Seal of the Board of Governors of the Federal Reserve System



CA 04-4
Supersedes CA 96-7 and CA 00-2 and CA 04-1

June 30, 2004


SUBJECT: Revised HMDA Examination, Sampling and Resubmission Procedures and Notification of Availability of HMDA Questions and Answers

This letter transmits revised Regulation C risk-focused examination, sampling and resubmission procedures. These revised procedures reflect changes made to Regulation C in 2002 and 2003, and continue to include an optional-use checklist. In addition, questions and answers (Qs&As) pertaining to Regulation C have been published and are posted on the FFIEC HMDA website at Examiners should use these new procedures and the Qs&As on examinations commencing after February 1, 2004 .

Revisions made to Regulation C that will impact our examinations include the following:

•  Coverage Rule - Coverage of nondepository lenders was expanded by adding a dollar volume threshold of $25 million .

•  Property type - The revisions added a new field "property type," which requires lenders to identify applications and loans that involve manufactured housing. Previously, lenders had to report in the "loan purpose" field whether an application or loan involved a "one- to four-family" or a multifamily dwelling; and manufactured homes were reported as "one- to four-family" dwellings.

•  Purpose of loan-home improvement and refinancing - T he new rule redefined "home improvement loans" and "refinancing". Lenders must now report dwelling-secured loans for home improvement purposes as home improvement loans, whether or not the loans are classified as home improvement loans. Loans for home improvement purposes that are not dwelling secured will continue to be reported only if the lender classifies the loans as home improvement loans. The definition of refinancing was expanded to include a transaction in which a new obligation satisfies and replaces an existing obligation by the same borrower and in which both the existing loan and the new loan are secured by a lien on a dwelling.

•  Preapprovals - The revisions now require lenders to report information on requests for preapproval that are denied, whether or not they eventually result in a loan application. Previously, requests for preapproval were reported only if the request was approved and resulted in a loan application.

•  Application information - The revisions changed requirements regarding lender collection of ethnicity and race information. New ethnicity categories, Hispanic and not of Hispanic origin, were created, and the race categories were revised to reflect changes to OMB standards. L enders also must now ask applicants their ethnicity, race, and sex in applications taken by telephone, mail or Internet.

•  Lien status- Lenders now must report the lien status of applications and originated loans.

•  Additional data items - For loan originations, lenders must now report the rate spread between the APR and the yield on comparable Treasury securities, if the spread exceeds or equals 3 percentage points for first-lien loans and 5 percentage points for subordinate lien loans. Lenders must also report whether a loan is subject to the Home Ownership and Equity Protections Act.

•  Type of purchaser - For loans originated or purchased, and then sold within the same year, the revised regulation requires lenders to report the type of entity that purchases the loan. The Board also revised the list of the types of purchasers and applicable codes.

Changes made to the HMDA sampling and resubmission procedures reflect the addition of the new HMDA fields to the list of key fields. The following fields are now considered key fields: property type; request for preapproval; application date and action date, ethnicity, race, and sex of the applicant and co-applicant; type of purchaser; rate spread; HOEPA status; and lien status. These fields are now considered to be critical to the integrity of analyses of the overall HMDA data. Additionally, guidance is added to the sampling procedures to allow judgemental sampling at small HMDA reporters where there is insufficient data to use in the fair lending or CRA analyses .

The Qs&As will be updated periodically as new information becomes available. Please be sure to check the FFIEC HMDA website for the most current version of the document prior to commencing an examination.

Finally, the revised edition of HMDA: Getting it Right is available at The HMDA guide is a valuable tool for lenders and examiners alike. Paper copies of this guide have been distributed to each Reserve Bank for further distribution to the state member banks in your district.

Questions on the revised procedures and Qs&As should be referred to the review examiner assigned to your district or Tracy Anderson at (202)736-1921.


Suzanne G. Killian
Manager, Oversight


Attachment 1 – HMDA Sampling Procedures (44 KB PDF)
Attachment 2 – HMDA Examination Procedures (64 KB PDF)
Attachment 3 – HMDA Resubmission Standards (6 KB PDF)

CA letters | 2004 Letters