Heads Up On Final HMDA Rule

As we reported in November, the CFPB issued a final rule on October 15, 2015 amending Regulation C to implement changes to HMDA made by the Dodd-Frank Act requiring financial institutions to collect and report additional home loan information. While required collection of the new loan data points will not begin until January 1, 2018, it is not too early to begin thinking about it and planning for the changes. This article will provide an overview of the final rule including the changes in covered institutions and covered loans, key compliance dates, and reporting requirements.

Compliance Dates. The good news is that no new Reg. C requirements go into effect in 2016. HMDA reporters will report 2015 loan data and collect 2016 data for reporting in early 2017 under the existing rule. Effective January 1, 2017, a new exemption from HMDA reporting for certain low volume depository institutions will be added, but except for that one change, HMDA reporters will submit 2016 data and collect 2017 data for reporting in 2018 under the existing rule. The big changes take place beginning January 1, 2018, when the rules concerning covered institutions, covered transactions, and required collection of new and modified data points will begin for 2018 loan data to be reported in early 2019. Additional changes affecting reporting and enforcement provisions become effective January 1, 2019, and quarterly reporting begins for large reporters effective January 1, 2020.

Covered Institutions. The final rule adds a new exemption for certain low volume depository institutions. Effective January 1, 2017, a bank, savings association or credit union that would otherwise be covered under the current rule will be exempt if the institution originated fewer than 25 home purchase or refinance of purchase loans in each of 2015 and 2016.

The coverage rules for federally insured depository institutions will change effective January 1, 2018. A depository institution will be covered by Reg. C if it meets the following tests:

Asset size threshold - the institution's total assets as of December 31 of the preceding year exceed the threshold set in the rule ($44 Million for 2016, adjusted annually for inflation). Location test - the institution has a home or branch office in a MSA. Loan activity test - the institution originated at least one first lien home purchase or refinance loan secured by a one to four family dwelling during the preceding year. Loan volume threshold - the institution originated at least 25 closed-end mortgages or at least 100 open-end lines of credit secured by a dwelling in each of the two preceding...