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CFPB Proposes Changes to Mortgage Data Rule Reporting Threshold
Monday, July 17, 2017 6:45 AM

Proposed Rule Would Temporarily Raise the Reporting Threshold for Smaller Institutions

The Consumer Financial Protection Bureau on Friday issued a proposal on reporting requirements for banks and credit unions that issue home-equity lines of credit. Under rules that are scheduled to take effect in January 2018, financial institutions are generally required under the Home Mortgage Disclosure Act (HMDA) to report home-equity lines of credit if they made 100 such loans in each of the last two years. The new proposal would increase that threshold to 500 loans through calendar years 2018 and 2019 so that the Bureau can consider whether to make a permanent adjustment.

The current rule requires certain lenders to collect, report, and disclose information about their open-end lending as part of their HMDA data. However, when adopting the rule, the Bureau says, it recognized that reporting these loans represents a new and, in some cases, significant compliance burden for smaller institutions. To avoid imposing those burdens on small-volume lenders where the benefits of the data do not justify the costs, the Bureau limited this new requirement to lenders that originated at least 100 dwelling-secured open-end lines of credit in each of the two preceding calendar years. 

The Bureau has heard increasing concerns from community banks and credit unions that the challenges and costs of reporting open-end lending may be greater than the Bureau had estimated when adopting the 100-loan threshold. Additionally, the Bureau’s 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.

Accordingly, the Bureau is seeking comment on whether to postpone collection of this information for smaller-volume institutions so that the Bureau can study whether the threshold should be adjusted permanently. The Bureau estimates that the temporary 500-loan threshold would still capture about three-quarters of the home-equity lending market, down from about 88 percent at the 100-loan threshold. 

"Increasing the exemption is a step in the right direction," says Suzanne Yashewski, Cornerstone SVP regulatory compliance counsel. "However, we still have a long way to go towards regulatory relief under CFPB regulations."

View the proposed rule.

The public comment period is open until July 31, 2017. The Bureau will issue a separate proposal with a longer notice and comment process to consider adjustments to the permanent threshold at a later date.

If you need help in crafting your own letters, or if you have questions, please contact Cornerstone Credit Union League SVP Regulatory Compliance Suzanne Yashewski at syashewski@cornerstoneleague.coop or 512-853-8516.