On Aug. 24, the Consumer Financial Protection Bureau (CFPB) announced updates to the Home Mortgage Disclosure Rule (HMDA). The Bureau temporarily changed the HMDA reporting requirements for institutions who issue home equity lines of credit, specifically banks and credit unions. Additionally, it clarified these institutions are required to obtain and report on specific mortgage lending activities.
HMDA uses data collection and analysis to determine whether lending institutions are fairly distributing credit among different communities and offering borrowing opportunities to all credit-worthy consumers. It is exclusively a data collection law founded on the recognition of the need to make credit available to low-income and minority communities that have declined due to historical patterns of unfair lending practices.
In 2015, the Dodd-Frank Wall Street Reform and Consumer Protection Act mandated changes that the CFPB implemented to HMDA regulation to improve quality of data reported by institutions. Most of these requirements will take effect in January 2018, and many credit unions and banks are working to implement these compliance requirements into their institutions through regulatory compliance training, policy changes, and procedural improvements.
According to an article published by the CFPB, the HMDA reporting requirements and rules that are scheduled to take effect in January will be changed to include the final rule. This rule has increased the home equity lines of credit reporting threshold from 100 to 500 loans through calendar years 2018 and 2019. This will allow the Bureau to determine if they will make a permanent change on this ruling.
In addition to finalizing the rule, the Bureau issued new HMDA implementation materials, including a summary of the changes updates to filing instructions. Clarification of key terms, including temporary financing and automated underwriting system, were included.
These changes will establish rules for reporting specific loans purchased by banks and credit unions.
Another change will facilitate census reporting utilizing a geocoding tool which will be provided on the Bureau’s website.
•Keeping experienced employees current on regulatory changes
•Pace of change challenges compliance