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Submission for OMB Review; Comment Request-Thrift Financial Report: Schedules PD and VA

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Office of Thrift Supervision (OTS), Treasury.


Notice and request for comment.


The information collection requirement described below has been submitted to the Office of Management and Budget (OMB) for review, as required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507). OTS has solicited public comments on the proposal and is now providing a summary of those comments as well as final notice of the proposed revisions to this information collection.

On April 29, 2004, OTS, together with the Office of the Comptroller of the Currency (OCC), Board of Governors of the Federal Reserve System (Board), and Federal Deposit Insurance Corporation (FDIC) (collectively the agencies), requested public comment for 60 days (69 FR 23502) on proposed revisions to the instructions for the Thrift Financial Report (TFR), which are currently approved collections of information. After considering the comments received, OTS has adopted the proposed instructional revisions and also will add new items to the TFR based on suggestions by commenters. In addition, on April 26, 2005, OTS requested public comment for 60 days (70 FR 21494) on other proposed revisions to the TFR. OTS received no comments on these additional revisions and has adopted the revisions as proposed. OTS is submitting the adopted revisions to OMB for review and approval.


Submit written comments on or before August 5, 2005.


Send comments to OMB and OTS at these addresses: Mark Menchik, Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10236, Washington, DC 20503, or e-mail to; and Information Collection Comments, Chief Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552, send facsimile transmissions to (202) 906-6518, send e-mails to, or hand deliver comments to the Guard's Desk, east lobby entrance, 1700 G Street, NW., on business days between 9 a.m. and 4 p.m. All comments should refer to “TFR: Schedules PD and VA, OMB No. 1550-0023.” OTS will post comments and the related index on the OTS Internet site at In addition, interested persons may inspect comments at the Public Reading Room, 1700 G Street, NW., by appointment. To make an appointment, call (202) 906-5922, send an e-mail to, or send a facsimile transmission to (202) 906-7755.

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To obtain a copy of the submission to OMB, contact Marilyn K. Burton, OTS Clearance Officer, at, (202) 906-6467, or facsimile number (202) 906-6518, Chief Counsel's Office, Office of Thrift Supervision, 1700 G Street, NW., Washington, DC 20552. You can obtain a copy of the September 2005 Thrift Financial Report form from the OTS Web site at​resultsort.cfm?​catNumber=​275&​dl=​33&​edit=​1.

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OTS may not conduct or sponsor an information collection, and respondents are not required to respond to an information collection, unless the information collection displays a currently valid OMB control number. OTS has requested OMB approval to revise the currently approved collections of information identified below.

The effect of the proposed revisions on the reporting requirements of these information collections will vary from institution to institution, depending on the institution's involvement with the types of activities or transactions to which the proposed changes apply. OTS expects that the reporting changes that relate to certain securitized U.S. government-guaranteed or -insured residential mortgage loans will primarily affect the small percentage of institutions that service or securitize and service these loans. The revisions to the TFR dealing with acquired loans with evidence of deterioration of credit quality since origination, including Start Printed Page 39017acquisitions of such loans in business combinations accounted for using the purchase method, will generally apply only to the limited number of institutions that are involved in purchase business combinations or that engage in purchases of loans with credit quality problems as a business activity. OTS estimates that implementation of these reporting changes will result in a small increase in the current reporting burden imposed by the TFR for those institutions involved with these activities and transactions. The following burden estimates include the effect of the proposed revisions.

Title: Thrift Financial Report.

OMB Number: 1550-0023.

Form Number: OTS 1313.

Statutory Requirement: 12 U.S.C. 1464(v) imposes reporting requirements for savings associations. Except for selected items, these information collections are not given confidential treatment.

Type of Review: Revision of currently approved collections.

Affected Public: Savings associations.

Estimated Number of Respondents and Recordkeepers: 880.

Estimated Burden Hours per Respondent: 36.4 burden hours.

Estimated Frequency of Response: Quarterly.

Estimated Total Annual Burden: 128,128 burden hours. Because some of these changes will not affect all savings associations that file the TFR, the burden hours reflected above will vary from institution to institution.

Abstract: All OTS-regulated savings associations must comply with the information collections described in this notice. OTS collects this information each calendar quarter, or less frequently if so stated. OTS needs this information to monitor the condition, performance, and risk profile of the savings association industry.

Current Actions

I. Overview

On April 29, 2004, OTS, together with the agencies, jointly published a notice (69 FR 23502) soliciting comments for 60 days on proposed revisions to the Call Report and the TFR. This joint notice requested comments on two proposed instructional changes, one of which would affect how institutions report certain information in the TFR, but the notice did not propose to change the report forms themselves. The proposal affecting the TFR would change and clarify the reporting requirements related to certain U.S. Government-guaranteed or -insured residential mortgage loans backing Government National Mortgage Association (GNMA) securities that meet certain delinquency criteria and are subject to servicer or seller/servicer buy-back provisions, i.e., “GNMA loans.” These clarifications involved the reporting of GNMA loans as delinquent and the balance sheet classification of real property backing a delinquent GNMA loan on which an institution has foreclosed.

OTS received six comments on the April 2004 proposals pertaining to TFR changes: Four from savings associations, one from a thrift holding company, and one from a trade group whose members include savings associations.

OTS has considered these comments and has decided to proceed with the instructional revisions pertaining to mortgage loans subject to buy-back provisions, but with the addition of new items to the TFR Schedule PD on which savings associations report information on past due and nonaccrual loans.[1] This decision is discussed below.

In addition, on April 26, 2005, OTS published a notice (70 FR 21494) requesting comments on proposed revisions to the TFR in response to Statement of Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3), which was issued by the American Institute of Certified Public Accountants. SOP 03-3 applies to loans acquired in fiscal years beginning after December 15, 2004. OTS proposed to add three items to the TFR relating to loans within the scope of SOP 03-3. OTS also proposed a revision to the TFR instructions to explain how the delinquency status of loans within the scope of SOP 03-3 should be determined for purposes of disclosing past due loans in the TFR.

OTS received no comments in response to its April 2005 proposal, and has decided to proceed with the SOP 03-3 changes as proposed.

OTS will implement the proposed TFR changes as of the September 30, 2005, report date, except for the revisions pertaining to foreclosed properties backing delinquent GNMA loans. Nonetheless, as is customary for TFR changes, if the information to be reported in accordance with the revised reporting requirements is not readily available, institutions are advised that they may report reasonable estimates of this information for the report date when the proposed changes first take effect, i.e., September 30, 2005. With respect to the reporting of foreclosed properties backing GNMA loans, institutions should report these properties in their TFR in accordance with their existing reporting policies for such properties through the December 31, 2005, report date. Effective with the March 31, 2006, report date, all institutions should report these properties as real estate owned on the balance sheet and disclose the amount in a new subitem that will be added to the TFR schedule in which information on the composition of real estate owned is reported.

II. Revisions to the Thrift Financial Report

A. GNMA Buy-Back Option

Under the GNMA Mortgage-Backed Securities Guide, the issuer of GNMA securities has the option to repurchase individual Federal Housing Administration (FHA), Department of Veterans Affairs/Veterans Administration (VA), and Farmers Home Administration (FmHA) mortgage loans backing the securities when these GNMA loans meet certain delinquency criteria. Because of this option, if and when individual loans that have been accounted for as sold in accordance with Statement of Financial Accounting Standards No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities (FAS 140), later meet GNMA's specified delinquency criteria and are eligible for repurchase, FAS 140 requires these individual delinquent GNMA loans to be brought back onto the seller/servicer's books as assets, along with an offsetting liability. This rebooking of the GNMA loans is required regardless of whether the seller/servicer intends to exercise the buy-back option.

OTS and the other federal banking agencies jointly proposed that all delinquent rebooked GNMA loans (including those for which the institution is taking steps to foreclose on the real estate collateral at the time of repurchase, but for which the sheriff's sale has not yet taken place) should be reported as past due on TFR Schedule PD, Consolidated Past Due and Nonaccrual Assets, and on Call Report Schedule RC-N—Past Due and Nonaccrual Loans, Leases, and Other Assets, in accordance with their contractual terms. As part of this change, the agencies proposed to eliminate an existing provision in the TFR and Call Report instructions that permits institutions not to report Start Printed Page 39018delinquent GNMA loans that are repurchased when they are “in foreclosure status” at the time of repurchase as past due loans in TFR Schedule PD or in Call Report Schedule RC-N, provided the government reimbursement process is proceeding normally. In proposing this reporting change, the agencies noted that delinquent rebooked GNMA loans would also be reported as supplemental items in TFR Schedule PD and in Call Report Schedule RC-N, which disclose amounts for past due loans wholly or partially guaranteed or insured by the U.S. Government. These items supplement the main body of the past due loans schedule by providing information that enables users of the TFR and Call Report to determine the amount of an institution's total delinquent loans that are not protected by a U.S. Government guarantee or insurance.

In addition, the agencies proposed that, when an institution forecloses on real estate backing a delinquent GNMA loan that it has rebooked as an asset, it should report the property as “real estate owned” and not as an “other asset” on the TFR and Call Report balance sheets. The foreclosed property should be reported in this manner beginning at the time of foreclosure until it has been sold, transferred to HUD, or otherwise disposed of.

OTS received six comments addressing the portion of the April 2004 proposal on GNMA loan reporting issues. With one exception, commenters disagreed with the agencies' proposed reporting treatment for past due GNMA loans and foreclosed property. One commenter did “not object to the proposal that all delinquent rebooked GNMA loans should be treated consistently and reported as past due” in the schedule for past due loans, observing that users of this schedule “will have a method to identify the amount of loans that are not guaranteed by the U.S. Government.” However, this commenter did not favor the proposed treatment of foreclosed property.

Delinquency Reporting

With respect to delinquency reporting, five commenters did not support reporting rebooked past due GNMA loans in the main body of TFR Schedule PD. These commenters recommended that if these delinquent loans must be reported in this schedule, they should be reported only in a Memorandum section of the schedule and should not be aggregated with other past due loans. They favored segregated reporting for the GNMA loans because these loans have a different risk profile than other past due loans due to their guarantees or insurance. These commenters stated that reporting these delinquent rebooked GNMA loans with the other past due loans will skew analytical ratios used to evaluate credit risk, which will lead to misinterpretation of the past due data and cause banks and savings associations to have to respond to questions regarding these data. One commenter specifically suggested that if the agencies decided to proceed with the proposed inclusion of delinquent rebooked GNMA loans in the body of the past due schedule, “a separate line should be added for past due GNMA loans.” Nevertheless, this commenter also expressed concern that the agencies' proposed past due reporting treatment in Schedule PD and Schedule RC-N would produce disparities between the TFR and Call Report past due schedules and the past due reporting by public banking organizations in their filings with the Securities and Exchange Commission (SEC).

OTS does not believe that the agencies' proposal to include delinquent rebooked GNMA loans in the body of the past due schedule should lead to inconsistencies in the disclosure of these loans in the TFR and Call Report and in SEC filings. Accounting staff members in the SEC's Division of Corporation Finance prepared guidance on “Current Accounting and Disclosure Issues in the Division of Corporation Finance” dated November 30, 2004, and updated on March 4, 2005. Both versions of this guidance discuss “Accounting for Loans or Other Receivables Covered by Buyback Provisions,” including, but not limited to, loans securitized through GNMA.[2] (See Section II.K.1. of the SEC staff's November 2004 guidance, which was carried forward without revision to Section II.N.1. of the March 2005 guidance.) The SEC staff's discussion of this topic states the following concerning loans, including GNMA loans, that have been “re-recognized,” i.e., rebooked as assets in accordance with FAS 140:

In the event that loans re-recognized by the transferor have the risk elements contemplated by Item III.C.1. of Industry Guide 3 (i.e., nonaccrual, past due, restructured), the amount of such loans should be included in the disclosures required by that Item. Supplemental disclosures may be made to facilitate understanding of the aggregate amounts reported pursuant to Item III.C.1. These disclosures may include, for example, information as to the nature of the loans, any guarantees, the extent of collateral, or amounts in process of collection. For example, if a loan re-recognized by a transferor is accruing, but it is contractually past due 90 days or more as to principal or interest, that loan should be included in the disclosure required by Item III.C.1(b) even if the loan is guaranteed through a government program, such as the Veterans Administration (VA) or Federal Housing Authority (FHA).

As recognized by the SEC staff, delinquent rebooked GNMA loans are to be included in the aggregate past due disclosures required by Industry Guide 3. However, public banking organizations may provide supplemental disclosure of the fact that these loans are guaranteed or insured by the U.S. Government to assist users in understanding the aggregate amounts of past due loans. The agencies' proposal for reporting past due rebooked GNMA loans in TFR Schedule PD and Call Report Schedule RC-N parallels the SEC staff's guidance because these schedules include items that permit the “supplemental disclosure” of the amount of past due loans wholly or partially guaranteed or insured by the U.S. Government. Nevertheless, the agencies and other users of the supplemental Schedule PD and Schedule RC-N items on past due government-guaranteed or -insured loans would benefit from having delinquent rebooked GNMA loans identified separately from other past due government-guaranteed or -insured loans, especially for institutions that service or sell and continue to service a significant volume of GNMA loans.

Accordingly, OTS has decided to proceed with the agencies' original proposal that would require rebooked GNMA loans that are past due to be reported in the main body of TFR Schedule PD and in memoranda items PD195, PD295, and PD395, “Loans and Leases Reported in PD115-PD380 That Are Wholly or Partially Guaranteed by the U.S. Government, Agency, or Sponsored Entity.” However, based on suggestions from commenters, effective September 30, 2005, OTS will add to TFR Schedule PD new memoranda items PD192, PD292, and PD392 for “Loans and Leases Reported in PD115-PD380 That Are Held for Sale” and PD196, PD296, and PD396 in which savings associations would report “Guaranteed Portion of Other Loans and Leases Included in PD195-PD395 (Exclude Rebooked ‘GNMA Loans’). OTS will also add new memoranda items PD197, PD297, and PD397 to Schedule PD effective September 30, 2005, in which savings associations Start Printed Page 39019would report “Rebooked ‘GNMA Loans’ Repurchased or Eligible for Repurchase Included in PD195-PD395.” [3] [4]

OTS notes that savings associations that originate and hold FHA, VA, and FmHA mortgage loans in their loan portfolios, rather than securitizing and selling them in the form of GNMA securities, currently report these loans as past due in the main body of TFR Schedule PD if and when these loans become delinquent. These past due loans are also reported in existing TFR Schedule PD memoranda items PD195, PD295, and PD395 for past due loans wholly or partially guaranteed or insured by the U.S. Government. The reporting treatment of these guaranteed and insured loans in Schedule PD will not change.

Foreclosed Real Estate

Commenters on the portion of the agencies' April 2004 proposal on GNMA loans objected to the proposed balance sheet classification of foreclosed real estate collateral backing delinquent GNMA loans as “real estate owned.” Commenters recommended that institutions report such real estate as “other assets” because they do not believe that institutions are exposed to the underlying risk of the real estate, despite the foreclosure, due to the insurance or guarantee by the U.S. Government. They also observed that, in contrast to foreclosed real estate arising from other types of loans, institutions do not intend to sell foreclosed properties resulting from GNMA loans in order to recover the value of these assets. Instead, institutions look to their claim on the U.S. Government for recovery.

OTS has reviewed and considered these comments. As stated in the April 2004 proposal, the U.S. Department of Housing and Urban Development (HUD), the federal entity that administers the GNMA program, cannot accept a foreclosed property nor can the government guarantee or insurance be honored until all legal actions related to the foreclosure process have been completed. Commenters confirmed that certain conditions must be met before a property can be conveyed to HUD. While these conditions normally will be met, whether they will ultimately be met for an individual property is not known at the time of foreclosure. For example, the servicing guide for VA loans indicates the circumstances in which foreclosed property would not be conveyed, including when the VA issues “no-bid” advice (because the VA's cost of paying its guarantee is less than its estimated cost of taking possession of the property and selling it) and when there has been a failure to follow the regulations upon which the VA's guarantee is based.

Although the existence of insurance or a guarantee from the U.S. Government on a particular foreclosed loan will aid in determining whether the carrying value of the asset is recoverable, it does not determine the classification of the asset upon foreclosure. Because an institution's claim against the U.S. Government is effectively conditional until all the conditions have been met for the conveyance of a foreclosed property to HUD, the asset resulting from an institution's foreclosure on a delinquent GNMA loan has more of the characteristics of real estate than a receivable from the U.S. Government. Accordingly, the agencies believe that, for TFR and Call Report balance sheet purposes, it is more appropriate to view this asset as real estate owned than as a receivable at foreclosure.

The agencies recognize that the more common practice is for institutions that foreclose on delinquent GNMA loans to report the resulting asset as an “other asset” rather than “real estate owned” on the TFR and Call Report balance sheets. In this regard, some commenters recommended that if the agencies concluded that these assets should not be reported as “other assets,” there should be separate disclosure of these assets in the TFR and Call Report because of the difference in their risk profile compared to other types of foreclosed real estate. OTS sees merit in enabling institutions with foreclosed properties from GNMA loans to distinguish the amount of these properties from other foreclosed properties. Therefore, OTS will delay the implementation date for institutions to report foreclosed real estate from GNMA loans as “other real estate owned” on the balance sheet until the March 31, 2006, report date. OTS will also add to TFR Schedule SC a new line, SC429, “U.S. government-guaranteed or -insured real estate owned,” to enable institutions to disclose the amount of such real estate effective with the March 2006 TFR. Until then, i.e., through the December 31, 2005, report date, institutions should continue to report these foreclosed properties in their TFRs in accordance with their existing reporting policies for such properties.

B. Loans Within the Scope of SOP 03-3

SOP 03-3 applies to “purchased impaired loans,” i.e., loans [5] that a savings association has purchased, including those acquired in a purchase business combination, when there is evidence of deterioration of credit quality since the origination of the loan and it is probable, at the purchase date, that the savings association will be unable to collect all contractually required payments receivable. To assist OTS in understanding the relationship between the allowance for loan and lease losses and the carrying amount of the loan portfolios of those savings associations that include purchased impaired loans, OTS proposed to add three items to the TFR. All three of these items represent information included in the disclosures required by SOP 03-3. OTS proposed to add three memorandum items to TFR Schedule VA, Consolidated Valuation Allowances and Related Data, related to purchased impaired loans held for investment: [6] (1) the outstanding balance,[7] (2) the recorded investment (carrying amount before deducting any loan loss allowances) as of the report date that are included in Schedule SC, and (3) the amount of post-acquisition loan loss allowances that is included in the total amount of the allowance for loan and lease losses as of the report date.

OTS also stated that it planned to revise the instructions to Schedule VA to explain how purchased impaired loans should be reported in this schedule. SOP 03-3 does not prohibit placing loans on nonaccrual status and any nonaccrual purchased impaired loans should be reported accordingly in Schedule PD—Consolidated Past Due Start Printed Page 39020and Nonaccrual Assets. For those purchased impaired loans that are not on nonaccrual status, savings associations should determine the loans' delinquency status in accordance with the contractual repayment terms of the loans without regard to the purchase price of (initial investment in) these loans or the amount and timing of the cash flows expected at acquisition. As previously mentioned, OTS received no comments in response to its April 2005 proposed reporting revisions related to SOP 03-3.

Accordingly, the OTS will adopt as proposed the remaining changes to the September 2005 TFR published in the Federal Register on April 29, 2004 (69 FR 23502), and April 26, 2005 (70 FR 21494).

III. Request for Comment

All comments will become a matter of public record. Written comments are invited on:

(a) Whether the proposed revisions to the TFR collections of information are necessary for the proper performance of OTS functions, including whether the information has practical utility;

(b) The accuracy of OTS estimates of the burden of the information collections as they are proposed to be revised, including the validity of the methodology and assumptions used;

(c) Ways to enhance the quality, utility, and clarity of the information to be collected;

(d) Ways to minimize the burden of information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and

(e) Estimates of capital or start up costs and costs of operation, maintenance, and purchase of services to provide information.

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Dated: June 30, 2005.

By the Office of Thrift Supervision.

Richard M. Riccobono,

Acting Director.

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1.  The other federal banking agencies joining OTS in the April 2004 proposal intend to follow a similar course of action with respect to U.S. government-guaranteed or -insured residential mortgage loans backing GNMA securities subject to buy-back provisions in the future, beginning with the June 2005 Call Report.

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3.  See the OTS website at​resultsort.cfm?​catNumber=​275&​dl=​33&​edit=​1 for the revised TFR Schedule PD effective September 30, 2005.

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4.  In addition, if a savings association services but did not originate mortgage loans backing a GNMA security, i.e., where the savings association was not the transferor of the loans that have been securitized, the servicing savings association should also include any government-guaranteed or -insured mortgage loans that it has purchased out of the securitization in Schedule PD, lines PD195-PD395 and PD197-PD397, even if the savings association was not required to record the delinquent loans as assets prior to purchasing the loans.

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5.  As defined in SOP 03-3, the term “loans” includes “debt securities.”

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6.  Loans held for investment are those loans that the savings association has the intent and ability to hold for the foreseeable future or until maturity or payoff. Thus, the outstanding balance and carrying amount of any purchased impaired loans that are held for sale would not be reported in these proposed memorandum items.

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7.  Outstanding balance as defined in SOP 03-3 is the undiscounted sum of all amounts, including amounts deemed principal, interest, fees, penalties, and other under the loan, owed to the savings association at the report date, whether or not currently due and whether or not any such amounts have been charged off by the savings association. However, the outstanding balance does not include amounts that would be accrued under the contract as interest, fees, penalties, and other after the report date.

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[FR Doc. 05-13286 Filed 7-5-05; 8:45 am]