On May 12, 2020 (85 FR 28364), the Bureau of Consumer Financial Protection (CFPB) published a final rule to amend Regulation C, the regulation that implements the Home Mortgage Disclosure Act (12 CFR 1003), by:

  • Increasing the threshold for reporting data about closed-end mortgage loans, so that institutions originating fewer than 100 closed-end mortgage loans in either of the two preceding calendar years will not have to report such data effective July 1, 2020.
    • This will have the effect of excluding certain institutions from HMDA reporting as of that date. Accordingly, newly excluded institutions may cease collecting 2020 data for closed-end mortgage loans as of July 1, 2020.
    • Institutions are permitted to voluntarily report 2020 closed-end data as long as the data are submitted for the entire calendar year.
  • Setting the threshold for reporting data about open-end lines of credit at 200 open-end lines of credit effective January 1, 2022, upon the expiration of the current temporary threshold of 500 open-end lines of credit.
    • Although effective January 1, 2022, as HMDA reporting is generally based on the calendar year, reportable in the year which an institution takes final action, an institution will be responsible for ensuring compliance before January 1 occurs. For example, if an institution takes an application on November 23, 2021 and originates the loan on January 5, 2022, such transaction will be subject to the 2022 requirements.

Effective Date: The final rule regarding the closed-end mortgage loan threshold increase to 100, and conforming amendments, was effective on July 1, 2020. The final rule regarding the open-end lines of credit threshold decrease to 200, and conforming amendments, is effective January 1, 2022.

Background: HMDA requires certain depository institutions and for-profit non-depository institutions to report data about originations and purchases of mortgage loans, as well as mortgage loan applications that do not result in originations. The regulation establishes which institutions are subject to Regulation C by imposing its requirements on those institutions that meet the definition of “financial institution.” Among other criteria, the regulation requires an institution meet or exceed thresholds based on loan volume – that is prior to the July 1, 2020 revision, a financial institution was one that either originated at least 25 closed-end mortgage loans in each of the two preceding calendar years or originated at least 500 open-end lines of credit in each of the two preceding calendar years. The 500 open-end threshold was a temporary threshold (the original threshold was 100), designed to give the CFPB time to make any future adjustments.

The regulation also establishes which transactions are subject to Regulation C by imposing its reporting requirements on those transactions that meet the definition of “closed-end mortgage loan” and “open-end line of credit,” subject to certain exclusions.

Among other exclusions, if an institution does not meet or exceed the same thresholds above, then it is not required to report such transactions. The institutional coverage and transactional coverage thresholds were designed to work in tandem.

This final rule adjusts these thresholds, thereby determining, in part, which institutions and which transactions are subject to HMDA reporting.

The rule can be found here: https://www.govinfo.gov/ content/pkg/FR-2020-05-12/ pdf/2020-08409.pdf.

The CFPB updated its HMDA Small Entity Compliance Guidance, which can be found here: https://files.consumerfinance. gov/f/documents/cfpb_hmda_ small-entity-compliance- guide_2020.pdf.

 

InCompliance Quarterly Newsletter-Subscribe Here