institution or insured
credit union is not required to report the total
points and fees. See § 1003.3(d) and related
commentary.
2. Total points and fees cure mechanism.
For covered loans subject to this reporting
requirement, if a financial institution
determines that the transaction’s total points
and fees exceeded the applicable limit and
cures the overage pursuant to Regulation Z,
12 CFR 1026.43(e)(3)(iii) and (iv), a financial
institution complies with § 1003.4(a)(17)(ii)
by reporting the correct amount of total
points and fees, provided that the cure was
effected during the same reporting period in
which closing occurred. For example, in the
case of a financial institution’s quarterly
submission, the financial institution reports
the revised amount of total points and fees
only if it cured the overage prior to the end
of the quarter in which closing occurred. The
financial institution does not report the
revised amount of total points and fees in its
quarterly submission if it cured the overage
after the end of the quarter, even if the cure
was effected prior to the deadline for timely
submission of the financial institution’s
quarterly data. However, the financial
institution reports the revised amount of total
points and fees on its annual loan/
application register.
Paragraph 4(a)(18)
1. Origination charges—scope of
requirement. Section 1003.4(a)(18) does not
require financial institutions to report the
total borrower-paid origination charges for
applications, or for transactions not subject to
Regulation Z, 12 CFR 1026.19(f), such as
open-end lines of credit, reverse mortgages,
or loans or lines of credit made primarily for
business or commercial purposes. In these
cases, a financial institution complies with
§ 1003.4(a)(18) by reporting that the
requirement is not applicable to the
transaction. For partially exempt transactions
under § 1003.3(d), an insured depository
institution or insured credit union is not
required to report the total borrower-paid
origination charges. See § 1003.3(d) and
related commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective
date. For purchased covered loans subject to
this reporting requirement for which
applications were received by the selling
entity prior to the effective date of Regulation
Z, 12 CFR 1026.19(f), a financial institution
complies with § 1003.4(a)(18) by reporting
that the requirement is not applicable to the
transaction.
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

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§ 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 borrowerpaid 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)
1. Discount points—scope of requirement.
Section 1003.4(a)(19) does not require
financial institutions to report the discount
points for applications, or for transactions
not subject to Regulation Z, 12 CFR
1026.19(f), such as open-end lines of credit,
reverse mortgages, or loans or lines of credit
made primarily for business or commercial
purposes. In these cases, a financial
institution complies with § 1003.4(a)(19) by
reporting that the requirement is not
applicable to the transaction. For partially
exempt transactions under § 1003.3(d), an
insured depository institution or insured
credit union is not required to report the
discount points. See § 1003.3(d) and related
commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective
date. For purchased covered loans subject to
this reporting requirement for which
applications were received by the selling
entity prior to the effective date of Regulation
Z, 12 CFR 1026.19(f), a financial institution
complies with § 1003.4(a)(19) by reporting
that the requirement is not applicable to the
transaction.

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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)
1. Lender credits—scope of requirement.
Section 1003.4(a)(20) does not require
financial institutions to report lender credits
for applications, or for transactions not
subject to Regulation Z, 12 CFR 1026.19(f),
such as open-end lines of credit, reverse
mortgages, or loans or lines of credit made
primarily for business or commercial
purposes. In these cases, a financial
institution complies with § 1003.4(a)(20) by
reporting that the requirement is not
applicable to the transaction. For partially
exempt transactions under § 1003.3(d), an
insured depository institution or insured
credit union is not required to report lender
credits. See § 1003.3(d) and related
commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective
date. For purchased covered loans subject to
this reporting requirement for which
applications were received by the selling
entity prior to the effective date of Regulation

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Z, 12 CFR 1026.19(f), a financial institution
complies with § 1003.4(a)(20) by reporting
that the requirement is not applicable to the
transaction.
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.
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.
Paragraph 4(a)(21)
1. Interest rate—disclosures. Except for
partially exempt transactions under
§ 1003.3(d), § 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

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21033

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.
2. Applications. In the case of an
application, § 1003.4(a)(21) requires a
financial institution to report the applicable
interest rate only if the application has been
approved by the financial institution but not
accepted by the borrower. In such cases, a
financial institution reports the interest rate
applicable at the time that the application
was approved by the financial institution. A
financial institution may report the interest
rate appearing on the disclosure provided
pursuant to 12 CFR 1026.19(e) or (f) if such
disclosure accurately reflects the interest rate
at the time the application was approved. For
applications that have been denied or
withdrawn, or files closed for
incompleteness, a financial institution
reports that no interest rate was applicable to
the application.
3. Adjustable rate—interest rate unknown.
Except as provided in comment 4(a)(21)–1,
for adjustable-rate covered loans or
applications, if the interest rate is unknown
at the time that the application was
approved, or at closing or account opening,
a financial institution reports the fullyindexed rate based on the index applicable
to the covered loan or application. For
purposes of § 1003.4(a)(21), the fully-indexed
rate is the index value and margin at the time
that the application was approved, or, for
covered loans, at closing or account opening.
Paragraph 4(a)(22)
1. Prepayment penalty term—scope of
requirement. Section 1003.4(a)(22) does not
require financial institutions to report the
term of any prepayment penalty for
transactions not subject to Regulation Z, 12
CFR part 1026, such as loans or lines of
credit made primarily for business or
commercial purposes, or for reverse
mortgages or purchased covered loans. In
these cases, a financial institution complies
with § 1003.4(a)(22) by reporting that the
requirement is not applicable to the
transaction. For partially exempt transactions
under § 1003.3(d), an insured depository
institution or insured credit union is not
required to report the term of any
prepayment penalty. See § 1003.3(d) and
related commentary.
2. Transactions for which no prepayment
penalty exists. For covered loans or
applications that have no prepayment
penalty, a financial institution complies with

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§ 1003.4(a)(22) by reporting that the
requirement is not applicable to the
transaction. A financial institution may rely
on the definitions and commentary to
Regulation Z, 12 CFR 1026.32(b)(6)(i) or (ii)
in determining whether the terms of a
transaction contain a prepayment penalty.
Paragraph 4(a)(23)
1. General. For covered loans that are not
purchased covered loans and that are not
partially exempt under § 1003.3(d),
§ 1003.4(a)(23) requires a financial institution
to report the ratio of the applicant’s or
borrower’s total monthly debt to total
monthly income (debt-to-income ratio) relied
on in making the credit decision. For
example, if a financial institution calculated
the applicant’s or borrower’s debt-to-income
ratio twice—once according to the financial
institution’s own requirements and once
according to the requirements of a secondary
market investor—and the financial
institution relied on the debt-to-income ratio
calculated according to the secondary market
investor’s requirements in making the credit
decision, § 1003.4(a)(23) requires the
financial institution to report the debt-toincome ratio calculated according to the
requirements of the secondary market
investor.
2. Transactions for which a debt-to-income
ratio was one of multiple factors. A financial
institution relies on the ratio of the
applicant’s or borrower’s total monthly debt
to total monthly income (debt-to-income
ratio) in making the credit decision if the
debt-to-income ratio was a factor in the credit
decision even if it was not a dispositive
factor. For example, if the debt-to-income
ratio was one of multiple factors in a
financial institution’s credit decision, the
financial institution has relied on the debtto-income ratio and complies with
§ 1003.4(a)(23) by reporting the debt-toincome ratio, even if the financial institution
denied the application because one or more
underwriting requirements other than the
debt-to-income ratio were not satisfied.
3. Transactions for which no credit
decision was made. If a file was closed for
incompleteness, or if an application was
withdrawn before a credit decision was
made, a financial institution complies with
§ 1003.4(a)(23) by reporting that the
requirement is not applicable, even if the
financial institution had calculated the ratio
of the applicant’s total monthly debt to total
monthly income (debt-to-income ratio). For
example, if a file was closed for
incompleteness and was so reported in
accordance with § 1003.4(a)(8), the financial
institution complies with § 1003.4(a)(23) by
reporting that the requirement is not
applicable, even if the financial institution
had calculated the applicant’s debt-to-income
ratio. Similarly, if an application was
withdrawn by the applicant before a credit
decision was made, the financial institution
complies with § 1003.4(a)(23) by reporting
that the requirement is not applicable, even
if the financial institution had calculated the
applicant’s debt-to-income ratio.
4. Transactions for which no debt-toincome ratio was relied on. Section
1003.4(a)(23) does not require a financial
institution to calculate the ratio of an

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applicant’s or borrower’s total monthly debt
to total monthly income (debt-to-income
ratio), nor does it require a financial
institution to rely on an applicant’s or
borrower’s debt-to-income ratio in making a
credit decision. If a financial institution
made a credit decision without relying on the
applicant’s or borrower’s debt-to-income
ratio, the financial institution complies with
§ 1003.4(a)(23) by reporting that the
requirement is not applicable since no debtto-income ratio was relied on in connection
with the credit decision.
5. Non-natural person. A financial
institution complies with § 1003.4(a)(23) by
reporting that the requirement is not
applicable when the applicant and coapplicant, if applicable, are not natural
persons.
6. Multifamily dwellings. A financial
institution complies with § 1003.4(a)(23) by
reporting that the requirement is not
applicable for a covered loan secured by, or
an application proposed to be secured by, a
multifamily dwelling.
7. Purchased covered loans. A financial
institution complies with § 1003.4(a)(23) by
reporting that the requirement is not
applicable when reporting a purchased
covered loan.
Paragraph 4(a)(24)
1. General. Except for purchased covered
loans and partially exempt transactions
under § 1003.3(d), § 1003.4(a)(24) requires a
financial institution to report the ratio of the
total amount of debt secured by the property
to the value of the property (combined loanto-value ratio) relied on in making the credit
decision. For example, if a financial
institution calculated a combined loan-tovalue ratio twice—once according to the
financial institution’s own requirements and
once according to the requirements of a
secondary market investor—and the financial
institution relied on the combined loan-tovalue ratio calculated according to the
secondary market investor’s requirements in
making the credit decision, § 1003.4(a)(24)
requires the financial institution to report the
combined loan-to-value ratio calculated
according to the requirements of the
secondary market investor.
2. Transactions for which a combined loanto-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 loanto-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.
3. Transactions for which no credit
decision was made. If a file was closed for
incompleteness, or if an application was
withdrawn before a credit decision was

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made, a financial institution complies with
§ 1003.4(a)(24) by reporting that the
requirement is not applicable, even if the
financial institution had calculated the ratio
of the total amount of debt secured by the
property to the value of the property
(combined loan-to-value ratio). For example,
if a file is closed for incompleteness and is
so reported in accordance with § 1003.4(a)(8),
the financial institution complies with
§ 1003.4(a)(24) by reporting that the
requirement is not applicable, even if the
financial institution had calculated a
combined loan-to-value ratio. Similarly, if an
application was withdrawn by the applicant
before a credit decision was made and is so
reported in accordance with § 1003.4(a)(8),
the financial institution complies with
§ 1003.4(a)(24) by reporting that the
requirement is not applicable, even if the
financial institution had calculated a
combined loan-to-value ratio.
4. Transactions for which no combined
loan-to-value ratio was relied on. Section
1003.4(a)(24) does not require a financial
institution to calculate the ratio of the total
amount of debt secured by the property to the
value of the property (combined loan-tovalue ratio), nor does it require a financial
institution to rely on a combined loan-tovalue ratio in making a credit decision. If a
financial institution makes a credit decision
without relying on a combined loan-to-value
ratio, the financial institution complies with
§ 1003.4(a)(24) by reporting that the
requirement is not applicable since no
combined loan-to-value ratio was relied on in
making the credit decision.
5. Purchased covered loan. A financial
institution complies with § 1003.4(a)(24) by
reporting that the requirement is not
applicable when the covered loan is a
purchased covered loan.
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 loan-to-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-tovalue ratio relied on in making the credit
decision.
Paragraph 4(a)(25)
1. Amortization and maturity. For a fully
amortizing covered loan, the number of
months after which the legal obligation
matures is the number of months in the
amortization schedule, ending with the final

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payment. Some covered loans do not fully
amortize during the maturity term, such as
covered loans with a balloon payment; such
loans should still be reported using the
maturity term rather than the amortization
term, even in the case of covered loans that
mature before fully amortizing but have reset
options. For example, a 30-year fully
amortizing covered loan would be reported
with a term of ‘‘360,’’ while a five year
balloon covered loan would be reported with
a loan term of ‘‘60.’’
2. Non-monthly repayment periods. If a
covered loan or application includes a
schedule with repayment periods measured
in a unit of time other than months, the
financial institution should report the
covered loan or application term using an
equivalent number of whole months without
regard for any remainder.
3. Purchased loans. For a covered loan that
was purchased, a financial institution reports
the number of months after which the legal
obligation matures as measured from the
covered loan’s origination.
4. Open-end line of credit. For an open-end
line of credit with a definite term, a financial
institution reports the number of months
from origination until the account
termination date, including both the draw
and repayment period.
5. Loan term—scope of requirement. For a
covered loan or application without a
definite term, such as a reverse mortgage, a
financial institution complies with
§ 1003.4(a)(25) by reporting that the
requirement is not applicable. For partially
exempt transactions under § 1003.3(d), an
insured depository institution or insured
credit union is not required to report the loan
term. See § 1003.3(d) and related
commentary.
Paragraph 4(a)(26)
1. Types of introductory rates. Except for
partially exempt transactions under
§ 1003.3(d), § 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. For example,
assume an open-end line of credit contains
an introductory or ‘‘teaser’’ interest rate for
two months 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 ‘‘2.’’
Section 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. For
example, if a closed-end mortgage loan with
a 30-year term has an adjustable-rate product
with an introductory interest rate for the first
60 months, after which the interest rate is
permitted, but not required to vary, according
to the terms of an index rate, the financial
institution complies with § 1003.4(a)(26) by
reporting the number of months as ‘‘60.’’
Similarly, if a closed-end mortgage loan with
a 30-year term is a step-rate product with an

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introductory interest rate for the first 24
months, after which the interest rate will
increase to a different known interest rate for
the next 36 months, the financial institution
complies with § 1003.4(a)(26) by reporting
the number of months as ‘‘24.’’
2. Preferred rates. Section 1003.4(a)(26)
does not require reporting of introductory
interest rate periods based on preferred rates
unless the terms of the legal obligation
provide that the preferred rate will expire at
a certain defined date. Preferred rates include
terms of the legal obligation that provide that
the initial underlying rate is fixed but that it
may increase or decrease upon the
occurrence of some future event, such as an
employee leaving the employ of the financial
institution, the borrower closing an existing
deposit account with the financial
institution, or the borrower revoking an
election to make automated payments. In
these cases, because it is not known at the
time of closing or account opening whether
the future event will occur, and if so, when
it will occur, § 1003.4(a)(26) does not require
reporting of an introductory interest rate
period.
3. Loan or application with a fixed rate. A
financial institution complies with
§ 1003.4(a)(26) by reporting that the
requirement is not applicable for a covered
loan with a fixed rate or an application for
a covered loan with a fixed rate.
4. Purchased loan. A financial institution
complies with § 1003.4(a)(26) by reporting
that requirement is not applicable when the
covered loan is a purchased covered loan
with a fixed rate.
5. Non-monthly introductory periods. 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. 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)(27)
1. General. Except for partially exempt
transactions under § 1003.3(d),
§ 1003.4(a)(27) requires reporting of
contractual features that would allow
payments other than fully amortizing
payments. Section 1003.4(a)(27) defines the
contractual features by reference to
Regulation Z, 12 CFR part 1026, but without
regard to whether the covered loan is
consumer credit, as defined in
§ 1026.2(a)(12), is extended by a creditor, as
defined in § 1026.2(a)(17), or is extended to
a consumer, as defined in § 1026.2(a)(11),
and without regard to whether the property
is a dwelling as defined in § 1026.2(a)(19).
For example, assume that a financial
institution originates a business-purpose
transaction that is exempt from Regulation Z

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pursuant to 12 CFR 1026.3(a)(1), to finance
the purchase of a multifamily dwelling, and
that there is a balloon payment, as defined
by Regulation Z, 12 CFR 1026.18(s)(5)(i), at
the end of the loan term. The multifamily
dwelling is a dwelling under § 1003.2(f), but
not under Regulation Z, 12 CFR
1026.2(a)(19). In this example, the financial
institution should report the businesspurpose transaction as having a balloon
payment under § 1003.4(a)(27)(i), assuming
the other requirements of this part are met.
Aside from these distinctions, financial
institutions may rely on the definitions and
related commentary provided in the
appropriate sections of Regulation Z
referenced in § 1003.4(a)(27) of this part in
determining whether the contractual feature
should be reported.
Paragraph 4(a)(28)
1. General. Except for partially exempt
transactions under § 1003.3(d),
§ 1003.4(a)(28) requires a financial institution
to report the property value relied on in
making the credit decision. For example, if
the institution relies on an appraisal or other
valuation for the property in calculating the
loan-to-value ratio, it reports that value; if the
institution relies on the purchase price of the
property in calculating the loan-to-value
ratio, it reports that value.
2. Multiple property values. When a
financial institution obtains two or more
valuations of the property securing or
proposed to secure the covered loan, the
financial institution complies with
§ 1003.4(a)(28) by reporting the value relied
on in making the credit decision. For
example, when a financial institution obtains
an appraisal, an automated valuation model
report, and a broker price opinion with
different values for the property, it reports
the value relied on in making the credit
decision. Section § 1003.4(a)(28) does not
require a financial institution to use a
particular property valuation method, but
instead requires a financial institution to
report the valuation relied on in making the
credit decision.
3. Transactions for which no credit
decision was made. If a file was closed for
incompleteness or the application was
withdrawn before a credit decision was
made, the financial institution complies with
§ 1003.4(a)(28) by reporting that the
requirement is not applicable, even if the
financial institution had obtained a property
value. For example, if a file is closed for
incompleteness and is so reported in
accordance with § 1003.4(a)(8), the financial
institution complies with § 1003.4(a)(28) by
reporting that the requirement is not
applicable, even if the financial institution
had obtained a property value. Similarly, if
an application was withdrawn by the
applicant before a credit decision was made
and is so reported in accordance with
§ 1003.4(a)(8), the financial institution
complies with § 1003.4(a)(28) by reporting
that the requirement is not applicable, even
if the financial institution had obtained a
property value.
4. Transactions for which no property
value was relied on. Section 1003.4(a)(28)
does not require a financial institution to
obtain a property valuation, nor does it

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require a financial institution to rely on a
property value in making a credit decision.
If a financial institution makes a credit
decision without relying on a property value,
the financial institution complies with
§ 1003.4(a)(28) by reporting that the
requirement is not applicable since no
property value was relied on in making the
credit decision.
Paragraph 4(a)(29)
1. Classification under State law. A
financial institution should report a covered
loan that is or would have been secured only
by a manufactured home but not the land on
which it is sited as secured by a
manufactured home and not land, even if the
manufactured home is considered real
property under applicable State law.
2. Manufactured home community. A
manufactured home community that is a
multifamily dwelling is not considered a
manufactured home for purposes of
§ 1003.4(a)(29).
3. Multiple properties. See comment
4(a)(9)–2 regarding transactions involving
multiple properties with more than one
property taken as security.
4. Scope of requirement. A financial
institution reports that the requirement is not
applicable for a covered loan where the
dwelling related to the property identified in
§ 1003.4(a)(9) is not a manufactured home.
For partially exempt transactions under
§ 1003.3(d), an insured depository institution
or insured credit union is not required to
report the information specified in
§ 1003.4(a)(29). See § 1003.3(d) and related
commentary.
Paragraph 4(a)(30)
1. Indirect land ownership. Indirect land
ownership can occur when the applicant or
borrower is or will be a member of a residentowned community structured as a housing
cooperative in which the occupants own an
entity that holds the underlying land of the
manufactured home community. In such
communities, the applicant or borrower may
still have a lease and pay rent for the lot on
which his or her manufactured home is or
will be located, but the property interest type
for such an arrangement should be reported
as indirect ownership if the applicant is or
will be a member of the cooperative that
owns the underlying land of the
manufactured home community. If an
applicant resides or will reside in such a
community but is not a member, the property
interest type should be reported as a paid
leasehold.
2. Leasehold interest. A leasehold interest
could be formalized in a lease with a defined
term and specified rent payments, or could
arise as a tenancy at will through permission
of a land owner without any written, formal
arrangement. For example, assume a
borrower will locate the manufactured home
in a manufactured home community, has a
written lease for a lot in that park, and the
lease specifies rent payments. In this
example, a financial institution complies
with § 1003.4(a)(30) by reporting a paid
leasehold. However, if instead the borrower
will locate the manufactured home on land
owned by a family member without a written
lease and with no agreement as to rent

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payments, a financial institution complies
with § 1003.4(a)(30) by reporting an unpaid
leasehold.
3. Multiple properties. See comment
4(a)(9)–2 regarding transactions involving
multiple properties with more than one
property taken as security.
4. Manufactured home community. A
manufactured home community that is a
multifamily dwelling is not considered a
manufactured home for purposes of
§ 1003.4(a)(30).
5. Direct ownership. An applicant or
borrower has a direct ownership interest in
the land on which the dwelling is or is to be
located when it has a more than possessory
real property ownership interest in the land
such as fee simple ownership.
6. Scope of requirement. A financial
institution reports that the requirement is not
applicable for a covered loan where the
dwelling related to the property identified in
§ 1003.4(a)(9) is not a manufactured home.
For partially exempt transactions under
§ 1003.3(d), an insured depository institution
or insured credit union is not required to
report the information specified in
§ 1003.4(a)(30). See § 1003.3(d) and related
commentary.
Paragraph 4(a)(31)
1. Multiple properties. See comment
4(a)(9)–2 regarding transactions involving
multiple properties with more than one
property taken as security.
2. Manufactured home community. For an
application or covered loan secured by a
manufactured home community, the
financial institution should include in the
number of individual dwelling units the total
number of manufactured home sites that
secure the loan and are available for
occupancy, regardless of whether the sites
are currently occupied or have manufactured
homes currently attached. A financial
institution may include in the number of
individual dwelling units other units such as
recreational vehicle pads, manager
apartments, rental apartments, site-built
homes or other rentable space that are
ancillary to the operation of the secured
property if it considers such units under its
underwriting guidelines or the guidelines of
an investor, or if it tracks the number of such
units for its own internal purposes. For a
loan secured by a single manufactured home
that is or will be located in a manufactured
home community, the financial institution
should report one individual dwelling unit.
3. Condominium and cooperative projects.
For a covered loan secured by a
condominium or cooperative property, the
financial institution reports the total number
of individual dwelling units securing the
covered loan or proposed to secure the
covered loan in the case of an application.
For example:
i. Assume that a loan is secured by the
entirety of a cooperative property. The
financial institution would report the number
of individual dwelling units in the
cooperative property.
ii. Assume that a covered loan is secured
by 30 individual dwelling units in a
condominium property that contains 100
individual dwelling units and that the loan
is not exempt from Regulation C under

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§ 1003.3(c)(3). The financial institution
reports 30 individual dwelling units.
4. Best information available. A financial
institution may rely on the best information
readily available to the financial institution
at the time final action is taken and on the
financial institution’s own procedures in
reporting the information required by
§ 1003.4(a)(31). Information readily available
could include, for example, information
provided by an applicant that the financial
institution reasonably believes, information
contained in a property valuation or
inspection, or information obtained from
public records.
Paragraph 4(a)(32)
1. Affordable housing income restrictions.
For purposes of § 1003.4(a)(32), affordable
housing income-restricted units are
individual dwelling units that have
restrictions based on the income level of
occupants pursuant to restrictive covenants
encumbering the property. Such income
levels are frequently expressed as a
percentage of area median income by
household size as established by the U.S.
Department of Housing and Urban
Development or another agency responsible
for implementing the applicable affordable
housing program. Such restrictions are
frequently part of compliance with programs
that provide public funds, special tax
treatment, or density bonuses to encourage
development or preservation of affordable
housing. Such restrictions are frequently
evidenced by a use agreement, regulatory
agreement, land use restriction agreement,
housing assistance payments contract, or
similar agreement. Rent control or rent
stabilization laws, and the acceptance by the
owner or manager of a multifamily dwelling
of Housing Choice Vouchers (24 CFR part
982) or other similar forms of portable
housing assistance that are tied to an
occupant and not an individual dwelling
unit, are not affordable housing incomerestricted dwelling units for purposes of
§ 1003.4(a)(32).
2. Federal affordable housing sources.
Examples of Federal programs and funding
sources that may result in individual
dwelling units that are reportable under
§ 1003.4(a)(32) include, but are not limited
to:
i. Affordable housing programs pursuant to
Section 8 of the United States Housing Act
of 1937 (42 U.S.C. 1437f);
ii. Public housing (42 U.S.C. 1437a(b)(6));
iii. The HOME Investment Partnerships
program (24 CFR part 92);
iv. The Community Development Block
Grant program (24 CFR part 570);
v. Multifamily tax subsidy project funding
through tax-exempt bonds or tax credits (26
U.S.C. 42; 26 U.S.C. 142(d));
vi. Project-based vouchers (24 CFR part
983);
vii. Federal Home Loan Bank affordable
housing program funding (12 CFR part 1291);
and
viii. Rural Housing Service multifamily
housing loans and grants (7 CFR part 3560).
3. State and local government affordable
housing sources. Examples of State and local
sources that may result in individual
dwelling units that are reportable under

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§ 1003.4(a)(32) include, but are not limited
to: State or local administration of Federal
funds or programs; State or local funding
programs for affordable housing or rental
assistance, including programs operated by
independent public authorities; inclusionary
zoning laws; and tax abatement or tax
increment financing contingent on affordable
housing requirements.
4. Multiple properties. See comment
4(a)(9)–2 regarding transactions involving
multiple properties with more than one
property taken as security.
5. Best information available. A financial
institution may rely on the best information
readily available to the financial institution
at the time final action is taken and on the
financial institution’s own procedures in
reporting the information required by
§ 1003.4(a)(32). Information readily available
could include, for example, information
provided by an applicant that the financial
institution reasonably believes, information
contained in a property valuation or
inspection, or information obtained from
public records.
6. Scope of requirement. A financial
institution reports that the requirement is not
applicable if the property securing the
covered loan or, in the case of an application,
proposed to secure the covered loan is not a
multifamily dwelling. For partially exempt
transactions under § 1003.3(d), an insured
depository institution or insured credit union
is not required to report the information
specified in § 1003.4(a)(32). See § 1003.3(d)
and related commentary.
Paragraph 4(a)(33)
1. Agents. If a financial institution is
reporting actions taken by its agent consistent
with comment 4(a)–4, the agent is not
considered the financial institution for the
purposes of § 1003.4(a)(33). For example,
assume that an applicant submitted an
application to Financial Institution A, and
Financial Institution A made the credit
decision acting as Financial Institution B’s
agent under State law. A covered loan was
originated and the obligation arising from a
covered loan was initially payable to
Financial Institution A. Financial Institution
B purchased the loan. Financial Institution B
reports the origination and not the purchase,
and indicates that the application was not
submitted directly to the financial institution
and that the transaction was not initially
payable to the financial institution.
Paragraph 4(a)(33)(i)
1. General. Except for partially exempt
transactions under § 1003.3(d),
§ 1003.4(a)(33)(i) requires a financial
institution to indicate whether the applicant
or borrower submitted the application
directly to the financial institution that is
reporting the covered loan or application.
The following scenarios demonstrate whether
an application was submitted directly to the
financial institution that is reporting the
covered loan or application.
i. The application was submitted directly
to the financial institution if the mortgage
loan originator identified pursuant to
§ 1003.4(a)(34) was an employee of the
reporting financial institution when the
originator performed the origination

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activities for the covered loan or application
that is being reported.
ii. The application was also submitted
directly to the financial institution reporting
the covered loan or application if the
reporting financial institution directed the
applicant to a third-party agent (e.g., a credit
union service organization) that performed
loan origination activities on behalf of the
financial institution and did not assist the
applicant with applying for covered loans
with other institutions.
iii. If an applicant contacted and
completed an application with a broker or
correspondent that forwarded the application
to a financial institution for approval, an
application was not submitted to the
financial institution.
Paragraph 4(a)(33)(ii)
1. General. Except for partially exempt
transactions under § 1003.3(d),
§ 1003.4(a)(33)(ii) requires financial
institutions to report whether the obligation
arising from a covered loan was or, in the
case of an application, would have been
initially payable to the institution. An
obligation is initially payable to the
institution if the obligation is initially
payable either on the face of the note or
contract to the financial institution that is
reporting the covered loan or application. For
example, if a financial institution reported an
origination of a covered loan that it approved
prior to closing, that closed in the name of
a third-party, such as a correspondent lender,
and that the financial institution purchased
after closing, the covered loan was not
initially payable to the financial institution.
2. Applications. A financial institution
complies with § 1003.4(a)(33)(ii) by reporting
that the requirement is not applicable if the
institution had not determined whether the
covered loan would have been initially
payable to the institution reporting the
application when the application was
withdrawn, denied, or closed for
incompleteness.
Paragraph 4(a)(34)
1. NMLSR ID. Except for partially exempt
transactions under § 1003.3(d),
§ 1003.4(a)(34) requires a financial institution
to report the Nationwide Mortgage Licensing
System and Registry unique identifier
(NMLSR ID) for the mortgage loan originator,
as defined in Regulation G, 12 CFR 1007.102,
or Regulation H, 12 CFR 1008.23, as
applicable. The NMLSR ID is a unique
number or other identifier generally assigned
to individuals registered or licensed through
NMLSR to provide loan originating services.
For more information, see the Secure and
Fair Enforcement for Mortgage Licensing Act
of 2008, title V of the Housing and Economic
Recovery Act of 2008 (S.A.F.E. Act), 12
U.S.C. 5101 et seq., and its implementing
regulations (12 CFR part 1007 and 12 CFR
part 1008).
2. Mortgage loan originator without
NMLSR ID. An NMLSR ID for the mortgage
loan originator is not required by
§ 1003.4(a)(34) to be reported by a financial
institution if the mortgage loan originator is
not required to obtain and has not been
assigned an NMLSR ID. For example, certain
individual mortgage loan originators may not

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be required to obtain an NMLSR ID for the
particular transaction being reported by the
financial institution, such as a commercial
loan. However, some mortgage loan
originators may have obtained an NMLSR ID
even if they are not required to obtain one
for that particular transaction. 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. In the event that the
mortgage loan originator is not required to
obtain and has not been assigned an NMLSR
ID, a financial institution complies with
§ 1003.4(a)(34) by reporting that the
requirement is not applicable.
3. Multiple mortgage loan originators. If
more than one individual associated with a
covered loan or application meets the
definition of a mortgage loan originator, as
defined in Regulation G, 12 CFR 1007.102, or
Regulation H, 12 CFR 1008.23, a financial
institution complies with § 1003.4(a)(34) by
reporting the NMLSR ID of the individual
mortgage loan originator with primary
responsibility for the transaction as of the
date of action taken pursuant to
§ 1003.4(a)(8)(ii). A financial institution that
establishes and follows a reasonable, written
policy for determining which individual
mortgage loan originator has primary
responsibility for the reported transaction as
of the date of action taken complies with
§ 1003.4(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)
1. Automated underwriting system data—
general. Except for purchased covered loans
and partially exempt transactions under
§ 1003.3(d), § 1003.4(a)(35) requires a
financial institution to report the name of the
automated underwriting system (AUS) used
by the financial institution to evaluate the
application and the result generated by that
AUS. The following scenarios illustrate when
a financial institution reports the name of the
AUS used by the financial institution to
evaluate the application and the result
generated by that AUS.
i. A financial institution that uses an AUS,
as defined in § 1003.4(a)(35)(ii), to evaluate
an application, must report the name of the
AUS used by the financial institution to
evaluate the application and the result
generated by that system, regardless of
whether the AUS was used in its

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underwriting process. For example, if a
financial institution uses an AUS to evaluate
an application prior to submitting the
application through its underwriting process,
the financial institution complies with
§ 1003.4(a)(35) by reporting the name of the
AUS it used to evaluate the application and
the result generated by that system.
ii. A financial institution that uses an AUS,
as defined in § 1003.4(a)(35)(ii), to evaluate
an application, must report the name of the
AUS it used to evaluate the application and
the result generated by that system,
regardless of whether the financial institution
intends to hold the covered loan in its
portfolio or sell the covered loan. For
example, if a financial institution uses an
AUS developed by a securitizer to evaluate
an application and intends to sell the covered
loan to that securitizer but ultimately does
not sell the covered loan and instead holds
the covered loan in its portfolio, the financial
institution complies with § 1003.4(a)(35) by
reporting the name of the securitizer’s AUS
that the institution used to evaluate the
application and the result generated by that
system. Similarly, if a financial institution
uses an AUS developed by a securitizer to
evaluate an application to determine whether
to originate the covered loan but does not
intend to sell the covered loan to that
securitizer and instead holds the covered
loan in its portfolio, the financial institution
complies with § 1003.4(a)(35) by reporting
the name of the securitizer’s AUS that the
institution used to evaluate the application
and the result generated by that system.
iii. A financial institution that uses an
AUS, as defined in § 1003.4(a)(35)(ii), that is
developed by a securitizer to evaluate an
application, must report the name of the AUS
it used to evaluate the application and the
result generated by that system, regardless of
whether the securitizer intends to hold the
covered loan it purchased from the financial
institution in its portfolio or securitize the
covered loan. For example, if a financial
institution uses an AUS developed by a
securitizer to evaluate an application and the
financial institution sells the covered loan to
that securitizer but the securitizer holds the
covered loan it purchased in its portfolio, the
financial institution complies with
§ 1003.4(a)(35) by reporting the name of the
securitizer’s AUS that the institution used to
evaluate the application and the result
generated by that system.
iv. A financial institution, which is also a
securitizer, that uses its own AUS, as defined
in § 1003.4(a)(35)(ii), to evaluate an
application, must report the name of the AUS
it used to evaluate the application and the
result generated by that system, regardless of
whether the financial institution intends to
hold the covered loan it originates in its
portfolio, purchase the covered loan, or
securitize the covered loan. For example, if
a financial institution, which is also a
securitizer, has developed its own AUS and
uses that AUS to evaluate an application that
it intends to originate and hold in its
portfolio and not purchase or securitize the
covered loan, the financial institution
complies with § 1003.4(a)(35) by reporting
the name of its AUS that it used to evaluate
the application and the result generated by
that system.

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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 closedend 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 closedend 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

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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).
3. Reporting automated underwriting
system data—multiple results. When a
financial institution uses one or more
automated underwriting systems (AUS) to
evaluate the application and the system or
systems generate two or more results, the
financial institution complies with
§ 1003.4(a)(35) by reporting, except for
purchased covered loans, the name of the
AUS used by the financial institution to
evaluate the application and the result
generated by that AUS as determined by the
following principles. To determine what
AUS (or AUSs) and result (or results) to
report under § 1003.4(a)(35), a financial
institution follows each of the principles that
is applicable to the application in question,
in the order in which they are set forth
below.
i. If a financial institution obtains two or
more AUS results and the AUS generating
one of those results corresponds to the loan
type reported pursuant to § 1003.4(a)(2), the
financial institution complies with
§ 1003.4(a)(35) by reporting that AUS name
and result. For example, if a financial
institution evaluates an application using the
Federal Housing Administration’s (FHA)
Technology Open to Approved Lenders
(TOTAL) Scorecard and subsequently
evaluates the application with an AUS used
to determine eligibility for a non-FHA loan,
but ultimately originates an FHA loan, the
financial institution complies with
§ 1003.4(a)(35) by reporting TOTAL
Scorecard and the result generated by that
system. If a financial institution obtains two
or more AUS results and more than one of
those AUS results is generated by a system
that corresponds to the loan type reported
pursuant to § 1003.4(a)(2), the financial
institution identifies which AUS result
should be reported by following the principle
set forth below in comment 4(a)(35)–3.ii.
ii. If a financial institution obtains two or
more AUS results and the AUS generating
one of those results corresponds to the
purchaser, insurer, or guarantor, if any, the
financial institution complies with
§ 1003.4(a)(35) by reporting that AUS name
and result. For example, if a financial
institution evaluates an application with the
AUS of Securitizer A and subsequently
evaluates the application with the AUS of
Securitizer B, but the financial institution
ultimately originates a covered loan that it
sells within the same calendar year to
Securitizer A, the financial institution
complies with § 1003.4(a)(35) by reporting
the name of Securitizer A’s AUS and the
result generated by that system. If a financial
institution obtains two or more AUS results
and more than one of those AUS results is
generated by a system that corresponds to the
purchaser, insurer, or guarantor, if any, the
financial institution identifies which AUS
result should be reported by following the
principle set forth below in comment
4(a)(35)–3.iii.
iii. If a financial institution obtains two or
more AUS results and none of the systems

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generating those results correspond to the
purchaser, insurer, or guarantor, if any, or the
financial institution is following this
principle because more than one AUS result
is generated by a system that corresponds to
either the loan type or the purchaser, insurer,
or guarantor, the financial institution
complies with § 1003.4(a)(35) by reporting
the AUS result generated closest in time to
the credit decision and the name of the AUS
that generated that result. For example, if a
financial institution evaluates an application
with the AUS of Securitizer A, subsequently
again evaluates the application with
Securitizer A’s AUS, the financial institution
complies with § 1003.4(a)(35) by reporting
the name of Securitizer A’s AUS and the
second AUS result. Similarly, if a financial
institution obtains a result from an AUS that
requires the financial institution to
underwrite the loan manually, but the
financial institution subsequently processes
the application through a different AUS that
also generates a result, the financial
institution complies with § 1003.4(a)(35) by
reporting the name of the second AUS that
it used to evaluate the application and the
AUS result generated by that system.
iv. If a financial institution obtains two or
more AUS results at the same time and the
principles in comment 4(a)(35)–3.i through
.iii do not apply, the financial institution
complies with § 1003.4(a)(35) by reporting
the name of all of the AUSs used by the
financial institution to evaluate the
application and the results generated by each
of those systems. For example, if a financial
institution simultaneously evaluates an
application with the AUS of Securitizer A
and the AUS of Securitizer B, the financial
institution complies with § 1003.4(a)(35) by
reporting the name of both Securitizer A’s
AUS and Securitizer B’s AUS and the results
generated by each of those systems. In any
event, however, the financial institution does
not report more than five AUSs and five
results. If more than five AUSs and five
results meet the criteria in this principle, the
financial institution complies with
§ 1003.4(a)(35) by choosing any five among
them to report.
4. Transactions for which an automated
underwriting system was not used to evaluate
the application. Section 1003.4(a)(35) does
not require a financial institution to evaluate
an application using an automated
underwriting system (AUS), as defined in
§ 1003.4(a)(35)(ii). For example, if a financial
institution only manually underwrites an
application and does not use an AUS to
evaluate the application, the financial
institution complies with § 1003.4(a)(35) by
reporting that the requirement is not
applicable since an AUS was not used to
evaluate the application.
5. Purchased covered loan. A financial
institution complies with § 1003.4(a)(35) by
reporting that the requirement is not
applicable when the covered loan is a
purchased covered loan.
6. Non-natural person. When the applicant
and co-applicant, if applicable, are not
natural persons, a financial institution
complies with § 1003.4(a)(35) by reporting
that the requirement is not applicable.
7. Determination of securitizer, Federal
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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 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 closedend 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.

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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.
Paragraph 4(a)(37)
1. Open-end line of credit. Except for
partially exempt transactions under
§ 1003.3(d), § 1003.4(a)(37) requires a
financial institution to identify whether the
covered loan or the application is for an
open-end line of credit. See comments 2(o)–
1 and –2 for a discussion of open-end line
of credit and extension of credit.
Paragraph 4(a)(38)
1. Primary purpose. Except for partially
exempt transactions under § 1003.3(d),
§ 1003.4(a)(38) requires a financial institution
to identify whether the covered loan is, or the
application is for a covered loan that will be,
made primarily for a business or commercial
purpose. See comment 3(c)(10)–2 for a
discussion of how to determine the primary
purpose of the transaction and the standard
applicable to a financial institution’s
determination of the primary purpose of the
transaction. See comments 3(c)(10)–3 and –4
for examples of excluded and reportable
business- or commercial-purpose
transactions.

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[The following amendments would be
effective January 1, 2022, further amending
the part as proposed to be amended as of
January 1, 2020.]

6. Section 1003.2 is amended by
revising paragraphs (g)(1)(v)(B) and
(g)(2)(ii)(B) to read as follows:

■

§ 1003.2

Definitions.

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*
*
(g) * * *
(1) * * *
(v) * * *
(B) In each of the two preceding
calendar years, originated at least 200
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 200
open-end lines of credit that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10).
*
*
*
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■ 7. Section 1003.3 is amended by
revising paragraph (c)(12) to read as
follows:
§ 1003.3 Exempt institutions and excluded
and partially exempt transactions.

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(c) * * *

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(12) An open-end line of credit, if the
financial institution originated fewer
than 200 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
*
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*
■ 8. In supplement I to part 1003:
■ a. Under Section 1003.2—Definitions,
revise 2(g) Financial Institution; and
■ b. Under Section 1003.3—Exempt
Institutions and Excluded and Partially
Exempt Transactions, under 3(c)
Excluded Transactions, revise
Paragraph 3(c)(12).
The revisions read as follows:
Supplement I to Part 1003—Official
Interpretations
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Section 1003.2—Definitions

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2(g) Financial Institution
1. Preceding calendar year and preceding
December 31. The definition of financial
institution refers both to the preceding
calendar year and the preceding December
31. These terms refer to the calendar year and
the December 31 preceding the current
calendar year. For example, in 2019, the
preceding calendar year is 2018 and the
preceding December 31 is December 31,
2018. Accordingly, in 2019, Financial
Institution A satisfies the asset-size threshold
described in § 1003.2(g)(1)(i) if its assets
exceeded the threshold specified in comment
2(g)–2 on December 31, 2018. Likewise, in
2020, Financial Institution A does not meet
the loan-volume test described in
§ 1003.2(g)(1)(v)(A) if it originated fewer than
25 closed-end mortgage loans during either
2018 or 2019.
2. [Reserved]
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,

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and B originated a combined total of at least
200 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.
4. Merger or acquisition—coverage for
calendar year of merger or acquisition. The
scenarios described below illustrate a
financial institution’s responsibilities for the
calendar year of a merger or acquisition. For
purposes of these illustrations, a ‘‘covered
institution’’ means a financial institution, as
defined in § 1003.2(g), that is not exempt
from reporting under § 1003.3(a), and ‘‘an
institution that is not covered’’ means either
an institution that is not a financial
institution, as defined in § 1003.2(g), or an
institution that is exempt from reporting
under § 1003.3(a).
i. Two institutions that are not covered
merge. The surviving or newly formed
institution meets all of the requirements
necessary to be a covered institution. No data
collection is required for the calendar year of
the merger (even though the merger creates
an institution that meets all of the
requirements necessary to be a covered
institution). When a branch office of an
institution that is not covered is acquired by
another institution that is not covered, and
the acquisition results in a covered
institution, no data collection is required for
the calendar year of the acquisition.
ii. A covered institution and an institution
that is not covered merge. The covered
institution is the surviving institution, or a
new covered institution is formed. For the
calendar year of the merger, data collection
is required for covered loans and
applications handled in the offices of the
merged institution that was previously
covered and is optional for covered loans and
applications handled in offices of the merged
institution that was previously not covered.
When a covered institution acquires a branch
office of an institution that is not covered,
data collection is optional for covered loans
and applications handled by the acquired
branch office for the calendar year of the
acquisition.
iii. A covered institution and an institution
that is not covered merge. The institution
that is not covered is the surviving
institution, or a new institution that is not
covered is formed. For the calendar year of
the merger, data collection is required for
covered loans and applications handled in
offices of the previously covered institution
that took place prior to the merger. After the
merger date, data collection is optional for
covered loans and applications handled in
the offices of the institution that was
previously covered. When an institution
remains not covered after acquiring a branch
office of a covered institution, data collection
is required for transactions of the acquired
branch office that take place prior to the
acquisition. Data collection by the acquired
branch office is optional for transactions
taking place in the remainder of the calendar
year after the acquisition.

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iv. Two covered institutions merge. The
surviving or newly formed institution is a
covered institution. Data collection is
required for the entire calendar year of the
merger. The surviving or newly formed
institution files either a consolidated
submission or separate submissions for that
calendar year. When a covered institution
acquires a branch office of a covered
institution, data collection is required for the
entire calendar year of the merger. Data for
the acquired branch office may be submitted
by either institution.
Alternative 1—Paragraph 2(g)–5
5. Originations. Whether an institution is a
financial institution depends in part on
whether the institution originated at least 50
closed-end mortgage loans in each of the two
preceding calendar years or at least 200 openend 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).
Alternative 2—Paragraph 2(g)–5
5. Originations. Whether an institution is a
financial institution depends in part on
whether the institution originated at least 100
closed-end mortgage loans in each of the two
preceding calendar years or at least 200 openend 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).
6. Branches of foreign banks—treated as
banks. A Federal branch or a State-licensed
or insured branch of a foreign bank that
meets the definition of a ‘‘bank’’ under
section 3(a)(1) of the Federal Deposit
Insurance Act (12 U.S.C. 1813(a)) is a bank
for the purposes of § 1003.2(g).
7. Branches and offices of foreign banks
and other entities—treated as nondepository
financial institutions. A Federal agency,
State-licensed agency, State-licensed
uninsured branch of a foreign bank,
commercial lending company owned or
controlled by a foreign bank, or entity
operating under section 25 or 25A of the
Federal Reserve Act, 12 U.S.C. 601 and 611
(Edge Act and agreement corporations) may
not meet the definition of ‘‘bank’’ under the
Federal Deposit Insurance Act and may
thereby fail to satisfy the definition of a
depository financial institution under
§ 1003.2(g)(1). An entity is nonetheless a
financial institution if it meets the definition
of nondepository financial institution under
§ 1003.2(g)(2).

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Section 1003.3—Exempt Institutions and
Excluded and Partially Exempt Transactions
3(c) Excluded Transactions

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*

*

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 200 open-end lines of

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credit in either of the two preceding calendar
years. For example, assume that a bank is a
financial institution in 2022 under
§ 1003.2(g) because it originated 100 closedend mortgage loans in 2020, 175 closed-end
mortgage loans in 2021, 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 2020 and 2021,
respectively. The closed-end mortgage loans
that the bank originated or purchased, or for
which it received applications, during 2022
are covered loans and must be reported,
unless they otherwise are excluded
transactions under § 1003.3(c). However, the
open-end lines of credit that the bank
originated or purchased, or for which it

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received applications, during 2022 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 open-end
lines of credit that are excluded transactions
because the financial institution originated
fewer than 200 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 open-end
lines of credit must report all such
applications for open-end lines of credit

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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.

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Dated: April 26, 2019.
Kathleen L. Kraninger,
Director, Bureau of Consumer Financial
Protection.
[FR Doc. 2019–08983 Filed 5–10–19; 8:45 am]
BILLING CODE 4810–AM–P

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