CUNA Comment Letter

Regulation C, Home Mortgage Disclosure

May 28, 1998

William W. Wiles, Secretary
Board of Governors of the Federal Reserve System
20th Street and Constitution Ave, NW
Washington, DC 20551

RE: Docket No. R-1001 Regulation C, Home Mortgage Disclosure

Dear Mr. Wiles:

Credit Union National Association and Affiliates (CUNA), which represents over 11,000 state and federal credit unions nationwide, appreciates the opportunity to comment on the advance notice of proposed rulemaking on Regulation C. The advance notice appeared in the Federal Register on March 12.

The credit union movement supports the purposes of the HMDA data collection requirements to help determine whether financial institutions are serving the housing needs in their area and to assist in identifying possible discriminatory lending patterns. Credit unions' HMDA data reflect their good lending practices. The possible revisions outlined in the advance notice would not to any notable degree improve the implementation of HMDA but would necessitate expensive changes to credit unions' data collection systems and the retraining of staff. Therefore, CUNA urges that no changes to the HMDA-LAR codes and to the data collection and reporting requirements be made.

Credit unions find that their members do a lot of "shopping" for loans and that getting a preapproval is one way of doing that. Because preapprovals can be given over the telephone and without any formal application, it would be difficult to track such transactions. Therefore, CUNA does not support any change to require the reporting of approvals or denials of preapprovals, beyond the current requirement to report those that result in an origination.

CUNA does not support a change to the data collection code that would require two codes for the reporting of refinancings, one for the refinancing of home purchase loans and the other for the refinancing of home improvement loans. Currently there is only one code for all refinancings. Such a revision would necessitate changes to a credit union's data collection system so the new code could be tracked, and we question whether such a breakdown of refinancings warrants the increased burden to the reporting institutions.

In response to some of the other issues, we do not see the need for reporting mobile homes separately from traditional homes as they are both "dwellings" under the regulation. Therefore, we do not support such a revision. We do not support a requirement to make reporting of the reason(s) for denial mandatory. Some credit unions do capture the reasons for denial when they are tracking loan applications, but the codes for denial currently in their system are not pegged to those codes on the HMDA-LAR, and therefore, such a change would be difficult and expensive. Although some credit unions said that reporting on the appraised value of the property would not be burdensome, other credit unions reported that many of their loans do not require a formal appraisal, but use instead an inspection and verification of the county assessed value. Thus, for some transactions appraisals are not required, and any mandatory data collection requirement would be very burdensome. CUNA does not support this change.

CUNA is very pleased that the FFIEC has again published "A Guide to HMDA Reporting: Getting It Right!" as we believe that this is one of the best tools for credit unions to use to comply with the HMDA requirements. However, its usability could be greatly improved if there were a topical index. If the Federal Reserve Board does move forward with a reorganization of Regulation C, its commentary, and the HMDA-LAR instructions, CUNA recommends that a topical index also be made a part of that reorganization. Without an index it can be very difficult for the reader to go from the instructions to the regulation and commentary or vice versa.

CUNA again appreciates the opportunity to comment on this advance notice on Regulation C.

Sincerely yours,

Sarah Cummer
Regulatory Affairs Counsel