1557-0345 Reg C Supporting Statement 6-14-22

Supporting Statement

CFPB Regulation C – Home Mortgage Disclosure

OMB Control No. 1557-0345

A. Justification.

1. Circumstances that make collection necessary:

The Consumer Financial Protection Bureau’s (CFPB) Regulation C,¹ which implements the Home Mortgage Disclosure Act (HMDA)² requires certain depository and non-depository institutions (financial institutions) that make certain mortgage loans to collect, report, and disclose data about originations and purchases of mortgage loans as well as data about loan applications that do not result in originations. HMDA requires the generation of loan data that can be used to: (1) help determine whether depository and non-depository institutions are serving the housing needs of their communities; (2) assist public officials in distributing public-sector investments so as to attract private investment to areas where it is needed; and (3) assist in identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes.

Twelve CFR 1003.5 requires the disclosure and reporting of data on mortgage loans. Section 1003.5(a)(1)(i) provides that by March 1 following the calendar year for which data are collected and recorded, a financial institution must submit its annual loan/application register in electronic format to the appropriate Federal agency at the address identified by such agency. An authorized representative of the financial institution with knowledge of the data submitted must certify to the accuracy and completeness of data submitted. The financial institution must retain a copy of its annual loan/application register for at least three years.

Section 1003.5(a)(1)(ii) provides that within 60 calendar days after the end of each calendar quarter except the fourth quarter, a financial institution that reported for the preceding calendar year at least 60,000 covered loans and applications, combined, excluding purchased covered loans, shall submit to the appropriate Federal agency its loan/application register containing all data required to be recorded for that quarter pursuant to § 1003.4(f). The financial institution shall submit its quarterly loan/application register pursuant to § 1003.5(a)(1)(ii) in electronic format at the address identified by the appropriate Federal agency for the institution.

Under section 1003.5(a)(2), a financial institution that is a subsidiary of a bank or savings association must complete a separate loan/application register. The subsidiary must submit the loan/application register, directly or through its parent, to the appropriate Federal agency for the subsidiary's parent at the address identified by the agency.

Section 1003.5(b)(1) provides that the Federal Financial Institutions Examination Council (FFIEC) will make available a disclosure statement based on the data each financial institution submits for the preceding calendar year.

Section 1003.5(b)(2) provides that no later than three business days after receiving notice from the FFIEC that a financial institution's disclosure statement is available, the financial institution must make available to the public upon request at its home office, and each branch office physically located in each Metropolitan Statistical Area (MSA) and each Metropolitan Division (MD), a written notice that clearly conveys that the institution's disclosure statement may be obtained on the CFPB's Web site. A financial institution must make this notice available for a period of three years.

Section 1003.5(c)(1) provides that a financial institution must make available to the public upon request at its home office, and each branch office physically located in each MSA and each MD, a written notice that clearly conveys that the institution's loan/application register, as modified by the CFPB to protect applicant and borrower privacy, may be obtained on the CFPB’s Web site. A financial institution shall make available the notice following the calendar year for which the data are collected. A financial institution must make the notice available to the public for a period of five years.

Section 1003.5(d)(2) provides that a financial institution may make available to the public, at its discretion its disclosure statement or its loan/application register, as modified by the CFPB to protect applicant and borrower privacy.

Section 1003.5(e) provides that a financial institution must post a general notice about the availability of its HMDA data in the lobby of its home office and of each branch office physically located in each MSA and each MD. This notice must clearly convey that the institution's HMDA data is available on the CFPB’s Web site.

2. Use of the information:

This regulation implements the requirements of HMDA. The regulation requires certain financial institutions to report data to the appropriate federal agency about home purchase loans, home improvement loans, and refinancings that the financial institutions originate or purchase, or for which they receive certain applications and to disclose certain data to the public.

3. Consideration of the use of improved information technology:

Institutions may use any technology that is reasonable and appropriate for its circumstances.

4. Efforts to identify duplication:

These requirements and disclosures are unique and cover an institution’s particular circumstances. No duplication with other regulatory requirements exists.

5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden:

There are no alternatives that would result in further lowering the burden on small institutions, while still accomplishing the purposes of the rules.

6. Consequences to the federal program if the collection were conducted less frequently:

The public would not be protected adequately and negative safety and soundness consequences could result.

7. Special circumstances necessitating collection inconsistent with 5 CFR part 1320:

Not applicable. The collection is conducted in accordance with the guidelines in 5 CFR part 1320.

8. Efforts to consult with persons outside the agency:

The OCC issued a notice for 60 days of comment regarding this collection on April 21, 2022, 87 FR 23911. No comments were received.

9. Payment to respondents:

There is no payment to respondents.

10. Any assurance of confidentiality:

The information collected will be kept private to the extent permitted by law.

11. Justification for questions of a sensitive nature:

No personally identifiable information is collected. However, questions of a sensitive nature are included under the monitoring information requirement. For example, institutions must ask applicants for home loans to indicate their sex and race/national origin. If an applicant chooses not to furnish the information, the bank must note the applicant's race and sex based on visual observation or surname.

The regulations are designed to identify possible discriminatory practices. Such discrimination would tend to occur on how the lender perceives the applicant, rather than how the applicant characterizes himself or herself.

While an applicant’s color or sex may be evident when they come in person to inquire about an application, a practice of discrimination cannot be ascertained unless the examiner has the information on each applicant's race or sex. Also, without this information in each file, corrective action for the class of persons who may have been discriminated against cannot be undertaken.

The collection by the OCC of sex and race/national origin information is exempted under the supervisory agency provision of 12 U.S.C. 3413(b), which permits the examination by or disclosure to any such agency of financial records or information in the exercise of its supervisory, regulatory, or monetary functions.

12. Burden estimate:

OCC 2022 Burden¹

	Estimate number respondents	Estimated average hours per response	Estimate annual burden hours
Reporting
Tier 1	13	5,969	77,597
Tier 2 Full Reporters	191	1,232	235,312
Tier 2 Partial Reporters	210	986	207,060
Tier 3 Partial Reporters	23	64	1,472
Recordkeeping
Tier 1	13	4,130	53,690
Tier 2	401	83	33,283
Tier 3	23	27	621
Disclosure **
Tier 1	13	5	65
Totals	437		609,100

¹In 2020, all OCC reporters were annual reporters only; none had more than 60,000 LAR lines per year. Tiers and burden hours reflect the methodology used by the CFPB (link) and the FRB (link). 

² For disclosure, we estimate that the disclosure burden for Tiers 2 and Tier 3 banks is negligible.

Estimated Number of Respondents: 437.

Estimated Annual Burden: 609,100 hours.

Cost of Hour Burden: 609,100 x $119.63 = $ 72,866,633

To estimate wages the OCC reviewed May 2021 data for wages (by industry and occupation) from the U.S. Bureau of Labor Statistics (BLS) for credit intermediation and related activities (NAICS 5220A1).  To estimate compensation costs associated with the rule, the OCC uses $119.63 per hour, which is based on the average of the 90th percentile for six occupations adjusted for inflation (6.1 percent as of Q1 2022), plus an additional 32.8 percent for benefits (based on the percent of total compensation allocated to benefits as of Q4 2021 for NAICS 522: credit intermediation and related activities).

13. Estimate of annualized cost to respondents:

Not applicable.

14. Estimate of annualized costs to the Federal Government:

Not applicable.

15. Change in burden:

Former Burden: 635,938 hours.

Current Burden: 609,100 hours.

Difference: - 26,838 hours.

The decrease in burden is due to reduction in the number of respondents.

16. Information regarding collections whose results are planned to be published for statistical use:

The OCC has no plans to publish the information for statistical use.

17. Exceptions to certification statement:

None.

B. Collections of information employing statistical methods.

Not applicable.

1 12 CFR part 1003.

2 12 U.S.C. 2801-2811.