The CFPB issued two requests for comments relating to Regulation C, which implements HMDA: an advance notice of proposed rulemaking (ANPR) and a proposed rule. The ANPR requests comments on certain data points added or revised by the 2015 HMDA Rule. The proposed rule would adjust Regulation C’s institutional and transactional coverage thresholds for reporting data related to closed-end mortgage loans and open-end lines of credit for both depository and non-depository institutions. The proposed rule would also incorporate into Regulation C the CFPB’s 2018 interpretive rule that implemented and clarified the partial data point exemptions that the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) added to HMDA.
The CFPB is seeking comments through the ANPR on whether to make changes to certain data points that the 2015 HMDA Rule revised or added to Regulation C. While the Dodd-Frank Act mandated the CFPB to add certain data points to Regulation C’s collection and reporting requirements, the 2015 HMDA Rule also added certain data points pursuant to the CFPB’s discretionary authority, including origination charges, interest rate, debt-to-income ratio, and loan-to-value ratio. Additionally, the 2015 HMDA Rule revised preexisting data points, such as ethnicity and race, to require additional information. For example, before the 2015 HMDA Rule, financial institutions were required to ask loan applicants to identify their ethnicity and race using aggregate categories (e.g., Hispanic or Asian). However, financial institutions are now required to request that an applicant also self-identify their race and ethnicity using disaggregated categories (e.g., Cuban or Chinese).
The CFPB seeks information that will help assess whether the data points revised and added to the 2015 HMDA Rule by the CFPB’s discretionary authority, like the ones mentioned above, appropriately balance the benefits and burdens associated with data reporting. Specifically, the CFPB requests comments from all interested parties on:
- Any of the new or revised data points specified in the ANPR for which the cost of collecting and reporting does not justify the benefit of collecting and reporting for furthering HMDA’s purposes;
- Cost and benefits of providing information through the free-form text fields as required for certain data points, as well as any better alternatives;
- Other factors the CFPB should consider in deciding whether to propose the elimination or revision of any new or revised data point; and
- The need for more clarification on the collection and reporting requirements for any of the new or revised data points that may further reduce the burden associated with the collection or reporting of such data points.
The ANPR also seeks information on whether the CFPB should require institutions to report data relating to business- or commercial-purpose transactions made to a non-natural person and secured by a multifamily dwelling. Specifically, the CFPB requests comments on the burden created and the value provided in serving HMDA’s purposes by requiring such data.
The CFPB’s proposed rule would amend the coverage thresholds affecting whether a financial institution needs to report any information under HMDA for closed- or open-end transactions. The proposed rule provides two alternatives that would permanently increase, effective January 1, 2020, the closed-end coverage threshold from 25 to either 50 or 100 closed-end mortgage loans in each of the preceding two calendar years. Additionally, the proposed rule would extend to January 1, 2022, the current temporary open-end coverage threshold of 500 open-end lines of credit, and then permanently set this threshold at 200 open-end lines of credit after the end of the extension.
Further, the proposed rule would also incorporate into Regulation C, with minor adjustments, a 2018 CFPB interpretive rule implementing and clarifying aspects of the partial HMDA exemptions added by the EGRRCPA. The interpretive rule, previously reported here, among other things, identifies 26 data points in Regulation C covered by the partial exemptions and the depositories that qualify for the partial exemption. The proposed rule would further implement the EGRRCPA by addressing certain issues not covered by the 2018 interpretive rule, such as how to determine whether a partial exemption applies to a transaction after a merger or acquisition.
Comments responding to the ANPR must be received by July 8, 2019. Comments responding to the proposed rule must be received by June 12, 2019 (except those addressing the Paperwork Reduction Act analysis, which must be received by July 12, 2019).