On July 14, 2017, the CFPB issued a proposed rule to amend 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 proposed rule will temporarily increase the institutional and transactional coverage threshold related to open-end lines of credits (“HELOC”) that trigger HMDA reporting obligations. The proposal is intended to provide a temporary regulatory relief for small community financial institutions. Comments to the proposal are due by July 31, 2017.
Specifically, the proposed rule will amend 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 will also amend 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 will be updated to reflect the increased threshold.
The proposed rule temporarily increases these thresholds for a period of 2 years, to allow the CFPB to study the impact of the increase and determine whether to maintain the proposed increase or change it up or down. However, as a default the CFPB proposes that the coverage thresholds will revert back to the 100 HELOC level if no regulatory action is taken by January 1, 2020.
The CFPB is seeking comments on whether the threshold should be reduced, kept or increased. It stated that it considered an increase up to 1000 HELOCs, but said it would exempt approximately 90% of financial institution from the reporting requirement.
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