With so many updates affecting the Home Mortgage Disclosure Act (HMDA) recently, we wanted to give a brief overview of a couple of those changes.
Asset Threshold Update:
Effective Date: January 31, 2019
Under HMDA, the Bureau of consumer Financial Protection increased the exemption threshold to $46 million from $45 million. Credit unions with assets of $46 million or less as of Dec. 31, 2018, are exempt from collecting data in 2019. However, an institution’s exemption from collecting data in 2019 does not affect its responsibility to report data it was required to collect in 2018. This increase was based on the 2.6 percent increase in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in November 2018.
Partial Exemptions from the Requirements of HMDA under Regulation C:
Effective Date: September 7, 2018
In 2015, the CFPB published a final rule amending Regulation C to implement the Dodd-Frank Act amendments to HMDA and make other changes, including adding a number of new data points. This Final Rule took effect on January 1, 2018, and apply to data collected beginning in 2018 and reported beginning in 2019. Further rulemaking is predicted to commence in the spring of 2019 to more definitively identify the modifications to the data that the CFPB determines to be appropriate.
The 2015 HMDA Final Rule loan-volume thresholds require an institution that originated at least 25 closed-end mortgage loans or at least 100 open-end lines of credit in each of the two preceding calendar years to report HMDA data, provided that the institution meets all of the other criteria for institutional coverage. The final rule also includes a separate test to ensure that covered institutions that meet only the 25 closed-end mortgage loan threshold are not required to report their open-end lending, and that covered institutions that meet only the 100 open-end line of credit threshold are not required to report their closed-end lending.
After issuing the 2015 HMDA Final rule, the Bureau of Consumer financial Protection (the Bureau) was concerned that the 100 open-end lines of credit threshold was too low and temporarily increased the threshold to 500 open-end lines of credit for calendar years 2018 and 2019.
The Bureau issued a statement in December 2017 indicating that for data collected in 2018 and reported in 2019 any supervisory examinations of 2018 HMDA data will be diagnostic to help financial institutions identify compliance weaknesses and will only require data resubmission if data errors are material.
Economic Growth, Regulatory Relief, and consumer Protection Act:
On August 31, 2018 the Consumer Financial Protection Bureau (CFPB) released a Final Rule referred to as “Partial Exemptions from the Requirements of the Home Mortgage Disclosure Act under the Economic Growth, Regulatory Relief, and Consumer Protection Act (Regulation C).” This Final Rule outlines the specific criteria for institutions to qualify for the small filer exemption.
To determine if an institution qualifies for the 2018 HMDA partial exemption the following criteria would need to apply:
- Must be an insured depository institution
- Must have originated fewer than 500 closed-end mortgage loans in each of the preceding calendar years, or fewer than 500 open-end lines of credit in each of the two preceding calendar years.
- Special Note: If an institution originated fewer than 500 closed-end mortgage loans, but more than 500 open-end lines of credit, they would only be exempt from reporting the data for the closed-end loans. The same would be true in reverse, if the institution originated fewer than 500 open-end lines of credit, but more than 500 closed-end mortgage loans, they would only be exempt from reporting the data for the open-ended lines of credit.
- Must have received a “Satisfactory” or “Outstanding” rating on each of the two most recent CRA (Community Reinvestment Act) evaluations. Institutions that have received a rating of “needs to improve record of meeting community credit needs” during each of its two most recent examinations or of “substantial noncompliance in meeting community credit needs” on its most recent examination must comply with HMDA section 304(b)(5) and (6); meaning they would be unable to qualify for the partial exemption.
If an institution qualifies as partially exempt they would not be required to report 26 data points out of 48 total data points specified in the rule. The Act permits insured depository institutions and insured credit unions to voluntarily report data covered by the partial exemption. This could be beneficial if an institution‘s loan volumes tend to fluctuate above or below the threshold from year to year. HMDA reporters must provide data for the entire data point when data are reported for any data field within that data point. The following 22 data points will still need to be reported regardless of partial exemption:
- Application Date (1003.4(a)(1)(ii))
- Loan Type (1003.4(a)(2))
- Loan Purpose (1003.4(a)(3))
- Preapproval (1003.4(a)(4))
- Construction Method (1003.4(a)(5))
- Occupancy Type (1003.4(a)(6))
- Loan Amount (1003.4(a)(7))
- Action Taken (1003.4(a)(8)(i))
- Action Taken Date (1003.4(a)(8)(ii))
- State (1003.4(a)(9)(ii)(A))
- County (1003.4(a)(9)(ii)(B))
- Census Tract (1003.4(a)(9)(ii)(C))
- Ethnicity (1003.4(a)(10)(i))
- Race (1003.4(a)(10)(i))
- Sex (1003.4(a)(10)(i))
- Age (1003.4(a)(10)(ii))
- Income (1003.4(a)(10)(iii))
- Type of Purchaser (1003.4(a)(11))
- HOEPA Status (1003.4(a)(13))
- Lien Status (1003.4(a)(14))
- Number of Units (1003.4(a)(31))
- Legal Entity Identifier (1003.5(a)(3))
Some helpful resources are provided below:
2019 HMDA FIG The 2019 Filing Instructions Guide (FIG) will help you file HMDA data collected in 2019 with the Bureau of Consumer Financial Protection in 2020.
Having trouble keeping track of all the changes? Contact CU Rx today at firstname.lastname@example.org