On July 14, 2017, the Consumer Financial Protection Bureau (“CFPB”) issued a proposal to ease, at least temporarily, the reporting requirements for community banks and credit unions under the Home Mortgage Disclosure Act (“HMDA”). The proposed rule would raise the threshold at which financial institutions have to report on home equity lines of credit for the years 2018 and 2019.
In October 2015, the CFPB issued a final rule implementing the HMDA amendments in the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which updated many HMDA reporting requirements. Among other things, Dodd-Frank required some lenders to report home-equity lines of credit and other open-end lines of credit secured by a dwelling in their HMDA reporting.
The final rule exempted lenders that originated fewer than 100 dwelling-secured open-end lines of credit in each of the preceding years from the new reporting requirements for open-end lines of credit. Based on concerns raised by community banks and credit unions about the substantial compliance burden this creates, the CFPB is now proposing to raise the exemption threshold.
Under the new proposal, for the years 2018 and 2019, all lenders that originated fewer than 500 home-equity and other dwelling-secured open-end lines of credit in the previous two calendar years would be exempt from the reporting requirement. The CFPB estimates that this would exempt roughly 25% of the home-equity lending market. Although the proposal contemplates a temporary change, the CFPB indicated that it would use the intervening period to determine if it should make the higher threshold permanent.
The CFPB has provided a tight deadline for submitting comments on this proposal. The comment period closes on July 31, 2017.