Regulation C

What Is Regulation C?

Regulation C is the regulation that implements the Home Mortgage Disclosure Act of 1975. Regulation C requires many financial institutions to annually disclose loan data about the communities to which they provided residential mortgages. As a result, regulatory authorities can evaluate whether the lender is adequately meeting the needs of the prospective borrowers in that community.

How Regulation C Works

All providers of mortgages that are backed by the government in any capacity must annually reveal the quantity and dollar amounts of all mortgages provided within the past year. These loans must be broken down by census tract in which the properties are located.

As of 2023, any lending institution with total assets of $50 million or less is exempt from the data collection requirements established under Regulation C. This includes banks, savings associations and credit unions with total assets that are at or below the $50 million threshold. The threshold is increased periodically in order to keep pace with inflation as measured by the Consumer Price Index (CPI). This means that for years 2023 and beyond, the threshold could be raised again.

Regulation C is designed to provide data that can be used to:

• Help determine whether banks, savings associations and credit unions are serving the housing needs of people in their respective communities
• Aid public officials in distributing public-sector investments in order to attract private investment to areas where it is needed
• Assist in identifying possible discriminatory lending patterns and enforcing compliance with federal anti-discrimination statutes

Regulation C guidelines are subject to change as new final rules are issued. For example, 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 temporary threshold of 500 open-end lines of credit.

What Does Regulation C Cover?

Regulation C covers a number of issues related to data collection and loan originations. Here's a closer look at how this regulation works.

Data Compilation

Financial institutions required to comply with 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 also furnish data about the loan applications that did not result in originations. This includes withdrawn applications, loan denials, applications that were dismissed because they were incomplete and applications that received approval but were not accepted.

The collection of such data is supposed to give authorities a way to screen for incidents of discrimination in lending. The information is tied to geolocation and demographics from the census tract. If there is a repeating pattern where financing is denied to a particular segment of the population, the financial institution could face penalties from authorities. For example, a bank might constantly deny financing to people of a certain ethnicity or from a particular area despite otherwise being qualified. Such activity would draw attention from regulators.

Reporting and Disclosure

Regulation C requires annual reporting from financial institutions that are subject to this rule. Reports must be submitted by March 1 the following calendar year for which data is collected and recorded. Financial institutions are required to retain copies of annual loan/application registers for at least three years.

Meanwhile, financial institutions that reported at least 60,000 covered loans and applications combined, excluding purchased covered loans, are also required to report data quarterly. This reporting is due within 60 calendar days after the end of each calendar quarter.

The Federal Financial Institutions Examination Council (FFIEC) is required to make disclosure statements available, based on the data submitted by each financial institution for the preceding calendar year. Once these disclosure statements are issued, the financial institution must provide written notice to the public that the statements are available for viewing 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 appropriate federal supervisory agency. Specifically, "an institution is required to record data on each application or loan within 30 calendar days after the end of the calendar quarter during which the institution took final action."

Mortgage

Institutions covered by Regulation C must collect and report "any mortgage loan secured by a dwelling, including open-end lines of credit, regardless of the loan’s purpose." But certain types of loans are excluded, including unsecured home-improvement loans, dwelling-secured loans that are made primarily for a commercial or business purpose, agricultural-purpose loans and other specifically excluded loans.

Data points collected include:

• Details about the applicant or borrower, such as age and credit score
• Information about the loan pricing, including the borrower’s total cost to obtain a mortgage, temporary introductory rates, and borrower-paid origination charges
• Details about loan features, such as the loan term, prepayment penalties, or non-amortizing features
• Information about the property used to secure the loan, including the property type and value

Special Considerations

The Bureau of Consumer Financial Protection continues to amend Regulation C. Updates to regulations have thus far included the addition of new reporting requirements to be in compliance with the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. Dodd-Frank also transferred 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 role in ensuring fair practices across the mortgage lending industry. If you plan to apply for a mortgage to buy a home, refinance an existing mortgage or apply for a home equity loan or line of credit, it's important to know how this regulation affects you and what information your lender may collect.