| Fed Proposing Revisions to HMDA
Comments must be made by April 8 March 5, 2003 By MortgageDaily.com staff |
| The Federal Reserve Board has issued transition rules in order for lenders to comply with a proposed amendment to the Home Mortgage Disclosure Act (HMDA).
Revisions made to HMDA will require mortgage lenders to report new pieces of information, and will go into effect Jan. 1, 2004. The transition rules give guidance on what information to collect from now until then. For applications received before Jan. 1, 2004, the transition rules say that lenders do not have to identify loans involving manufactured homes or requests for preapproval. The rules also say lenders can continue using the current definitions of a home improvement loan and a refinancing, if they want. Lenders do, however, need to use the new racial classification codes, such as identifying “Hispanic” as an ethnicity and not a race. The revisions will also require lenders to report the purchaser type, rate spread, whether a loan is subject to the Home Ownership and Equity Protection Act, and the lien status of applications and originated loans. There are no transition rules for lenders on these changes because information about these items is available at final action, the board said. Regulation CÂ of HMDA requires lenders to report data on each application or loan, such as dates, loan type and purpose, and if the loan is sold, the type of purchaser. Lenders also must report on each borrower’s ethnicity, race, sex, and income, and on the details of each property. The revisions to Regulation C were made by the board in 2002. Comments on the revisions are due by April 8, and the board expects to issue final guidance soon after. The revisions include requirements that a lender report the difference between a loan’s annual percentage rate and the yield on Treasury securities with comparable maturity periods. The definition of home improvement loans and refinancings have been revised as well. When taking an application over the phone, lenders also must ask a borrower’s ethnicity, sex, and race. The HMDA has three purposes, the board said. It provides data to the public and government to ensure that lenders are serving the housing needs in the areas they are located, and to help public officials target public investment to promote private investment where it’s needed. It also provides information that helps identify possible discriminatory lending practices and helps enforce statutes against it. The revisions originally were to take effect Jan.1 of this year, but the board postponed the date to 2004 because some HMDA reporters, especially the larger ones, wouldn’t have been able to implement the new rules in time. Comments on the revisions can be e-mailed to regs.comments@federalreserve.com. |
