CFPB Announces Final HMDA Rule

The Consumer Financial Protection Bureau (CFPB) announced the final Home Mortgage Disclosure Act (HMDA) rule. The NWCUA and CUNA have long advocated for credit unions to be exempt from the requirements, saying they would add yet another layer of expense and regulatory burden for credit unions (reporting from CUNA).

“This is another major rule that will require a huge implementation effort and comes on the heels of the TILA-RESPA final implementation,” said John Trull, AVP of Regulatory Advocacy for the Association. “It is disheartening for credit unions—many of whom are dealing with post-TRID implementation stress disorder—to be thrown another regulatory curve ball that will require a significant compliance lift.”

The final rule adopts many of the provisions proposed in 2014. However, a number of changes were made after considering comments received from the public. For example, the final rule does not include several of the data points proposed by the Bureau (such as the risk-adjusted, pre-discounted interest rate), and does not adopt the proposal to require reporting of all dwelling-secured transactions made for commercial purposes.

The Bureau was statutorily required by the Dodd Frank Act to make changes to HMDA reporting but added reporting requirements that were not required.

“It is unfortunate that the Bureau did not take additional time to consider the impacts of this rule on smaller credit unions before finalizing it,” said Jennifer Wagner, SVP of Advocacy for the Association. “At a minimum, we would like to see the Bureau create a grant pool to assist financial institutions under $500 million in assets with the cost of implementation, and will engage our members to deliver this important message to the CFPB.”

The final rule did include carve-outs for small credit unions:

  • Ease reporting requirements: The final rule retains the existing provisions that ease the burden on small banks and credit unions. For example, small depository institutions that are located outside a metropolitan statistical area remain excluded from coverage. In addition, under a new standardized reporting threshold in the rule, small depository institutions that have a low loan volume will no longer have to report HMDA data. For small credit unions with few staff members, this change could significantly ease compliance costs. The new threshold will reduce the overall number of banks required to report HMDA data by an estimated 22 percent. However, because those lenders receive a low volume of applications and originate a low volume of mortgage loans, the change will not compromise the usefulness of the dataset.
  • Align reporting requirements with industry data standards: In addition to collecting data under HMDA, many financial institutions are collecting the same or similar data for their own processing, underwriting, and pricing of loans, or to facilitate the sale of loans on the secondary market. Many of the amended requirements align with well-established industry data standards, including definitions that are already in use by a significant portion of the mortgage market. The Bureau anticipates that this alignment will mitigate the burden on many lenders, and improve the quality and the value of the information reported.

The Bureau also extended the implementation period from 12 months to two years with some provisions taking effect beginning 2019.

CUNA President/CEO Jim Nussle said, “Today’s HMDA announcement by the CFPB is extremely disappointing. At a time when the bureau should be working to increase the availability of credit to middle class Americans, they instead continue to impose staggering amounts of regulatory burden for credit unions and other small financial institutions.”

CUNA Chief Advocacy Officer Ryan Donovan added, “The CFPB needs to do a much better job articulating what it will do with this vast data grab which goes way beyond the Dodd-Frank Act requirements.” The rule is 797 pages long.

By the CFPB’s own estimates, the changes represent an additional compliance burden of 4.7 million hours per year for all entities required to report under HMDA. The bureau estimates that high complexity financial institutions will need to spend $800,000 in one-time costs and will have an additional $400,000 in ongoing expenses, making the initial investment $1.2 million for a highly complex institution.

CUNA and the Association asked the agency to:

Refrain from adding home equity lines of credit (HELOCs) to HMDA reporting requirements. The reporting burden on credit unions to aggregate and report on this data could be problematic for many credit unions, as HELOCs are often treated as consumer loans, maintained and managed by a consumer loan origination system (LOS), while first mortgages are maintained by a mortgage LOS;

Stick to the 17 data points mandated by Dodd-Frank, instead of the 37 the CFPB sought. CUNA urged the bureau to not require these additional data points to be collected and reported for HMDA purposes, or to exempt credit unions from the additional regulatory requirements; and

Exempt credit unions that originate under 500 mortgage loans per year, up from the proposed 25 mortgages per year threshold.

 “However,” Donovan emphasized, “We are going to continue to express our concerns about this rule to the CFPB, and point out areas where this impacts credit unions ability to serve consumers.

A copy of the final rule is available here.Resources that explain and facilitate implementation of the rule are available here. And the CFPB’s online HMDA tool is available here.

Questions about this story? Contact James Pearson: 206.340.4790,

Posted in Advocacy News, CUNA.