September 15, 2019

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CFPB Reopens HMDA Proposed Rule Comment Period

The CFPB recently announced that it is reopening the comment period for the May 2019 Home Mortgage Disclosure Act (HMDA) rule proposal. Comments on certain aspects of the proposal, addressed below, are due by October 15, 2019.

The CFPB notes that later this summer the national loan level dataset for 2018 and the CFPB’s annual overview of residential mortgage lending based on that data (collectively, the “2018 HMDA Data”) will be released, and that stakeholders have asked to submit comments on the May 2019 proposal based on the 2018 HMDA Data. The 2018 HMDA Data will be the first data reflecting the significant expansion of the HMDA data reporting categories. The CFPB decided to extend the comment period to permit stakeholders to submit comments based on the 2018 HMDA Data.

The CFPB requests comment on the proposals to (1) modify the loan volume threshold that triggers the reporting of closed-end mortgage loans, and (2) modify the permanent open-end line of credit threshold that triggers the reporting of open-end lines of credit. The CFPB also requests comment on the appropriate effective date for any change to the closed-end mortgage loan threshold.

With regard to closed-end mortgage loans, the CFPB proposal is to increase the loan volume threshold from at least 25 originated loans in each of the prior two calendar years to at least 50 originated loans in each of the prior two calendar years.  The CPFB also solicits comments on an alternative threshold of 100 originated loans in each of the prior two calendar years. Before the main implementation of the HMDA rule amendments issued in October 2015, the threshold for reporting closed-end loans applicable to non-depository lenders was 100 originated loans in the prior calendar year.

With regard to open-end lines of credit, the CFPB proposal is to continue until January 1, 2022 the temporary volume threshold of at least 500 originated open-end lines of credit in each of the prior two calendar years that triggers reporting of lines of credit, and then implement a permanent threshold of 200 originated lines of credit in each of the prior two calendar years. As previously reported, while the HMDA rule amendments adopted in October 2015 established a threshold of 100 originated lines of credit in each of the prior two calendar years, in 2017 the CFPB temporarily increased the threshold until January 1, 2020 to the 500 originated lines of credit level. As noted above, the CFPB only requests comment on the proposed permanent threshold of 200 lines of credit in each of the prior two calendar years.

The CFPB states it “believes that it would be useful to have public comment on the 2018 HMDA Data in considering where to set the permanent coverage thresholds for closed-end mortgage loans and open-end lines of credit. For example, the new data may shed light on the number of institutions and percentage of market activity covered at different potential coverage thresholds and the value of the data that would not be reported if the thresholds were increased.”

The CFPB originally intended to implement any changes to the closed-end loan reporting threshold on January 1, 2020. The CFPB advises that based on the reopening of the comment period, if the CFPB decides to amend the closed-end loan threshold, it will not be able to finalize the change to take effect on January 1, 2020. The CFPB requests comment on the appropriate effective date of any change, should the CFPB decide to modify the reporting threshold. In particular, the CFPB requests comment on the costs and benefits of a mid-year effective date during 2020, such as May 2020, versus a January 1, 2021 effective date. The CFPB also requests comment on the costs and benefits of specific days of the week or times of the month, quarter, or year for a new closed-end coverage threshold to take effect, and whether there are any other considerations that the CFPB should address in a final rule if it were to adopt a mid-year effective date.

Copyright © by Ballard Spahr LLP

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About this Author

Richard J. Andreano, Jr. , Ballard Spahr Law Frim, Washington DC,  Business and Finance attorney, Mortgage Banking, Consumer Financial Services, Fair Lending

Richard J. Andreano, Jr., is the Practice Leader of Ballard Spahr's Mortgage Banking Group. He has devoted 30 years of practice to financial services, mortgage banking, and consumer finance law.

Mr. Andreano advises banks, lenders, brokers, home builders, title companies, real estate professionals, and other settlement providers on regulatory compliance and transactional matters, Federal Housing Administration (FHA) issues, and administrative examinations, enforcement actions and investigations. He also works with litigation counsel on devising strategies for defense of class action...

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