On April 16, 2020, the Consumer Financial Protection Bureau (“CFPB”) issued a final Home Mortgage Disclosure Act (“HMDA”) rule which amends Regulation C to raise the loan-volume coverage thresholds for closed-end mortgage loans and open-end lines of credit. The permanent threshold for collecting and reporting data about closed-end mortgage loans will increase from 25 to 100 loans in each of the prior two years, effective July 1, 2020. The permanent threshold for collecting and reporting data about open-end lines of credit will increase from 100 to 200 in each of the prior two years. The new threshold for open-end lines of credit becomes effective January 1, 2022.
The CFPB announcement regarding the final rule states that the “Bureau recognizes the operational challenges confronted by institutions due to the current COVID-19 pandemic.” Additionally, the CFPB anticipates that the when the final rule becomes effective it will “reduce regulatory burden on smaller institutions to help those institutions to focus on responding to consumers in need now and in the longer term.”
The CFPB website provides an executive summary of the final rule, and an unofficial redline version of the changes that the final rule makes to Regulation C.
Closed End Loan Threshold
By raising the closed end loan threshold from 25 to 100 loans as of July 1, 2020, some institutions that previously would have been required to report data will no longer be a reporting institution under HMDA. An institution that was subject to reporting as of January 1, 2020 because it originated at least 25 closed-end mortgage loans in 2018 and 2019 may no longer be subject to reporting as of July 1, 2020, if it originated fewer than 100 closed-end loans during either of those years.
The CFPB advises that “newly excluded institutions” can stop collecting HMDA data on closed-end mortgage loans beginning July 1, 2020, but still must record closed-end data for the first quarter of 2020. Additionally, newly excluded institutions are not required to report HMDA data for 2020, even data that was collected prior to July 1, 2020. Institutions may choose to voluntarily report HMDA data on closed-end mortgage loans in 2021 but will then be required to report data for the full 2020 calendar year.
Open-End Lines of Credit
In October 2019, the CFPB issued a final rule amending Regulation C to implement certain proposals from its May 2019 Notice of Proposed Rulemaking under HMDA. Most notably, the rule extended for two years a temporary threshold of 500 open-end lines of credit until January 1, 2022. The 2020 final rulemaking increases the permanent threshold to 200 lines of credit, instead of allowing the threshold to revert back to 100 open-end lines of credit at the end of the two-year extension. Starting in calendar year 2022, financial institutions that originated at least 200 open-end lines of credit in each of the two preceding calendar years must collect and report HMDA data by March 1 of the next calendar year.
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