Interpretive and Procedural HMDA Rule Issued by Bureau of Consumer Financial Protection
On August 31, 2018, just in time for the unofficial end of summer marked by this Labor Day weekend, the Bureau has provided additional information related to the impact of regulatory relief measures on 2018 HMDA reporting requirements. To recap, legislation took effect in the late spring which provided a partial exemption for reporting of the expanded data fields for certain institutions. Below is a summary of the clarifications provided in the latest rule.
Data points reported if exemption applies
The Bureau has included the list of data points it interprets as “requirements of HMDA section 304(b)(5) and (6)” and thus not required to be reported if the partial exemption applies. Below is the listing of data fields for which regulatory relief, if available, applies. Note, for instructions for how to indicate items are exempt on the LAR refer to the Filing instructions guide for HMDA data collected in 2018. Generally speaking, code 1111 will be utilized for this purpose.
Note, the Legal Entity Identifier which replaced the pre-existing respondent identifier, and Age must be reported even when the partial exemption applies. Lien status must be reported for Purchased Loans. Construction method and number of units, which collectively replaced the original “property type” data point, must still be reported.
Moreover, regardless of the partial exemption for reporting of the Universal Loan Identifier, the loans and applications must be identifiable in the HMDA data to ensure proper HMDA submission, processing, and compliance. Therefore, institutions must continue to provide information so that each loan and application is identifiable by conforming to the following “non-universal loan identifier” described below:
The non-universal loan identifier may be composed of up to 22 characters to identify the covered loan or application, which:
- May be letters, numerals or a combination of letters and numerals;
- Must be unique within the insured depository institution or insured credit union; and
- Must not include any information that could be used to directly identify the applicant or borrower
Permissible optional reporting
The Bureau confirmed that optional reporting of all data fields is permitted. However, if voluntary information is provided for one data field in a multi-data field data point, all components of the data point must be reported.
For example, if a partially exempt institution reports a data field that is part of the property address data point, such as street address, it will need to report all other data field that are part of the property address data point (including zip , city and state) for that transaction.
Loans counted toward partial exemptions thresholds
The partial exemption applies to certain depository institutions with production below a 500 unit threshold for either closed-end mortgage loans or open-end lines of credit, in the previous two calendar years. For the purposes of applying the threshold, the Bureau clarified that the exemptions for closed-end mortgage loans and open-end lines of credit are independent of each other, and that the terms “closed-end mortgage loan” and “open-end line of credit” utilize the same definitions as the original HMDA rule.
The entirety of the rule, which includes additional information related to the impact of CRA ratings on the partial exemption can be viewed here: https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-issues-rule-implement-and-clarify-new-hmda-amendments/
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