36201Federal Register / Vol. 62, No. 129 / Monday, July 7, 1997 / Rules and Regulations
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 338
RIN 3064–AB72
Fair Housing
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is amending its fair
housing regulation to clarify certain
nondiscriminatory advertising
requirements with regard to the type of
slogan and logotype insured state
nonmember banks may use in written,
oral and visual advertisements, the type
of fair housing posters they may display,
and the location for displaying the
poster. The final rule also eliminates the
FDIC’s separate fair housing
recordkeeping requirements that serve
as a substitute monitoring program
permitted by the Federal Reserve
Board’s Regulation B, which
implements the Equal Credit
Opportunity Act. Furthermore, the final
rule reduces the burden associated with
maintaining, updating, and reporting a
register of home loan applications by
requiring insured state nonmember
banks to comply only with the Federal
Reserve Board’s Regulation C, which
implements the Home Mortgage
Disclosure Act. The final rule simply
cross-references Regulations B and C.
This action is being taken in
accordance with section 303(a) of the
Riegle Community Development and
Regulatory Improvement Act of 1994
which requires the federal bank and
thrift regulatory agencies to review and
streamline their regulations and policies
in order to improve efficiency, reduce
unnecessary costs, eliminate
unwarranted constraints on credit
availability, and remove inconsistencies
and outmoded and duplicative
requirements.
The final rule seeks to reduce burden
on insured state nonmember banks and
to more closely align the FDIC’s fair
housing regulation with those of other
federal bank and thrift regulatory
agencies.
EFFECTIVE DATE: August 6, 1997.
FOR FURTHER INFORMATION CONTACT:
Steve Fritts, Associate Director, Division
of Compliance and Consumer Affairs,
(202) 942–3454; Michael R. Evans, Fair
Lending Specialist, Supervision and
Regulation Section, Division of
Compliance and Consumer Affairs,
(202) 942–3091; or Lori J. Sommerfeld,
Attorney, Regulation and Legislation
Section, Legal Division, (202) 898–8515;
Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
I. Proposed Rule
In accordance with section 303(a) of
the Riegle Community Development and
Regulatory Improvement Act (CDRIA) of
1994 (12 U.S.C. 4803(a)), the FDIC
conducted a systematic review of its
regulations and written policies and
determined that it was appropriate to
revise part 338, Fair Housing (12 CFR
part 338). A notice of proposed
rulemaking on this issue was published
on September 20, 1996 (61 FR 49420).
A. Subpart A (Advertising)
The proposed rule revised subpart A
of part 338 by clarifying certain
nondiscriminatory advertising
requirements. Currently, § 338.4
requires all insured state nonmember
banks engaged in extending loans for
the purpose of purchasing, constructing,
improving, repairing, or maintaining a
dwelling or any loan secured by a
dwelling to display an Equal Housing
Lender poster where deposits are
received or home loans are made in a
manner clearly visible to the general
public entering the bank. Also, current
§ 338.3 requires all insured state
nonmember banks to include in all
written and visual advertisements a
copy of the Equal Housing Lender
logotype and legend contained in the
poster and, with respect to oral
advertisements, a statement that the
bank is an ‘‘Equal Housing Lender.’’
These advertising requirements are
intended to help an insured state
nonmember bank communicate to its
customers (or potential customers)
seeking home loans that the bank is
committed to fair lending.
The proposed rule revised § 338.3 to
give insured state nonmember banks the
option of using either the FDIC’s Equal
Housing Lender logotype and legend, or
the Equal Housing Opportunity logotype
and legend contained in the Equal
Housing Opportunity poster as
prescribed by regulations of the
Department of Housing and Urban
Development (HUD) (specifically, 24
CFR 110.25(a)), in written and visual
advertisements. With respect to oral
advertisements, insured state
nonmember banks were also offered the
option of using the slogan ‘‘Equal
Opportunity Lender’’ in lieu of the
current slogan ‘‘Equal Housing Lender.’’
The optional use of either poster,
logotype or slogan is designed to
provide flexibility for institutions that
offer a broader variety of loan products
than mortgage loans (e.g., auto,
consumer, and credit card extensions of
credit).
In addition, the proposed rule
clarified placement of the poster in
§ 338.4. Regardless of which poster an
institution chooses to display, the poster
must be displayed in a single central
location clearly visible to the general
public entering the area, either where
deposits are received or where home
loans are made. This change was
designed to create consistency and
eliminate confusion among insured state
nonmember banks about the need for
multiple posters.
The proposed rule also eliminated a
reference to HUD’s advertising
regulations. As a result of HUD’s
regulatory review, part 109 (Fair
Housing Advertising) was removed from
its regulations (24 CFR part 109) and
will be relegated to other non-codified
guidance. See 61 FR 14378 (April 1,
1996). Accordingly, § 338.1 was revised
to eliminate the reference to Part 109.
New information was also added to
§ 338.3 advising all insured state
nonmember banks to refer to HUD for
further guidance concerning fair
housing advertising beyond that set
forth in § 338.3.
No changes were proposed to the
definitions governing subpart A
(§ 338.2).
B. Subpart B (Recordkeeping
Requirements)
Section 338.6 of the proposed rule
eliminated the definitions of
application, dwelling, home
improvement loan, and home purchase
loan. Because these definitions have
created some confusion within the
industry, the FDIC believed that
eliminating them from part 338 would
create consistency by automatically
subjecting insured state nonmember
banks to the relevant definitions in the
Federal Reserve Board’s Regulations B
and C (12 CFR parts 202 and 203).
Regulation B implements the Equal
Credit Opportunity Act (ECOA, 15
U.S.C. 1691–1691f), and Regulation C
implements the Home Mortgage
Disclosure Act (HMDA, 12 U.S.C. 2801–
2810). Proposed § 338.6 also reinstated
a definition for controlled entity, which
is a ‘‘corporation, partnership,
association, or other business entity
with respect to which a bank possesses
directly or indirectly, the power to
direct or cause the direction of
management and policies, whether
through the ownership of voting
securities, by contract, or otherwise.’’
This term is used in § 338.9 (which
governs mortgage lending of a
controlled entity), and the definition
FEDERAL DEPOSIT INSURANCE
CORPORATION
12 CFR Part 338
RIN 3064–AB72
Fair Housing
AGENCY: Federal Deposit Insurance
Corporation (FDIC).
ACTION: Final rule.
SUMMARY: The FDIC is amending its fair
housing regulation to clarify certain
nondiscriminatory advertising
requirements with regard to the type of
slogan and logotype insured state
nonmember banks may use in written,
oral and visual advertisements, the type
of fair housing posters they may display,
and the location for displaying the
poster. The final rule also eliminates the
FDIC’s separate fair housing
recordkeeping requirements that serve
as a substitute monitoring program
permitted by the Federal Reserve
Board’s Regulation B, which
implements the Equal Credit
Opportunity Act. Furthermore, the final
rule reduces the burden associated with
maintaining, updating, and reporting a
register of home loan applications by
requiring insured state nonmember
banks to comply only with the Federal
Reserve Board’s Regulation C, which
implements the Home Mortgage
Disclosure Act. The final rule simply
cross-references Regulations B and C.
This action is being taken in
accordance with section 303(a) of the
Riegle Community Development and
Regulatory Improvement Act of 1994
which requires the federal bank and
thrift regulatory agencies to review and
streamline their regulations and policies
in order to improve efficiency, reduce
unnecessary costs, eliminate
unwarranted constraints on credit
availability, and remove inconsistencies
and outmoded and duplicative
requirements.
The final rule seeks to reduce burden
on insured state nonmember banks and
to more closely align the FDIC’s fair
housing regulation with those of other
federal bank and thrift regulatory
agencies.
EFFECTIVE DATE: August 6, 1997.
FOR FURTHER INFORMATION CONTACT:
Steve Fritts, Associate Director, Division
of Compliance and Consumer Affairs,
(202) 942–3454; Michael R. Evans, Fair
Lending Specialist, Supervision and
Regulation Section, Division of
Compliance and Consumer Affairs,
(202) 942–3091; or Lori J. Sommerfeld,
Attorney, Regulation and Legislation
Section, Legal Division, (202) 898–8515;
Federal Deposit Insurance Corporation,
550 17th Street, NW., Washington, DC
20429.
SUPPLEMENTARY INFORMATION:
I. Proposed Rule
In accordance with section 303(a) of
the Riegle Community Development and
Regulatory Improvement Act (CDRIA) of
1994 (12 U.S.C. 4803(a)), the FDIC
conducted a systematic review of its
regulations and written policies and
determined that it was appropriate to
revise part 338, Fair Housing (12 CFR
part 338). A notice of proposed
rulemaking on this issue was published
on September 20, 1996 (61 FR 49420).
A. Subpart A (Advertising)
The proposed rule revised subpart A
of part 338 by clarifying certain
nondiscriminatory advertising
requirements. Currently, § 338.4
requires all insured state nonmember
banks engaged in extending loans for
the purpose of purchasing, constructing,
improving, repairing, or maintaining a
dwelling or any loan secured by a
dwelling to display an Equal Housing
Lender poster where deposits are
received or home loans are made in a
manner clearly visible to the general
public entering the bank. Also, current
§ 338.3 requires all insured state
nonmember banks to include in all
written and visual advertisements a
copy of the Equal Housing Lender
logotype and legend contained in the
poster and, with respect to oral
advertisements, a statement that the
bank is an ‘‘Equal Housing Lender.’’
These advertising requirements are
intended to help an insured state
nonmember bank communicate to its
customers (or potential customers)
seeking home loans that the bank is
committed to fair lending.
The proposed rule revised § 338.3 to
give insured state nonmember banks the
option of using either the FDIC’s Equal
Housing Lender logotype and legend, or
the Equal Housing Opportunity logotype
and legend contained in the Equal
Housing Opportunity poster as
prescribed by regulations of the
Department of Housing and Urban
Development (HUD) (specifically, 24
CFR 110.25(a)), in written and visual
advertisements. With respect to oral
advertisements, insured state
nonmember banks were also offered the
option of using the slogan ‘‘Equal
Opportunity Lender’’ in lieu of the
current slogan ‘‘Equal Housing Lender.’’
The optional use of either poster,
logotype or slogan is designed to
provide flexibility for institutions that
offer a broader variety of loan products
than mortgage loans (e.g., auto,
consumer, and credit card extensions of
credit).
In addition, the proposed rule
clarified placement of the poster in
§ 338.4. Regardless of which poster an
institution chooses to display, the poster
must be displayed in a single central
location clearly visible to the general
public entering the area, either where
deposits are received or where home
loans are made. This change was
designed to create consistency and
eliminate confusion among insured state
nonmember banks about the need for
multiple posters.
The proposed rule also eliminated a
reference to HUD’s advertising
regulations. As a result of HUD’s
regulatory review, part 109 (Fair
Housing Advertising) was removed from
its regulations (24 CFR part 109) and
will be relegated to other non-codified
guidance. See 61 FR 14378 (April 1,
1996). Accordingly, § 338.1 was revised
to eliminate the reference to Part 109.
New information was also added to
§ 338.3 advising all insured state
nonmember banks to refer to HUD for
further guidance concerning fair
housing advertising beyond that set
forth in § 338.3.
No changes were proposed to the
definitions governing subpart A
(§ 338.2).
B. Subpart B (Recordkeeping
Requirements)
Section 338.6 of the proposed rule
eliminated the definitions of
application, dwelling, home
improvement loan, and home purchase
loan. Because these definitions have
created some confusion within the
industry, the FDIC believed that
eliminating them from part 338 would
create consistency by automatically
subjecting insured state nonmember
banks to the relevant definitions in the
Federal Reserve Board’s Regulations B
and C (12 CFR parts 202 and 203).
Regulation B implements the Equal
Credit Opportunity Act (ECOA, 15
U.S.C. 1691–1691f), and Regulation C
implements the Home Mortgage
Disclosure Act (HMDA, 12 U.S.C. 2801–
2810). Proposed § 338.6 also reinstated
a definition for controlled entity, which
is a ‘‘corporation, partnership,
association, or other business entity
with respect to which a bank possesses
directly or indirectly, the power to
direct or cause the direction of
management and policies, whether
through the ownership of voting
securities, by contract, or otherwise.’’
This term is used in § 338.9 (which
governs mortgage lending of a
controlled entity), and the definition
36202 Federal Register / Vol. 62, No. 129 / Monday, July 7, 1997 / Rules and Regulations
was inadvertently omitted from part 338
when it was last amended in 1991.
Section 338.7 currently requires
insured state nonmember banks to
request and maintain certain
information regarding the race and other
personal characteristics of applicants for
a home purchase loan. The purpose of
collecting and retaining this information
is to monitor the institution’s
compliance with ECOA, and § 338.7
serves as a substitute monitoring system
permitted by Regulation B. However,
§ 338.7 requires the collection of more
extensive data. For example, under
current § 338.7(a)(1), institutions that
have no office located in a primary
metropolitan statistical area (PMSA) or
a metropolitan statistical area (MSA), or
which have total assets of $10 million
or less, are also required to request and
retain information on the location of the
property to be purchased. Further,
current § 338.7(a)(2) requires insured
state nonmember banks that have an
office located in a PMSA or MSA and
that have total assets exceeding $10
million to request and retain essentially
all of the information listed on the
model Residential Loan Application
Form contained in appendix B of
Regulation B (12 CFR part 202,
appendix B). Under Regulation B, the
only information that must be requested
is the race or national origin, sex,
marital status, and age of home loan
applicants.
Current § 338.8 also notifies
institutions of their duty to maintain,
update, and report a register of home
loan applications consistent with
Regulation C. Information required to be
collected includes the type of loan
requested, the purpose of the loan,
whether the loan was approved or
denied (including an option for
collecting denial reasons for
disapproved loans), and the type of
purchaser (if the loan was sold).
Further, § 338.8 requires all institutions
subject to Regulation C to report data on
the sex, race or national origin and
income of applicants. Until recently,
such data were optional under
Regulation C for institutions with assets
between $10 and $30 million.
When the FDIC’s proposed rule was
issued, Regulation C required the
collection of data only for institutions
with assets of $30 million or more.
However, current § 338.8 extends the
requirements to all insured state
nonmember institutions with assets
exceeding $10 million that have offices
located in a PMSA or an MSA.
Regulation C specifies a quarterly
schedule for entering the required data
on the HMDA register, whereas § 338.8
currently requires more rigorous
updating (within 30 days after final
disposition of the loan application).
The proposed rule eliminated the
FDIC’s separate fair housing
recordkeeping requirements contained
in § 338.7 that serve as a substitute
monitoring program permitted by
Regulation B. The proposed rule also
removed the requirements in § 338.8
that insured state nonmember banks
maintain, update and report a register of
home loan applications that are
duplicative and more rigorous than the
requirements of Regulation C. Instead,
the proposed rule simply cross-
referenced Regulations B and C and
required insured state nonmember
banks to comply only with those
regulations. However, the FDIC
proposed to revise § 338.8 to require
those institutions subject to Regulation
C to collect and report the reasons for
denial of each loan application. The
reporting of loan denial reasons is
currently optional under Regulation C.
The proposed rule also revised
§ 338.5, which describes the purpose of
subpart B, to reflect the changes to
§§ 338.6, 338.7, and 338.8.
II. Final Rule
The FDIC received 15 comment letters
reflecting the views of one law firm that
represents insured state nonmember
banks, one community-based
organization, three trade associations,
four bank holding companies, and six
insured state nonmember banks.
A. Subpart A (Advertising)
The vast majority of the commenters
favored the changes with respect to the
advertising requirements which would
permit insured state nonmember banks
to use either the FDIC’s Equal Housing
Lender poster, logotype or slogan, or
HUD’s Equal Housing Opportunity
poster, logotype or slogan. Commenters
also generally approved of clarifying
placement of the poster in a single
central location within a bank readily
visible to customers. One commenter
suggested that the FDIC provide a
definition of ‘‘advertisement’’ in subpart
A which would include certain
electronic advertisements. However, the
FDIC believes it would be more
appropriate to address this issue in
connection with release of the agency’s
examination guidelines for electronic
banking activities. Another commenter
suggested that the definitions for
dwelling, handicap and familial status,
which are identical to the definitions for
the same terms contained in the Fair
Housing Act (42 U.S.C. 3602), be
replaced with cross-references. The
FDIC originally inserted those
definitions in subpart A for ease of
reference so that bankers and their
attorneys would not have to consult the
Fair Housing Act, and the agency
believes that logic still applies.
The FDIC is eliminating from the final
rule a proposed section, § 338.3(c),
which would have advised all insured
state nonmember banks to consult the
U.S. Department of Housing and Urban
Development (HUD) for further
guidance concerning fair housing
advertising beyond that set forth in
§ 338.3. No comments were received on
this aspect of this proposal. However,
upon further reflection the FDIC
believes that this provision is
unnecessary because questions
concerning the size of the logotype and
legend in print advertising occur rather
infrequently and can be handled
through informal referrals to HUD.
Accordingly, § 338.3(c) is being
removed from the final rule. Other than
this modification, the FDIC is retaining
the advertising portion of part 338
(subpart A) as proposed.
B. Subpart B (Recordkeeping
Requirements)
Two commenters suggested
definitional changes to subpart B. One
commenter suggested that § 338.7 be
modified to require insured nonmember
banks to collect the ‘‘government’’
monitoring information required by
Regulation C. However, § 338.7 contains
a cross-reference to Regulation B, not
Regulation C. Moreover, Regulation B
uses the term ‘‘monitoring information’’.
Although the FNMA/FHLMC residential
mortgage loan application form contains
a section on ‘‘government monitoring’’
information, the FDIC believes that it is
more appropriate to parallel the
language of Regulation B rather than an
application that may be subject to
change. Therefore, this change is not
being implemented. Another commenter
suggested adding a definition of ‘‘home
loan’’, which is used in § 338.9
(mortgage lending of a controlled
entity), to § 338.6 or clarifying the term
in § 338.9. The FDIC agrees that this
term is ambiguous. It is intended to
cover home purchase loans and home
improvement loans as defined in
§§ 203.2 (f) and (g) of Regulation C (12
CFR 203.2 (f), (g)). Accordingly, the
FDIC is modifying § 338.9 by replacing
the term ‘‘home loan’’ with the phrase
‘‘home purchase loans or home
improvement loans as defined in
Regulation C’’.
A majority of the comments favored
eliminating the additional data
collection and retention requirements
imposed by subpart B of part 338 that
go beyond the requirements of
Regulations B and C. However, one
was inadvertently omitted from part 338
when it was last amended in 1991.
Section 338.7 currently requires
insured state nonmember banks to
request and maintain certain
information regarding the race and other
personal characteristics of applicants for
a home purchase loan. The purpose of
collecting and retaining this information
is to monitor the institution’s
compliance with ECOA, and § 338.7
serves as a substitute monitoring system
permitted by Regulation B. However,
§ 338.7 requires the collection of more
extensive data. For example, under
current § 338.7(a)(1), institutions that
have no office located in a primary
metropolitan statistical area (PMSA) or
a metropolitan statistical area (MSA), or
which have total assets of $10 million
or less, are also required to request and
retain information on the location of the
property to be purchased. Further,
current § 338.7(a)(2) requires insured
state nonmember banks that have an
office located in a PMSA or MSA and
that have total assets exceeding $10
million to request and retain essentially
all of the information listed on the
model Residential Loan Application
Form contained in appendix B of
Regulation B (12 CFR part 202,
appendix B). Under Regulation B, the
only information that must be requested
is the race or national origin, sex,
marital status, and age of home loan
applicants.
Current § 338.8 also notifies
institutions of their duty to maintain,
update, and report a register of home
loan applications consistent with
Regulation C. Information required to be
collected includes the type of loan
requested, the purpose of the loan,
whether the loan was approved or
denied (including an option for
collecting denial reasons for
disapproved loans), and the type of
purchaser (if the loan was sold).
Further, § 338.8 requires all institutions
subject to Regulation C to report data on
the sex, race or national origin and
income of applicants. Until recently,
such data were optional under
Regulation C for institutions with assets
between $10 and $30 million.
When the FDIC’s proposed rule was
issued, Regulation C required the
collection of data only for institutions
with assets of $30 million or more.
However, current § 338.8 extends the
requirements to all insured state
nonmember institutions with assets
exceeding $10 million that have offices
located in a PMSA or an MSA.
Regulation C specifies a quarterly
schedule for entering the required data
on the HMDA register, whereas § 338.8
currently requires more rigorous
updating (within 30 days after final
disposition of the loan application).
The proposed rule eliminated the
FDIC’s separate fair housing
recordkeeping requirements contained
in § 338.7 that serve as a substitute
monitoring program permitted by
Regulation B. The proposed rule also
removed the requirements in § 338.8
that insured state nonmember banks
maintain, update and report a register of
home loan applications that are
duplicative and more rigorous than the
requirements of Regulation C. Instead,
the proposed rule simply cross-
referenced Regulations B and C and
required insured state nonmember
banks to comply only with those
regulations. However, the FDIC
proposed to revise § 338.8 to require
those institutions subject to Regulation
C to collect and report the reasons for
denial of each loan application. The
reporting of loan denial reasons is
currently optional under Regulation C.
The proposed rule also revised
§ 338.5, which describes the purpose of
subpart B, to reflect the changes to
§§ 338.6, 338.7, and 338.8.
II. Final Rule
The FDIC received 15 comment letters
reflecting the views of one law firm that
represents insured state nonmember
banks, one community-based
organization, three trade associations,
four bank holding companies, and six
insured state nonmember banks.
A. Subpart A (Advertising)
The vast majority of the commenters
favored the changes with respect to the
advertising requirements which would
permit insured state nonmember banks
to use either the FDIC’s Equal Housing
Lender poster, logotype or slogan, or
HUD’s Equal Housing Opportunity
poster, logotype or slogan. Commenters
also generally approved of clarifying
placement of the poster in a single
central location within a bank readily
visible to customers. One commenter
suggested that the FDIC provide a
definition of ‘‘advertisement’’ in subpart
A which would include certain
electronic advertisements. However, the
FDIC believes it would be more
appropriate to address this issue in
connection with release of the agency’s
examination guidelines for electronic
banking activities. Another commenter
suggested that the definitions for
dwelling, handicap and familial status,
which are identical to the definitions for
the same terms contained in the Fair
Housing Act (42 U.S.C. 3602), be
replaced with cross-references. The
FDIC originally inserted those
definitions in subpart A for ease of
reference so that bankers and their
attorneys would not have to consult the
Fair Housing Act, and the agency
believes that logic still applies.
The FDIC is eliminating from the final
rule a proposed section, § 338.3(c),
which would have advised all insured
state nonmember banks to consult the
U.S. Department of Housing and Urban
Development (HUD) for further
guidance concerning fair housing
advertising beyond that set forth in
§ 338.3. No comments were received on
this aspect of this proposal. However,
upon further reflection the FDIC
believes that this provision is
unnecessary because questions
concerning the size of the logotype and
legend in print advertising occur rather
infrequently and can be handled
through informal referrals to HUD.
Accordingly, § 338.3(c) is being
removed from the final rule. Other than
this modification, the FDIC is retaining
the advertising portion of part 338
(subpart A) as proposed.
B. Subpart B (Recordkeeping
Requirements)
Two commenters suggested
definitional changes to subpart B. One
commenter suggested that § 338.7 be
modified to require insured nonmember
banks to collect the ‘‘government’’
monitoring information required by
Regulation C. However, § 338.7 contains
a cross-reference to Regulation B, not
Regulation C. Moreover, Regulation B
uses the term ‘‘monitoring information’’.
Although the FNMA/FHLMC residential
mortgage loan application form contains
a section on ‘‘government monitoring’’
information, the FDIC believes that it is
more appropriate to parallel the
language of Regulation B rather than an
application that may be subject to
change. Therefore, this change is not
being implemented. Another commenter
suggested adding a definition of ‘‘home
loan’’, which is used in § 338.9
(mortgage lending of a controlled
entity), to § 338.6 or clarifying the term
in § 338.9. The FDIC agrees that this
term is ambiguous. It is intended to
cover home purchase loans and home
improvement loans as defined in
§§ 203.2 (f) and (g) of Regulation C (12
CFR 203.2 (f), (g)). Accordingly, the
FDIC is modifying § 338.9 by replacing
the term ‘‘home loan’’ with the phrase
‘‘home purchase loans or home
improvement loans as defined in
Regulation C’’.
A majority of the comments favored
eliminating the additional data
collection and retention requirements
imposed by subpart B of part 338 that
go beyond the requirements of
Regulations B and C. However, one