Changes to the HMDA Reporting Thresholds for 2017

Also, what does the credit union need to know about mailing 1099-INT Forms to our members?

The Consumer Financial Protection Bureau (CFPB) recently published a final rule regarding the institutional asset-size exemption threshold under the Home Mortgage Act (HMDA).  Based on a minimal increase in the Consumer Price Index, the asset-size exemption threshold will remain at $44 million for calendar year 2017.

But, January 1, 2017 also means the new HMDA reporting requirement of originated at least 25 closed-end mortgage loans in each of the two preceding calendar years goes into effect.

This means credit unions that do not meet ALL of the following requirements are exempt from the data collection and reporting requirements under HMDA for calendar year 2017:

  • Assets in excess of $44 million as of 12/31/2016;
  • Home or branch office in a Metropolitan Statistical Area;
  • In the preceding calendar year, originated at least one home purchase loan or refinance transaction secured by a first lien on a one to four unit dwelling;
  • The credit union is Federally insured or regulated; and
  • In each of the two preceding calendar year, originated at least 25 closed-end mortgage loans

Credit unions can use the HMDA institutional coverage chart that the CFPB has provided in making the determination for 2017 reporting.

Please note, the new 25 or more closed-end mortgage loan requirement applies to data collection for calendar year 2017.  It does not change data collection and reporting requirements for calendar year 2016.  If you had to collect data for 2016, you will need to submit the data by March 1, 2017.

Compliance Question of the Week

What does the credit union need to know about mailing 1099-INT forms to our members?

If a member qualifies for a 1099-INT, the credit union must use the official IRS Form 1099-INT or an acceptable substitute. Additionally, the statement may also contain the following information:

  • Form W-2, W-8, W-9, or other Forms 1098, 1099, and 5498 statements;
  • A check from the account being reported;
  • A letter explaining why no check is enclosed;
  • A statement of the person’s account that is shown on the 1099-INT; and
  • A letter explaining the tax consequences of the information shown on the statement.

No additional enclosures, such as advertising, promotional material, or a quarterly or annual report, are permitted. Even a sentence or two on the year-end statement describing new services offered by the payer is not permitted. Logos are permitted on the envelope and on any non-tax enclosures.

A recipient statement may be perforated to a check or to a statement of the recipient’s specific account. The check or account statement to which the recipient statement is perforated must contain, in bold and conspicuous type, the legend “Important Tax Return Document Attached.”

The legend “Important Tax Return Document Enclosed” must appear in a bold and conspicuous manner on the outside of the envelope and on each letter explaining why no check is enclosed, or on each check or account statement that is not perforated to the recipient statement. The legend is not required on any tax form, tax statement, or permitted letter of tax consequences included in a statement mailing. Further, you need not pluralize the word “document” in the legend simply because more than one recipient statement is enclosed.

Related Links:

IRS General Instructions for Certain Information Returns

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA issued Letter to Credit Unions 16-CU-13 explaining the new accounting standard issued by the Financial Accounting Standards Board. The NCUA provides FAQs to credit unions regarding the new accounting standard on financial instruments—credit losses.

The NCUA issued Letter to Credit Unions 16-CU-12 detailing the new Risk-Based Examination Scheduling Policy. The letter details the requirements for federally chartered and federally insured state-chartered credit unions to be eligible for the extended examination cycles.

Consumer Financial Protection Bureau (CFPB)

The CFPB announced the released its monthly complaint snapshot. The December complaint snapshot highlights consumer complaints about debt protection. Consumers are reporting that they are continuing to be harassed about debts that they have already paid or do not owe.

Federal Deposit Insurance Corporation (FDIC)

FDIC published proposed amendments to its Recordkeeping Requirement regulation for Qualified Financial Contracts.

Financial Crimes Enforcement Network (FinCEN)

FinCEN issued a notice and request for nominations for public membership on the Bank Secrecy Act Advisory Group. New members will be selected for a three-year membership terms.

Office of the Comptroller of the Currency (OCC)

The OCC issued a revised version of its “Internal and External Audits” booklet of the Comptroller’s Handbook.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of December 30, 2016. The last update prior to this was December 29, 2016.

Questions? Contact the Compliance Hotline: 1.800.546.4465; [email protected].