The passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) in May created widespread confusion regarding how various provisions of the act might affect credit union operations.
The changes that specifically pertain to the Home Mortgage Disclosure Act (HMDA) have been a primary pain point for compliance professionals. That’s because the act’s HMDA provision created more uncertainty at a time when credit unions are still catching up with the Jan. 1, 2018, amendments to Regulation C.
On Aug. 31, 2018, after months of waiting, the Bureau of Consumer Financial Protection (BCFP) finally published a final rule clarifying the S. 2155 HMDA changes.
Overall, these provisions are a win for credit unions because the act provides an exemption from the collection of certain data points for small-volume mortgage lenders. But credit unions need to ensure they understand exactly what the new rule does and does not do now that we finally have more guidance.
What it doesn’t do
The new HMDA rule does not exempt any previously covered institution from the mortgage loan data reporting requirements of HMDA that were in eﬀect prior to Jan. 1, 2018. If your credit union originated at least 25 closed-end mortgage loans or 500 openend home equity lines of credit (HELOC) in each of the preceding two calendar years, it is still subject to HMDA reporting.
S. 2155 just rolls back the rule to the state it was in on Dec. 31, 2017, before the new Dodd-Frank-enacted data collection requirements were implemented on Jan. 1, 2018.
Therefore, if you originated 25 to 500 closed-end loans in each of the preceding two calendar years, you will report only the old HMDA data points that were in eﬀect last year. And if you originated less than 500 HELOCs in each of the preceding two years, you will not report any open-end HMDA data (at least for now).
What it does do
The new provision exempts small-volume mortgage lenders from the expanded HMDA data reporting requirements that became eﬀective on Jan. 1, 2018, if certain conditions are met.
For closed-end mortgage reporting, the conditions require that the credit union has originated fewer than 500 of such loans in each of the preceding two calendars years.
For HELOCs, the credit union must have originated less than 500 of those loans in each of the preceding two calendars years.
The bureau has now clarified which loans count toward meeting the 500-loan threshold to qualify for the partial exemption: Only those loans that would otherwise be HMDA-reportable count.
It’s important to note that a BCFP-amended rule that became final in August 2017 already temporarily raised the HELOC threshold from 100 to 500 loan originations, so S. 2155 will not have any impact on the HELOC threshold in the short term.
The BCFP-revised rule only temporarily raises the threshold to 500 for 2018 and 2019 for any HELOC reporting to allow the bureau more time to assess the potential impact.
So absent another rulemaking from BCFP, S. 2155 will not potentially come into play to keep the threshold at 500 for HELOC reporting until 2020.
While the act provided no eﬀective date for the HMDA provision, the bureau states in the rule that it believes the best interpretation is that this provision took eﬀect on the date of the act’s enactment, or May 24, 2018.
This is great news for credit unions that qualify for the partial exemption because they won’t have to collect and report the expanded data points for 2018 after May 24.
NEXT: Data collection and voluntary reporting