On April 16, 2020 the Consumer Financial Protection Bureau (CFPB) published a final rule which amended reporting thresholds under Regulation C, Home Mortgage Disclosure Act (HMDA). These reporting thresholds, in part, determine the lending volumes of covered loans (i.e. loans that would be reportable under transactional requirements) to determine which financial institutions are required to collect and report HMDA data. As a result, this change may result in additional financial institutions being exempt from HMDA data collection and reporting requirements for 2020 and moving forward.
Specifically, the final rule adjusts Regulation C’s coverage thresholds for closed-end mortgage loans and open-end lines of credit. Effective July 1, 2020, the final rule permanently raises the closed-end coverage threshold from 25 to 100 covered closed-end mortgage loans in each of the two preceding calendar years. The final rule also adjusts the rules so that institutions have the option to report closed-end data collected in 2020 if they: (1) meet the definition of financial institution as of January 1, 2020 but are newly excluded on July 1, 2020 by the increase in the closed-end threshold, and (2) report closed-end data for the full calendar year. The final rule also sets the permanent open-end threshold at 200 open-end lines of credit effective January 1, 2022, upon expiration of the temporary threshold of 500 open-end lines of credit.
What does this mean for financial institutions currently collecting information for HMDA reporting in 2020? Essentially this means if the financial institution did not originate 100 or more covered closed-end mortgage loans in 2018 and 2019, beginning July 1, 2020 it would no longer be required to collect information and it would not be required to report closed-end mortgage applications on the 2020 HMDA LAR. However, at its option the institution could continue to collect and report information for 2020 if it does so for the entire calendar year but will be bound to the new thresholds for reporting going forward. Until 2022, a financial institution would continue to not report covered open-end lines of credit so long as it did not originate 500 or more covered open-end loans in each of the prior two years. Going forward, if an institution does not exceed the closed-end mortgage and open-end lines of credit thresholds in the previous two years, it would not be subject to HMDA reporting for that year.
A financial institution should perform an analysis to determine if it remains a HMDA covered institution for 2020 considering these changes. Financial institutions currently subject to 2020 reporting who will be newly exempt as of July 1, 2020 should consider whether or not it would be best to continue to collect and report information for 2020 or to cease collection and reporting and update its policies and procedures accordingly.
The CFPB provided several documents to help financial institutions with HMDA coverage questions. See the links below for additional information.
- Unofficial, informal redline to reflect changes to Regulation C
- Executive Summary
- HMDA Rule Key Dates Timeline 2020-2022
- HMDA institutional coverage chart, effective July 1, 2020 through December 31, 2021
- HMDA institutional coverage chart, effective January 1, 2022
- HMDA transactional coverage chart, effective July 1, 2020 through December 31, 2021
- HMDA transactional coverage chart, effective January 1, 2022