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January 17, 1996

Steven Alan Bennett
Senior Vice President and
    General Counsel
Bank One, Columbus, NA
100 East Broad Street
Columbus, OH 43271-0152

Dear Mr. Bennett:

This is in response to your letter regarding the appropriate method for a bank to report loans that are subject to the Home Mortgage Disclosure Act ("HMDA") and the Board's Regulation C (12 C.F.R. Part 203), where the bank has purchased the loan from a mortgage affiliate pursuant to the conditions set forth in 12 C.F.R. 250.250 ("Section 250.250"). Section 250.250 provides that the bank's purchase of a loan from an affiliate may be exempt from the quantitative restrictions of Section 23A of the Federal Reserve Act (12 U.S.C. 371c) if the bank makes an independent credit evaluation of each loan and agrees to purchase the loan prior to the affiliate granting the loan.

On December 6, 1995, the Board released a staff commentary to Regulation C that addresses this issue (60 Federal Register 63,393 (1995)). The commentary states that "[i]f an institution makes an independent evaluation of the creditworthiness of an applicant (for example, as part of a pre-closing review by an affiliate bank under 12 CFR 250.250 which interprets Section 23A of the Federal Reserve Act), the institution is making a credit decision. If the institution then acquires the loan, it reports the loan as an origination whether the loan closes in the name of the institution or its affiliate. An institution that does not acquire the loan but takes another action reports that action."

If you have any questions, please call Ms. Pamela G. Nardolilli of the Board's Legal Division at 202/452-3289 or Ms. Manley Williams of the Board's Division of Consumer and Community Affairs at 202/736-5565.

Sincerely, yours

(signed) J. Virgil Mattingly

J. Virgil Mattingly

General Counsel

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