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HISTORY OF HMDA

The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and was implemented by the Federal Reserve Board's Regulation C. On July 21, 2011, the rule-writing authority of Regulation C was transferred to the Consumer Financial Protection Bureau (CFPB).

In 1980, amendments to HMDA directed the Federal Financial Institutions Examination Council (FFIEC) to compile annually for each Metropolitan Statistical Area (MSA) aggregate lending data by census tract for certain lenders. In addition, the FFIEC was directed to produce tables for each MSA that aggregates the lending activity of institutions by various categories of census tracts, grouped according to location, age of housing stock, income level, and racial characteristics. The aggregate lending data were forwarded annually by the FFIEC to a central data depository in each MSA (usually libraries or planning agencies designated by the FFIEC).

A congressional act passed on February 5, 1988, amended the law and expanded coverage to nonmajority-owned savings and loan service corporations, mortgage banking subsidiaries of bank holding companies, and mortgage banking subsidiaries of savings and loan holding companies. (Previously, only depository institutions and their majority-owned subsidiaries were covered.)

In 1989, the Federal Reserve Board revised Regulation C, to incorporate amendments contained in the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). The FIRREA amendments accomplished the following: expanded the coverage of HMDA to include mortgage lenders not affiliated with depository institutions or holding companies; required reporting of data regarding the disposition of applications for mortgage and home improvement loans in addition to data regarding loan originations and purchases; and required most lenders to identify the race, sex, and income of loan applicants and borrowers. Lenders were also required to identify the class of purchaser for mortgage loans sold and were permitted to explain the basis for their lending decisions. To facilitate the collection of this information, Regulation C requires a loan/application register (LAR) to be submitted by each institution. The LAR allows institutions to log loan applications, loans originated, and loans purchased.

In 1991, Congress, via the Federal Deposit Insurance Corporation Improvement Act, authorized the Federal Reserve Board, in consultation with the Department of Housing and Urban Development, to develop a new exemption standard for nondepository mortgage lenders that is comparable to the exemption for depository institutions. In 1992, the Board adopted a standard that further expanded coverage of independent mortgage lenders. Under the adopted standard, a nondepository mortgage lender with an office in an MSA is covered if it meets either an asset-size test or a lending activity test.

The Board also revised the instructions for reporting loan applications received through a loan broker or correspondent to make the rule for reporting loan approvals conform to the existing rule for reporting loan denials. This revision applies to all lenders covered by HMDA, not only nondepository mortgage lenders.

In 1993, Regulation C was revised by the Federal Reserve Board to incorporate amendments contained in the Housing and Community Development Act of 1992. The amendments required institutions--in response to requests from the public--to make a modified version of their loan/application register data available within 30 days of the date it was due to its regulatory agency. The amendments also required institutions to make their FFIEC Disclosure Statements publicly available within three business days of receipt from the FFIEC. These amendments were applied beginning with the 1992 HMDA data collection.

In 1994, Regulation C was amended by the Federal Reserve Board to make HMDA data available to the public earlier, to improve the accuracy of the HMDA data, and to clarify and simplify the reporting requirements. Amendments that require institutions, except those with 25 or fewer line entries, to report in machine-readable format and update their HMDA loan/application registers on a quarterly basis were intended to improve data quality, as well as aid in earlier data availability. In addition, institutions were expected to accurately compile and check their data before submission.

The 1994 amendments were applied by institutions beginning with the calendar year (CY) 1995 data. Institutions, however, had to comply with the new or changed requirements beginning with the CY 1996 data. (For the amendment concerning the transmittal sheet, i.e., inclusion of total number of line entries contained in the accompanying data submission, compliance was mandatory beginning with the submission of the CY 1995 data due March 1, 1996.)

The Board adopted an interim rule to Regulation C in September 1996 that raised the exemption threshold level for depository institutions from $10 million to $28 million in assets. The interim rule became final in 1997, subsequently requiring depository institutions with assets greater than $28 million as of December 31, 1996, to collect HMDA data for CY 1997 provided they also meet the other reporting criteria. The final rule also established an alternative way for institutions to provide disclosure statements in metropolitan areas where they have branch offices, which they could begin using with CY 1996 statements and for prior years' data. Institutions must continue to make a complete copy of their disclosure statement available to the public, at their home office, within three business days of receiving the statement from the FFIEC.

For branch offices located in other metropolitan areas, institutions can either make the disclosure statement available to the public, within ten business days of receiving it, in at least one branch office in each additional MSA where they have offices; or post a notice informing the public that disclosure statements will be provided upon written request and indicating the address for sending requests. A specific branch disclosure statement need only contain data relating to the MSA for which the request is made and will be sent to the requestor within fifteen calendar days of receiving a written request.

In 1997, the Federal Reserve System on behalf of the FFIEC, designed the HMDA Data Entry Software to assist respondents in automating the filing of the HMDA data. The free software included editing features to help an institution verify and analyze the accuracy of the data. It contained the Internet e-mail export option, which was a more efficient method for submitting HMDA data over mailing a diskette or CD-ROM.

In 1998, the amendments consisted of a modification to the loan/application register (LAR) to prepare for Year 2000 data systems conversion, deletion of the requirement to enter the reporting institution's parent company on the transmittal sheet, and technical changes to the regulation and reporting forms.

In order to meet the Year 2000 data systems standards, the final rule to Regulation C requires a lender to report dates on the LAR using four digits for the year, rather than two digits. For example, January 15, 1998, will be reflected as 01/15/1998 rather than 01/15/98.

As previously adopted and declared in 1997, Section 203.2 (e)(1)(i) of Regulation C provides that the Board will adjust the exemption threshold for depository institutions annually based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPIW), not seasonally adjusted, for each twelve-month period ending in November, rounded to the nearest million. Pursuant to this section, the Board raised the threshold to $29 million for the 1998 data collection.

In 1999, there were no changes to Regulation C. The asset threshold for depository institutions remained at $29 million for the 1999 data collection. The asset threshold for nondepository institutions remained the same as in 1998 -- $10 million or less (when combined with the assets of any parent corporation) or originated 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year.

The Board raised the asset threshold for depository institutions to $30 million for the 2000 data collection. The nondepository institution asset threshold was unchanged from 1999.

Beginning August 1, 2000, the Board no longer accepted 'reel' tapes for the submission of HMDA data. The only acceptable media for submitting HMDA data is Internet e-mail, PC diskette, CD-ROM, or 'cartridge' tape (specifically, IBM-compatible tapes 3480, 3490, or 3490E).

Commencing with the release of 2000 data, the FFIEC distributed HMDA disclosure statements on CD-ROM instead of on paper to reporters. This policy has been adopted by the FFIEC in their efforts to reduce paper. Furthermore, the 2000 HMDA Disclosure Statements, including supplementary tables, became available on the FFIEC website in August 2001. The CD-ROM, which was sent to reporters in July 2001, provides institutions with their own disclosure statements as well as the disclosure statements for all HMDA reporters.

The Board raised the asset threshold for depository institutions to $31 million for data collection in 2001 and to $32 million for data collection in 2002; the Board kept the threshold at $32 million for data collection in 2003. The asset threshold for nondepository institutions for the 2000, 2001, 2002, and 2003 data collections continued to be the same as it was in 1999.

On January 23, 2002, the Board amended the regulation to replace "metropolitan statistical area" with "metropolitan area," the term now used by the U.S. Office of Management and Budget (OMB). Metropolitan area will have the same meaning as "metropolitan statistical area" does currently. (We changed this term on all HMDA documents and reports on the 2003 data that we collect in 2004). In May 2002, the Board adopted an interim amendment to Regulation C that is effective January 1, 2003. It mandates the use of 2000 census information in HMDA reporting. Another amendment that is effective January 1, 2003 requires lenders to ask applicants their race or national origin and sex in applications taken by telephone, conforming the telephone application rule to the rule applicable to mail and Internet applications; the data are reported on the calendar year 2003 HMDA data.

In May 2002, the Board approved a final rule that postpones the effective date of the HMDA Regulation C amendments from January 1, 2003 to January 1, 2004. Those amendments expand the coverage of nondepository lenders by adding a $25 million dollar volume test to the existing percentage-based coverage test. The amendments include requiring lenders to report data items related to loan pricing; for loan originations in which the annual percentage rate (APR) exceeds the yield for comparable Treasury securities by a specified amount or threshold -- the thresholds are a spread of 3 percentage points for first-lien loans and 5 percentage points for subordinate-lien loans. The amendments also require lenders to report the lien status of applications and originated loans. Lenders must report whether a loan is covered by the Home Ownership and Equity Protection Act (HOEPA). The final rule requires lenders to report whether an application or loan involves a manufactured home.

There were certain definitions revised in the regulation including the definition of an application to include a request for preapproval as defined in the regulation, for purposes of reporting denials of such requests; and the definition of a refinancing and home improvement loan. In addition, the amendments conform the collection of data on race and ethnicity to standards established by the U.S. OMB in 1997.

In June 2003, OMB released the list of metropolitan statistical areas and metropolitan divisions, micropolitan statistical areas, and combined statistical areas, based on the application of the 2000 standards to data from the 2000 Census. Each MSA and Metropolitan Division is assigned a 5-digit number (previously, all MSAs and PMSAs were assigned 4-digit numbers). OMB Bulletin No. 03-04, June 6, 2003. In July 2003, the FFIEC instructed lenders to use the newly released MSAs and Metropolitan Divisions for collecting and reporting HMDA data beginning January 1, 2004. See http://www.ffiec.gov/hmda/pdf/spec2004.pdf. Regulation C refers to the MSA and the PMSA for determining coverage under HMDA, reporting property location, providing disclosures and reports of lending activity, and posting notices about the availability of HMDA data. The MSA, and in the case of large MSAs, the Metropolitan Division, are the geographic units most analogous to MSAs and PMSAs under the 1990 standards. Thus, their use minimizes any disruption in HMDA data caused by the changes to OMB standards.

In December of 2003, the Board published a final rule amending Regulation C and the staff commentary that interprets the requirements of Regulation C. The regulation and staff commentary are amended to conform them to changes in the Standards for OMB. In addition, the revisions to Regulation C formalize the FFIEC's July 2003 guidance as discussed in the previous paragraph. The regulation, Appendix A, and the staff commentary are amended to use the terms "MSA" and "Metropolitan Division." The staff commentary was also amended to increase the asset-size threshold for depository institutions based on the annual percentage change in the CPIW. The asset threshold was raised to $33 million for data collection in 2004. The asset threshold for nondepository institutions for the 2004 data collection remains unchanged -- $10 million or less (when combined with the assets of any parent corporation) or originated 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year.

In December 2004, the Board increased the asset exemption threshold for depository institutions to $34 million for data collection in 2005. The asset threshold for nondepository institutions for the 2005 collection remained unchanged at $10 million or less (when combined with the assets of any parent corporation) or originated 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year.

In December 2005, the Board raised the asset exemption threshold for depository institutions to $35 million for data collection in 2006. The asset threshold for nondepository institutions for the 2006 collection remained unchanged.

In December 2006, the Board raised the asset exemption threshold for depository institutions to $36 million for data collection in 2007. The asset threshold for nondepository institutions for the 2007 collection remained unchanged at $10 million or less (when combined with the assets of any parent corporation) or originated 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year.

In December 2007, the Board raised the asset exemption threshold for depository institutions to $37 million for data collection in 2008. The asset threshold for nondepository institutions for the 2008 collection remained unchanged.

HMDA data are submitted to the Board, on behalf of the FFIEC supervisory agencies, and following production of each institution's disclosure statement by the Board, the FFIEC will post the HMDA aggregate tables and individual institution disclosure reports to www.ffiec.gov/reports.htm. Institutions should make their disclosure statements available to the public within three business days of receipt. Furthermore, each reporting institution must maintain a complete copy of its disclosure statement for public use in its home office. For branch offices, the lender has the option of making the statement available to the public in at least one branch office in each additional MSA/MD where it has offices; or the lender can post in the lobby of each branch office the address where a written request for the statement can be sent. (The disclosure statement need only contain data relating to the MSA/MD for which the request is made.)

In December 2008, the Board raised the asset exemption threshold for depository institutions to $39 million for data collection in 2009. The asset threshold for nondepository institutions for the 2008 collection remained unchanged at $10 million or less (when combined with the assets of any parent corporation) or originated 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year.

In December 2008, the Board published a final rule to amend Regulation C to revise the rules for reporting price information on higher-priced loans. The rules are being conformed to the definition of "higher-priced mortgage loan'' adopted by the Board under Regulation Z (Truth in Lending) in July of 2008. Since 2004, Regulation C has required lenders to collect and report the spread between the annual percentage rate (APR) on a loan and the yield on Treasury securities of comparable maturity if the spread is equal to or greater than 3.0 percentage points for a first-lien loan (or 5.0 percentage points for a subordinate-lien loan). Under the final rule, a lender will report the spread between the loan's APR and a survey-based estimate of APRs currently offered on prime mortgage loans of a comparable type if the spread is equal to or greater than 1.5 percentage points for a first-lien loan (or 3.5 percentage points for a subordinate-lien loan).

The final rule is effective October 1, 2009. Compliance is mandatory for loan applications taken on and after that date and for loans that close on and after January 1, 2010 (regardless of their application dates).

A new exclusive export feature, Submission via Web, was added to the FFIEC HMDA Data Entry Software beginning with the submission of the 2008 HMDA data. It is the most secure and more efficient than the Internet e-mail submission option or preparing and mailing a diskette or CD-ROM. The Submission via Web option is now the preferred option an institution should choose when exporting HMDA data; it offers a single step submission process which provides confirmation that the HMDA file was received successfully at the Federal Reserve Board.

In December 2009, the Board did not change the asset exemption threshold for depository institutions for data collection in 2010; it remained at $39 million, the same for the 2009 HMDA data collection. The asset threshold for nondepository institutions remained the same as it has for the past several years -- $10 million or less (when combined with the assets of any parent corporation) or originated 100 or more home purchase loans (including refinancing of home purchase loans) in the preceding calendar year.

In 2010, a notice was posted to the FFIEC HMDA website that provided information about changes to HMDA Institution Disclosure Statements and Metropolitan Statistical Area (MSA/MD) Aggregate and National Aggregate Reports that were made for the presentation of the 2009 HMDA data (see http://www.ffiec.gov/hmda/pdf/HMDA_2009Disc_Changes.pdf). As a consequence of changes to the loan price (rate spread) reporting rules made under Regulation C in 2008, the 2009 HMDA data reflect price information reported under two different methodologies. The changes to the disclosure statements and reports were made to help ensure the accuracy of the information provided to the public. The changes only affected tables that included loan pricing information. In addition, the raw data made available to the public by the FFIEC contained pricing information for all loans and included a field that indicated whether or not the application for the loan was taken prior to October 1, 2009.

In December 2010, the Board raised the asset exemption threshold for depository institutions to $40 million for data collection in 2011. The asset threshold for nondepository institutions for the 2011 collection remained unchanged at $10 million or less (when combined with the assets of any parent corporation) or originated 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year.

The rules used to determine whether a loan was classified as higher-priced under HMDA were changed in 2008. The 2010 data reflect the first full year of data reported under the revised loan pricing rules.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the Dodd-Frank Act) transferred HMDA rulemaking authority to the Consumer Financial Protection Bureau (CFPB). It also affected HMDA supervisory and enforcement authority of the Board of Governors of the Federal Reserve System (FRS), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), the National Credit Union Administration (NCUA), and the Department of Housing and Urban Development (HUD)

The Dodd-Frank Act also transferred OTS's functions on July 21, 2011. While most of its functions were transferred to the OCC, certain other authorities of the OTS were transferred to the FDIC, the FRS, and the CFPB.

The appropriate Federal Agencies for HMDA Reporting and Compliance questions are:

CFPB for very large banks, thrifts, credit unions (those with over $10 billion in assets) and their affiliates (including affiliates that are themselves banks, thrifts, or credit unions regardless of asset size and subsidiaries of such affiliates).

FRS for any of the following that are not being handled by the CFPB as indicated above: state member banks of the Federal Reserve System, their subsidiaries, subsidiaries of bank holding companies, branches and agencies of foreign banks (other than federal branches, federal agencies and insured state branches of foreign banks), commercial lending companies owned or controlled by foreign banks, and organizations operating under section 25 or 25A of the Federal Reserve Act, and as a result of the Dodd-Frank Act changes, subsidiaries of savings and loan holding companies.

FDIC for any of the following that are not being handled by the CFPB as indicated above: nonmember insured banks (except for federal savings banks) and their subsidiaries, insured state branches of foreign banks that are supervised by the FDIC, certain other depository institutions, and as a result of the Dodd-Frank changes, state-chartered savings associations and their subsidiaries.

OCC for any of the following that are not being handled by the CFPB as indicated above: national banks and their subsidiaries, federal branches and federal agencies of foreign banks, and as a result of the Dodd-Frank Act changes, federal savings associations and their subsidiaries.

NCUA for credit unions that are not being handled by the CFPB as indicated above.

HUD for other lending institutions that are not being handled by the CFPB or another agency as indicated above.

In February 2012, the CFPB raised the asset exemption threshold for depository institutions to $41 million for data collection in 2012.

In December 2012, the CFPB increased the asset exemption threshold for depository institutions to $42 million for data collection in 2013.

Beginning with calendar year 2012, the Census Reports and the HMDA Aggregate and Disclosure Reports are based on 2006-2010 5-year estimate American Community Survey data. The list of MSAs, states, counties, tracts, MSA family incomes, tract family incomes, tract income levels, and income percentages are generated using 2006-2010 ACS data. The use of the 2006-2010 ACS data resulted in the removal of Table 10 and the revision to Table 9 of the 2012 HMDA Aggregate and Disclosure Reports (http://www.ffiec.gov/hmdaadwebreport/info12.htm).

Since the CFPB took control of rulemaking authority, the asset exemption threshold for depository institutions has been raised three times. First, in February 2012 the exemption rose to $41 million for data collection in 2012, then in December 2012 the exemption became $42 million for data collection in 2013, and finally the exemption increased to $43 million for data collection in 2014.