The Consumer Financial Protection Bureau (CFPB) has issued a proposal that would increase the reporting threshold on home-equity lines of credit (HELOC) for credit unions and banks.
Under rules that are scheduled to take effect in January, financial institutions are generally required under the Home Mortgage Disclosure Act (HMDA) to report HELOCs if they made 100 such loans in each of the last two years. The new proposal would increase that threshold to 500 loans through calendar years 2018 and 2019 so that the bureau can consider whether to make a permanent adjustment.
“Home-equity lines of credit worsened the foreclosure crisis that swept the country in 2008 and 2009,” said CFPB Director Richard Cordray. “We need to keep track of the responsible use of these loans for consumers, but after hearing from community banks and credit unions we want to reconsider whether that goal can be achieved with a higher reporting threshold.”
On Monday, Cordray pledged that the bureau would issue a proposal in the coming weeks to raise the threshold. In a letter sent to several senators, Cordray cited increasing concerns from credit unions and other community financial institutions about the reporting burden.
CUNA has pushed to raise the threshold required under the HMDA rule from CFPB.
In recent advocacy efforts with Congress, CUNA has shared its research that found 23% of credit unions that currently offer HELOCs indicate they plan to either curtail their HELOC offerings or stop offering them in response to reporting burdens.