From:
Kelley C. Lee
Sent: Thursday, March 25, 2004 10:51 AM
To: regs.comments@federalreserve.gov; Comments;
regs.comments@occ.treas.gov; regs.comments@ots.treas.gov
Subject: EGRPRA Specifically 12 CFR 203 (HMDA)
As a community banker and former OCC bank examiner,
I would like to share my thoughts and comments
regarding the above reference regulation.
First, I want to express my support for the need to
monitor home mortgage activity. Without specific
initiatives started 15-20 years ago, the national
average for home ownership would not be where it is
today. This is a very positive thing and has helped
thousands of Americans recognize a part of the
"American Dream."
However, like many good intentions that start off
with noble and right purposes, HMDA has gone awry.
Our $225MM bank actively seeks to make both
conforming and non-conforming home mortgages. We
generated approximately $12MM in purchase, refi, and
home equity loans during 2003. In total, we closed
approximately 80 loans during the year.
Because our bank is extremely compliance sensitive,
we have procedures in place where our HMDA LAR and
all supporting documentation are reviewed quarterly
and then once more prior to our submission of the
final report. These reviews are performed in-house
and take hundreds of man hours to perform. In
addition to our in-house review, we also have
engaged outside compliance auditors who also review
HMDA as part of their scope.
The reasons for providing your this background
information is not to brag about how great our
commitment or compliance efforts are. We know we
must comply with both the letter AND spirit of the
law. My reason for providing you this information is
that with all our efforts to comply, as well as,
seek out mortgage loan opportunities, our impact on
the total picture is microscopic.
$12MM in mortgage volume for the Dallas MSMA does
not even rank us in the top 100 mortgage producers.
We could have the most outlaw operation in this part
of the country and the HMDA data would not bear that
out when you are reviewing regional performance.
My point is this, HMDA is necessary and good but
does not necessarily apply to every lender. The
$30MM exemption from HMDA reporting is too low.
Because of the amount of time, effort, training, and
auditing expense associated with complying with a
"zero tolerance" regulation, the materiality should
fit the bill and costs associated with the
compliance effort.
My recommendation would be to provide an exemption
to lenders that make less than 200-500 mortgage
loans a year. Again, materiality is the basis for my
recommendation. Because we compete against the
biggest of the big (Countrywide, Citi, Washington
Mutual, B of A, Wells Fargo) our paltry efforts for
the year are exceeded by many, many, mortgage
companies on a daily and weekly basis. If our data
were excluded from HMDA analysis, no one would be
able to tell that it were missing!!! If you have
never tried to understand or deal with all of the
reporting nuances regarding HMDA LAR, I would invite
you to our shop. We would love the opportunity to
show you the daily effort required in maintaining
compliance. I think you will be "shocked" if you
take me up on that offer.
This regulation should be for those who impact,
control, and drive the markets...not the little guys
trying to scrape out a meager existence.
Thank you for the opportunity to express my opinion.
Sincerely,
Kelley C. Lee
Executive Vice President
The First National Bank of Athens
Athens, Texas
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