CUNA Comment Letter

Proposed Revision to the HMDA Reporting Threshold

August 28, 2008

Ms. Jennifer J. Johnson
Board of Governors of the Federal Reserve System
20th Street and Constitution Avenue, NW
Washington, DC 20551

RE:     Docket No. R-1316 – Proposed Revision to the HMDA Reporting Threshold

Dear Ms. Johnson:

The Credit Union National Association (CUNA) appreciates the opportunity to comment on the Federal Reserve Board’s (Board’s) proposed rule to amend Regulation C, the Home Mortgage Disclosure Act (HMDA), by revising the threshold for reporting price information on higher-priced loans. The revised threshold will be identical to the one used to determine the definition of “higher-priced mortgage loan” under the recent final rule that amends the Regulation Z requirements with regard to residential mortgage loans. By way of background, CUNA represents approximately 90% of our nation’s 8,300 federal and state-chartered credit unions, which serve 91 million members.

Summary of CUNA’s Comments


Regulation C currently requires lenders to report the spread between the annual percentage rate (APR) on a loan and the yield on comparable Treasury securities if the spread is at least three percentage points for first-lien loans or five percentage points for subordinate-lien loans. Under this proposal, a lender would report the spread if the loan APR exceeds an average of comparable prime mortgage rates by at least 1.5 percentage points for first-lien loans or 3.5 percentage points for subordinate lien loans. This proposal mirrors the threshold for the restrictions on “higher- priced mortgage loans,” as outlined in the recent Regulation Z mortgage lending final rules.

For now, the Board will rely on the PMMS conducted by Freddie Mac for purposes of determining the “average prime mortgage rate” and plans to post these rates on the Internet on a weekly basis. The Board may at any time consider other alternatives for calculating this average rate, including conducting its own survey.

We support the proposed threshold, which will be consistent with the recent Regulation Z mortgage lending final rules. In our comment letter in response to the Regulation Z rules, we suggested that the Board use a threshold based on conventional mortgage rates, instead of the proposed threshold based on Treasury securities, and we are pleased that the Board has adopted this approach. We also support changing the Regulation C threshold so it is consistent with the threshold in the new Regulation Z mortgage lending rules.

As indicated by the Board, the PMMS only provides data for 30-year fixed rate, 15-year fixed rate, one-year variable rate, and five-year variable rate first lien mortgage loans. The Board plans to use interpolation techniques to calculate the data for other types of mortgage loans, and we agree with this approach. We also suggest that the PMMS information be provided in an electronically retrievable format to assist lenders in complying with the HMDA requirements.

We are, however, concerned with the proposed January 1, 2009 implementation date. This will not provide lenders with sufficient time to make the necessary program changes. This will be even more of a challenge in the current regulatory climate in which the Board and other federal financial institution regulators have issued a significant number of new, complex consumer protection rules over the past several years and will issue several more in the near future.

Thank you for the opportunity to comment on the proposal to amend the Regulation C threshold for reporting price information on higher-priced loans. If you have questions about our comments, please contact Senior Vice President and Deputy General Counsel Mary Dunn or me at (202) 638-5777.


Jeffrey P. Bloch
Senior Assistant General Counsel