Last year, the Consumer Financial Protection Bureau (“CFPB”) made changes to the data collection and reporting rules under the Home Mortgage Disclosure Act (“HMDA”).
The new policy exempts insured depository institutions and credit unions from certain HMDA requirements if they originated less than 500 closed-end home mortgages or 500 open-ended lines of credit per year, in each of the two preceding years.
Now, the CFPB is proposing to loosen HMDA reporting rules even more by offering some relief for smaller lenders and credit unions, and possibly exempting them from reporting requirements altogether. The new rules would go into effect on January 1, 2020.
Under the current law, lenders that originate 25 or more mortgages in a two-year period are required to report their HMDA data to the CFPB. However, the CFPB proposal establishes two new thresholds that would raise the HMDA reporting requirement to lenders that originate either 50 or 100 mortgages over a two-year period. This new threshold would eliminate reporting requirements for many small lenders, community banks, and local credit unions.
CFPB Director Kath Kraninger explained, “[T]oday’s proposed changes would provide much-needed relief to smaller community banks and credit unions while still providing federal regulators and other stakeholders with the information we need under the Home Mortgage Disclosure Act.”
In the proposal, the CFPB states that the proposed increase in the closed-end coverage threshold from 25 to 50 would relieve institutions that originate between 25 and 49 closed-end mortgages of the ongoing costs associated with reporting those loans that they might otherwise incur if the closed-end coverage threshold remained at the current 25.
The CFPB added, “[T]he loss in data from these depository institutions and for this relatively small number of census tracts may be justified by the significant reduction in compliance costs for the approximately 745 lower-volume depository institutions that would no longer be required to report HMDA data.”
The CFPB estimated that the proposed increase to the threshold would result in aggregate savings on the operational costs of roughly 40% of institutional lenders obligated under HMDA of approximately $8.1 million per year.
If you make consumer loans and want up to date information regarding HMDA reporting requirements, please contact Geraci Law Firm for more information.