Reg. C HMDA Proposal

Get your comment pens warmed up. http://www.bog.frb.fed.us/boarddocs/meetings/2000/20001129/20001129-OpenMemo1-1.pdf

Changes to definitions and the data collected are proposed. Yes, APRs are included as they seek out subprime loans. This would also be an "aide" in fair lending audits.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

As Andy says, warm up your comment pens. We'll have a model comment letter ready with blanks for you to fill in. As we work on this, any ideas or questions you have would enrich the model -- and each other's comments!

This proposal will cause some major changes -- including how to capture data. A very important question is what additional costs will be. I think the compliance world should think very hard about what new processes are involved.

The other concern is cost. Several of the Governors raised some serious concerns about costs. This is clearly an area for comment.

For those of you who want to get an executive summary of the proposal, we posted an article by BOL Guru Lucy Griffin earlier today which explains what the proposed changes would do and the rationale behind them. You will find it helpful in getting ready to write your comment letter. Link to it from the Compliance section:
Lucy's article

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[This message has been edited by Mary Beth Guard (edited 11-29-2000).]

For the faint of heart, although I haven't finished the 165 pages yet (my boss hates it when I go to sleep at work and this isn't high energy reading) this was discussed at the recent PCi Fair Lending Conference. As I recall, it will effect data gathered in '01 and reported in '02.

Correct me if I am wrong.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

Andy, are you suggesting that data collection would be retroactive? (Assuming comments are due early February, 'final' regulations are issued late first quarter or early second quarter - that we'd have to capture data from this coming January?)

This will likely change the tone of my comment letter, as gearing up for expanded data collection in 30 days is vastly different than gearing up for expanded data collection in 390 days...

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This is a proposal and does not specifically deal with an implementation schedule. However this is clearly a point to raise in your comment letter, along with what systems and procedures would have to be revamped to compile the data. At the Board meeting this morning, FRB staff expressed the view that these additional data items should not be difficult to implement because banks are already familiar with and use the terms and calculations.

The best I could expect (other than abandonment of the proposal) is to delay the effective date until we start collecting data for calendar year 2018, which is probably the year after my wife will let me retire!

Seriously, we have a lot of work to do writing the comments on this one. Banks that use automated systems to gather HMDA data will have to think long and hard about pulling in data on home improvement loans (if new to them) and HELOCs. These usually are run on completely different systems from "vanilla" real estate loans.

I pulled out my tape from the PCi Conference and listened to it again. The speaker did indicate that the proposal was expected to be effective for the 2002 data collection year. I "spoke" to quickly in my earlier post.

So as we put Privacy into full blown production, we'll have HMDA to address in our free time.

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Andy Zavoina
Opinions stated are not necessarily that of my employer.

Here's a link to the Federal Register document, published today (12/15/00).
http://www.gpo.ucop.edu/cgi-bin/gpogate?waisdoc=1&doctype=PDF&docid=::::1855866+194432+/diskb/wais/data/2000_register/fr15de00.dat.HTML&server=2000_register/162.140.64.89

[This message has been edited by John Burnett (edited 12-15-2000).]