CFPB Issues Final Rule Amendments to HMDA

8/29/17

The Consumer Financial Protection Bureau (CFPB) issued a rule amending the 2015 updates to the Home Mortgage Disclosure Act (HMDA). The CFPB is temporarily changing the reporting requirements for Home Equity Lines of Credit (HELOCs) and clarifying information that financial institutions are required to collect and report about their mortgage lending.

The final rule temporarily increases the open-end threshold to 500 or more open-end lines of credit for two years (calendar years 2018 and 2019). In addition, the final rule corrects a drafting error by clarifying both the open-end and closed-end thresholds so only financial institutions that meet the threshold for two years in a row are required to collect data in the following calendar years. With these amendments, credit unions that originated between 100 and 499 open-end lines of credit in either of the two preceding calendar years will not be required to begin collecting data on their open-end lending before Jan. 1, 2020. This temporary increase in the open-end threshold will provide time for the CFPB to consider whether to initiate another rulemaking to address the appropriate level for the open-end threshold for data collected beginning Jan. 1, 2020.

The final rule establishes transition rules for two data points, loan purpose and the unique identifier for the loan originator. The transition rules require, in the case of loan purpose, or permit, in the case of the unique identifier for the loan originator, financial institutions to report “not applicable” for these data points when reporting certain loans they purchased and that were originated before certain regulatory requirements took effect. The final rule also makes additional amendments to clarify certain key terms, such as multifamily dwelling, temporary financing, and automated underwriting system, and to create a new reporting exception for certain transactions associated with New York State consolidation, extension, and modification agreements.

In addition, the 2017 HMDA Final Rule facilitates reporting the census tract of the property securing or, in the case of an application, proposed to secure a covered loan that is required to be reported by Regulation C. The Bureau plans to make available on its website a geocoding tool that financial institutions may use to identify the census tract in which a property is located. The final rule establishes that a financial institution would not violate Regulation C by reporting an incorrect census tract for a particular property if the financial institution obtained the incorrect census tract number from the geocoding tool on the Bureau’s website, provided that the financial institution entered an accurate property address into the tool and the tool returned a census tract for the address entered.

Finally, the final rule also makes certain technical corrections. These technical corrections include, for example, a change to the calculation of the check digit under 1003.4(a)(1)(i) and replacement of the word “income” with the correct word “age” in comment 4(a)(10)(ii)–3, and provides clarifications on certain key terms, such as “temporary financing” which is now defined as  a loan or line of credit that is designed to be replaced by a separate permanent financing extended by any financial institution to the same borrower at a later time.

Question of the Week

If you have two or more businesses with separate Tax ID Numbers, but with the same associated consumers listed, do you need to fill out a CTR if more than $10,000 in cash is deposited or withdrawn from a combination of these accounts in one day?

Yes. Even though the businesses are considered separate entities, a CTR is required when one person performs cash transactions in excess of $10,000 in one day. Similarly, if one account has cash transactions performed in excess of $10,000, a CTR is required, no matter how many individuals performed the transactions.

Resources

Legal Briefs

National Credit Union Administration (NCUA)

The NCUA issued a letter to credit unions regarding the new HMDA Examiner Testing Guidelines released by the FFIEC. The new guidelines will apply to data collected in 2017 and beyond.

Consumer Financial Protection Bureau (CFPB)

The CFPB finalized a rule that temporarily changes the HMDA data reporting threshold for creditors. The final rule increases the reporting requirement threshold for HELOCS from 100 loans in the past two years to 500 loans. The increase will be in place for 2018 and 2019 reporting years.

The CFPB released a report that warns older consumers against taking out a reverse mortgage in order to maximize Social Security benefits.

Federal Reserve Board (FRB)

The FRB released the meeting minutes from its July 17 and 26, 2017 discount rate meetings.

The FRB announced its 2017 holiday currency ordering schedule for special currency requests.

The FRB issued a policy statement that revises part II of its policy on Payment System Risk related to posting times used for measuring balances to conform with enhancement to its same-day automated clearinghouse (ACH) service.

Federal Financial Institutions Examination Council (FFIEC)

The FFIEC announced that it has made modifications to the Filing Instructions Guide for HMDA data collected in 2017 and in or after 2018.

Office of the Comptroller of the Currency (OCC)

The OCC released bulletin 2017-28, which provides guidance for managing risks associated with higher loan-to-value loans.

The OCC, jointly with the FDIC and FRB, issued a press release on a proposal that would extend the existing transitional capital treatment for certain portions of the capital rules.

Office of Foreign Assets Control (OFAC)

OFAC has updated the SDN list as of August 22, 2017. The last update prior to this was August 17, 2017.

Questions? Contact the Compliance Hotline: 1.800.546.4465, compliance@nwcua.org.

Posted in Compliance News, Compliance News.