1557-0159 Supporting Statement 8-16-2017

Office of the Comptroller of the Currency

Supporting Statement

Fair Housing Home Loan Data System Regulation

OMB Control No. 1557-0159

A. Justification

1. Circumstances that make the collection necessary:

The Fair Housing Act¹ prohibits discrimination in the financing of housing on the basis of race, color, religion, sex, or national origin. The Equal Credit Opportunity Act² (ECOA) prohibits discrimination in any aspect of a credit transaction on the basis of race, color, religion, national origin, sex, marital status, age, receipt of income from public assistance, or exercise of any right under the Consumer Credit Protection Act³ (CCPA). The OCC is responsible for ensuring that national banks and federal savings associations comply with those laws. This information collection is needed to promote compliance and for OCC to fulfill its statutory responsibilities.

2. Use of the information:

The OCC uses the data to determine whether an institution treated applicants consistently and made credit decisions commensurate with the applicants’ qualifications and in compliance with ECOA and CCPA.

The information collection requirements are as follows:

• 12 CFR 27.3(a) requires national banks that are required to collect data on home loans under 12 CFR part 203⁴ to present the data on Form FR HMDA-LAR,⁵ or in automated format in accordance with the HMDA-LAR instructions, and to include one additional item (the reason for denial) on the HMDA-LAR. Section 27.3(a) also lists exceptions to the HMDA-LAR recordkeeping requirements. Federal savings associations report this information to the OCC pursuant to 12 CFR 128.6 and the CFPB’s Regulation C, 12 CFR part 1003.

• 12 CFR 27.3(b) lists the information national banks shall attempt to obtain from an applicant as part of a home loan application, and also sets forth the information that banks must disclose to an applicant.

• 12 CFR 27.3(c) sets forth additional information national banks must maintain in the loan file.

• 12 CFR 27.4 states that the OCC may require a national bank to maintain a Fair Housing Inquiry/Application Log found in Appendix III to part 27 if there is reason to believe that the bank is engaging in discriminatory practices or if analysis of the data compiled by the bank under the Home Mortgage Disclosure Act⁶ and 12 CFR part 203 indicates a pattern of significant variation in the number of home loans between census tracts with similar incomes and home ownership levels differentiated only by race or national origin. Section 27.4(a)(2) also requires a log if complaints filed with the Comptroller or letters in the Community Reinvestment Act file are found to be substantive in nature, indicating that the bank's home lending practices are, or may be, discriminatory.

• 12 CFR 27.5 requires a national bank to maintain the information required by

§ 27.3 for 25 months after the bank notifies the applicant of action taken on an application or after withdrawal of an application.

• 12 CFR 27.7 requires a national bank to submit the information required by

§§ 27.3(a) and 27.4 to the OCC upon its request prior to a scheduled examination using the Monthly Home Loan Activity Format form in Appendix I to part 27 and the Home Loan Data Form in Appendix IV to part 27. Section 27.7(c)(3) states that a bank with fewer than 75 home loan applications in the preceding year will not be required to submit such forms unless the home loan activity is concentrated in the few months preceding the request for data, indicating the likelihood of increased activity over the subsequent year, or there is cause to believe that a bank is not in compliance with the fair housing laws based on prior examinations and/or complaints, among other factors.

• § 27.7(d) provides that if there is cause to believe that a bank is in noncompliance with fair housing laws, the Comptroller may require submission of additional Home Loan Data Submission Forms. The Comptroller may also require submission of the information maintained under § 27.3(a) and Home Loan Data Submission Forms at more frequent intervals.

OCC-regulated institutions now have access to a CFPB-developed web-based data submission and edit-check system (the HMDA Platform) that may be used to process HMDA data.  Some institutions, typically those with small volumes of reported loans or those who do not use a vendor or other software to prepare their HMDA data for submission, will still need a software solution for integrating HMDA data from paper records or disparate electronic systems.  Therefore, the CFPB created a prototype “LAR Formatting Tool” which will allow financial institutions with small volumes of reported loans, or those who do not use a vendor or other software to prepare their HMDA data for submission, to enter HMDA data and to create a pipe delimited text file to upload to the HMDA Platform. The institution can then proceed through the interactive web pages of the HMDA Platform to process HMDA data.

3. Consideration of the use of information technology:

Institutions may use any information technology that allows them to meet the requirements of this collection.

4. Efforts to identify duplication:

The information collected is unique. No duplication exists.

5. If the collection of information impacts small businesses or other small entities, describe any methods used to minimize burden:

There are no alternatives that would result in lowering the burden on small institutions, while still accomplishing the purpose of the rule.

6. Consequences to the Federal program if the collection were conducted less frequently:

The OCC requires reports only on an as-needed basis. Less frequent collection would impair program effectiveness.

7. Special circumstances necessitating collection inconsistent with 5 CFR part 1320:

This information collection is conducted in a manner that is consistent with guidelines set forth in 5 CFR part 1320.

8. Efforts to consult with persons outside the agency:

The OCC issued a notice for 60 days of comment regarding this collection on June 5, 2017, 82 FR 25917. No comments were received.

9. Payment to respondents:

There is no payment to respondents.

10. Any assurance of confidentiality:

The information collection is kept private to the extent permitted by law.

11. Justification for questions of a sensitive nature:

No personally identifiable information is collected. However, questions of a sensitive nature are included under the monitoring information requirement. Institutions must ask applicants for home loans to indicate their sex and race/national origin. If the applicant chooses not to furnish the information, the bank must note the applicant's race and sex based on visual observation or surname.

The regulations are designed to identify possible discriminatory practices. Such discrimination would tend to occur on how the lender perceives the applicant, rather than how the applicant characterizes himself or herself.

While an applicant’s color or sex may be evident when they come to inquire about an application, a practice of discrimination cannot be ascertained unless the examiner has the information on the applicant's race or sex. Also, without this information in each file, corrective action for the class of persons who may have been discriminated against cannot be undertaken.

The collection by the OCC of sex and race/national origin information is exempted under the supervisory agency provision of 12 U.S.C. 3413(b), which permits the examination by or disclosure to any such agency of financial records or information in the exercise of its supervisory, regulatory, or monetary functions.

12. Burden estimate:

Section Number	Requirements	Type of Burden	Number of National Banks	Number of Federal Savings Associations	Time Required to Comply	Totals
§27.3(a) § 128.6	Quarterly Recordkeeping: Institutions required to collect home loan data under Reg C (12 CFR Part 1003) must use Form FR HMDA-LAR Maintain reasons for denial	Recordkeeping	687 (all NB-HMDA Reporters)	326 (12 CFR 1003)	4	4,052
§27.3(b)	Informational Required on Applications for Home Loans: (b)(1) lists information to be obtained (b)(2): Lists disclosures to applicant Allows for use of form in Appendix II	Recordkeeping	1590 (all NBs-exclude Trusts and Credit Card Banks)	N/A	4	6,360
§27.3(c)	Additional Information Required in the Loan File: List of required files to be kept	Recordkeeping	1590 (all NBs-exclude Trusts and Credit Card Banks)	N/A	4	6,360
§27.4	Inquiry/Application Log: Requires use of log in Appendix III	Recordkeeping	1601 (all NBs-exclude Trusts)	N/A	4	6,404
§27.5	Record Retention Period: Bank must maintain information for 25 months after it notifies applicant of action taken on application, or after withdrawal of application	Recordkeeping	1590 (all NBs-exclude Trusts and Credit Card Banks)	N/A	4	6,360
§27.7	Availability, Submission, and Use of Data: OCC may request information maintained under §§27.3(a)(2) and 27.4 prior to exam; to be submitted using form in Appendix I If statistical analysis is warranted, bank must submit form in Appendix IV If there is cause to believe that a bank is in noncompliance, submission of additional Home Loan Data Submission Forms and submission of information under § 27.3(a) and Home Loan Data Submission Forms at more frequent intervals may be required.	Reporting	542 (all NBs-Non-HMDA-exclude Trusts and Credit Card Banks)	N/A	4	2,168
	Totals		1,601	326		31,704

Cost of Hour Burden:

31,704 x $114 = $3,614,256

To estimate average hourly wages we reviewed data from May 2016 (released in March 2017) for wages (by industry and occupation) from the U.S. Bureau of Labor Statistics (BLS) for depository credit intermediation (NAICS 522100). To estimate compensation costs associated with the rule, we use $114 per hour, which is based on the average of the 90th percentile for seven occupations adjusted for inflation (2 percent), plus an additional 30 percent to cover private sector benefits. Thirty percent represents the average private sector costs of employee benefits.

13. Estimate of the total annual cost to respondents (excluding the cost of any hour burden shown in Item 12):

Not applicable.

14. Estimate of annualized cost to the federal government:

Not applicable.

15. Changes in burden:

There is no change in burden.

16. Information regarding collections whose results are planned to be published for statistical use:

There are no plans to publish the information collected.

17. Display of expiration date:

Not applicable.

18. Exceptions to certification statement:

Not applicable.

B. Collections of Information Employing Statistical Methods

Not applicable.

1 42 U.S.C. 3605.

2 15 U.S.C. 1691 et seq.

3 (15 U.S.C. 1601 et seq.

4 This regulation has been transferred to the Consumer Financial Protection Bureau (CFPB) (12 CFR part 1003).

5 Loan Application Register, http://www.ffiec.gov/hmda/pdf/hmdalar2011.pdf.

6 12 U.S.C. 2801 et seq.

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