HMDA: The 2020 Edition
Is anyone else watching Elf and reading the new HMDA and Regulation C rules? Just me?!
The Home Mortgage Disclosure Act (HMDA) requires credit unions to disclose certain information regarding loans originated or purchased by credit unions. HMDA is implemented by the CFPB's Regulation C which was amended in October to extend the current threshold for reporting data about open-end lines of credit. The rule extends temporary relief but does not make permanent changes to the coverage thresholds for closed-end mortgage loans and open-end lines of credit as originally proposed.
Currently, HMDA establishes a coverage threshold for open-end lines of credit of at least 500 open-end lines of credit in each of the two preceding calendar years. See, 12 CFR § 1003.3(c)(12). Credit unions that have not originated at least 500 open-end lines of credit in each of the two preceding years are excluded from the requirement to report them. However, this threshold for open-end lines of credit was part of a temporary rule effective only for calendar years 2018 and 2019 in order to give the CFPB time to analyze and determine whether this was the appropriate threshold. As the CFPB continues its analysis and considers a permanent threshold for open-end lines of credit, it has decided to extend the 500 loan threshold for 2 more years.
Ultimately, credit unions that originate fewer than 500 open-end lines of credit in each of the two preceding calendar years continue to be excluded from those reporting requirements until January 1, 2022. The CFPB has stated its reasoning for extending the current threshold: “…the temporary coverage threshold of 500 open-end lines of credit will also ensure that institutions that would be required to report under any new permanent threshold that the Bureau sets in 2020 to take effect in 2022 have time to adapt their systems and prepare for compliance.”
In addition to the thresholds extended by the CFPB, the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) added partial exemptions from HMDA’s requirements. The EGRRCPA exempts certain credit unions from reporting some HMDA data for a limited set of transactions. In 2018, the CFPB issued an interpretive and procedural rule. This year, in accordance with the EGRRCPA and the interpretive rule, the CFPB amended Regulation C to incorporate these exemptions and to clarify how and when they apply. As noted in the final rule, Regulation C clarifies:
- insured credit unions covered by a partial exemption may, at their option, report exempt data fields as long as they report all data fields that the data point comprises;
- only loans and lines of credit that are otherwise reportable under Regulation C count towards the thresholds for the partial exemptions;
- the rule specifies which of the data points in Regulation C are covered by the partial exemptions; and
- the rule designates a non-universal loan identifier for certain partially exempt transactions.
Importantly, Regulation C was amended to allow better understanding of the partial exemptions. For example, section 1003.3(d)(1) sets forth definitions relating to the partial exemptions, including a definition of “optional data” which may help credit unions identify which data points are covered by the partial exemptions. Section 1003.3(d)(2) and (3) provide the general tests for when the partial exemptions apply for closed-end mortgage loans and open-end lines of credit, respectively. The CFPB also updated the commentary in order to provide examples of the application of the new rules.
Keep in mind that credit unions may choose to collect, record, and report optional data for partially exempt transactions so long as the following guidelines are met:
- If the credit union reports the street address, city name, or zip code for the property securing a covered loan, or in the case of an application, proposed to secure a covered loan pursuant to section 1003.4(a)(9)(i), it reports all data that would be required by section 1003.4(a)(9)(i) if the transaction were not partially exempt; and
- If the credit union reports any data for the transaction pursuant to paragraphs 1003.4(a)(15), (16), (17), (27), (33), or (35), it reports all data that would be required by those paragraphs.
If your credit union is still experiencing HMDA woes, try reviewing A Guide to HMDA Reporting: Getting It Right!
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