New HMDA Threshold Issued for Credit Unions

October 8, 2018 by Bryan P. Redington, Esq.

The Office of Consumer Financial Protection announced in July that it made significant changes to credit union reporting requirements under the Home Mortgage Disclosure Act (HMDA).

Under the Economic Growth, Regulatory Relief, and Consumer Protection Act, signed into law on May 24, 2018, amendments were made to HMDA that granted partial exemptions for some insured credit unions in complying with HMDA requirements.

The Act provides partial exemptions for reporting requirements of certain depository institutions.

  • For closed-end mortgage loans, if the credit union originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years.
  • For open-end lines of credit, if the credit union originated fewer than 500 opened lines of credit in each of the two preceding calendar years.
  • The Act also exempts small volume mortgage lenders from the expanded HMDA data reporting requirements that became effective on Jan. 1, 2018 if certain conditions are met.

What this means is that for insured credit unions which fall within the partial exemption threshold, they are exempt from the collection and reporting requirements for some of the data points specified in current Reg. C guidelines.

The Credit Union National Association (CUNA) took a detailed look into the relief provided under the Act. They focused and reported on the changes and how they would affect the nation’s credit unions.

CUNA provides a breakdown of what sections of the Act provide relief to certain covered credit unions, and other rules outlined in the Act.

Section 104 provides relief for small depository institutions that originate less than 500 closed-end mortgages or less than 500 open-ended lines of credit (HELOCs) in each of two preceding calendar years by exempting them from some Reg. C disclosure requirements of HMDA.

However, Section 104 does not exempt any previously covered financial institution from the reporting requirements of HMDA that were in effect before Jan. 1, 2018. If a credit union originates a minimum of 25 closed-end loans or 500 HELOCs in each of the previous two calendar years, it must follow HMDA reporting guidelines.

Although Section 2155 of the Act does repeal the additional data collection requirements implemented on Jan. 1, 2018, rolling them back to the rule as it was on Dec. 31, 2017.

As it stands now, if a credit union originated between 25 and 500 closed-end loans in the previous two years, it need only report on the HMDA data points that were required as of last year. If a credit union originates less than 500 HELOCs, the requirements of [HMDA section 304(b)(5) and (6)] shall not apply.

The CFPB amended a rule in August 2017 to temporarily raise the HELOC threshold from 100 to 500 originations for 2018 and 2019. This increase was meant to allow the agency more time to gauge the impact of the rule changes and will exempt many smaller depository institutions from data collection and reporting requirements.

It appears now that the Bureau of Consumer Financial Protection will take the lead in determining what the reporting requirements will be mandated moving forward, and it is expected that we will soon see additional guidance for information collection requirements under HMDA.