On August 24, 2017, the Consumer Financial Protection Bureau (“CFPB”) issued a final rule amending Regulation C, the implementing regulation for the Home Mortgage Disclosure Act (“HMDA”). In October 2015, the CFPB promulgated substantial revisions to Regulation C (the “HMDA Rule”) to implement statutory amendments to HMDA in section 1094 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The 2015 amendments modified the types of institutions and transactions subject to Regulation C, the types of data institutions are required to collect and report, and the processes for reporting and disclosing the required data. Most of the new or revised regulatory provisions are scheduled to take effect in January 2018.
One such provision would have required certain lenders, including community banks and credit unions, to report home equity lines of credit (“HELOCs”) if the lender originated at least 100 HELOCs in each of the two preceding calendar years. The CFPB’s recent change to the HMDA Rule temporarily increases the threshold for this reporting requirement to 500 HELOCs in each of the two preceding calendar years (through 2018 and 2019).
When it proposed this temporary increase in the HELOC reporting threshold, the CFPB explained that it was responding to “increasing concerns from community banks and credit unions” regarding “the challenges and costs of reporting open-end lending.” The CFPB also noted that its “analysis of more recent data suggests changes in open-end origination trends that may result in more institutions reporting open-end lines of credit than was initially estimated.” The CFPB has indicated that the temporary amendment to the reporting threshold will give the CFPB time to consider whether a permanent change is warranted.
The final rule issued August 24, 2017, also includes clarifications and technical corrections to the HMDA Rule. For example, it establishes transition rules for two data points—loan purpose and unique identifier for the loan originator—that allow financial institutions to report “not applicable” for particular loans purchased and originated before certain regulatory requirements took effect. The final rule also clarifies key terms, including “temporary financing,” “multifamily dwelling,” and “automated underwriting system.” Finally, the CFPB clarifies the scope of the safe harbor for bona fide errors resulting from use of a new CFPB geocoding tool (initially proposed in April 2017) that financial institutions may use to identify census tracts. The CFPB plans to make the geocoding tool available on its website.
The CFPB also released an executive summary of the final rule and updates to technical filing instructions.