Bloomberg--With assistance from Allyson Versprille and Cheryl Bolen

The real estate and banking lobbies asked, the White House’s regulatory review office listened—and then the administration helped those industries become eligible for a $414.5 billion perk in the 2017 tax law.

New documents provided by the Office of Management and Budget show that during the White House body’s review of IRS proposed rules for the law’s 20 percent pass-through write-off, the regulations were revised to keep real estate agents and brokers, lenders, insurance agents and brokers, and others from losing out on the deduction if their income is above certain levels. It’s unclear whether the office, the Treasury Department, or the Internal Revenue Service directed the revisions.

The changes followed meetings between OMB and the National Association of Realtors, the Mortgage Bankers Association, and other banking groups. An April 2018 memorandum following months of negotiations between Treasury and the White House office granted OMB and its Office of Information and Regulatory Affairs (OIRA) new authority over tax regulations, reversing a decades-old arrangement exempting most tax rules from such scrutiny.

“There had to be some lobbying impact there,” said Tony Nitti, a partner and CPA at RubinBrown LLP in Denver who focuses on partnership and real estate tax. “Look who met and look who got results.”

Nitti, who viewed both versions of the proposed regulations, said it is clear that the IRS had a different interpretation and intent for the rules prior to the White House review.

Steve Schneider, a partner at Baker McKenzie in Washington who specializes in real estate tax, said evidence of the revision showed stakeholders have a sort of “appeals process” when it comes to advocating for their interests in the tax law regulations.

“It does create some examples of additional bites at the apple that others might see as helpful,” Schneider said, adding that he generally agreed with those changes. “It is helpful to know that, hey, you can go to appeals.”

IRS and Treasury spokespeople didn’t respond to requests for comment. An OIRA spokesperson declined to comment or answer questions. 

Lobbying Scramble

The tax overhaul created a 20 percent write-off for owners of pass-through businesses, in which income is taxed at the individual owner level, under added tax code Section 199A. These structures include limited liability companies, S corporations, partnerships, and sole proprietorships. The nonpartisan Joint Committee on Taxation estimated it would cost $414.5 billion over a decade.

For single pass-through owners earning more than $157,500 and married owners earning more than $315,000, a restriction based on the wages they pay their employees and the capital they own phases in. For a category of activities known as “specified service” businesses, that deduction is gone completely above incomes of $207,500 for singles and $415,000 for married filers. The statute defines “specified services” to include health, law, accounting, performing arts, financial services, brokerage services, and businesses dealing in securities, commodities, and partnership interests, among others.

This prompted a scramble among various industry lobbying groups to get their members excluded from the definition of a “specified service” as the IRS began to craft its regulations.

Those groups included the Mortgage Bankers Association, the American Bankers Association, the Underwriters Group, and ABD Insurance & Financial Services, which wrote letters to Treasury and IRS officials asking them to leave their industries out of the definition. 

‘Dealing in Securities’

The proposed rules for the new deduction, upon landing at OIRA, included real estate and insurance agents and brokers within the definition of “brokerage services,” according to a copy of that version of the rules recently obtained by Bloomberg Tax. The package of regulations also said a banking or lending business that regularly makes or sells loans to customers is treated as a dealer in securities.

In late July and early August, Quicken Loans, Independent Community Bankers of America, the National Association of Realtors, the American Bankers Association, and the Subchapter S Bank Association were among the groups participating in meetings with OMB and Treasury officials. Representatives of some of the groups told Bloomberg Tax at the time that the meetings mostly consisted of a presentation from the industry organizations with little feedback from the government.

The version of the proposed rules released to the public says “a taxpayer that regularly originates loans in the ordinary course of a trade or business of making loans but engages in no more than negligible sales of the loans is not dealing in securities.”

Two handouts brought to separate OIRA meetings by, respectively, the Mortgage Bankers Association and several other banking groups, urged IRS and Treasury officials to adopt a narrower reading of “dealing in securities” to ensure their industries didn’t fall into that “specified service” category.

Pete Mills, the Mortgage Bankers Association’s senior vice president of residential policy, said in an emailed statement that the group was “pleased that the final rule reflected changes in the definition of ‘dealing in securities’ that were consistent with the recommendations in our formal comments.”

Once the proposed rules were released to the public, a Quicken Loans vice chairman praised this narrow definition of “dealing in securities” and asked the IRS for clarity on one point in a September public comment letter.

Eileen Newell, vice president of tax at Quicken Loans owner Rock Holdings LLC, is listed as a participant in one OIRA meeting on the deduction via teleconference, but “only listened in on a group conference call with OIRA, which was held by an outside group,” a spokesperson said in a statement to Bloomberg Tax. 

Brokerage Services

The public version of the proposal also added a few words carving out “real estate agents and brokers, or insurance agents and brokers” as exceptions to the brokerage service category.

The National Association of Realtors brought a handout to its meeting with OIRA officials requesting that the proposed rules state that the “brokerage services” definition “was not intended to encompass real estate and other transactions with close ties to building and construction.” The letter to IRS officials pointed to the explicit exclusion of engineering and architecture from the list of services, which, like real estate brokers, “add value to real estate.”

In an emailed statement, the association said it was “pleased to see the final regulations allow all real estate professionals to benefit” from the deduction and said the change resulted in fair tax treatment for real estate agents and pass-through businesses relative to corporations.

Ballard Sparh, LLP--Elanor A. Mulhern

The Federal Financial Institutions Examination Council (FFIEC)—the interagency body tasked with setting uniform principles and standards for the examination of financial institutions by federal regulators, including the Consumer Financial Protection Bureau—has adopted a Policy Statement designed to streamline the information presented in examination reports (ROE). While the agencies represented by the FFIEC will make any individual adjustments deemed necessary for their existing ROE guidance, financial institutions should be aware of the new format outlined in the Policy Statement which sets forth minimum expectations for what should be included in all ROEs.

In the Policy Statement, the FFIEC explicitly rescinds and replaces the 1993 Interagency Policy Statement on the Uniform Core Report of Examination. The Policy Statement is the latest in a series of FFIEC announcements related to their Examination Modernization Project which was launched to identify and assess ways to improve the effectiveness, efficiency and quality of examination processes, particularly through the use of technology, and to reduce unnecessary regulatory burden on community financial institutions. The Policy Statement list of minimum expectation for ROEs includes:

• Identifying information about the institution and agency;
• A statement on the confidentiality of information;
• Conclusions presented in the order of importance;
• A brief narrative on the financial institution’s condition and risk profile, including assigned regulatory component and composite ratings;
• A discussion of the adequacy of the financial institution’s risk management practices;
• Prominent notice of any issues of supervisory concern or warranting corrective action; and
• Signatures of the board of directors acknowledging receipt and review.

As with the recent FFIEC's guidance regarding Home Mortgage Disclosure Act rules (as discussed in our prior blog post), the Policy Statement is an important resource for financial institutions interacting with the FFIEC member agencies.

The Securities and Exchange Commission today voted to adopt amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies. These amendments are expected to benefit investors by eliminating outdated and unnecessary disclosure and making it easier for them to access and analyze material information.  

The amendments, consistent with the Commission’s mandate under the Fixing America’s Surface Transportation (FAST) Act, are based on recommendations in the staff’s FAST Act Report as well as a broader review of the Commission’s disclosure rules. The amendments are intended to improve the readability and navigability of company disclosures, and to discourage repetition and disclosure of immaterial information. Specifically, the amendments will, among other things, increase flexibility in the discussion of historical periods in Management’s Discussion and Analysis, allow companies to redact confidential information from most exhibits without filing a confidential treatment request, and incorporate technology to improve access to information on the cover page of certain filings.

“Investors will benefit from the SEC staff’s exemplary work to improve disclosure,” said SEC Chairman Jay Clayton. “The amendments adopted today demonstrate our focus on modernizing our disclosure system to meet the expectations of today’s investors while eliminating unnecessary costs and burdens.” 

The amendments relating to the redaction of confidential information in certain exhibits will become effective upon publication in the Federal Register. The rest of the amendments will be effective 30 days after they are published in the Federal Register, except that the requirements to tag data on the cover pages of certain filings are subject to a three-year phase-in, and the requirement that certain investment company filings be made in HTML format and use hyperlinks will be effective for filings on or after April 1, 2020.

FACT SHEET

FAST Act Modernization and Simplification of Regulation S-K

March 20, 2019

Action

The Commission voted to adopt amendments to modernize and simplify certain disclosure requirements in Regulation S-K, and related rules and forms, in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors. The amendments are also intended to improve the readability and navigability of disclosure documents and discourage repetition and disclosure of immaterial information.

Highlights

Among other things, the amendments:

• Simplify disclosure or the disclosure process, including changes that would allow registrants to omit confidential information from most exhibits without filing a confidential treatment request, and changes to Management’s Discussion and Analysis that allow for flexibility in discussing historical periods;
• Revise rules or forms to update, streamline or otherwise improve the Commission’s disclosure framework by eliminating the risk factor examples listed in the disclosure requirement and revising the description of property requirement to emphasize the materiality threshold;
• Update rules to account for developments since their adoption or last amendment by eliminating certain requirements for undertakings in registration statements; and
• Incorporate technology to improve access to information by requiring data tagging for items on the cover page of certain filings and the use of hyperlinks for information that is incorporated by reference and available on EDGAR.

The amendments also include parallel amendments to several rules and forms applicable to investment companies and investment advisers, including amendments that require certain investment company filings to include a hyperlink to each exhibit listed in the exhibit index of the filings and be submitted in HyperText Markup Language (HTML) format.

What’s Next?

The amendments will be effective 30 days after they are published in the Federal Register, except that the amendments relating to the redaction of confidential information in certain exhibits will become effective upon publication in the Federal Register. The requirements to tag data on the cover pages of certain filings are subject to a three-year phase-in, depending on the nature of the filer. All investment company registration statement and Form N-CSR filings made on or after April 1, 2020 must be made in HTML format and comply with the rule and form amendments pertaining to the use of hyperlinks.

FIL-14-2019

March 20, 2019

Printable Format:

FIL-14-2019 - PDF (PDF Help)

Summary:

On March 8, 2019, the FDIC Board approved a final rule rescinding and removing Part 350 of the FDIC's regulations, which is entitled Disclosure of Financial and Other Information by FDIC Insured State Nonmember Banks. The FDIC is taking this action to simplify its regulations by eliminating unnecessary or redundant regulations, which is consistent with the objectives of Section 2222 of the Economic Growth and Regulatory Paperwork Reduction Act of 1996.

Statement of Applicability to Institutions With Total Assets Under $1 Billion: This Financial Institution Letter applies to all FDIC-supervised institutions, including community institutions.

Highlights:

• Part 350 requires insured state nonmember banks and insured state-licensed branches of foreign banks to prepare, and make available to the public, annual disclosure statements consisting of certain financial data as well as other information, such as enforcement actions, the FDIC may require of individual institutions. Part 350 does not apply to insured state savings associations.
• Technological advancements since Part 350 took effect in 1988 provide ready access through the FDIC's website to more extensive and timely information on the condition and performance of FDIC-supervised institutions, as well as enforcement actions against individual institutions, than is provided in annual disclosure statements.
• Considering these developments, the FDIC determined that Part 350 is outdated and no longer necessary. Accordingly, the FDIC is rescinding and removing Part 350 from the Code of Federal Regulations.
• Although the FDIC's final rule rescinding and removing Part 350 will not take effect until April 17, 2019, state nonmember banks and insured state-licensed branches of foreign banks need not prepare, and make available to the public, disclosure statements containing financial data for 2018 and 2017.
• This FIL expires one year after issuance.

Distribution:

• FDIC-Supervised Institutions

Suggested Routing:

• Chief Executive Officer
• Chief Financial Officer

Related Topics:

• Disclosure of Financial and Other Information by FDIC-Insured State Nonmember Banks, 12 CFR Part 350

Attachment:

• Federal Register Notice

Contact:

• Andrew Overton, Examination Specialist (Bank Accounting), Division of Risk Management Supervision, at 202-898-8922 or aoverton@fdic.gov.

Note:

FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's website at www.fdic.gov/news/news/financial/index.html.

To receive FILs electronically, please visit www.fdic.gov/about/subscriptions/fil.html.

Paper copies may be obtained via the FDIC's Public Information Center, 3501 Fairfax Drive, E 1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).

Ballard Spahr LLP--Barbara S. Mishkin 

The FTC and CFPB have reauthorized their memorandum of understanding.  According to the FTC’s press release, “the agreement reflects the ongoing coordination between the two agencies under the terms of the Consumer Financial Protection Act, and is designed to coordinate efforts to protect consumers and avoid duplication of federal law enforcement and regulatory efforts.”

The first MOU, signed in 2012, had an initial term of three years, and was reauthorized in 2015 for an additional three-year term.  Although some definitional and organizational changes were made to the new MOU, it does not appear to have any material substantive differences from the 2015 MOU.  However, unlike the prior two MOUs which each had a three-year term, the new MOU provides that it “will remain in effect unless superseded by the signed, mutual agreement of the agencies.”

Reverse Mortgage Daily--Chris Clow

The Trump Administration plans for its Office of Inspector General to increase oversight of the Home Equity Conversion Mortgage program in 2020, according to a proposed budget released Monday.

The Administration’s HUD budget proposal for the 2020 fiscal year includes a statement on this expanded oversight that the OIG will have, in addition to addressing management challenges by updating the department’s information technology and providing resources to support congressionally mandated department audits.

“The OIG will expand oversight of the HECM program, ensuring the program does not pose undue risk to the Mutual Mortgage Insurance (MMI) Fund,” the department’s “Budget in Brief” document states.

In the press release announcing the HUD budget proposal, the department noted that it was “seeking up to $400 billion in new single-family loan guarantee authority,” which is a total equal to the amount of appropriations sought to support all single family programs in fiscal year 2019’s budget proposal last year.

Other priorities that HUD has laid out for the new fiscal year includes appropriating $2.6 billion for housing assistance programs to combat homelessness, seeking a combined $290 million for HUD’s Office of Lead Hazard Control and Healthy Homes, seeking $22.2 billion for HUD’s Housing Choice Voucher Program and $12 billion to renew rental subsidies.

HUD has also prioritized the pursuit of rent reform and limiting the regulatory structure of the Public Housing program, which the department describes as “cumbersome” in its press release.

Last year, the White House proposed a permanent end to the cap on the number of reverse mortgages, and a cut to the appropriations for housing counseling programs.

The submission of the White House’s budget proposal is a requirement of the federal government’s budgetary process, and often represents only a starting point in the Administration’s fiscal negotiations with Congress. It is typically not enacted as originally written.

FDIC

Summary:

The banking agencies, under the auspices of the Federal Financial Institutions Examination Council (FFIEC), have finalized revisions to the Consolidated Reports of Condition and Income (Call Report) and certain other FFIEC reports that primarily address changes in the accounting for credit losses under the Financial Accounting Standards Board's Accounting Standards Update (ASU) 2016-13. Other revisions to these reports result from the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) and relate to the reporting of high volatility commercial real estate (HVCRE) exposures and reciprocal deposits. These revisions, which were issued for comment in September 2018, are subject to approval by the U.S. Office of Management and Budget.

Statement of Applicability to Institutions under $1 Billion in Total Assets: This Financial Institution Letter applies to all FDIC-supervised banks and savings associations, including community institutions.

Highlights:

• The changes related to credit loss reporting affect all three versions of the Call Report (FFIEC 031, FFIEC 041, and FFIEC 051), as well as the following FFIEC reports that are applicable to a limited number of institutions:
  • Foreign Branch Report of Condition (FFIEC 030),
  • Abbreviated Foreign Branch Report of Condition (FFIEC 030S), and
  • Regulatory Capital Reporting for Institutions Subject to the Advanced Capital Adequacy Framework (FFIEC 101).
• The changes to the Call Report and the FFIEC 101 report implement the agencies' recent revisions to the regulatory capital rules for the current expected credit losses (CECL) methodology in ASU 2016-13, including a CECL regulatory capital transition.
• Because ASU 2016-13 has different effective dates for different institutions, the reporting changes related to credit losses will be phased in between March 31, 2019, and December 31, 2022.
• The reporting changes involving the reporting of HVCRE exposures and reciprocal deposits arise from two sections of EGRRCPA that were effective upon enactment on May 24, 2018. As a consequence, these changes affected reporting in the Call Report and the FFIEC 101 report beginning as of the June 30, 2018, report date.
• Redlined copies of the FFIEC report forms showing the reporting changes related to credit losses are available on the report forms webpage on the FFIEC's website.
• The agencies currently are considering the comments received on a separate proposal to implement Section 205 of EGRRCPA on reduced reporting for covered institutions in the Call Report (see FIL 74-2018, dated November 19, 2018). Although the proposal included revisions to the FFIEC 051 reporting requirements that were proposed to take effect March 31, 2019, these reporting changes, if finalized, would take effect no earlier than June 30, 2019.

Distribution:

• FDIC-Supervised Institutions

Suggested Routing:

• Chief Financial Officer
• Chief Accounting Officer
• Call Report Preparer

Related Topics:

• FIL-10-2019, March 6, 2019, Revisions to the Consolidated Reports of Condition and Income (Call Report) and Certain Other Regulatory Reports
• FIL-41-2017, September 6, 2017, New Accounting Standard on Credit Losses: Frequently Asked Questions
• FIL-39-2016, June 17, 2016, Joint Statement on New Accounting Standard on Financial Instruments – Credit Losses

Attachment:

• Final Paperwork Reduction Act Federal Register Notice

Contact:

• FDIC's Data Collection and Analysis Section at 800-688-3342 or FDICInfoReq@fdic.gov.

Note:

FDIC Financial Institution Letters (FILs) may be accessed from the FDIC's website at www.fdic.gov/news/news/financial/index.html.

To receive FILs electronically, please visit www.fdic.gov/about/subscriptions/index.html.

Paper copies may be obtained via the FDIC's Public Information Center, 3501 Fairfax Drive, E 1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).

Ballard Sparh, LLP--John L. Culhane, Jr.

The FTC has sent its annual letter to the CFPB reporting on the FTC's activities related to compliance with the Equal Credit Opportunity Act and Regulation B.

The FTC has authority to enforce the ECOA and Reg. B as to nonbank providers within its jurisdiction. However, like several of the FTC's prior letters on its ECOA activities, the letter on 2018 activities does not describe any 2018 FTC ECOA enforcement activity and only contains information about the FTC's research and policy development efforts and educational initiatives. (In December 2018, a group of Democratic Senators sent a letterto the FTC calling on it "to improve its enforcement actions and aggressively police predatory practices at car dealerships.")

With respect to research and policy development, the letter discusses the following initiatives:

• Hearings on algorithms, artificial intelligence, and predictive analytics. In 2018, the FTC began a series of public hearings called "FTC Hearings on Competition and Consumer Protection in the 21st Century." One of the hearings looked at competition and consumer protection issues associated with the use of algorithms, AI, and predictive analytics in business decisions and conduct. The FTC notes that panelists discussed how issues of fairness, bias, and discrimination could impact the use of such technologies and whether current legal protections such as the ECOA were adequate to address those issues.
• Auto buyer study. In 2018, the FTC continued work on a qualitative study of consumers' experiences in buying and selling automobiles at dealerships. The FTC believes the results of the study will provide meaningful information about consumers' experiences and help focus FTC initiatives, including consumer education about the purchase and financing process and business education to foster compliance with laws enforced by the FTC, such as the FTC Act and ECOA.
• ECOA in the military. In 2018, the FTC's Military Task Force continued to work on military consumer protection issues. Other FTC initiatives to assist military consumers included a training program for servicemembers and their families that included a discussion of ECOA/Reg. B protections.
• Interagency fair lending task force. The FTC continues to be a member of the Interagency Task Force on Fair Lending along with the CFPB, DOJ, HUD, and the federal banking agencies.

With regard to the FTC's consumer and business educational initiatives, the FTC states that in 2018, it "engaged in efforts to provide education on important issues, including those related to credit transactions to which Regulation B applies or relates." By way of example, the FTC references a blog post about the need to provide financial education to servicemembers.

Summary

The Office of the Comptroller of the Currency (OCC) is issuing this bulletin to inform national banks, federal savings associations, and federal branches and agencies (collectively, banks) about key data fields that the OCC has determined examiners will typically use to test and validate the accuracy and reliability of home mortgage loan data collected beginning in 2018. This bulletin sets out the key data fields separately for banks that are required to report all of the data, as set forth in the Home Mortgage Disclosure Act (HMDA) rule issued in October 2015¹ and revised in September 2017,²and for banks that qualify for a partial exemption from HMDA reporting under the interpretive and procedural rule³ issued by the Consumer Financial Protection Bureau (CFPB) in August 2018.

This Bulletin rescinds OCC Bulletin 2017-41, “Home Mortgage Disclosure Act: Interagency Key Fields.”

Highlights

Key data fields are identified to support the efficient and effective evaluation of banks’ compliance with the HMDA requirements. Of 110 data fields, 37 have been identified as key fields by the OCC, Federal Reserve Board (FRB), and Federal Deposit Insurance Corporation (FDIC) on an interagency basis. OCC examiners will typically test and validate these 37 key fields for the banks that are required to collect, record, and report information for all HMDA data fields. For banks that qualify for a partial exemption from the HMDA data collection, recording, and reporting requirements, examiners will typically test and validate 21 of those 37 fields, as identified in this bulletin.

Background

The HMDA, which is implemented by Regulation C (12 CFR 1003), requires certain financial institutions to collect, record, and report information about their mortgage lending activity.⁴ Amendments to Regulation C (HMDA amendments)⁵ establish the data to be collected.⁶ To ensure compliance with the HMDA’s requirements, traditionally the OCC, the FRB, and the FDIC have identified and focused examination-related testing of HMDA data on certain agency-designated key data fields. Key data fields are those fields considered to be most important to ensuring the integrity of analyses of overall HMDA data.

Separately, the Federal Financial Institutions Examination Council (FFIEC) members⁷issued “FFIEC HMDA Examiner Transaction Testing Guidelines” (guidelines) for the FFIEC members’ examination staff to use in assessing the accuracy of the HMDA data that financial institutions record and report. The guidelines include a data sampling process that involves prioritizing designated data fields for review or reviewing all data fields within a sample. The guidelines themselves, however, do not establish designated key data fields. In an effort to promote efficiency, coordination, and consistency, the OCC, the FRB, and the FDIC jointly identified and designated 37 of the HMDA data fields to be collected beginning January 1, 2018, pursuant to the HMDA amendments, as key fields for purposes of testing and validating bank data. In identifying the key fields, the OCC, the FRB, and the FDIC considered a variety of factors, including the HMDA’s requirements, the goal of ensuring the efficiency of bank examinations, and the effective validation of HMDA data important to evaluating compliance with the Community Reinvestment Act and fair lending requirements. The OCC, the FRB, the FDIC also took into account the likelihood that a data field would be reported correctly based on past examination experience.

Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (Economic Growth Act), enacted in May 2018, amends section 304(i) of the HMDA to exempt certain institutions from collecting, recording, and reporting some HMDA data fields. The exempted data points include information such as length of term, points and fees, prepayment penalties, reasons for denial,⁸ and Annual Percentage Rate for originated or purchased loans. The CFPB’s interpretive and procedural rule issued in August 2018⁹ implements the requirements of section 104(a). The rule provides clarification and guidance to all banks covered by the partial exemption and explains what data must be collected, recorded, and reported.

To qualify for the partial exemption for closed-end mortgage loans, a bank must have originated, in each of the two preceding calendar years, fewer than 500 closed-end mortgage loans.

To qualify for the partial exemption for open-end lines of credit, a bank must have originated, in each of the two preceding calendar years, fewer than 500 open-end lines of credit.

The partial exemption is not available to banks that do not meet certain Community Reinvestment Act performance evaluation rating standards.

To evaluate financial institutions’ compliance with HMDA requirements, OCC examination staff will focus on identified key data fields during transaction testing pursuant to HMDA for data collected on or after January 1, 2018. Examination staff will focus on the 37 fields listed below for banks that are subject to collecting, recording, and reporting information for all HMDA data fields. Testing for banks that qualify for a partial exemption from HMDA data collection, recording, and reporting requirements will focus on 21 key fields, as set forth below, and validate that the bank meets the criteria for a partial exemption. In certain circumstances, however, and consistent with the FFIEC guidelines, examination staff may determine that it is appropriate to review additional HMDA data fields.

Proper reporting of HMDA data is important in assessing the accuracy of the HMDA data that financial institutions record and report. Where errors that exceed established thresholds¹⁰ are identified in an institution’s HMDA data, the OCC supervisory office has discretion in requiring the institution to correct specific errors, without requiring resubmission of the data. The supervisory office may require resubmission of HMDA data when the inaccurate data are indicative of systemic internal control weaknesses that call into question the integrity of the institution’s entire HMDA data report.

The following table lists the key data fields that examiners will use to verify the accuracy of the HMDA Loan/Application Register (LAR) for banks that are full HMDA reporters and separately for banks that qualify for the partial exemption.

Compliance Statement

As announced in December 2017 on an interagency basis, the OCC does not intend to require data resubmission for HMDA data collected in 2018 and reported in 2019, unless data errors are material. Furthermore, the OCC does not intend to assess penalties with respect to errors in data collected in 2018 and reported in 2019. Collection and submission of the 2018 HMDA data will provide banks with an opportunity to identify any gaps in their implementation of the amended Regulation C and make improvements in their HMDA compliance management systems for future years. Any examinations of 2018 HMDA data will be diagnostic, to help banks identify compliance weaknesses, and the OCC will credit good-faith compliance efforts.

Further Information

Please contact Vonda J. Eanes, Director for CRA and Fair Lending Policy, Compliance Risk Policy Division at (202) 649-5470.

Grovetta N. Gardineer Senior Deputy Comptroller for Bank Supervision Policy

 ¹ 80 Fed. Reg. 66128.

 ² 82 Fed. Reg. 43088.

 ³ 83 Fed. Reg. 45325.

 ⁴ 12 USC 2801 et seq.  ⁵ 80 Fed. Reg. 66127.

 ⁶ Beginning with data collected on or after January 1, 2018, financial institutions subject to the HMDA will collect and report data on covered loans specified in 12 CFR 1003.4(a)(1)-(38) on a loan application register containing 110 data fields, as specified in the FFIEC Filing Instructions Guide (FIG). Refer to FFIEC Resources for HMDA Filers for additional information.

 ⁷ The FFIEC members are the FRB, FDIC, the OCC, the CFPB, the National Credit Union Administration, and the State Liaison Committee. The FFIEC members promote compliance with federal consumer protection laws and regulations through supervisory and outreach programs. The HMDA is among these laws and regulations.

 ⁸ OCC-regulated banks and their subsidiaries are required to report reasons for denial on the HMDA Loan/Application Register (LAR) regardless of partial exemption status. Refer to 12 CFR 27 (national banks) and 12 CFR 128.6 (federal savings associations).

 ⁹ 83 Fed. Reg. 45325.

 ¹⁰ The information provided in this bulletin supplements guidance issued on August 25, 2017, through OCC Bulletin 2017-31, “FFIEC HMDA Examiner Transaction Testing Guidelines,” which indicates examiners should direct a bank to correct any data field in its full HMDA LAR for any field where the error rate exceeds the stated resubmission threshold. The bank may also be required in such cases to resubmit its HMDA LAR with the corrected data field(s). OCC examiners will consult with their supervisory office and, as applicable, OCC’s Compliance Supervision Management Division to determine whether resubmission is required based on specific facts and circumstances.

WASHINGTON—Comptroller of the Currency Joseph Otting today issued the following statement supporting the Financial Stability Oversight Council’s (FSOC) decision to propose an activities-based approach for identifying potential market-wide risks and to amend the process for designating nonbank financial companies systemically important.

I support the proposal to revise the nonbanks interpretive guidance, which is consistent with the recommendations in the November 2017 U.S. Treasury Report.

The proposal shifts the FSOC’s focus away from the designation of individual companies as systemically important to an activities-based approach for identifying potential market-wide risks to financial stability. This approach would rely on the expertise of the primary regulators to address the identified risks. Should the FSOC consider designating a nonbank financial company as systemically important, the proposal includes positive changes to the process. Such changes include the addition of a determination of the likelihood of the company experiencing material financial distress and an analysis of benefits and costs.

The proposal ensures FSOC continues to serve its primary function in a transparent, efficient, and effective manner.

I thank the FSOC staff and the staff at all of the member agencies for their hard work on this proposal.

The Federal Financial Institutions Examination Council (FFIEC) members today issued principles to promote consistency, clarity and ease of reference for the presentation of information in examination reports. The FFIEC Policy Statement on the Report of Examinationwas developed as part of the FFIEC’s Examination Modernization Project, which is aimed at reducing unnecessary regulatory burden on community financial institutions. 

The federal banking agencies, consisting of the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC), are rescinding their 1993 Interagency Policy Statement on the Uniform Core Report of Examination, and replacing it with this FFIEC policy statement.

The FFIEC was established in March 1979 to prescribe uniform principles, standards, and report forms and to promote uniformity in the supervision of financial institutions. It also conducts schools for examiners employed by the five federal member agencies represented on the FFIEC and makes those schools available to employees of state agencies that supervise financial institutions. The Council consists of the following six voting members: a member of the FRB; the Chairman of the FDIC; the Director of the Consumer Financial Protection Bureau (CFPB); the Comptroller of the Currency; the Chairman of the NCUA; and the Chairman of the State Liaison Committee (SLC).

###

Media Contacts:

CFPB  David Eskola (202) 435-7425

FDIC Julianne Fisher Breitbeil (202) 898-6895

FRB Darren Gersh (202) 452 2955

NCUA John Fairbanks (703) 518-6330

OCC Stephanie Collins (202) 649-6870

SLC James Kurtzke (202) 728-5733

The FFIEC was established in March 1979 to prescribe uniform principles, standards, and report forms and to promote uniformity in the supervision of financial institutions. It also conducts schools for examiners employed by the five federal member agencies represented on the FFIEC and makes those schools available to employees of state agencies that supervise financial institutions. The Council consists of the following six voting members: a member of the Board of Governors of the Federal Reserve System; the Chairman of the Federal Deposit Insurance Corporation; the Director of the Consumer Financial Protection Bureau; the Comptroller of the Currency; the Chairman of the National Credit Union Administration; and the Chairman of the State Liaison Committee.

The Federal Deposit Insurance Corporation (FDIC) today issued its list of state nonmember banks recently evaluated for compliance with the Community Reinvestment Act (CRA). The list covers evaluation ratings that the FDIC assigned to institutions in December 2018.

The CRA is a 1977 law intended to encourage insured banks and thrifts to meet local credit needs, including those of low- and moderate-income neighborhoods, consistent with safe and sound operations. As part of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA), Congress mandated the public disclosure of an evaluation and rating for each bank or thrift that undergoes a CRA examination on or after July 1, 1990.

A consolidated list of all state nonmember banks whose evaluations have been made publicly available since July 1, 1990, including the rating for each bank, can be obtained at www.fdic.gov or from the FDIC's Public Information Center, 3501 Fairfax Drive, Room E-1002, Arlington, VA 22226 (877-275-3342 or 703-562-2200).

A copy of an individual bank's CRA evaluation is available directly from the bank, which is required by law to make the material available upon request, or from the FDIC's Public Information Center.

Read the List

Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's banks and savings associations, 5,406 as of December 31, 2018. It promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars—insured financial institutions fund its operations.

FDIC press releases and other information are available on the Internet at www.fdic.gov, by subscription electronically (go to www.fdic.gov/about/subscriptions/index.html) and may also be obtained through the FDIC's Public Information Center (877-275-3342 or 703-562-2200). PR-15-2019

Media contact:
Greg Hernandez
(202) 898-6984
ghernandez@fdic.gov