CSBS Issue Briefings - January 2020

CSBS ISSUE BRIEFING

Home Mortgage Disclosure Act

CSBS Official Public Position The Home Mortgage Disclosure Act (HMDA) requirements have changed on a few occasions due to 2015 CFPB rulemaking that implemented Dodd-Frank changes to Regulation C and made other discretionary changes as well as Section 104 of last year’s Senate regulatory relief bill. While state regulators support the statutory intention of HMDA, we believe the relationship lending model of community banks should not be subjected to the same scrutiny as large, global institutions that deploy standardized model-based lending programs. These concerns have largely been abated by new transaction volume thresholds (in place as of October 2019) that go beyond what CSBS has supported in comments regarding HMDA. Summary/Timeline In October 2015, the Consumer Financial Protection Bureau (CFPB) finalized amendments to HMDA (Regulation C). The updated rule required financial institutions to report 25 new data points identified in the Dodd-Frank Act, as well as other data points that the Bureau believes may be necessary. The rule also sought to provide limited relief to the smallest depository HMDA reporters by increasing the threshold for reporting from one covered loan to 25 covered loans. In May 2018, President Trump signed into law the 2018 Economic Growth, Regulatory Relief and Consumer Protection Act. Section 104 of the Act made it so that institutions required to report HMDA data will only report certain new HMDA data points (added by DFA and the 2015 Rule) if they originated more than 500 closed-end mortgage loans in each of the two preceding calendar years. In August 2018, the CFPB issued an interpretive and procedural rule to implement and clarify the partial exemptions that will apply if the bank or credit union originated fewer than 500 closed-end mortgage loans in each of the preceding two calendar years (and have a satisfactory CRA rating). The rule clarified 26 data points are covered by the partial exemption, and 22 data points still must be reported by institutions or credit unions that qualify for the partial exemption. The 2018 HMDA data contains a variety of information reported for the first time. A total of 2,251 reporters (2018 data) made use of the EGRRCPA’s partial exemptions for at least one of the 26 data points eligible for the exemptions. In May 2019, the CFPB proposed changes to HMDA’s transactional reporting thresholds to implement the threshold increase included in the Senate regulatory relief bill. In October, the Bureau issued an updated HMDA rule implementing that proposal. The final rule amended Regulation C to adjust the threshold for reporting data about open-end lines of credit by extending the current temporary threshold of 500 open-end lines of credit to January 2022. The CFPB issued an ANPR in June 2019 seeking industry feedback on the reporting of new data points. In 2019, the CFPB issued only one action related to fair lending, fining Freedom Mortgage $1.75 million for alleged violations of HMDA. Why it Matters to State Regulators State regulators are the primary supervisor for the vast majority of lenders required to report loan data under HMDA. The data serves as the basis for Community Reinvestment Act and fair lending reviews

FOR STATE REGULATOR USE ONLY