The Board of Governors of the Federal Reserve System recently announced that it was increasing the asset threshold that triggers home mortgage collection and reporting requirements for certain depository institutions. Pursuant to the Federal Reserve’s Regulation C which implements the Home Mortgage Disclosure Act, the central bank will raise the asset exemption requirement to $40 million.
What this means is that financial institutions such as banks, savings and loans, and credit unions, with assets equal to or less than $40 million dollars will not be required to collect and disclose certain loan information.
Specific information collected include:
- The number of applications for mortgages;
- The number of original and refinanced loans;
- Types, purposes, and amounts of loans; and
- Race, ethnicity, sex, and income of applicants.
The information collected under Regulation C and the HMDA is used to determine whether financial institutions are serving the housing needs of their communities; assist public officials in deciding how to distribute public funds in order to attract private investment; and identify discriminatory lending patterns.
According to the Federal Reserve, depository institutions with assets equal to or less than $40 million by December 31, 2010 will not be required to collect loan data in 2011. The Federal Reserve based its adjustment of the asset requirements on changes in the consumer price index for urban wage earners and clerical workers.
For calendar year 2004, the number of institutions reporting loan data spiked to 8,853, up from 8,121 reporting for calendar year 2003. The number of reporting institutions has fallen steadily since 2004. For example, the number of depository institutions reporting for calendar year 2009 fell to 8,124, down from a high of 8,886 in the 2006 calendar year.
The amount of loan records disclosed has been falling steadily since calendar year 2003, with 41.6 million disclosed for calendar year 2003 down to 19.5 million disclosed for calendar year 2009.
The general effects of the recession of 2007-2009 may have impacted the amount of loan data collected as lending standards and sources of credit tightened. The past recession may have impacted the number of institutions required to collect information, as either asset valuations of these firms fell or financial institutions closed their doors.