CFPB Proposed HMDA Rule Includes Changes to Thresholds for Reporting
On May 2, 2019, the Consumer Financial Protection Bureau (CFPB) published a proposed rule to amend Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). Below are key points related to this latest HMDA happening.
To recap, if an institution is otherwise covered, the following level of origination activity triggers the requirement to collect and report loan-level HMDA data under the current rule:
- For closed-end mortgage loans, 25 loans in each of the two preceding calendar years.
- For covered open-end lines of credit, including Home Equity Lines of Credit (HELOCs), 500 originations in each of the two preceding calendar years in 2018 and 2019 only. The original rule included a threshold of 100 for open-end lines of credit, which was increased to 500 on a temporary basis only through 2019.
In addition, certain institutions are partially exempt from HMDA’s data collection and reporting requirements pursuant to the 2018 Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA). However, the partial exemption affects only the extent of required reporting and does exempt any otherwise covered institutions from reporting altogether. The origination threshold trigger for the EGRRCPA partial exemption is 500 closed-end mortgage loans or open-end lines of credit in each of the two preceding years. The origination threshold for the EGRRCPA partial exemption is not affected by this proposal.
The proposed rule sets forth two alternative thresholds for closed-end mortgage loans, and an adjusted threshold for the reporting of open-end lines of credit as follows.
- For closed-end mortgage loans:
Alternative 1: 50 originations in each of the two preceding calendar years, beginning in 2020; OR
Alternative 2: 100 originations each of the two preceding calendar years, beginning in 2020
- For open-end lines of credit:
200 in each of the two preceding calendar years, beginning in 2022.
Note, the proposal maintains the uniform approach to origination activity for both depository and non-depository institutions. With adoption of either alternative for closed-end origination activity, institutions originating fewer than 50 (but more than 25 loans) in 2019 and 2018 would not be required to collect and report data for those transactions in 2020.
Importantly, institutions with open-end originations of 200 or more but less than 500, which have not already begun to report open-end transactions on a voluntary basis, will be impacted by this rule. Even if the institution enjoys a partial exemption under the EGRRCPA, the open-end transactions will need to be reported beginning in 2022. The partial exemption will continue to apply to reduce the overall amount of data collected and reported, but processes and systems will need to change to collect and report the remaining required data points.
Comments are requested and must be provided within 30 days of publication of this proposed rule in the Federal Register, which is expected shortly. Specific requests for comment and feedback are included throughout the proposed rule available in its entirety here: https://files.consumerfinance.gov/f/documents/cfpb_nprm-hmda-regulation-c.pdf
In addition, the proposed rule amends Regulation C to incorporate the interpretations and procedures from the CFPB’s August 2018 Interpretive and Procedure Rule, with minor adjustments. These changes will be addressed in a separate summary.
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