On August 31 the Bureau of Consumer Financial Protection issued a final rule to implement and clarify the requirements of section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA), which amended certain provisions of the Home Mortgage Disclosure Act (HMDA). The rule clarifies:
- That insured depository institutions and insured credit unions covered by a partial exemption under the EGRRCPA have the option of reporting exempt data fields as long as they report all data fields within any exempt data point for which they report data;
- That only loans and lines of credit that are otherwise HMDA reportable count toward the thresholds for the partial exemptions;
- Which of the data points in Regulation C are covered by the partial exemptions;
- Designates a non-universal loan identifier for partially exempt transactions for institutions that choose not to report a universal loan identifier; and
- The EGRRCPA’s exception to the partial exemptions for negative Community Reinvestment Act examination history.
Section 104(a) of the Act amends HMDA section 304(i) by adding partial exemptions from HMDA’s requirements for certain insured depository institutions and insured credit unions.
- New HMDA section 304(i)(1) provides that the requirements of HMDA section 304(b)(5) and (6) shall not apply with respect to closed-end mortgage loans of an insured depository institution or insured credit union if it originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years.
- New HMDA section 304(i)(2) provides that the requirements of HMDA section 304(b)(5) and (6) shall not apply with respect to open-end lines of credit of an insured depository institution or insured credit union if it originated fewer than 500 open-end lines of credit in each of the two preceding calendar years.
- Notwithstanding the new partial exemptions, new HMDA section 304(i)(3) provides that an insured depository institution must comply with HMDA section 304(b)(5) and (6) if it has received a rating of “needs to improve record of meeting community credit needs” during each of its two most recent examinations or a rating of “substantial noncompliance in meeting community credit needs” on its most recent examination under section 807(b)(2) of the Community Reinvestment Act of 1977.
Section 104 of EGRRCPA was effective upon enactment, May 24, 2018, but without regulations it was basically impossible to take advantage of the exception. The final rule is effective when published in the Federal Register, which is expected soon. While covered institutions may legally take advantage of the exception, systems most likely need updating to take advantage of the exception.
The CFPB also needs to update its HMDA platform to accept data from institutions covered by the exception. Accordingly, the HMDA platform will continue to accept submissions of a data field that is covered by a partial exemption under the Act for a specific loan or application as long as those insured depository institutions and insured credit unions that choose to voluntarily report the data include all other data fields that the data point comprises. For example, if a partially exempt institution reports a data field that is part of the property address data point (such as street address) for a partially exempt loan or application, it will report all other data fields that are part of the property address data point (including zip code, city, and State) for that transaction in accordance with the 2018 Filing Instructions Guide (FIG).
The final rule contains specific lists of the fields on the Loan Application Register that an exempt institution does not need to report.
A copy of the 31 page final rule is available at: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_hmda_interpretive-procedural-rule_2018-08.pdf