CFPB Issues Rule to Implement and Clarify New HMDA Amendments

Written By: Joel Palmer, Op-Ed Writer

The Consumer Financial Protection Bureau (CFPB) has issued a ruling to clarify a key provision of the Economic Growth, Regulatory Relief, and Consumer Protection Act.

Section 104(a) of the law, signed by President Trump in May, amended the Home Mortgage Disclosure Act (HMDA). This section was designed to decrease the HMDA compliance burden for smaller institutions.

"Some such institutions have raised questions about the application of the Act, and the rule issued today seeks to provide clarification,” read a summary of the final rule.

The CFPB’s final rule clarifies:

• Institutions and credit unions covered by a partial exemption can still report exempt data fields as long as they report all data fields within any exempt data point for which they report data.

• Only loans and lines of credit that are otherwise HMDA reportable count toward the thresholds for the partial exemptions.

• Which data points in Regulation C are covered by the partial exemptions.

• The exception to the partial exemptions for negative Community Reinvestment Act (CRA) examination history.

The rule also assigns a non-universal loan identifier for partially exempt transactions for institutions that choose not to report a universal loan identifier.

The final rule notes that Section 104(a) of the Act does not define the terms “closed-end mortgage loan” or “open- end line of credit.” It also does not specify whether these would include loans or lines of credit that would otherwise not be subject to HMDA reporting under Regulation C.

The final rule interprets these terms to include “only those closed-end mortgage loans and open-end lines of credit that would otherwise be reportable under HMDA”.The rule stated that “tying the definitions to the same criteria that already determines HMDA reportability will not impose any additional costs”. Broadening the definition, on the other hand, “would have resulted in fewer covered persons being eligible for the Act’s partial exemptions and additional costs for covered persons.”

The final rule includes 26 data points that CFPB interprets as being covered by the law’s partial exemption. It also includes 22 data points that are unchanged by the new law.

CFPB said it anticipates initiating a notice-and-comment rulemaking to incorporate these interpretations and procedures into Regulation C and further implement the act.

The bureau also included a filing instructions guide for HMDA data collected in 2018.

The Economic Growth, Regulatory Relief, and Consumer Protection Act rolled back many of the reporting requirements included in an October 2015 update to the HMDA. That 800-page set of rules increased mortgage lenders reporting requirements and were designed to provide regulators with more information on consumers’ access to mortgage loans. It also expanded the data related to mortgage applications and loans to be collected, reported and disclosed under HMDA.

Those new data points included age applicants, fees payable at origination, difference between the APR of the loan and benchmark rates, prepayment penalties, property values, loan terms, and credit scores of loan applicants.

Those rules had also eliminated the asset test for exemption of certain lenders. Prior to the passage of the new law, lenders that made the lending decision on at least 25 loans in a given year had to file.

About the Author

As an NAMP® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.

Opinion-Editorial (Op-Ed) Disclaimer For NAMP® Library Articles: The views and opinions expressed in the NAMP® Library articles are those of the authors and do not necessarily reflect any official NAMP® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMP®. Nothing contained in this article should be considered legal advice.