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June 13, 2019

NAFCU to CFPB: Increase HMDA thresholds, consider CU exemption

regulationsNAFCU Senior Counsel for Research and Policy Andrew Morris shared the association's support for the CFPB's proposed amendments to Regulation C, which would increase the institutional and transactional coverage thresholds that govern reporting of Home Mortgage Disclosure Act (HMDA) data. If finalized, credit unions with originations below the thresholds would be relieved of some or all of their HMDA data reporting requirements.

In the proposed rule, the CFPB provides two alternatives that would permanently raise the closed-end thresholds to either 50 or 100 closed-end mortgage loans in each of the two preceding calendar years. The current temporary institutional and transactional coverage threshold of 500 open-end lines of credit would also be extended to Jan. 1, 2022. After this date, the open-end threshold would be set to 200 open-end lines of credit in each of the two preceding calendar years—an increase from the default level of 100 under the 2015 HMDA Rule.

In a letter to the CFPB Wednesday, Morris outlined specific suggestions that NAFCU would like to see implemented, including:

  • an increase to the closed-end coverage threshold to 500 closed-end mortgage loans in each of the two preceding calendar years;
  • an increase to the open-end coverage threshold or for the coverage to permanently be maintained at 500 open-end lines of credit; and
  • incorporating the 2018 HMDA Rule into Regulation C.

In addition, Morris asked the bureau to consider "whether burdensome data collection requirements are necessary for small credit unions that do not originate a substantial number of covered loans or lines of credit." While "a universal adjustment to the transactional and institutional coverage thresholds would still benefit credit unions," Morris specifically asked the bureau to consider industry-specific relief through the bureau's exemption authority.

"HMDA reporting for credit unions has a disproportionate cost impact because these institutions often lack the scale, sophistication, and bargaining power to easily implement fully-automated reporting systems," Morris noted.

Prior to the proposed rulemaking, NAFCU requested more guidance on HMDA to ensure credit unions are compliant, and met with CFPB Director Kathy Kraninger to discuss credit unions' concerns and priorities. Ahead of the March 1 deadline for covered institutions to file their first Loan/Application Register with the CFPB, NAFCU's compliance team provided credit unions with necessary guidance and resources to correctly submit their data.