FRH5_20210222_omb

Supporting Statement for the
Recordkeeping Requirements Associated with the
Real Estate Lending Standards Regulation for State Member Banks
(FR H-5; OMB No. 7100-0261)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extend for three years, without
revision, the Recordkeeping Requirements Associated with the Real Estate Lending Standards
Regulation for State Member Banks (FR H-5; OMB No. 7100-0261). This information collection
includes a recordkeeping requirement contained in the Board’s Regulation H - Membership of
State Banking Institutions in the Federal Reserve System (12 CFR Part 208) that implements
section 304 of the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA).1
Pursuant to Regulation H, state member banks (SMBs) must adopt and maintain a written real
estate lending policy. Additionally, this information collection includes certain voluntary
recordkeeping provisions in the Interagency Guidelines for Real Estate Lending Policies
(Guidelines).2
The estimated total annual burden for the FR H-5 is 18,870 hours.
Background and Justification
Section 304 of FDICIA requires the Board to adopt regulations prescribing standards for
SMBs for extensions of credit secured by liens on or interest in real estate or made for the
purpose of financing the construction of a building or other improvements in real estate,
regardless of whether a lien has been taken on the property. The Board implemented section 304
by amending its Regulation H to require SMBs to adopt and maintain written real estate lending
policies consistent with safe and sound banking practices.3 In addition, the Board, along with the
Federal Deposit Insurance Corporation (FDIC) and Office of the Comptroller of the Currency
(OCC), issued the Guidelines to assist institutions in the formulation and maintenance of a real
estate lending policy.
Description of Information Collection
Pursuant to Regulation H, an SMB’s real estate lending policy must establish loan
portfolio diversification standards; prudent underwriting standards, including loan-to-value
(LTV) limits; loan administration procedures; and loan documentation, approval, and reporting
requirements. The policies must be appropriate to the size of the institution and the nature and
scope of its operations. The lending policies should also reflect consideration of the Guidelines.
The Guidelines set forth additional information that should be included in each SMB’s
real estate lending policy. Additionally, the Guidelines provide that a bank’s internal LTV limits
1

Public Law 102-242, 105 Stat. 2236 (1991).
See 12 CFR Part 208, Appendix C.
3
See 12 CFR 208.51(a).
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generally should not exceed the supervisory LTV limits as set forth in the Guidelines. However,
the Guidelines acknowledge that appropriate LTV limits vary not only among categories of real
estate loans but also among individual loans. Therefore, the Guidelines state that it may be
appropriate in individual cases to originate or purchase loans with LTV ratios in excess of the
supervisory LTV limits, based on the support provided by other credit factors. Such loans should
be identified in a SMB’s records. Compliance with the Guidelines is voluntary.
Respondent Panel
The FR H-5 respondent panel comprises all SMBs.
Time Schedule for Information Collection
The FR H-5 information collection is ongoing. The Board neither collects nor publishes
the information required under the collection. Bank examiners verify compliance with the
regulation during examinations of SMBs.
Public Availability of Data
The Board does not publicly release any information collected pursuant to this
information collection.
Legal Status
The FR H-5 is authorized by section 304 of the FDICIA (12 U.S.C. § 1828(o)), which
provides that “each appropriate Federal banking agency shall adopt uniform regulations
prescribing standards for extensions of credit that are (A) secured by liens on interests in real
estate or (B) made for the purpose of financing the construction of a building or other
improvements to real estate” (12 U.S.C. § 1828(o)(1)). The Board also has the authority to
require reports from state member banks (12 U.S.C. §§ 248(a) and 324). The recordkeeping
requirement contained in the Board’s Regulation H is mandatory. The recordkeeping provisions
in the Guidelines are voluntary, as the Guidelines are nonbinding guidance.
Because these records would be maintained at each banking organization, the Freedom of
Information Act (FOIA) would only be implicated if the Board obtained such records as part of
the examination or supervision of a banking organization. In the event the records are obtained
by the Board as part of an examination or supervision of a financial institution, this information
would be considered confidential pursuant to exemption 8 of the FOIA, which protects
information contained in “examination, operating, or condition reports” obtained in the bank
supervisory process (5 U.S.C. § 552(b)(8)). In addition, the information may also be kept
confidential under exemption 4 of the FOIA, which protects commercial or financial information
obtained from a person that is privileged or confidential (5 U.S.C. § 552(b)(4)).

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Consultation Outside the Agency
The Board consulted with FDIC and OCC in establishing this information collection.
There has been no consultation outside the Federal Reserve System regarding the extension,
without revision, of the information collection.
Public Comments
On August 21, 2020, the Board published an initial notice in the Federal Register
(85 FR 51716) requesting public comment for 60 days on the extension, without revision, of the
FR H-5. The comment period for this notice expired on October 20, 2020. The Board did not
receive any comments. On December 14, 2020, the Board published a final notice in the Federal
Register (85 FR 80788).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the FR H-5 is 18,870
hours. As of December 31, 2019, 754 SMBs were required to maintain written real estate lending
policies and keep records of loans that exceed supervisory LTV limits. There were no de novo
SMBs in the past three years that would have been required to create a real estate lending policy
statement. However, to avoid potentially underestimating the burden on de novo SMBs, the
Board has estimated that one respondent per year will be required to create a new policy. In
addition to recordkeeping, banks will also spend time on ongoing maintenance of a compliance
monitoring system, including reviewing policies and procedures related to implementation.
These recordkeeping requirements represent less than 1 percent of the Board’s total paperwork
burden.

FR H-5
Maintain a policy
statement
Policy statement (de novo)
Recordkeeping for loans
with LTVs that exceed
supervisory limits and
maintaining a system of
review
Total

Estimated
number of
respondents4

Annual
frequency

Estimated
average hours
per response

Estimated
annual burden
hours

754
1

1
1

5
20

3,770
20

754

4

5

15,080
18,870

4

Number of respondents is based on information from the Changes in Number and Charters of Insured Banks
Report (http://fedweb.frb.gov/fedweb/bsr/surveil/surveil_chrtchg.shtm), prepared by the Surveillance, Financial
Trends and Analysis section of the Board’s S&R division. For the Aggregate Report, the number of respondents is
the number of SMBs as of Fourth Quarter 2019. Of these respondents, 506 are considered small entities as defined
by the Small Business Administration (i.e., entities with less than $600 million in total assets),
https://www.sba.gov/document/support--table-size-standards. There are no special accommodations given to
mitigate the burden on small institutions.

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The estimated total annual cost to the public for the FR H-5 is $1,089,743.5
Sensitive Questions
This collection of information contains no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing this
information collection is negligible.

5

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $20, 45% Financial Managers at
$71, 15% Lawyers at $70, and 10% Chief Executives at $93). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2019, published March 31, 2020, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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