CFPB Delivers Rulings on HMDA Relief

10/31/2018 - By Jennifer Paradise, CRCM

On May 24, 2018, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act) was signed into law.  Section 104 of the Act amended the Home Mortgage Disclosure Act (HMDA) by adding partial exemptions from the disclosure requirements for certain insured depository institutions and insured credit unions.

The Bureau of Consumer Financial Protection has since released an interpretive rule (rule) that implements and clarifies the partial exemption.  The rule is effective May 24, 2018 but provides the exemption to certain data that may have been collected on or before May 24, 2018. 

The rule provides that institutions that originated fewer than 500 closed-end or 500 open-end mortgage loans in each of the two preceding calendar years do not need to collect or report certain data with respect to these loans.  An institution is not eligible for the exemptions if it received a “needs to improve” during each of its two most recent CRA exams, or a “substantial non-compliance” during its most recent CRA exam.  

Per the Act, twenty-six of forty-eight data points are included in the exemption.  Seven of these have multiple data fields; for example, the property address and credit score each have multiple pieces of data to be reported.  Institutions may voluntarily report exempt data points, however all the fields for that data point must be reported.  

The rule also allows institutions to collect the data for exempt data points, whether they are reported or not.  Institutions may want to collect such data as listed below, because these are helpful for monitoring fair lending.  

  • Credit Score 
  • Reasons for Denial 
  • Origination Charges 
  • Lender Credits 
  • Interest Rate 
  • Prepayment Penalty Term 
  • Debt-to-Income Ratio 
  • Combined-Loan-to-Value Ratio 
  • Loan Term 
  • Property Address

IMPORTANT NOTES

1. Institutions can be exempt from collecting and reporting closed-end loans but not open-end lines of credit, or vice versa.

2. The Universal Loan Identifier (ULI) is an exempt data point, however, institutions still must uniquely identify each application so continuing to assign a ULI to each application may make sense.  Secondary market investors that do not qualify for exceptions are required to have a ULI, so they may still require the selling institution have a ULI for each loan.  

3. Institutions regulated by the OCC will still be required to report Reasons for Denial, regardless of whether they qualify as a small filer.  The same is true for FDIC regulated institutions that were previously regulated by the OTS.

4. Institutions may take exemptions at any time during the year, for the whole year, or part of the year.  For example, if an institution has collected all data fields through September 30, 2018, they can report that data in 2019 and then take exemptions for the data fields for the remainder of the year.

Additional detail regarding the interpretive rule is available in the executive summary and Regulatory and Reporting Overview Reference Chart on the HMDA rule implementation webpage.  The Filing Instructions Guide (FIG) was revised on August 31, 2018.

This article is current as of October 31, 2018 and may not be updated for regulatory changes occurring after this date.

About the Author | Jennifer Paradise, CRCM
Jennifer is a consultant in the Financial Institutions Advisory Group at Saltmarsh, Cleaveland & Gund and has been serving the financial institutions industry since 1990. She is primarily involved in performing fair lending, loan internal audit, loan compliance, and other consulting services for the firm's financial institution clients throughout the region. 

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