HMDA – The Gift that Keeps on Giving
Compliance expert Rachelle Dekker offers a recap of existing, finalized and outstanding HMDA rules.
As we move toward the last two months of 2019, the holiday season is quickly approaching. I can’t help but think of the gift that keeps on giving: HMDA! With the exception of 2016, each year we have been provided with a gift, I mean rule. So, let’s recap the current rules, re-visit the portion of the proposed rule that is now final, and lastly, cover the portion of the proposed rule that is still outstanding.
2015 HMDA Final Rule: The 2015 HMDA Final Rule changes included adjusting the institutional coverage, altering the transactional coverage, and the adding and modifying several data points. Keep in mind, the 2015 HMDA Final Rule was the initial change in the loan volume threshold. If a lender originated at least 25 closed-end mortgage loans that were not otherwise excluded, in each of the two preceding calendar years, or originated at least 100 open-end lines of credit that were not otherwise excluded in each of the two preceding calendar years, the lender was a HMDA reporter.
2017 HMDA Final Rule: The 2017 HMDA Final Rule was issued in August of 2017. This final rule clarified some important definitions and adjusted the threshold for open-end lines of credit. The threshold for determining whether an institution would report open-end lines of credit was increased temporarily from 100 to 500 in each of the two preceding calendar years, for the LAR filing years of 2018 and 2019.
2018 HMDA Final Rule: The 2018 HMDA Final Rule adjusted the institutional coverage. Financial Institutions that originated fewer than 500 closed-end mortgage loans or open-end lines of credit in each of the two preceding calendar years with a favorable CRA rating, if subject to CRA, would qualify for the partial exemption.
Proposed Rule (May 2019): The next change to HMDA was proposed in May of 2019. The proposal included two components. First, it addressed the adjustment to the institutional and transactional coverage thresholds within Regulation C. Secondly; it addressed the implementation of the partial exemption that resulted from the passing of the Economic Growth Regulatory Relief Consumer Protection Act (EGRRCPA).
2019 HMDA Final Rule: Shortly after the May 2019 proposed rule, the CFPB issued the 2019 HMDA Final Rule on October 10, 2019. The final rule did not include all of the proposed components. So, let’s look at what was finalized under the 2019 HMDA Final Rule.
First, it includes the continuation of the temporary open-end line of credit loan volume threshold. Until January 1, 2022, the temporary threshold for determining whether your institution will report open-end lines of credit will remain at 500. Second, the 2019 HMDA Final Rule incorporates the interpretative and procedural rule of the partial exemption from the Economic Growth Regulatory Relief Consumer Protection Act (EGRRCPA) into Regulation C. Keep in mind this final rule doesn not include all of the proposed components from the May proposal. The comment period for the closed-end mortgage loan threshold and the expiration of the temporary threshold for open-end lines of credit remained open until October 15, 2019, and will most likely be addressed in a final rule in 2020.
Nearly every year since 2015, the CFPB has issued a new HMDA Final Rule. Therefore, what do we have to look forward to in 2020 with HMDA? The 2020 HMDA Final Rule may address the increase in the loan volume threshold for closed-end mortgage loans. The proposed rule indicated that the volume may increase from 25 originated loans in each of the two preceding calendar years to 50 or even 100 originated loans in each of the two preceding calendar years. In addition, the open-end line of credit loan volume threshold, currently temporarily set at 500, could be decreased to 200. With that being said, I cannot help but think of HMDA as the gift that keeps on giving!