CFPB Updates HMDA Small Entity Compliance Guide
Happy Hump Day and Happy Puzzle Day!
Let’s celebrate by piecing together the partial exemptions of HMDA, using some updated guidance to help.
Last week, the CFPB released an updated version of its Home Mortgage Disclosure Act (HMDA) Small Entity Compliance Guide. The new version reflects changes made by the Bureau's rule in October to extend by two years the temporary threshold of 500 for reporting open-end lines of credit. This means credit unions that have not originated at least 500 open-end lines of credit in each of the two preceding years are excluded from certain reporting requirements until the year 2022. If this is your first time hearing about the updates to HMDA, check out my previous blog on the amendments.
Beside incorporating the new thresholds for reporting, the rule and the updated guide clarified the partial exemptions from certain HMDA requirements under the Economic Growth, Regulatory Relief, and Consumer Protection Act. These partial exemptions will become effective in 2022 after the expiration of the complete exemption for loans made beneath the reporting threshold amounts. For a credit union to use a partial exemption, it must be an “insured credit union” as defined in Section 101 of the Federal Credit Union Act, as well as originate loans that fall below the thresholds of 25 loans or 500 lines of credit.
HMDA’s partial exemptions allow a credit union to collect, record, and report only 22 data points, while not collecting, recording, or reporting the other 26 data points for that transaction. The Small Entity Guide includes a quick and handy list of the data points that may be excluded if a partial exemption is met.
Data points eligible financial institutions need not collect or report under the HMDA rule for transactions covered by a partial exemption:
- Universal Loan Identifier (ULI) (1003.4(a)(1)(i))
- Application Channel (1003.4(a)(33))
- Loan Term (1003.4(a)(25))
- Reasons for Denial (1003.4(a)(16))
- Property Address (1003.4(a)(9)(i))
- Manufactured Home Secured Property Type (1003.4(a)(29))
- Manufactured Home Land Property Interest (1003.4(a)(30))
- Property Value (1003.4(a)(28))
- Multifamily Affordable Units (1003.4(a)(32))
- Debt-to-Income Ratio (1003.4(a)(23))
- Combined Loan-to-Value Ratio (1003.4(a)(24))
- Credit Score (1003.4(a)(15))
- Automated Underwriting System (1003.4(a)(35))
- Interest Rate (1003.4(a)(21))
- Introductory Rate Period (1003.4(a)(26))
- Rate Spread (1003.4(a)(12))
- Non-Amortizing Features (1003.4(a)(27))
- Total Loan Costs or Total Points and Fees (1003.4(a)(17))
- Origination Charges (1003.4(a)(18))
- Discount Points (1003.4(a)(19))
- Lender Credits (1003.4(a)(20))
- Prepayment Penalty Term (1003.4(a)(22))
- Reverse Mortgage Flag (1003.4(a)(36))
- Open-End Line of Credit Flag (1003.4(a)(37))
- Business or Commercial Purpose Flag (1003.4(a)(38))
- Mortgage Loan Originator Identifier (1003.4(a)(34))
However, keep in mind that if a credit union decides to report any of the optional data fields, it will be required to report all other data fields that make up that data point. The Small Entity Guide includes an example:
Ficus Bank originates a Covered Loan. A partial exemption applies to the Covered Loan, but Ficus Bank opts to report that the Covered Loan does not have a balloon payment. Balloon payment is one of the data fields for the non-amortizing features data point. The other data fields that make up the non-amortizing features data point are interest-only payments, negative amortization, and other non-amortizing features. Because Ficus Bank chose to report the balloon payment data field, Ficus Bank must also report whether the Covered Loan has interest-only payments, negative amortization, and other non-amortizing features.
As a reminder, the filing period for HMDA data collected in 2019 officially opened Jan. 1. The Bureau last year published a chart – Reportable HMDA Data: A Regulatory and Reporting Overview Reference Chart – as a reference tool for data points collected in 2019, and previously published a filing instruction guide that provided technical instruction on filing data collected in 2019 and reportable this year. These resources may be valuable as your credit union begins to report HMDA data collected last year.
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