Changes in HMDA Notices
We've written a good bit about upcoming changes to the Home Mortgage Disclosure Act (HMDA) Regulation C, largely focusing on the expansion of the rule's scope and data collection requirements. However, the rule also changes certain disclosure requirements under section 1003.5. Currently, the rule requires a credit union that is a "financial institution" as defined in section 1003.2 to make certain public disclosures and make data publicly available. The rule's current requirements include:
- Making available to the public in the credit union's home office and at least one branch office in each Metropolitan Statistical Area (MSA) and Metropolitan District (MD) where the credit union has offices the disclosure statement that is prepared by the Federal Financial Institution Examination Council (FFIEC) within 10 business days of receiving the statement;
- Posting the address for sending written requests to obtain the disclosure statement in at least one branch office in each MSA where the credit union has offices and each other MD where the credit union has offices;
- Mailing or delivering a copy of the disclosure statement within 15 calendar days of receiving a written request;
- Making its modified Loan/Application Register (LAR) available for inspection and copying during hours the credit union is open to the public for business, with data for the prior year available by March 31;
- Posting a general notice of the availability of HMDA data in the lobby of the credit union's home office and each branch located in an MSA or MD.
As of January 1, 2018 these requirements will change. Within 3 business days of receiving notice from the FFIEC that the credit union's disclosure statement is available, revised section 1003.5(b) will require a credit to make a written notice available to the public upon request. The notice must state that the credit union's disclosure statement is available on the CFPB's website and be available for five years.
Additionally, the HMDA rule will require a credit union to provide a written notice regarding the availability of its modified LAR upon request from a member of the public. The notice must be available in the calendar year following the year the credit union collected data and be made available for three years. This requirement is illustrated in the CFPB's Small Entity Compliance Guide for HMDA on page 91:
The notice must be made available in the calendar year following the calendar year for which the Financial Institution collected data. The notice must be made available for three years. 12 CFR 1003.5(d)(1). For example, in calendar year 2021, an institution must make available a notice that its modified LAR is available on the Bureau’s website if it was required to collect data in 2018, 2019, or 2020.
Revised comment 5(c)-3 allows credit unions to use the same notice to meet this requirement as well as the notice that the disclosure statement created by the FFIEC is available (as required by revised section 1003.5(b)). Here is the "suggested" language from the commentary:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are available online for review. The data show geographic distribution of loans and applications; ethnicity, race, sex, age, and income of applicants and borrowers; and information about loan approvals and denials. These data are available online at the Consumer Financial Protection Bureau's Web site (www.consumerfinance.gov/hmda). HMDA data for many other financial institutions are also available at this Web site.
What about the lobby notice? As of January 1, 2018 revised section 1003.5(e) changes the lobby notice to account for a positive aspect of the revised HMDA rule – a credit union will no longer be required to make its LAR available for inspection at its home office. Rather, the rule will require credit unions to disclose that the LAR can be obtained from the CFPB's website. Specifically, a credit union subject to HMDA will be required to post in the lobby of its home office and each branch located in a MSA or Metropolitan District a general availability notice. The revised staff commentary contains the following suggested language:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are available online for review. The data show geographic distribution of loans and applications; ethnicity, race, sex, age, and income of applicants and borrowers; and information about loan approvals and denials. HMDA data for many other financial institutions are also available online. For more information, visit the Consumer Financial Protection Bureau's Web site (www.consumerfinance.gov/hmda).
Note that use of the specific notice language from the staff commentary is not mandatory, although using suggested language can often be easier to use for the purposes of complying.
NAFCU members can find our compilation of HMDA resources here.
About the Author
Brandy Bruyere, NCCO was named vice president of regulatory compliance in February 2017. In her role, Bruyere oversees NAFCU's regulatory compliance team who help credit unions with a variety of compliance issues.