Monthly Median Cost of Funds Reporting, and Publication of Cost of Funds Indices, 39474-39476 [2011-16809]
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39474
Federal Register / Vol. 76, No. 129 / Wednesday, July 6, 2011 / Notices
The Department of the
Treasury, as part of its continuing effort
to reduce paperwork and respondent
burden, invites the general public and
other Federal agencies to take this
opportunity to comment on proposed
and/or continuing information
collections, as required by the
Paperwork Reduction Act of 1995,
Public Law 104–13 (44 U.S.C.
3506(c)(2)(A)). Currently, the IRS is
soliciting comments concerning Form
1120–PC, U.S. Property and Casualty
Insurance Company Income Tax Return.
DATES: Written comments should be
received on or before September 6, 2011
to be assured of consideration.
ADDRESSES: Direct all written comments
to Yvette B. Lawrence, Internal Revenue
Service, room 6129, 1111 Constitution
Avenue, NW., Washington, DC 20224.
FOR FURTHER INFORMATION CONTACT:
Requests for additional information or
copies of the form and instructions
should be directed to Evelyn J. Mack, at
(202) 622–7381, or at Internal Revenue
Service, room 6231, 1111 Constitution,
Avenue, NW., Washington, DC 20224,
or through the Internet, at
Evelyn.J.Mack@irs.gov.
SUMMARY:
sroberts on DSK5SPTVN1PROD with NOTICES
SUPPLEMENTARY INFORMATION:
Title: U.S. Property and Casualty
Insurance Company Income Tax Return.
OMB Number: 1545–1027.
Form Number: Form 1120–PC.
Abstract: Property and casualty
insurance companies are required to file
an annual return of income and pay the
tax due. The data is used to insure that
companies have correctly reported
income and paid the correct tax.
Current Actions: On Form 1120–PC
line changes were made, within
Schedules E and H, to clarify the new
restrictions on the deduction of 100% of
unearned premiums by section 833
organizations, enable section 833
organizations to determine whether they
meet the 85% medical loss ratio
mandated by IRC 833(c)(5) and for
qualifying section 833 organizations to
compute the special deduction and the
ending adjusted surplus (Pub. L. 111–
148, section 9016 and IRC 833(c)(5)). A
question was added to Schedule I for
corporations to indicate whether they
have uncertain tax positions
(Announcements 2010–9 and 2010–17,
and 2010–30).
On Form 1120–PC (Schedule M–3)
two lines were added to monitor IRC
sections 174 and 118, respectively, at
the request of LMSB.
Type of Review: Revision of a
currently approved collection.
Affected Public: Business or other forprofit organizations.
VerDate Mar<15>2010
18:17 Jul 05, 2011
Jkt 223001
Estimated Number of Respondents:
4,200.
Estimated Time Per Respondent: 164
hrs., 59 min.
Estimated Total Annual Burden
Hours: 671,746.
The following paragraph applies to all
of the collections of information covered
by this notice:
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
unless the collection of information
displays a valid OMB control number.
Books or records relating to a collection
of information must be retained as long
as their contents may become material
in the administration of any internal
revenue law. Generally, tax returns and
tax return information are confidential,
as required by 26 U.S.C. 6103.
Request For Comments: Comments
submitted in response to this notice will
be summarized and/or included in the
request for OMB approval. All
comments will become a matter of
public record. Comments are invited on:
(a) Whether the collection of
information is necessary for the proper
performance of the functions of the
agency, including whether the
information shall have practical utility;
(b) the accuracy of the agency’s estimate
of the burden of the collection of
information; (c) ways to enhance the
quality, utility, and clarity of the
information to be collected; (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; and (e) estimates of capital
or start-up costs and costs of operation,
maintenance, and purchase of services
to provide information.
Approved: June 22, 2011.
Yvette B. Lawrence,
IRS Reports Clearance Officer.
[FR Doc. 2011–16820 Filed 7–5–11; 8:45 am]
BILLING CODE 4830–01–P
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
Monthly Median Cost of Funds
Reporting, and Publication of Cost of
Funds Indices
Office of Thrift Supervision
(OTS), Treasury.
ACTION: Notice of Termination of OMB
No. 1550–0021, Monthly Median Cost of
Funds Reporting, and Publication of
Cost of Funds Indices.
AGENCY:
The OTS is terminating the
collection of data used to calculate and
SUMMARY:
PO 00000
Frm 00099
Fmt 4703
Sfmt 4703
publish the Monthly Median Cost of
Funds Index (MMCOF), the Quarterly
Cost of Funds Index (QCOF), the
Semiannual Cost of Funds Index
(SCOF), and other related cost of funds
ratios currently published monthly in
the OTS’s Cost of Funds (COF) Report.1
FOR FURTHER INFORMATION CONTACT: For
further information about the changes
discussed in this notice, please contact
Jim Caton, Managing Director—
Economic and Industry Analysis, at
(202) 906–5680.
Copies of the reporting form, OMB
No. 1550–0021 (OTS Form 1568), and
instructions for cost of funds reporting
requirements are available on the OTS
Web site through the following link:
https://www.ots.treas.gov/
?p=StatisticalReleases.
SUPPLEMENTARY INFORMATION:
Abstract
Some institutions currently submit
MMCOF data to the OTS monthly for
the OTS’s use in calculating a monthly
median cost of funds index.
Additionally, the OTS publishes two
indices based on calculations from data
included in the Thrift Financial Report
(TFR): 2
1. A quarterly average cost of funds
index, and
2. A semiannual average cost of funds
index.
These indices are used by certain
mortgage lenders as benchmarks from
which to base rate adjustments for
adjustable rate mortgages (ARMs).
Effect of Recent Legislation
The Dodd-Frank Wall Street Reform
and Consumer Protection Act, Public
Law 111–203 (the Dodd-Frank Act), was
enacted into law on July 21, 2010. Title
III of the Dodd-Frank Act abolishes the
OTS, provides for its integration with
the Office of the Comptroller of the
Currency (OCC) effective as of July 21,
2011 (the ‘‘transfer date’’), and transfers
the OTS’s functions to the OCC, the
Board of Governors of the Federal
Reserve System (Board), and the Federal
Deposit Insurance Corporation (FDIC).
Under Title III of the Dodd-Frank Act,
all functions of the OTS relating to
Federal savings associations and
rulemaking authority for all savings
associations are transferred to the OCC.
All functions of the OTS relating to
state-chartered savings associations
(other than rulemaking) are transferred
1 Link to published COF reports: https://
www.ots.treas.gov/?p=StatisticalReleases.
2 Copies of the reporting forms and instructions
for the TFR (OMB No. 1550–0023) can be obtained
on the OTS Web site (https://www.ots.treas.gov/
?p=ThriftFinancialReports).
E:\FR\FM\06JYN1.SGM
06JYN1
Federal Register / Vol. 76, No. 129 / Wednesday, July 6, 2011 / Notices
to the FDIC. All functions of the OTS
relating to supervision of savings and
loan holding companies (including
rulemaking) are transferred to the Board.
sroberts on DSK5SPTVN1PROD with NOTICES
Current Actions
On February 8, 2011, the OTS
requested public comment (76 FR
7089) 3 on its notice of intent to
discontinue data collection and
publication of the monthly median cost
of funds index and related indices. The
changes to savings associations’ data
reporting requirements will be effective
January 31, 2012. At that time savings
associations currently regulated by the
OTS shall cease filing data used to
calculate the MMCOF index. Further
publication of the MMCOF, the QCOF,
the SCOF, and other related cost of
funds ratios currently published
monthly in the COF Report shall cease
as of January 31, 2012. The final COF
Report shall be for the month of
December 2011. Until the effective date
of these changes, savings associations
shall continue to file MMCOF data in
the current manner using existing
processes.
The OTS received two comments
regarding its notice of intent. One
comment was from a bank/thrift trade
association and the other comment was
from a savings association. The bank/
thrift trade association did not object to
the proposed changes becoming
effective as of January 31, 2012, but
requested that ‘‘OTS provide guidance
regarding converting ARM loans to an
alternative index.’’ In particular, the
bank/thrift trade association requested
that the guidance ‘‘recognize situations
where loan contracts might address
circumstances where use of an
alternative index may be necessary, as
well as certain legacy ARM contracts
that we understand may be silent or
non-specific regarding such
circumstances.’’
The other comment was from a
savings association. The commenter
noted that there are ‘‘numerous
adjustable interest rate home loans
including loans sold to the Federal
National Mortgage Association (FNMA
or Fannie Mae) and to the Federal Home
Loan Mortgage Corporation (FHLMC or
Freddie Mac) that use these indices.’’
The commenter expressed concern for
the difficulty of consumers agreeing ‘‘on
a substitution of indices as the cost of
fund indices are generally considered to
be a ‘‘lagging index’’ and stated it would
be hard to replace that feature to the
satisfaction of the consumer.
3 Link to 76 FR 7089: https://www.ots.treas.gov/
_files/4830090.pdf .
VerDate Mar<15>2010
18:17 Jul 05, 2011
Jkt 223001
Index Substitution
The Financial Institutions Reform,
Recovery, and Enforcement Act of 1989,
Public Law 101–73 (FIRREA), was
enacted into law on August 9, 1989.
Section 402(e)(4) of FIRREA requires the
OTS to designate acceptable substitute
indices should it discontinue
publication of indices used for ARM
rate adjustments. The Director of OTS
must determine, after notice and
opportunity for comment, that (A) the
new indices are based upon data
substantially similar to that of the
original indices; and (B) the substitution
of the new indices will result in an
interest rate substantially similar to the
rate in effect at the time the original
index became unavailable. Any such
substitute index may be substituted by
the holder of any such adjustable rate
mortgage instrument upon notice to the
borrower.
As described in the February 8, 2011
notice, the OTS analyzed the values and
changes of 17 publicly available indices
on a monthly basis from January 1990
through August 2010 to help designate
acceptable substitute indices for the
MMCOF, QCOF, and SCOF indices. The
OTS compared the values and changes
of the publicly available indices to those
of the MMCOF, QCOF, and SCOF.
Correlation coefficients 4 were
calculated for each publicly available
index value to the MMCOF, QCOF, and
SCOF.
The bank/thrift trade association
noted that each of the indices identified
have adequately high correlation with
the OTS’s COF indices and did not
express a particular preference for one
substitute over the others. The bank/
thrift trade association’s members
consider the Monthly Treasury Average
(MTA) index to be less suitable as a
direct substitute because of recent
changes in interest rate relationships
resulting from monetary policy actions.
The OTS agrees.
The OTS also finds that the MTA is
less of a lagging market index (LMI)
than the 11th District COF or the
Federal COF indices. Similarly, the
National Average Contract Mortgage
Rate index is less of an LMI than either
of these COF indices.
The bank/thrift trade association
commented that the 11th District COF
index has the strongest correlation to
the OTS COF indices, but is not as well
known outside the 11th Federal Home
4 The correlation coefficient is a single number
that describes the degree of relationship between
two variables. A perfect positive correlation (a
correlation coefficient of +1) implies that as one
index moves, either up or down, the other index
will move in lockstep, in the same direction.
PO 00000
Frm 00100
Fmt 4703
Sfmt 4703
39475
Loan Bank District as some other
substitute indices that OTS analyzed.
The OTS agrees with this comment.
Further, the OTS notes that only
Arizona, California, and Nevada savings
associations that are members of the
Federal Home Loan Bank of San
Francisco are eligible to be considered
for inclusion in this COF index. Thus,
a limited number of savings associations
in a limited geographic area participate
in providing data for this index. Given
that this is a weighted average index
with a limited number of participating
institutions, the resulting values can be
skewed by a few very large institutions.
The bank/thrift trade association
noted that the Federal COF index is well
known and highly correlated to the
OTS’s MMCOF, QCOF, and SCOF
indices, but the future of the Federal
COF index may depend on the outcome
of reform of government-sponsored
enterprises (GSEs), including Freddie
Mac. The OTS believes that any reform
of the GSEs would by necessity provide
for either a continuation of the Federal
COF or an acceptable substitute index to
the Federal COF similar to FIRREA’s
provision for substitutes for the OTS’s
COF indices.
The savings association commenter
mentioned there may be a large volume
of loans using the OTS COF indices that
have been sold to FNMA and FHLMC.
As described in the February 8, 2011
notice, the OTS analyzed the trends in
savings associations’ ARMs tied to LMIs
and found the volumes of these ARMs
declined precipitously over the past ten
years to currently very low levels.
Moreover, the OTS analyzed the usage
and trends of various indices used to
base rate adjustments for ARMs held by,
or serviced by, lenders of all types
throughout the United States from 1999
through 2010. This analysis, based on
lenders of all types, confirmed the
analysis based on savings associationspecific data. For example, based on
data analyzed from the CoreLogic/
LoanPerformance Servicing Database,5
OTS found that less than 0.05 percent
of the number and 0.01 percent of the
balances of ARMs loans outstanding as
of December 31, 2010, use the MMCOF
for the index rate.
The savings association commenter
also expressed concern about the
difficulty of obtaining borrowers’
consent to substitute indices proposed
5 Data were calculated from the CoreLogic/
LoanPerformance Servicing Database. The database
includes 44.1 million active first mortgages for a
total of $7.5 trillion active balances that are either
held in portfolio as whole loans or securitized as
of December 31, 2010. The data represent
approximately 80 percent of outstanding first
mortgages in the U.S.
E:\FR\FM\06JYN1.SGM
06JYN1
39476
Federal Register / Vol. 76, No. 129 / Wednesday, July 6, 2011 / Notices
by the holders of their mortgages. The
OTS notes that, pursuant to FIRREA,
substitute indices designated by the
Director may be substituted by the
holder of any such adjustable rate
mortgage instrument upon notice to the
borrower.
Given the Federal COF index’s close
correlation with the indices to be
terminated, and pursuant to the
requirements of FIRREA, the OTS is
designating the Federal COF index 6 as
an acceptable substitute index effective
with the termination date of the
discontinued indices. Further, the
calculation of the Federal COF does not
depend on a separate data collection
from a limited amount of participants
and is easily calculated.
In summary, after considering the
comments received on the notice of
sroberts on DSK5SPTVN1PROD with NOTICES
6 Link to Federal COF index data: https://
www.freddiemac.com/news/finance/cof_index.htm.
VerDate Mar<15>2010
18:17 Jul 05, 2011
Jkt 223001
intent, the OTS will terminate the
collection of data used to calculate and
publish the MMCOF, the QCOF, the
SCOF, and other related cost of funds
ratios currently published monthly in
the OTS’s COF Report. Savings
associations shall cease filing the
MMCOF data after the December 31,
2011, report date. Until the effective
date of these changes, savings
associations shall continue to file
MMCOF data in the current manner
using existing processes.
The holder of any adjustable rate
mortgage instrument whose interest rate
is adjusted based on the discontinued
MMCOF, QCOF, and SCOF indices shall
provide notice as soon as possible after
publication of this termination notice to
each affected borrower of the
termination of such index.
Holders of MMCOF adjustable rate
mortgage instruments shall begin using
the Federal COF index for the index rate
PO 00000
Frm 00101
Fmt 4703
Sfmt 9990
at adjustment determination dates
beginning after December 31, 2011.
Holders of QCOF adjustable rate
mortgage instruments shall begin using
an index rate calculated as the average
of the three monthly Federal COF index
values that were published immediately
previous to adjustment determination
dates beginning after December 31,
2011. Holders of SCOF adjustable rate
mortgage instruments shall begin using
an index rate calculated as the average
of the six monthly Federal COF index
values that were published immediately
previous to adjustment determination
dates beginning after December 31,
2011.
Dated: June 29, 2011.
John E. Bowman,
Acting Director, Office of Thrift Supervision.
[FR Doc. 2011–16809 Filed 7–5–11; 8:45 am]
BILLING CODE 6720–01–P
E:\FR\FM\06JYN1.SGM
06JYN1
]]>Agencies
[Federal Register Volume 76, Number 129 (Wednesday, July 6, 2011)]
[Notices]
[Pages 39474-39476]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-16809]
-----------------------------------------------------------------------
DEPARTMENT OF THE TREASURY
Office of Thrift Supervision
Monthly Median Cost of Funds Reporting, and Publication of Cost
of Funds Indices
AGENCY: Office of Thrift Supervision (OTS), Treasury.
ACTION: Notice of Termination of OMB No. 1550-0021, Monthly Median Cost
of Funds Reporting, and Publication of Cost of Funds Indices.
-----------------------------------------------------------------------
SUMMARY: The OTS is terminating the collection of data used to
calculate and publish the Monthly Median Cost of Funds Index (MMCOF),
the Quarterly Cost of Funds Index (QCOF), the Semiannual Cost of Funds
Index (SCOF), and other related cost of funds ratios currently
published monthly in the OTS's Cost of Funds (COF) Report.\1\
---------------------------------------------------------------------------
\1\ Link to published COF reports: https://www.ots.treas.gov/?p=StatisticalReleases.
FOR FURTHER INFORMATION CONTACT: For further information about the
changes discussed in this notice, please contact Jim Caton, Managing
Director--Economic and Industry Analysis, at (202) 906-5680.
Copies of the reporting form, OMB No. 1550-0021 (OTS Form 1568),
and instructions for cost of funds reporting requirements are available
on the OTS Web site through the following link: https://www.ots.treas.gov/?p=StatisticalReleases.
SUPPLEMENTARY INFORMATION:
Abstract
Some institutions currently submit MMCOF data to the OTS monthly
for the OTS's use in calculating a monthly median cost of funds index.
Additionally, the OTS publishes two indices based on calculations from
data included in the Thrift Financial Report (TFR): \2\
---------------------------------------------------------------------------
\2\ Copies of the reporting forms and instructions for the TFR
(OMB No. 1550-0023) can be obtained on the OTS Web site (https://www.ots.treas.gov/?p=ThriftFinancialReports).
---------------------------------------------------------------------------
1. A quarterly average cost of funds index, and
2. A semiannual average cost of funds index.
These indices are used by certain mortgage lenders as benchmarks
from which to base rate adjustments for adjustable rate mortgages
(ARMs).
Effect of Recent Legislation
The Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203 (the Dodd-Frank Act), was enacted into law on July
21, 2010. Title III of the Dodd-Frank Act abolishes the OTS, provides
for its integration with the Office of the Comptroller of the Currency
(OCC) effective as of July 21, 2011 (the ``transfer date''), and
transfers the OTS's functions to the OCC, the Board of Governors of the
Federal Reserve System (Board), and the Federal Deposit Insurance
Corporation (FDIC).
Under Title III of the Dodd-Frank Act, all functions of the OTS
relating to Federal savings associations and rulemaking authority for
all savings associations are transferred to the OCC. All functions of
the OTS relating to state-chartered savings associations (other than
rulemaking) are transferred
[[Page 39475]]
to the FDIC. All functions of the OTS relating to supervision of
savings and loan holding companies (including rulemaking) are
transferred to the Board.
Current Actions
On February 8, 2011, the OTS requested public comment (76 FR 7089)
\3\ on its notice of intent to discontinue data collection and
publication of the monthly median cost of funds index and related
indices. The changes to savings associations' data reporting
requirements will be effective January 31, 2012. At that time savings
associations currently regulated by the OTS shall cease filing data
used to calculate the MMCOF index. Further publication of the MMCOF,
the QCOF, the SCOF, and other related cost of funds ratios currently
published monthly in the COF Report shall cease as of January 31, 2012.
The final COF Report shall be for the month of December 2011. Until the
effective date of these changes, savings associations shall continue to
file MMCOF data in the current manner using existing processes.
---------------------------------------------------------------------------
\3\ Link to 76 FR 7089: https://www.ots.treas.gov/_files/4830090.pdf .
---------------------------------------------------------------------------
The OTS received two comments regarding its notice of intent. One
comment was from a bank/thrift trade association and the other comment
was from a savings association. The bank/thrift trade association did
not object to the proposed changes becoming effective as of January 31,
2012, but requested that ``OTS provide guidance regarding converting
ARM loans to an alternative index.'' In particular, the bank/thrift
trade association requested that the guidance ``recognize situations
where loan contracts might address circumstances where use of an
alternative index may be necessary, as well as certain legacy ARM
contracts that we understand may be silent or non-specific regarding
such circumstances.''
The other comment was from a savings association. The commenter
noted that there are ``numerous adjustable interest rate home loans
including loans sold to the Federal National Mortgage Association (FNMA
or Fannie Mae) and to the Federal Home Loan Mortgage Corporation (FHLMC
or Freddie Mac) that use these indices.'' The commenter expressed
concern for the difficulty of consumers agreeing ``on a substitution of
indices as the cost of fund indices are generally considered to be a
``lagging index'' and stated it would be hard to replace that feature
to the satisfaction of the consumer.
Index Substitution
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989, Public Law 101-73 (FIRREA), was enacted into law on August 9,
1989. Section 402(e)(4) of FIRREA requires the OTS to designate
acceptable substitute indices should it discontinue publication of
indices used for ARM rate adjustments. The Director of OTS must
determine, after notice and opportunity for comment, that (A) the new
indices are based upon data substantially similar to that of the
original indices; and (B) the substitution of the new indices will
result in an interest rate substantially similar to the rate in effect
at the time the original index became unavailable. Any such substitute
index may be substituted by the holder of any such adjustable rate
mortgage instrument upon notice to the borrower.
As described in the February 8, 2011 notice, the OTS analyzed the
values and changes of 17 publicly available indices on a monthly basis
from January 1990 through August 2010 to help designate acceptable
substitute indices for the MMCOF, QCOF, and SCOF indices. The OTS
compared the values and changes of the publicly available indices to
those of the MMCOF, QCOF, and SCOF. Correlation coefficients \4\ were
calculated for each publicly available index value to the MMCOF, QCOF,
and SCOF.
---------------------------------------------------------------------------
\4\ The correlation coefficient is a single number that
describes the degree of relationship between two variables. A
perfect positive correlation (a correlation coefficient of +1)
implies that as one index moves, either up or down, the other index
will move in lockstep, in the same direction.
---------------------------------------------------------------------------
The bank/thrift trade association noted that each of the indices
identified have adequately high correlation with the OTS's COF indices
and did not express a particular preference for one substitute over the
others. The bank/thrift trade association's members consider the
Monthly Treasury Average (MTA) index to be less suitable as a direct
substitute because of recent changes in interest rate relationships
resulting from monetary policy actions. The OTS agrees.
The OTS also finds that the MTA is less of a lagging market index
(LMI) than the 11th District COF or the Federal COF indices. Similarly,
the National Average Contract Mortgage Rate index is less of an LMI
than either of these COF indices.
The bank/thrift trade association commented that the 11th District
COF index has the strongest correlation to the OTS COF indices, but is
not as well known outside the 11th Federal Home Loan Bank District as
some other substitute indices that OTS analyzed. The OTS agrees with
this comment. Further, the OTS notes that only Arizona, California, and
Nevada savings associations that are members of the Federal Home Loan
Bank of San Francisco are eligible to be considered for inclusion in
this COF index. Thus, a limited number of savings associations in a
limited geographic area participate in providing data for this index.
Given that this is a weighted average index with a limited number of
participating institutions, the resulting values can be skewed by a few
very large institutions.
The bank/thrift trade association noted that the Federal COF index
is well known and highly correlated to the OTS's MMCOF, QCOF, and SCOF
indices, but the future of the Federal COF index may depend on the
outcome of reform of government-sponsored enterprises (GSEs), including
Freddie Mac. The OTS believes that any reform of the GSEs would by
necessity provide for either a continuation of the Federal COF or an
acceptable substitute index to the Federal COF similar to FIRREA's
provision for substitutes for the OTS's COF indices.
The savings association commenter mentioned there may be a large
volume of loans using the OTS COF indices that have been sold to FNMA
and FHLMC. As described in the February 8, 2011 notice, the OTS
analyzed the trends in savings associations' ARMs tied to LMIs and
found the volumes of these ARMs declined precipitously over the past
ten years to currently very low levels. Moreover, the OTS analyzed the
usage and trends of various indices used to base rate adjustments for
ARMs held by, or serviced by, lenders of all types throughout the
United States from 1999 through 2010. This analysis, based on lenders
of all types, confirmed the analysis based on savings association-
specific data. For example, based on data analyzed from the CoreLogic/
LoanPerformance Servicing Database,\5\ OTS found that less than 0.05
percent of the number and 0.01 percent of the balances of ARMs loans
outstanding as of December 31, 2010, use the MMCOF for the index rate.
---------------------------------------------------------------------------
\5\ Data were calculated from the CoreLogic/LoanPerformance
Servicing Database. The database includes 44.1 million active first
mortgages for a total of $7.5 trillion active balances that are
either held in portfolio as whole loans or securitized as of
December 31, 2010. The data represent approximately 80 percent of
outstanding first mortgages in the U.S.
---------------------------------------------------------------------------
The savings association commenter also expressed concern about the
difficulty of obtaining borrowers' consent to substitute indices
proposed
[[Page 39476]]
by the holders of their mortgages. The OTS notes that, pursuant to
FIRREA, substitute indices designated by the Director may be
substituted by the holder of any such adjustable rate mortgage
instrument upon notice to the borrower.
Given the Federal COF index's close correlation with the indices to
be terminated, and pursuant to the requirements of FIRREA, the OTS is
designating the Federal COF index \6\ as an acceptable substitute index
effective with the termination date of the discontinued indices.
Further, the calculation of the Federal COF does not depend on a
separate data collection from a limited amount of participants and is
easily calculated.
---------------------------------------------------------------------------
\6\ Link to Federal COF index data: https://www.freddiemac.com/news/finance/cof_index.htm.
---------------------------------------------------------------------------
In summary, after considering the comments received on the notice
of intent, the OTS will terminate the collection of data used to
calculate and publish the MMCOF, the QCOF, the SCOF, and other related
cost of funds ratios currently published monthly in the OTS's COF
Report. Savings associations shall cease filing the MMCOF data after
the December 31, 2011, report date. Until the effective date of these
changes, savings associations shall continue to file MMCOF data in the
current manner using existing processes.
The holder of any adjustable rate mortgage instrument whose
interest rate is adjusted based on the discontinued MMCOF, QCOF, and
SCOF indices shall provide notice as soon as possible after publication
of this termination notice to each affected borrower of the termination
of such index.
Holders of MMCOF adjustable rate mortgage instruments shall begin
using the Federal COF index for the index rate at adjustment
determination dates beginning after December 31, 2011. Holders of QCOF
adjustable rate mortgage instruments shall begin using an index rate
calculated as the average of the three monthly Federal COF index values
that were published immediately previous to adjustment determination
dates beginning after December 31, 2011. Holders of SCOF adjustable
rate mortgage instruments shall begin using an index rate calculated as
the average of the six monthly Federal COF index values that were
published immediately previous to adjustment determination dates
beginning after December 31, 2011.
Dated: June 29, 2011.
John E. Bowman,
Acting Director, Office of Thrift Supervision.
[FR Doc. 2011-16809 Filed 7-5-11; 8:45 am]
BILLING CODE 6720-01-P
