The CFPB has issued a final rule amending Regulation C, its Home Mortgage Disclosure Act regulation. The changes, which, in part, implement the Dodd-Frank Act’s amendments to HMDA, expand the scope of data required to be collected and reported, change the scope of HMDA’s coverage of both institutions and transactions, and adopt new processes for disclosing data. Most of the new and revised requirements take effect on either January 1, 2018 or January 1, 2019.
Key provisions of the nearly 800-page final rule include the following:
- Coverage. The final rule adopts a uniform loan-volume reporting threshold for both depository institutions and for-profit mortgage lending institutions that are not depository institutions. A financial institution will be subject to Regulation C if it originated at least 25 covered closed-end mortgage loans in each of the two preceding calendar years or at least 100 covered open-end lines of credit in each of the two preceding calendar years, and it meets other applicable coverage requirements. Banks, savings associations, and credit unions must also meet the current Regulation C asset-size, location, federally related and loan activity tests. Other for-profit mortgage lending institutions must also satisfy the existing Regulation C location test ( but will no longer be subject to a dollar-volume and asset test). Covered loans will generally include closed-end mortgage loans and open-end lines of credit secured by a dwelling. (Only covered institutions that originated at least 100 covered open-end lines of credit in each of the preceding two calendar years will be required to collect and report information about open-end lines of credit.) Dwelling-secured business purpose mortgage loans and credit lines must also be reported if they are home purchase or home improvement loans or refinancings. (Only dwelling-secured home improvement loans will have to be reported. However, the collection and reporting of certain preapproval requests will no longer be optional.)
- New Information. The new information that a covered institution must collect and report includes: (1) an applicant’s or borrower’s age, credit score, and debt-to-income ratio, (2) application channel used (but not for purchased loans) and name of automated underwriting system used, (3) property information, including address, construction method, property value, and certain information for manufactured and multifamily housing, (4) loan feature information, including pricing information such as borrower-paid loan costs and origination fees, discount points, loan term, interest rate, introductory rate period, non-amortizing features, and prepayment penalty term, and (5) unique identifiers, such as a universal loan identifier and loan originator identifier. A covered institution must also report how it collected information about an applicant’s or borrower’s ethnicity, race or sex (i.e., based on visual observation or surname) when an applicant chose not to provide the information for an application taken in person (and must allow applicants choosing to self-identify to use disaggregated ethnicity and race subcategories).
- Quarterly reporting. Beginning in 2020, a covered institution that reported a combined total of at least 60,000 applications and covered loans in the preceding calendar year must submit quarterly HMDA reports.
- Disclosure. A financial institution will be able to fulfill its obligation to publicly disclose HMDA data by providing a notice that its disclosure statement and modified loan/application register are available on the CFPB’s website. The CFPB has not yet determined which new information items will be made publicly available and has stated that it plans use “a balancing test to determine whether, and if so, how HMDA data should be modified prior to its disclosure in order to protect applicant and borrower privacy while also fulfilling HMDA’s disclosure purposes.”
We are currently preparing a legal alert that will contain a more detailed discussion of the final rule and will share the alert with our blog readers.