Footnote 1:  As of 2004, lenders must disclose certain pricing information for loans with prices above designated thresholds. Loans priced above the thresholds are referred to as “higher-priced” loans.

Footnote 2:  Federal Reserve Board Regulation C (12 Code of Federal Regulations (C.F.R.) Part 203) implements HMDA. HMDA Section 305(a), Enforcement, indicates that the FDIC has the authority to enforce HMDA provisions for FDIC-supervised institutions, in accordance with Section 8 of the Federal Deposit Insurance Act.

Footnote 3:  Banks, savings and loan associations, credit unions, and mortgage and consumer finance companies are required to report HMDA data if those institutions meet the law’s criteria for coverage by HMDA. Generally, a lender may be subject to HMDA depending on: the lender’s asset size, whether the lender has an office in a metropolitan statistical area (as defined by the Office of Management and Budget), and the extent of the lender’s housing-related lending activity.

Footnote 4:  Information about each application or loan and about each applicant or borrower is reported on a loan-by-loan, application-by-application basis on a lender’s loan application register (LAR).

Footnote 5:  The FFIEC, established in March 1979, is a formal interagency body empowered to prescribe uniform principles, standards, and report forms for the federal examination of financial institutions by the FRB, the FDIC, National Credit Union Administration (NCUA), Office of the Comptroller of the Currency, and Office of Thrift Supervision and to make recommendations to promote uniformity in the supervision of financial institutions.

Footnote 6:  According to the OMB Federal Register Notice entitled, Revisions to the Standards for the Classification of Federal Data on Race and Ethnicity, there are five minimum categories for data on race: American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White. Also, there are two categories for data on ethnicity--Hispanic or Latino and Not Hispanic or Latino.

Footnote 7:  Congress enacted the HOEPA in response to evidence of abusive mortgage lending, particularly lending that involves excessive interest rates and fees. HOEPA identifies a class of high-cost mortgage loans and requires that consumers who enter into these transactions be provided with additional disclosures intended to facilitate comparison with other loan products. HOEPA also restricts the use of certain loan terms associated with abusive lending and authorizes the FRB to issue regulations that prohibit specific types of mortgage lending practices found to be abusive.

Footnote 8:  As part of the compliance examination process, the FDIC reviews the information and disclosures that are provided to consumers by FDIC-supervised institutions in accordance with consumer protection laws and regulations. Also, DSC considers an institution's compliance with fair lending, privacy, and other consumer protection laws and its performance under the Community Reinvestment Act (CRA) when reviewing an institution's application for entry into or expansion within the insured depository institution system.

Footnote 9:  The FHA prohibits discrimination in various phases of housing and makes it unlawful for any lender involved in residential real-estate-related transactions to discriminate against any persons in making those transactions available, or in the terms and conditions of those transactions, because of race, color, religion, national origin, gender, familial status, or handicap. The ECOA prohibits discrimination in any aspect of a credit transaction on the basis of race, color, religion, national origin, gender, marital status, age, receipt of income from a public assistance program, and the good faith exercise of any right under the Consumer Credit Protection Act of 1968.

Footnote 10:  Technically, high-rate loans totaled 18.3 percent of loans, net of those excluded, because some HMDA data included loan applications prior to 2004.

Footnote 11:  According to DSC, the FDIC outlier list contains only preliminary scoping information – not evidence of violations. However, when an institution on the list changes its charter, the FDIC will offer its preliminary information to the federal regulator with enforcement jurisdiction.

Footnote 12:  Current year HMDA data are data that have not yet been submitted to the FRB.

Footnote 13:  While one of eight institution examinations is not a high noncompliance rate, we consider the materiality of the failure to report all withdrawn or denied applications and the related regional policy to be significant.

Footnote 14:  FDIC Rules and Regulations, Fair Housing: Section 338.8, Compilation of loan data in register format, states, “Banks and other lenders required to file a Home Mortgage Disclosure Act loan application register (LAR) with the Federal Deposit Insurance Corporation shall maintain, update and report such LAR in accordance with Regulation C of the Board of Governors of the Federal Reserve System.”

Footnote 15:  For the purpose of HMDA reporting, a financial institution that processes a loan application and arranges for another institution or investor to acquire the loan at settlement is acting as a “broker.” An institution that acquires a loan from a broker at or after closing is acting as an “investor.” “Correspondents” are companies that usually close and fund loans in their own name and subsequently sell them to a lender.

Footnote 16:  The FHA defines prohibited basis as race, color, religion, national origin, gender, familial status, and handicap.

Footnote 17:  According to the Mortgage Brokers Association publication NewsLink, dated
May 20, 2005, in the modern residential real-estate market, 68 percent of loans involve brokers.

Footnote 18:  

Footnote 19:  The new rules define a refinancing as a secured home loan that satisfies and replaces another secured home loan by the same borrower. The reporting of home equity lines of credit (extended for any purpose) is voluntary. Revisions to the Standards for the Classification of Federal Data on Race and Ethnicity, Federal Register, vol. 62 (October 30) pp. 58782-90.

Footnote 20:  The statistical analysis system uses HMDA data as a screen to identify those institutions and their specific products that warrant closer review for fair-lending concerns. The FRB has shared the screening procedures with other federal financial banking agencies so that, if they wish, they may integrate them into their supervisory programs. Additionally, the FRB is responding to agency requests for additional, more detailed analysis of the individual institutions that may be of concern to the agencies.

Footnote 21:  The “macro” screening technique for higher-priced loans uses the HMDA data file for FDIC-supervised institutions and ranks the institutions in terms of pricing disparities observed for specific loan products and specific protected groups (racial/ethnic groups and females). These rankings are used to generate lists of “high-risk” institutions from a fair-lending examination perspective.

Footnote 22:  The “micro” screening tool for higher-priced loans uses LAR data for an individual bank to analyze the pricing data at the bank level and perform simple statistical tests on observed pricing disparities. The output of the micro screens can be used to help examiners decide whether to expand the scope of an ongoing fair lending examination.