Truth in Lending (Regulation Z); Determining “Underserved” Areas Using Home Mortgage Disclosure Act Data, 38299-38301 [2020-13801]
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Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Rules and Regulations
Secured Liabilities at Failure
Federal Home Loan Bank advances,
secured federal funds purchased and
repurchase agreements are assumed to be
fully secured. Foreign deposits are treated as
An end-of-quarter loss severity ratio is LGD
divided by total domestic deposits at quarterend and the loss severity measure for the
scorecard is an average of end-of-period loss
severity ratios for three most recent quarters.
(b) [Reserved]
fully secured because of the potential for ring
fencing.
Exclude total outstanding borrowings from
the Federal Reserve Banks under the
Paycheck Protection Program Liquidity
Facility.
38299
Loss Severity Ratio Calculation
The FDIC’s loss given failure (LGD) is
calculated as:
III. Mitigating the Effects of Loans Provided
Under the Paycheck Protection Program and
Assets Purchased Under the Money Market
Mutual Fund Liquidity Facility on the
Unsecured Adjustment, Depository
Institution Debt Adjustment, and the
Brokered Deposit Adjustment to an IDI’s
Assessment Rate
TABLE E.5—EXCLUSIONS FROM ADJUSTMENTS TO THE INITIAL BASE ASSESSMENT RATE
Adjustment
Calculation
Exclusion
Unsecured debt adjustment .............
The unsecured debt adjustment shall be determined as the sum of the
initial base assessment rate plus 40 basis points; that sum shall be
multiplied by the ratio of an insured depository institution’s long-term
unsecured debt to its assessment base. The amount of the reduction
in the assessment rate due to the adjustment is equal to the dollar
amount of the adjustment divided by the amount of the assessment
base.
An insured depository institution shall pay a 50 basis point adjustment
on the amount of unsecured debt it holds that was issued by another
insured depository institution to the extent that such debt exceeds 3
percent of the institution’s Tier 1 capital. This amount is divided by
the institution’s assessment base. The amount of long-term unsecured debt issued by another insured depository institution shall be
calculated using the same valuation methodology used to calculate
the amount of such debt for reporting on the asset side of the balance sheets.
The brokered deposit adjustment shall be determined by multiplying 25
basis points by the ratio of the difference between an insured depository institution’s brokered deposits and 10 percent of its domestic
deposits to its assessment base.
Exclude from the assessment base the outstanding
balance of loans provided under the Paycheck Protection Program and the quarterly average amount
of assets purchased under the Money Market Mutual Fund Liquidity Facility.
Brokered deposit adjustment ...........
IV. Mitigating the Effects on the Assessment
Base Attributable to Loans Provided Under
the Paycheck Protection Program and
Participation in the Money Market Mutual
Fund Liquidity Facility
BUREAU OF CONSUMER FINANCIAL
PROTECTION
Total Assessment Amount Due = Total
Assessment Amount LESS: (SUM
(Outstanding balance of loans provided
under the Paycheck Protection Program and
quarterly average amount of assets purchased
under the Money Market Mutual Fund
Liquidity Facility) * Total Base Assessment
Rate)
Truth in Lending (Regulation Z);
Determining ‘‘Underserved’’ Areas
Using Home Mortgage Disclosure Act
Data
Federal Deposit Insurance Corporation.
By order of the Board of Directors.
Dated at Washington, DC, on June 22, 2020.
James P. Sheesley,
Acting Assistant Executive Secretary.
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[FR Doc. 2020–13751 Filed 6–24–20; 2:30 pm]
BILLING CODE 6714–01–P
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16:24 Jun 25, 2020
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12 CFR Part 1026
Bureau of Consumer Financial
Protection.
ACTION: Interpretive rule.
AGENCY:
This interpretive rule
construes the Bureau of Consumer
Financial Protection’s (Bureau’s)
Regulation Z, which implements the
Truth in Lending Act (TILA). The
Bureau produces annually a list of rural
and underserved counties and areas that
is used in applying various Regulation
Z provisions, such as the exemption
from the requirement to establish an
escrow account for a higher-priced
mortgage loan and the ability to
originate balloon-payment qualified
SUMMARY:
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Exclude from the assessment base the outstanding
balance of loans provided under the Paycheck Protection Program and the quarterly average amount
of assets purchased under the Money Market Mutual Fund Liquidity Facility.
Exclude from the assessment base the outstanding
balance of loans provided under the Paycheck Protection Program and the quarterly average amount
of assets purchased under the Money Market Mutual Fund Liquidity Facility.
mortgages. Regulation Z states that an
area is ‘‘underserved’’ during a calendar
year if, according to Home Mortgage
Disclosure Act (HMDA) data for the
preceding calendar year, it is a county
in which no more than two creditors
extended covered transactions, as
defined in Regulation Z, secured by first
liens on properties in the county five or
more times. The official commentary
provides an interpretation relating to
this standard that refers to certain data
elements from the previous version of
the Bureau’s Regulation C, which
implements HMDA, that were modified
or eliminated in the 2015 amendments
to Regulation C. The Bureau is issuing
this interpretive rule to supersede that
now outdated interpretation,
specifically by describing below the
HMDA data that will instead be used in
determining that an area is
‘‘underserved.’’
This interpretive rule is effective
on June 26, 2020.
DATES:
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Depository institution debt adjustment.
38300
Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Rules and Regulations
FOR FURTHER INFORMATION CONTACT:
Waeiz Syed, Counsel, 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. Discussion
jbell on DSKJLSW7X2PROD with RULES
A. Definition of ‘‘Underserved’’
As adopted in the Dodd-Frank Act
and further amended by the Helping
Expand Lending Practices in Rural
Communities Act of 2015, TILA sections
129C(b)(2)(E) and 129D(c) granted the
Bureau authority, among other things, to
create a special provision allowing the
origination of balloon-payment qualified
mortgages and an exemption from the
requirement to establish an escrow
account for higher-priced mortgage
loans.1 Through these amendments,
Congress limited the class of creditors to
which the Bureau may grant the special
provision and exemption to include
only certain creditors that operate in
‘‘rural’’ or ‘‘underserved’’ areas.
Section 1026.35(b)(2)(iv)(B) of
Regulation Z defines an area as
‘‘underserved’’ during a calendar year if,
according to HMDA data for the
preceding calendar year, it is a county
in which no more than two creditors
extended covered transactions, as
defined in § 1026.43(b)(1), secured by
first liens on properties in the county
five or more times.2 Section
1026.43(b)(1) of Regulation Z defines a
‘‘covered transaction’’ as a consumer
credit transaction that is secured by a
dwelling, as defined in § 1026.2(a)(19),
including any real property attached to
a dwelling, other than a transaction
exempt from coverage under
§ 1026.43(a).3 Accordingly, in
determining the number of first-lien
covered transactions in an area for the
purposes of determining whether an
area is ‘‘underserved,’’ the Bureau
1 Public Law 111–203, sections 1412 and 1461(a),
124 Stat. 1376, 2147 and 2179 (2010); Public Law
114–94, section 89003, 129 Stat. 1312, 1800 (2015)
(codified at 15 U.S.C. 1639c(b)(2)(E) and 15 U.S.C.
1639d(c)).
2 Escrow Requirements Under the Truth in
Lending Act (Regulation Z), 78 FR 4725, 4740–41
(Jan. 22, 2013) (noting that the Bureau adopted this
definition based on HMDA data to provide an
objective, easily administered rule and one that is
consistent with the purpose of preserving credit
access in underserved areas), as subsequently
amended by Amendments to the 2013 Escrows
Final Rule under the Truth in Lending Act
(Regulation Z), 78 FR 30739 (May 23, 2013), and
Amendments Relating to Small Creditors and Rural
or Underserved Areas Under the Truth in Lending
Act (Regulation Z), 80 FR 59943 (Oct. 2, 2015). 12
CFR 1026.35(b)(2)(iv)(B).
3 12 CFR 1026.43(b)(1).
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would not count transactions that fail to
meet the definition of a ‘‘covered
transaction’’ as set forth in
§ 1026.43(b)(1), such as a home equity
line of credit subject to § 1026.40.
The Bureau interpreted the definition
of ‘‘underserved’’ in the official
commentary to Regulation Z. In
comment 35(b)(2)(iv)–1.ii, the Bureau
stated that a county is an ‘‘underserved’’
area if, in the applicable calendar year’s
public HMDA aggregate dataset, no
more than two creditors have reported
five or more first-lien covered
transactions with HMDA geocoding that
places the properties in that county. For
the purposes of this determination,
because only covered transactions as
defined in § 1026.43(b)(1) of Regulation
Z are counted, all first-lien originations
(and only first-lien originations)
reported in the HMDA data are counted
except those for which the owneroccupancy status is reported as ‘‘Not
owner-occupied,’’ the property type is
reported as ‘‘Multifamily,’’ the
applicant’s or co-applicant’s race is
reported as ‘‘Not applicable,’’ or the
applicant’s or co-applicant’s sex is
reported as ‘‘Not applicable.’’ Comment
35(b)(2)(iv)–1.ii also specified HMDA
codes for each of these HMDA reporting
categories.
B. Determining ‘‘Underserved’’ Areas
Using HMDA Data
In 2015, the Bureau issued a final rule
amending Regulation C; for the most
part, the 2015 amendments took effect
on January 1, 2018.4 Among other
changes, the 2015 HMDA Final Rule
amended Regulation C to include nine
new data points as required by the
Dodd-Frank Act; added a number of
additional data points pursuant to the
Bureau’s discretionary authority under
HMDA section 304(b)(5) and (6); and
revised certain pre-existing data points
to clarify or amend their requirements.
In light of these changes, certain parts
of the methodology described in
comment 35(b)(2)(iv)–1.ii became
obsolete, as they referred to HMDA data
points replaced or otherwise modified
by the 2015 HMDA Final Rule. To avoid
uncertainty concerning how HMDA data
is to be used to determine the
underserved status of a county, the
Bureau is issuing this interpretive rule
to supersede the outdated portions of
the commentary and identify current
HMDA data points it will use to
determine whether a county is
underserved.
Under this interpretive rule, the
determination will be made by counting
4 Home Mortgage Disclosure Act (Regulation C),
80 FR 66128, 66256–58 (Oct. 28, 2015).
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first-lien originations from HMDA data
for the preceding calendar year, except
those for which any of the following
HMDA data points are reported with
values we interpret as being
inconsistent with Regulation Z’s
definition of a ‘‘covered transaction.’’
1. Construction Method and Total Units
Because a ‘‘covered transaction,’’ as
defined in § 1026.43(b)(1) of Regulation
Z, includes loans secured by residential
structures that contain one to four units,
the Bureau will not count first-lien
originations reported in HMDA data for
which the construction method status is
reported as ‘‘Site-built’’ (HMDA Code 1)
and the total units (i.e., number of
individual dwelling units related to the
property) is reported as being greater
than ‘‘4.’’
2. Open-End Line of Credit and Reverse
Mortgage
The definition of a ‘‘covered
transaction’’ in § 1026.43(b)(1) of
Regulation Z excludes specific
categories of loans, such as a home
equity line of credit subject to § 1026.40.
The definition of a ‘‘covered
transaction’’ also excludes, for example,
a reverse mortgage subject to § 1026.33,
for the purposes of § 1026.43(f), which
is the provision that permits creditors
operating in underserved areas to
originate qualified mortgages with
balloon payments.
For these reasons, the Bureau will not
count first-lien originations reported in
HMDA data for which the open-end line
of credit status is reported as ‘‘Open-end
line of credit’’ (HMDA Code 1) or the
reverse mortgage status is reported as
‘‘Reverse mortgage’’ (HMDA Code 1).
3. Business or Commercial Purpose
Regulation Z’s ‘‘covered transaction’’
definition also excludes an extension of
credit primarily for a business or
commercial purpose. Accordingly, the
Bureau will not count first-lien
originations reported in HMDA data for
which the business or commercial
purpose status is reported as ‘‘Primarily
for a business or commercial purpose’’
(HMDA Code 1).
4. Demographic Information of
Applicant and Co-Applicant
As defined in § 1026.43(b)(1) of
Regulation Z, a ‘‘covered transaction’’ is
limited to transactions made to
consumers, which § 1026.2(a)(11) of
Regulation Z defines, in part, as a
natural person to whom consumer
credit is offered or extended.
Appendix B and comment
4(a)(10)(ii)–4 of Regulation C instruct
covered financial institutions to report
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Federal Register / Vol. 85, No. 124 / Friday, June 26, 2020 / Rules and Regulations
the applicant’s or co-applicant’s
ethnicity, race, sex, and age as ‘‘not
applicable’’ if the applicant or coapplicant is not a natural person. For
these reasons, the Bureau will not count
first-lien originations reported in HMDA
data for which both the applicant’s and
co-applicant’s ethnicity, race, sex, and
age all are reported as follows: (1) The
applicant’s ethnicity is reported as ‘‘Not
applicable’’ (HMDA Code 4); (2) the
applicant’s race is reported as ‘‘Not
applicable’’ (HMDA Code 7); (3) the
applicant’s sex is reported as ‘‘Not
applicable’’ (HMDA Code 4); (4) the
applicant’s age is reported as ‘‘Not
applicable’’ (HMDA Code 8888); (5) the
co-applicant’s ethnicity is reported as
‘‘Not applicable’’ (HMDA Code 4) or
‘‘No co-applicant’’ (HMDA Code 5); (6)
the co-applicant’s race is reported as
‘‘Not applicable’’ (HMDA Code 7) or
‘‘No co-applicant’’ (HMDA Code 8); (7)
the co-applicant’s sex is reported as
‘‘Not applicable’’ (HMDA Code 4) or
‘‘No co-applicant’’ (HMDA Code 5); and
(8) the co-applicant’s age is reported as
‘‘Not applicable’’ (HMDA Code 8888) or
‘‘No co-applicant’’ (HMDA Code 9999).
The underserved counties list, using
the HMDA data described above, can be
found on the Bureau’s public website at
https://www.consumerfinance.gov/
policy-compliance/guidance/mortgageresources/rural-and-underservedcounties-list/, where, consistent with
past practice, the list is made available
along with historical lists.
C. Legal Authority
The Bureau is issuing this interpretive
rule based on its authority to interpret
Regulation Z, including under section
1022(b)(1) of the Dodd-Frank Act, which
authorizes guidance as may be
necessary or appropriate to enable the
Bureau to administer and carry out the
purposes and objectives of Federal
consumer financial laws.5
By operation of TILA section 130(f),
no provision of TILA sections 130,
108(b), 108(c), 108(e), or 112 imposing
any liability applies to any act done or
omitted in good faith in conformity with
this interpretive rule, notwithstanding
that after such act or omission has
occurred, the interpretive rule is
amended, rescinded, or determined by
judicial or other authority to be invalid
for any reason.6
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Because this rule is solely
interpretive, it is not subject to the 305 12 U.S.C. 5512(b)(1). The relevant provisions of
Regulation Z form part of Federal consumer
financial law. 12 U.S.C. 5481(12)(O), (14).
6 15 U.S.C. 1640(f).
16:24 Jun 25, 2020
III. Regulatory Requirements
This rule articulates the Bureau’s
interpretation of Regulation Z and TILA.
As an interpretive rule, it is exempt
from the notice-and-comment
rulemaking requirements of the
Administrative Procedure Act.8 Because
no notice of proposed rulemaking is
required, the Regulatory Flexibility Act
does not require an initial or final
regulatory flexibility analysis.9
The Bureau has determined that this
interpretive rule does not impose any
new requirements or revise any existing
recordkeeping, reporting, or disclosure
requirements on covered entities or
members of the public that would be
collections of information requiring
approval by the Office of Management
and Budget under the Paperwork
Reduction Act.10
IV. Congressional Review Act
Pursuant to the Congressional Review
Act,11 the Bureau will submit a report
containing this interpretive rule and
other required information to the United
States Senate, the United States House
of Representatives, and the Comptroller
General of the United States prior to the
rule’s published effective date. The
Office of Information and Regulatory
Affairs has designated this interpretive
rule as not a ‘‘major rule’’ as defined by
5 U.S.C. 804(2).
V. Signing Authority
The Director of the Bureau, having
reviewed and approved this document,
is delegating the authority to
electronically sign this document to
Laura Galban, a Bureau Federal Register
Liaison, for purposes of publication in
the Federal Register.
Dated: June 23, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer
Financial Protection.
[FR Doc. 2020–13801 Filed 6–25–20; 8:45 am]
BILLING CODE 4810–AM–P
II. Effective Date
VerDate Sep<11>2014
day delayed effective date for
substantive rules under section 553(d)
of the Administrative Procedure Act.7
Therefore, this rule is effective on June
26, 2020, the same date that it is
published in the Federal Register.
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75
U.S.C. 553(d).
U.S.C. 553(b).
9 5 U.S.C. 603(a), 604(a).
10 44 U.S.C. 3501 et seq.
11 5 U.S.C. 801 et seq.
85
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38301
SMALL BUSINESS ADMINISTRATION
13 CFR Part 120
[Docket No. SBA–2020–0039]
RIN 3245–AH53
Business Loan Program Temporary
Changes; Paycheck Protection
Program—Additional Eligibility
Revisions to First Interim Final Rule
U.S. Small Business
Administration.
ACTION: Interim final rule.
AGENCY:
On April 2, 2020, the U.S.
Small Business Administration (SBA)
posted on its website an interim final
rule relating to the implementation of
sections 1102 and 1106 of the
Coronavirus Aid, Relief, and Economic
Security Act (CARES Act or the Act)
(published in the Federal Register on
April 15, 2020). Section 1102 of the Act
temporarily adds a new product, titled
the ‘‘Paycheck Protection Program,’’ to
the U.S. Small Business
Administration’s (SBA’s) 7(a) Loan
Program. Subsequently, SBA issued a
number of interim final rules
implementing the Paycheck Protection
Program. On June 12, 2020, SBA posted
on its website an interim final rule
revising the interim final rule published
in the Federal Register on April 15,
2020 by changing the eligibility
requirement related to felony
convictions of applicants or owners of
the applicant. This interim final rule
further revises SBA’s interim final rule
published in the Federal Register on
April 15, 2020, by further changing that
eligibility requirement.
DATES:
Effective date: The provisions in this
interim final rule are effective June 24,
2020.
Comment date: Comments must be
received on or before July 27, 2020.
ADDRESSES: You may submit comments,
identified by number SBA–2020–0039,
through the Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
instructions for submitting comments.
SBA will post all comments on
www.regulations.gov. If you wish to
submit confidential business
information (CBI) as defined in the User
Notice at www.regulations.gov, please
send an email to ppp-ifr@sba.gov.
Highlight the information that you
consider to be CBI and explain why you
believe SBA should hold this
information as confidential. SBA will
review the information and make the
final determination whether it will
publish the information.
SUMMARY:
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]]>Agencies
[Federal Register Volume 85, Number 124 (Friday, June 26, 2020)]
[Rules and Regulations]
[Pages 38299-38301]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-13801]
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1026
Truth in Lending (Regulation Z); Determining ``Underserved''
Areas Using Home Mortgage Disclosure Act Data
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Interpretive rule.
-----------------------------------------------------------------------
SUMMARY: This interpretive rule construes the Bureau of Consumer
Financial Protection's (Bureau's) Regulation Z, which implements the
Truth in Lending Act (TILA). The Bureau produces annually a list of
rural and underserved counties and areas that is used in applying
various Regulation Z provisions, such as the exemption from the
requirement to establish an escrow account for a higher-priced mortgage
loan and the ability to originate balloon-payment qualified mortgages.
Regulation Z states that an area is ``underserved'' during a calendar
year if, according to Home Mortgage Disclosure Act (HMDA) data for the
preceding calendar year, it is a county in which no more than two
creditors extended covered transactions, as defined in Regulation Z,
secured by first liens on properties in the county five or more times.
The official commentary provides an interpretation relating to this
standard that refers to certain data elements from the previous version
of the Bureau's Regulation C, which implements HMDA, that were modified
or eliminated in the 2015 amendments to Regulation C. The Bureau is
issuing this interpretive rule to supersede that now outdated
interpretation, specifically by describing below the HMDA data that
will instead be used in determining that an area is ``underserved.''
DATES: This interpretive rule is effective on June 26, 2020.
[[Page 38300]]
FOR FURTHER INFORMATION CONTACT: Waeiz Syed, Counsel, Office of
Regulations, at (202) 435-7700 or https://reginquiries.consumerfinance.gov/. If you require this document in an
alternative electronic format, please contact
[email protected].
SUPPLEMENTARY INFORMATION:
I. Discussion
A. Definition of ``Underserved''
As adopted in the Dodd-Frank Act and further amended by the Helping
Expand Lending Practices in Rural Communities Act of 2015, TILA
sections 129C(b)(2)(E) and 129D(c) granted the Bureau authority, among
other things, to create a special provision allowing the origination of
balloon-payment qualified mortgages and an exemption from the
requirement to establish an escrow account for higher-priced mortgage
loans.\1\ Through these amendments, Congress limited the class of
creditors to which the Bureau may grant the special provision and
exemption to include only certain creditors that operate in ``rural''
or ``underserved'' areas.
---------------------------------------------------------------------------
\1\ Public Law 111-203, sections 1412 and 1461(a), 124 Stat.
1376, 2147 and 2179 (2010); Public Law 114-94, section 89003, 129
Stat. 1312, 1800 (2015) (codified at 15 U.S.C. 1639c(b)(2)(E) and 15
U.S.C. 1639d(c)).
---------------------------------------------------------------------------
Section 1026.35(b)(2)(iv)(B) of Regulation Z defines an area as
``underserved'' during a calendar year if, according to HMDA data for
the preceding calendar year, it is a county in which no more than two
creditors extended covered transactions, as defined in Sec.
1026.43(b)(1), secured by first liens on properties in the county five
or more times.\2\ Section 1026.43(b)(1) of Regulation Z defines a
``covered transaction'' as a consumer credit transaction that is
secured by a dwelling, as defined in Sec. 1026.2(a)(19), including any
real property attached to a dwelling, other than a transaction exempt
from coverage under Sec. 1026.43(a).\3\ Accordingly, in determining
the number of first-lien covered transactions in an area for the
purposes of determining whether an area is ``underserved,'' the Bureau
would not count transactions that fail to meet the definition of a
``covered transaction'' as set forth in Sec. 1026.43(b)(1), such as a
home equity line of credit subject to Sec. 1026.40.
---------------------------------------------------------------------------
\2\ Escrow Requirements Under the Truth in Lending Act
(Regulation Z), 78 FR 4725, 4740-41 (Jan. 22, 2013) (noting that the
Bureau adopted this definition based on HMDA data to provide an
objective, easily administered rule and one that is consistent with
the purpose of preserving credit access in underserved areas), as
subsequently amended by Amendments to the 2013 Escrows Final Rule
under the Truth in Lending Act (Regulation Z), 78 FR 30739 (May 23,
2013), and Amendments Relating to Small Creditors and Rural or
Underserved Areas Under the Truth in Lending Act (Regulation Z), 80
FR 59943 (Oct. 2, 2015). 12 CFR 1026.35(b)(2)(iv)(B).
\3\ 12 CFR 1026.43(b)(1).
---------------------------------------------------------------------------
The Bureau interpreted the definition of ``underserved'' in the
official commentary to Regulation Z. In comment 35(b)(2)(iv)-1.ii, the
Bureau stated that a county is an ``underserved'' area if, in the
applicable calendar year's public HMDA aggregate dataset, no more than
two creditors have reported five or more first-lien covered
transactions with HMDA geocoding that places the properties in that
county. For the purposes of this determination, because only covered
transactions as defined in Sec. 1026.43(b)(1) of Regulation Z are
counted, all first-lien originations (and only first-lien originations)
reported in the HMDA data are counted except those for which the owner-
occupancy status is reported as ``Not owner-occupied,'' the property
type is reported as ``Multifamily,'' the applicant's or co-applicant's
race is reported as ``Not applicable,'' or the applicant's or co-
applicant's sex is reported as ``Not applicable.'' Comment
35(b)(2)(iv)-1.ii also specified HMDA codes for each of these HMDA
reporting categories.
B. Determining ``Underserved'' Areas Using HMDA Data
In 2015, the Bureau issued a final rule amending Regulation C; for
the most part, the 2015 amendments took effect on January 1, 2018.\4\
Among other changes, the 2015 HMDA Final Rule amended Regulation C to
include nine new data points as required by the Dodd-Frank Act; added a
number of additional data points pursuant to the Bureau's discretionary
authority under HMDA section 304(b)(5) and (6); and revised certain
pre-existing data points to clarify or amend their requirements.
---------------------------------------------------------------------------
\4\ Home Mortgage Disclosure Act (Regulation C), 80 FR 66128,
66256-58 (Oct. 28, 2015).
---------------------------------------------------------------------------
In light of these changes, certain parts of the methodology
described in comment 35(b)(2)(iv)-1.ii became obsolete, as they
referred to HMDA data points replaced or otherwise modified by the 2015
HMDA Final Rule. To avoid uncertainty concerning how HMDA data is to be
used to determine the underserved status of a county, the Bureau is
issuing this interpretive rule to supersede the outdated portions of
the commentary and identify current HMDA data points it will use to
determine whether a county is underserved.
Under this interpretive rule, the determination will be made by
counting first-lien originations from HMDA data for the preceding
calendar year, except those for which any of the following HMDA data
points are reported with values we interpret as being inconsistent with
Regulation Z's definition of a ``covered transaction.''
1. Construction Method and Total Units
Because a ``covered transaction,'' as defined in Sec.
1026.43(b)(1) of Regulation Z, includes loans secured by residential
structures that contain one to four units, the Bureau will not count
first-lien originations reported in HMDA data for which the
construction method status is reported as ``Site-built'' (HMDA Code 1)
and the total units (i.e., number of individual dwelling units related
to the property) is reported as being greater than ``4.''
2. Open-End Line of Credit and Reverse Mortgage
The definition of a ``covered transaction'' in Sec. 1026.43(b)(1)
of Regulation Z excludes specific categories of loans, such as a home
equity line of credit subject to Sec. 1026.40. The definition of a
``covered transaction'' also excludes, for example, a reverse mortgage
subject to Sec. 1026.33, for the purposes of Sec. 1026.43(f), which
is the provision that permits creditors operating in underserved areas
to originate qualified mortgages with balloon payments.
For these reasons, the Bureau will not count first-lien
originations reported in HMDA data for which the open-end line of
credit status is reported as ``Open-end line of credit'' (HMDA Code 1)
or the reverse mortgage status is reported as ``Reverse mortgage''
(HMDA Code 1).
3. Business or Commercial Purpose
Regulation Z's ``covered transaction'' definition also excludes an
extension of credit primarily for a business or commercial purpose.
Accordingly, the Bureau will not count first-lien originations reported
in HMDA data for which the business or commercial purpose status is
reported as ``Primarily for a business or commercial purpose'' (HMDA
Code 1).
4. Demographic Information of Applicant and Co-Applicant
As defined in Sec. 1026.43(b)(1) of Regulation Z, a ``covered
transaction'' is limited to transactions made to consumers, which Sec.
1026.2(a)(11) of Regulation Z defines, in part, as a natural person to
whom consumer credit is offered or extended.
Appendix B and comment 4(a)(10)(ii)-4 of Regulation C instruct
covered financial institutions to report
[[Page 38301]]
the applicant's or co-applicant's ethnicity, race, sex, and age as
``not applicable'' if the applicant or co-applicant is not a natural
person. For these reasons, the Bureau will not count first-lien
originations reported in HMDA data for which both the applicant's and
co-applicant's ethnicity, race, sex, and age all are reported as
follows: (1) The applicant's ethnicity is reported as ``Not
applicable'' (HMDA Code 4); (2) the applicant's race is reported as
``Not applicable'' (HMDA Code 7); (3) the applicant's sex is reported
as ``Not applicable'' (HMDA Code 4); (4) the applicant's age is
reported as ``Not applicable'' (HMDA Code 8888); (5) the co-applicant's
ethnicity is reported as ``Not applicable'' (HMDA Code 4) or ``No co-
applicant'' (HMDA Code 5); (6) the co-applicant's race is reported as
``Not applicable'' (HMDA Code 7) or ``No co-applicant'' (HMDA Code 8);
(7) the co-applicant's sex is reported as ``Not applicable'' (HMDA Code
4) or ``No co-applicant'' (HMDA Code 5); and (8) the co-applicant's age
is reported as ``Not applicable'' (HMDA Code 8888) or ``No co-
applicant'' (HMDA Code 9999).
The underserved counties list, using the HMDA data described above,
can be found on the Bureau's public website at https://www.consumerfinance.gov/policy-compliance/guidance/mortgage-resources/rural-and-underserved-counties-list/, where, consistent with past
practice, the list is made available along with historical lists.
C. Legal Authority
The Bureau is issuing this interpretive rule based on its authority
to interpret Regulation Z, including under section 1022(b)(1) of the
Dodd-Frank Act, which authorizes guidance as may be necessary or
appropriate to enable the Bureau to administer and carry out the
purposes and objectives of Federal consumer financial laws.\5\
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\5\ 12 U.S.C. 5512(b)(1). The relevant provisions of Regulation
Z form part of Federal consumer financial law. 12 U.S.C.
5481(12)(O), (14).
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By operation of TILA section 130(f), no provision of TILA sections
130, 108(b), 108(c), 108(e), or 112 imposing any liability applies to
any act done or omitted in good faith in conformity with this
interpretive rule, notwithstanding that after such act or omission has
occurred, the interpretive rule is amended, rescinded, or determined by
judicial or other authority to be invalid for any reason.\6\
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\6\ 15 U.S.C. 1640(f).
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II. Effective Date
Because this rule is solely interpretive, it is not subject to the
30-day delayed effective date for substantive rules under section
553(d) of the Administrative Procedure Act.\7\ Therefore, this rule is
effective on June 26, 2020, the same date that it is published in the
Federal Register.
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\7\ 5 U.S.C. 553(d).
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III. Regulatory Requirements
This rule articulates the Bureau's interpretation of Regulation Z
and TILA. As an interpretive rule, it is exempt from the notice-and-
comment rulemaking requirements of the Administrative Procedure Act.\8\
Because no notice of proposed rulemaking is required, the Regulatory
Flexibility Act does not require an initial or final regulatory
flexibility analysis.\9\
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\8\ 5 U.S.C. 553(b).
\9\ 5 U.S.C. 603(a), 604(a).
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The Bureau has determined that this interpretive rule does not
impose any new requirements or revise any existing recordkeeping,
reporting, or disclosure requirements on covered entities or members of
the public that would be collections of information requiring approval
by the Office of Management and Budget under the Paperwork Reduction
Act.\10\
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\10\ 44 U.S.C. 3501 et seq.
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IV. Congressional Review Act
Pursuant to the Congressional Review Act,\11\ the Bureau will
submit a report containing this interpretive rule and other required
information to the United States Senate, the United States House of
Representatives, and the Comptroller General of the United States prior
to the rule's published effective date. The Office of Information and
Regulatory Affairs has designated this interpretive rule as not a
``major rule'' as defined by 5 U.S.C. 804(2).
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\11\ 5 U.S.C. 801 et seq.
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V. Signing Authority
The Director of the Bureau, having reviewed and approved this
document, is delegating the authority to electronically sign this
document to Laura Galban, a Bureau Federal Register Liaison, for
purposes of publication in the Federal Register.
Dated: June 23, 2020.
Laura Galban,
Federal Register Liaison, Bureau of Consumer Financial Protection.
[FR Doc. 2020-13801 Filed 6-25-20; 8:45 am]
BILLING CODE 4810-AM-P
