CFPB Issues Request for Information Regarding HMDA Disclosure Guidelines

On January 7, the CFPB announced that it will request public feedback on the resubmission of mortgage lending data reported under HMDA. Upon publication in the Federal Register, the Request for Information Regarding Home Mortgage Disclosure Act Resubmission Guidelines (Request for Information) will be open for 60 days. The Bureau’s Request for Information follows the agency’s October release of a final rule amending Regulation C to expand the reporting requirements of the HMDA regulation. Among other things, the amended rule increases the number of data points collected from financial institutions that must be reported to federal regulators beginning March 1, 2019, thus potentially necessitating revisions to the resubmission guidelines, which are the guidelines that describe when supervised institutions will be expected to correct and resubmit data. In response to questions regarding whether the CFPB will adjust mortgage lending data resubmission guidelines to reflect the new data requirements under the amended rule, the Request for Information seeks public comment regarding (among other things): (i) the CFPB’s use of resubmission error thresholds and how they should be calculated; (ii) whether error thresholds should vary depending upon an institution’s LAR entry size; and (iii) whether systemic and non-systemic errors should be treated differently, and, if so, how they should be distinguished from one another.

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CFPB Releases HMDA Implementation Resources

On December 1, the CFPB released a group of resources designed to help financial institutions understand their obligations under HMDA and Regulation C, as amended by the Bureau’s October 15 final rule. The resources include a brief 5-page executive summary of the recent changes, the HMDA Small Entity Compliance Guide, two reference tools that show when data must be collected, recorded, and reported and when data can be reported as “not applicable,” and HMDA institutional coverage charts for both 2017 and 2018.

The most substantial of these resources is the HMDA Small Entity Compliance Guide that the Bureau describes as, “a plain-language guide to the new rule which makes the content more accessible for industry constituents, especially smaller businesses with limited legal and compliance staff.” The guide is 109 pages and covers key changes and effective dates, institutions and transactions that are covered under the new rule, the data points that must be reported and how they should be recorded and reported, as well as small sections on practical implementation and how mergers and acquisitions affect the applicability of the new rule. The guide also provides an e-mail address and phone number for anyone who has reviewed all of the available materials and still has a specific regulatory interpretation question.

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Special Alert: CFPB Adopts Significant Expansion of HMDA Reporting Requirements

On October 15, the Consumer Financial Protection Bureau (the CFPB or Bureau) issued a final rule that will expand the scope of the Home Mortgage Disclosure Act (HMDA) data reporting requirements while seeking to streamline certain existing requirements. Although some of the new data points the Bureau is requiring are expressly mandated by the Dodd-Frank Act, the Bureau is also requiring a significant number of new data points based on discretionary rulemaking authority granted by the Act.

While we describe the amended rule below in greater detail, highlights include:

  • Expanded data-collection under the revised rule will begin on January 1, 2018, and reporting will begin in 2019. The Bureau would have been allowed under Dodd-Frank to require data-collection beginning in 2017 (at least nine months after issuance of the rule) but responded to industry requests for more time to convert systems to meet the extensive new data-collection requirements of the amended rule.
  • The amended rule substantially expands the number of data points collected from financial institutions, including requiring reporting of rate spreads on most originated loans and lines of credit, not just higher-cost closed-end loans. However, the Bureau still has not decided the extent to which this information, which includes sensitive personal data such as credit scores, will be publicly available. It will solicit additional public input on privacy concerns before it determines how much of the information will be disclosed.
  • The amended rule will require financial institutions to report home equity lines of credit (HELOCs) and reverse mortgages. However, in response to widespread criticism by industry commenters, the CFPB did not adopt its proposal to require reporting of all commercial-purpose loans secured by a dwelling.
  • The amended rule does not make significant substantive changes to the definition of an “application” or to the “broker rule,” but it does reorganize and clarify existing Commentary provisions on those issues.
  • The amended rule requires both depository and nondepository institutions 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, so long as the institution meets all of the other tests for coverage of that type of institution.
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Questions regarding the matters discussed in this Alert may be directed to any of our lawyers listed below, or to any other BuckleySandler attorney with whom you have consulted in the past.

 

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CFPB Finalizes Rule to Update Reporting Requirements of the HMDA

On October 15, the CFPB finalized a rule amending Regulation C to update the reporting requirements of the HMDA. The final rule changes what data financial institutions must provide to Federal agencies. Data points to be reported under the final rule include: (i) information on applicants, borrowers, and the underwriting process, including age, credit score, debt-to-income ratio; (ii) information about the property securing the loan, such as property value and additional information on manufactured and multifamily housing; (iii) information on the features of the loan, such as pricing information, loan term, interest rate, introductory rate period, non-amortizing features, and the type of loan; and (iv) unique identifiers, including the property address, loan originator identifier, and a legal entity identifier for the financial institution. For more on this rule, please read BuckleySandler’s Special Alert.

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CFPB Increases Asset-Size Thresholds Under HMDA and TILA

On December 29, the CFPB published final rules adjusting the asset-size thresholds under HMDA (Regulation C) and TILA (Regulation Z). Both rules take effect on January 1, 2015.

HMDA requires certain lenders to collect and report data about mortgage application, origination, and purchase activity, and to make such data available to the public. Institutions with assets below certain dollar thresholds are exempt from the HMDA collection and reporting requirements. The final rule increases the asset-size exemption threshold for banks, savings associations, and credit unions from $43 million to $44 million, thereby exempting institutions with assets of $44 million or less as of December 31, 2014, from collecting and reporting HMDA data in 2015.

TILA, among other things, require creditors to establish escrow accounts when originating higher-priced mortgage loans (HPMLs). However, TILA exempts certain entities from this requirement, including entities with assets below the asset-size threshold established by the CFPB. The final rule increases this asset-size exemption threshold from $2.028 billion to $2.060 billion, thereby exempting creditors with assets of $2.060 billion or less as of December 31, 2014, from the requirement to establish escrow accounts for HPMLs in 2015.

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