On August 24, 2017, the CFPB issued a new rule amending the October 2015 final rule amending Regulation C, which implemented the Dodd-Frank Act amendments to HDMA, due largely to become effective on January 1, 2018 (“2015 HMDA Rule”). The new rule temporarily increases the institutional and transactional coverage threshold related to open-end lines of credits (“HELOC”) that trigger HMDA reporting obligations. The new rule also includes clarifications of certain key terms, technical corrections and minor changes to the 2015 HMDA Rule. The temporary increase to the reporting thresholds is set to be in place for 2 years, from January 1, 2018 to the end of 2019. A CFPB executive summary of the final rule is included here.
The final rule finalizes the CFPB proposed revisions to the 2015 HMDA Rule that were issued in April and July of 2017.
Specifically, with respect to the July 2017 HMDA revision proposal, the final rule amends the definition of “financial institution”, under both the depository and non-depository financial institution subparts, by temporarily increasing the institutional coverage threshold from 100 HELOCs, originated in each of the two preceding calendar years, to 500 HELOCs. It also amends the transactional coverage threshold for HELOCs by providing that a HELOC is an excluded transaction from HMDA reporting if the financial institution originates fewer than 500 HELOCs in either of the two preceding calendar years. In addition, the applicable CFPB official comments to the rule is updated to reflect the increased threshold.
As for the April 2017 HMDA revisions proposal, the final rule also establishes transition rules for two data points, “loan purpose” and the “unique identifier” for the loan originator. These transition rules require, in the case of loan purpose, or permit, in the case of the unique identifier for the loan originator, financial institutions to report not applicable for these data points when reporting certain loans that they purchased and that were originated before certain regulatory requirements took effect. The final rule also makes additional amendments to clarify certain key terms, such as “multifamily dwelling”, “temporary financing” and “automated underwriting system”, as well as, creates a new reporting exception for certain transactions associated with New York State consolidation, extension, and modification agreements.
Also part of the April 2017 HMDA revision, the final rule facilitates reporting the census tract of the property securing or, in the case of an application, proposed to secure a covered loan that is required to be reported by Regulation C. The CFPB stated that it plans to make available on its website a geocoding tool that financial institutions may use to identify the census tract in which a property is located. The final rule establishes a safe harbor for financial institutions using the CFPB geocoding tool. Under the final rule a financial institution would not violate HMDA Regulation C by reporting an incorrect census tract for a particular property if the financial institution obtained the incorrect census tract number from the geocoding tool on the CFPB’s website, provided that the financial institution entered an accurate property address into the tool and the tool returned a census tract for the address entered.
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