Regulation C
What Is Regulation C?
Regulation C is the regulation that executes the Home Mortgage Disclosure Act of 1975. Regulation C requires numerous financial institutions to annually reveal loan data about the networks to which they gave residential mortgages. Accordingly, regulatory specialists can assess whether the lender is sufficiently meeting the necessities of the prospective borrowers in that community.
How Regulation C Works
All suppliers of mortgages that are backed by the government in any capacity must annually uncover the quantity and dollar measures of all mortgages gave inside the past year. These loans must be broken down by census tract in which the properties are found.
As of Jan. 1, 2022, any lending institution with total assets of $50 million or less is exempt from the data collection requirements laid out under Regulation C. This incorporates banks, savings associations and credit unions that fall below the $50 million threshold. The threshold is increased occasionally to keep pace with inflation as estimated by the Consumer Price Index (CPI). This means that for a really long time 2023 and then some, the threshold could be raised once more.
Regulation C is intended to give data that can be utilized to:
- Assist with determining whether banks, savings associations and credit unions are serving the housing needs of individuals in their separate networks
- Aid public authorities in distributing public-sector investments to attract private investment to areas where it is required
- Help with recognizing conceivable oppressive lending patterns and upholding compliance with federal enemy of discrimination resolutions
Important
Regulation C isn't intended to encourage unstable lending practices or the ill-advised allocation of credit.
Regulation C guidelines are subject to change as new last rules are issued. For instance, the Bureau of Consumer Financial Protection (Bureau) amended Regulation C to increase the threshold for reporting data about closed-end mortgage loans in April 2020. As part of this rule change, the threshold for reporting data about open-end lines of credit was set at 200 effective beginning Jan. 1, 2022, upon the expiration of the previous brief threshold of 500 open-end lines of credit.
What Does Regulation C Cover?
Regulation C covers a number of issues connected with data collection and loan originations. Here is a more critical gander at the way this functions.
Data Compilation
Financial institutions required to follow Regulation C must report their data each calendar year. The data is broken up census tract to show mortgage origination, purchases of homes, and home-improvement loans.
Regulation C requires these institutions to likewise outfit data about the loan applications that didn't result in originations. This incorporates withdrawn applications, loan dissents, applications that were excused on the grounds that they were fragmented and applications that received endorsement yet were not accepted.
The collection of such data should give specialists a method for screening for incidents of discrimination in lending. The information is tied to geolocation and demographics from the census tract. In the event that there is a rehashing pattern where financing is denied to a particular segment of the population, the financial institution could face punishments from specialists. For instance, a bank could continually deny financing to individuals of a certain identity or from a particular area in spite of in any case being qualified. Such activity would draw consideration from regulators.
Reporting and Disclosure
Regulation C requires annual reporting from financial institutions that are subject to this rule. Reports must be put together by March 1 the accompanying calendar year for which data is collected and recorded. Financial institutions are required to hold duplicates of annual loan/application registers for somewhere around three years.
In the interim, financial institutions that reported no less than 60,000 covered loans and applications combined, excluding purchased covered loans, are additionally required to report data quarterly. This reporting is due inside 60 calendar days after the end of each calendar quarter.
The Federal Financial Institutions Examination Council (FFIEC) is required to make disclosure statements accessible, in light of the data presented by each financial institution for the first calendar year. When these disclosure statements are issued, the financial institution must give written notice to the public that the statements are accessible for survey at the CFPB's website as part of the Home Mortgage Disclosure Act.
Recordkeeping
Under Regulation C, a covered institution must record data from covered mortgage lending applications and loans. This information must then be reported to the fitting federal supervisory agency. Specifically, "an institution is required to record data on every application or loan inside 30 calendar days after the end of the calendar quarter during which the institution made a last move."
Note
Financial institutions might keep up with their annual HMDA records in one or the other paper or electronic form.
Mortgage
Institutions covered by Regulation C must collect and report "any mortgage loan secured by a dwelling, including open-end lines of credit, no matter what the loan's purpose." But certain types of loans are excluded, including unsecured home-improvement loans, dwelling-secured loans that are made essentially for a commercial or business purpose, horticultural purpose loans and other specifically excluded loans.
Data points collected include:
- Insights regarding the candidate or borrower, for example, age and credit score
- Information about the loan pricing, including the borrower's total cost to get a mortgage, transitory early on rates, and borrower-paid origination charges
- Insights concerning loan highlights, for example, the loan term, prepayment punishments, or non-amortizing highlights
- Information about the property used to secure the loan, including the property type and worth
Tip
Regulation C likewise requires financial institutions to collect and report information about a borrower's nationality, race and sex.
Special Considerations
The Bureau of Consumer Financial Protection keeps on amending Regulation C. Updates to the policy have hitherto incorporated the expansion of new reporting requirements to be in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank likewise moved the rulemaking authority on the Home Mortgage Disclosure Act (HMDA) from the Federal Reserve Board to the Consumer Financial Protection Bureau.
The Bottom Line
Regulation C serves an important job in guaranteeing fair practices across the mortgage lending industry. On the off chance that you plan to apply for a mortgage to buy a home, refinance an existing mortgage or apply for a home equity loan or credit extension, knowing how this regulation influences you and what information your lender might collect is important.
Features
- Regulation C is structured to assist public authorities with determining their distribution plans for public sector investment for of drawing more private investments to areas out of luck.
- Regulation C requires numerous financial institutions to annually unveil loan data about the networks to which they gave residential mortgages.
- All suppliers of mortgages that are backed by the government in any capacity must annually uncover the quantity and dollar measures of all mortgages gave inside the past year.
FAQ
What Is Mortgage Regulation C?
Regulation C, otherwise called Home Mortgage Disclosure, oversees the collection of data and the disclosure of certain information about mortgage-related activity. Financial institutions that have assets over certain thresholds, including banks, savings associations and credit unions, are required to order data under Regulation C rules.
Who Is Subject from Regulation C's perspective?
Regulation C covers both closed-end and open-end consumer loans or lines of credit that are secured by a home. So this can incorporate first and second mortgage loans, home equity loans and home equity lines of credit.
What Is a Covered Loan Regulation C?
A covered loan is a closed-end mortgage loan or an open-end credit extension that isn't viewed as specifically excluded from Regulation C reporting requirements. Covered loans incorporate consumer mortgage loans secured by real property where the loan surpasses a specific APR or percentage of points and fees.
