[161] 35. The Bureau further estimated that all but about 50 of the 1,720 newly excluded closed-end mortgage loan reporters that would be excluded under the proposed threshold of 100 closed-end mortgage loans would be eligible for a partial exemption for closed-end mortgage loans as provided by the EGRRCPA and the 2018 HMDA Rule. Although well-documented during the period of local bank dominance in American history, the rise of mass financial institutions since the early 1990s has led to increasing investor scrutiny regarding profits, and hence a lower likelihood that a bank can afford to subsidize such outright discrimination by forgoing loan originations. Also assume that the bank originated 75 and 90 closed-end mortgage loans in 2019 and 2020, respectively. Therefore, the Bureau now believes the one-time costs of starting to report information on open-end lines of credit, if the financial institution is to start reporting open-end lines of credit in 2022 and beyond, will be higher than the Bureau's initial estimates of one-time costs of open-end reporting provided in the 2015 HMDA Rule. In the May 2019 Proposal, the Bureau estimated that if the closed-end threshold were increased from 25 to 100, about 2,581 out of about 4,263 depository institutions covered under the current threshold of 25 (or approximately 61 percent) would continue to report HMDA data on closed-end mortgage loans, and approximately 90 percent or approximately 3.43 million total originations of closed-end mortgage loans in current market conditions reported by depository institutions under the current Regulation C coverage criteria would continue to be reported. [64], With the threshold of 100 closed-end mortgage loans established by this final rule, the Bureau estimates that, relative to the current threshold of 25, approximately 73,400 census tracts out of approximately 74,600 total census tracts in which HMDA data are currently reported, or over 98 percent, would retain more than 80 percent of reportable HMDA data. As noted above, even after the effective date, creditors will still be required under Regulation B to collect information regarding ethnicity, race, sex, marital status, and age where the credit sought is primarily for the purchase or refinancing of a dwelling that is or will be the applicant's principal residence and will secure the credit. The Final datasets include one year of resubmissions and late submissions by HMDA reporters and the Ultimate files contain two years of late and resubmitted data. Regulation C, 12 CFR part 1003, implements the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. The Bureau's overview is available in two articles. The Home Mortgage Disclosure Act (HMDA) is a federal law that requires lenders to keep certain information about their mortgage applicants. If the closed-end Start Printed Page 28383threshold were set at 500, the Bureau estimates that approximately 480 out of approximately 740 nondepository institutions covered under the current threshold of 25 (or approximately 65 percent) would continue to be required to report HMDA data on closed-end mortgage loans. Alamy and its logo are trademarks of Alamy Ltd. and are registered in certain countries. Together the annual savings in the operational costs of firms excluded under the alternative threshold of 50 closed-end mortgage loans would be about $2.0 million. When a covered institution acquires a branch office of an institution that is not covered, data collection is optional for covered loans and applications handled by the acquired branch office for the calendar year of the acquisition. With the 2018 HMDA data reported, the Bureau now can evaluate the impact of the final rule using the projected loan/application register records instead of projected originations for the first time. Lenders also use the data, says Kimberly Wachtel, corporate compliance manager for Inlanta Mortgage in Pewaukee, Wisconsin. Property value rounded to the nearest $10,000. This would occur if financial institutions serving rural areas are HMDA reporters (in which case the final rule will lead to decreased information in rural areas) and if these institutions pass on some or all of the cost reduction to consumers (in which case, some consumers could benefit). However, all these data points also provide a unique opportunity for regulators. However, the Bureau applied this restriction to ensure that institutions included in its coverage estimates are in fact financial institutions for purposes of Regulation C because it recognizes that institutions might not meet the Regulation C definition of financial institution for reasons that are not evident in the data sources that it utilized. The discussion also addresses comments the Bureau received on the proposed Dodd-Frank Act section 1022(b) analysis, as well as certain other comments on the benefits or costs of the relevant provisions of the May 2019 Proposal that the Bureau is finalizing in this rule, when doing so is helpful to understanding the Dodd-Frank Act section 1022(b) analysis. Based on the Bureau's outreach to stakeholders, the Bureau understands that most of these one-time costs consists of interpreting and implementing the regulatory changes and not from purchasing software upgrades or turning off the existing reporting functionality that the newly excluded institutions already built or purchased prior to the new changes taking effect. If a sign-in page does not automatically pop up in a new tab, click here. Drive with peace of mind when you compare insurance carriers and find the policy thats right for you. As used here, a newly excluded institution means an institution that was subject to HMDA's closed-end requirements as of January 1, 2020 because it originated at least 25 closed-end mortgage loans in 2018 and 2019 and met all of the other requirements under 1003.2(g) but is no longer subject to HMDA's closed-end requirements as of July 1, 2020 due to the final rule's change to the closed-end threshold. Pursuant to its authority under HMDA section 305(a), and for the reasons discussed below, the Bureau believes that the final rule's amendments to the thresholds in 1003.2(g)(1) and (2) are necessary and proper to effectuate the purposes of HMDA and facilitate compliance with HMDA by reducing burden and establishing a consistent loan-volume test, while still providing significant market coverage. MSA/MD Aggregate Reports. The Bureau estimates that among the 4,860 financial institutions that are currently required to report closed-end mortgage loans under HMDA, about 3,250 insured depository institutions and insured credit unions are partially exempt for closed-end mortgage loans under the EGRRCPA, and thus are not required to report a subset of the data points currently required by Regulation C for these transactions. Its worth noting that not all questions are required to be answered by the borrower, so you cant get every data point. As explained above and in greater detail in part VII.E.2 below, the differences in the estimates between the May 2019 Proposal and this final rule are mostly due to updates made to incorporate the newly available 2018 HMDA data. 190. Given these factors, it is possible that some lenders with open-end line of credit origination volumes exceeding 500 in both 2016 and 2017 originated fewer than 500 open-end lines of credit in 2018, but were nevertheless required to report their 2018 data under the HMDA reporting requirements. 75. The Bureau stated in the 2019 HMDA Rule that it intended to address in a separate final rule in 2020 the May 2019 Proposal's proposed amendment to the permanent threshold for open-end lines of credit. [43] The subsections of regulatory text and commentary included in this document show the complete language of those subsections. [185] 2. When an institution remains not covered after acquiring a branch office of a covered institution, data collection is required for transactions of the acquired branch office that take place prior to the acquisition. To accommodate such institutions, the amendments to 1003.3(c)(11) and comment 3(c)(11)-2 permit an institution that was a financial institution as of January 1, 2020 but is not a financial institution on July 1, 2020 because it originated fewer than 100 closed-end mortgage loans in 2018 or 2019 to report voluntarily in 2021 its closed-end HMDA data collected in 2020, as long as the institution reports such closed-end data for the full calendar year 2020. Lets dive into the HMDA, why its important and how you can access HMDA data online. HMDA - Home Mortgage Disclosure Act Home Mortgage Disclosure Act (HMDA): FFIEC Issues 2020 Version of As explained above and in greater detail in part VII.E.2 below, the differences in the estimates between the May 2019 Proposal and this final rule are mostly due to updates made to incorporate the newly available 2018 HMDA data. [111], The Bureau has considered the appropriate permanent open-end threshold in light of these developments and the comments received in response to the May 2019 Proposal and the July 2019 Reopening Notice. 121. As explained in more detail in part VII.E.3 and table 4 below, under the current temporary threshold of 500 open-end lines of credit, the Bureau estimates that there are about 333 financial institutions required under HMDA to report about 1.23 million open-end lines of credit. To estimate the one-time and ongoing costs of reporting data under HMDA in the 2015 HMDA Rule, the Bureau identified seven dimensions of compliance operations and used those to define three broadly representative financial institutions according to the overall level of complexity of their compliance operations: tier 1 (high-complexity), tier 2 (moderate-complexity), and tier 3 (low-complexity). 2808. The Bureau also recognizes that, since 2020 data collection is already underway, some affected institutions may wish to report the HMDA data that they have collected. After a merger or acquisition, the surviving or newly formed institution is a financial institution under 1003.2(g) if it, considering the combined assets, location, and lending activity of the surviving or newly formed institution and the merged or acquired institutions or acquired branches, satisfies the criteria included in 1003.2(g). Under the permanent threshold of 200 open-end lines of credit, the Bureau estimates about 1.34 million lines of credit or approximately 84 percent of origination volume will be reported by about 9 percent of all institutions providing open-end lines of credit. Following microeconomic principles, the Bureau believes that financial institutions will pass on reduced variable costs to future mortgage applicants, but absorb one-time costs and increased fixed costs if financial institutions are profit maximizers and the market is perfectly competitive. Home Mortgage Disclosure Act (Regulation C) | NCUA Regulation and Supervision > Manuals and Guides > Federal Consumer Financial Protection Guide > Compliance Management Print Feedback Overview The Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975 and is implemented by Regulation C. HOME MORTGAGE DISCLOSURE ACT NOTICE - Homebridge For the purposes of this analysis, references to the first set of provisions in this final rule are to those that increase the threshold for reporting data about closed-end mortgage loans from 25 to 100 originations in each of the two preceding calendar years, effective July 1, 2020. [96] Home Mortgage Disclosure Act Regulation C, Home Mortgage Disclosure CFPB Final Rule, Home Mortgage Disclosure (Regulation C), 84 FR 57946. Today, HMDA is enforced by the Consumer Finance Protection Bureau (CFPB). See 84 FR 57946, 57953 (Oct. 29, 2019); 82 FR 43088, 43095-96 (Sept. 13, 2017). The Home Mortgage Disclosure Act (HMDA), which Congress enacted in 1975, requires certain financial institutions to collect, record, report, and disclose information about their mortgage lending activity. The Bureau recognizes that, as a small financial institution commenter discussed, financial institutions may process applications for open-end lines of credit in different departments and on different systems than those used for closed-end loans. This final rule is effective on July 1, 2020, except for the amendments to 1003.2 in amendatory instruction 5, the amendments to 1003.3 in amendatory instruction 6, and the amendments to supplement I to part 1003 in amendatory instruction 7, which are effective on January 1, 2022. These estimates are updated in the final rule and presented here. Thus, the appropriate baseline for the consideration of benefits and costs of the change to the open-end threshold is a situation in which the open-end threshold is set at 100 for each of two preceding years for data collection starting in 2022, with a partial exemption threshold of 500 open-end lines of credit. For low-to-moderate income census tracts, if the threshold were increased from 25 to 250, the Bureau estimates that approximately 90 percent of tracts would retain more than 80 percent of reportable HMDA data, and there would be a decrease of at least 20 percent of reportable HMDA data in approximately 10 percent of such tracts, relative to the current threshold. 2802. The Bureau estimates that there will be about 6.2 million closed-end mortgage loan originations reported under the threshold of 100 closed-end mortgage loans, which will account for about 86.3 percent of all closed-end mortgage loan originations in the entire mortgage market. The Bureau recognizes that the costs to consumers from increasing the Start Printed Page 28398threshold to 100 loans will be higher than it would be if the Bureau were to increase the threshold to 50 loans. 1. All coverage numbers provided in this document are estimates based on available data, as explained in part VII below. MSA/MD Aggregate Reports. Section 1003.3(c)(11) and comment 3(c)(11)-2 (both currently and as revised) permit a financial institution whose closed-end mortgage loans are excluded by 1003.3(c)(11) to report voluntarily its closed-end data, as long as the financial institution reports such closed-end data for the full calendar year. The closed-end mortgage loans that the bank originated or purchased, or for which it received applications, during 2022 are covered loans and must be reported, unless they otherwise are excluded transactions under 1003.3(c). PDF Home Mortgage Disclosure (Regulation C) - Consumer Financial Protection [112] As discussed in greater detail elsewhere throughout this supplementary information, in this rulemaking the Bureau is amending Regulation C, effective July 1, 2020, to increase the threshold for reporting data about closed-end mortgage loans to 100 originated closed-end mortgage loans in each of the two preceding years. 159. Keeping this information in the public means well be able to see who was rejected for a loan, who paid more in origination fees, in which neighborhoods banks are approving mortgages, and many other factors. In comparison, in the May 2019 Proposal, the Bureau estimated that the annual saving on operational costs for depository institutions and credit unions with $10 billion or less in assets newly excluded from open-end reporting under the threshold of 200 open-end lines of credit would be about $19. The Bureau determines that this final rule's amendments to 1003.2(g)(2)(ii)(B) will also effectuate the purposes of HMDA by ensuring significant coverage of nondepository mortgage lending. However, for 2018 through 2021, all insured depository institutions and insured credit unions that are eligible for a partial exemption for open-end lines of credit by the EGRRCPA are also fully excluded from HMDA's requirements for their open-end lines of credit. Using data from various sources, including past HMDA submissions, Call Reports, Credit Union Call Reports, Summary of Deposits, and the National Information Center, the Bureau applied all current HMDA reporting requirements, including Regulation C's existing complete regulatory exclusion for institutions that originated fewer than 25 closed-end mortgage loans in either of the two preceding calendar years, and estimates that currently there are about 4,860 financial institutions required to report their closed-end mortgage loans and applications under HMDA. [5] The datasets containing information on HMDA reporters are the HMDA Panel[6] and HMDA Transmittal Sheet. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout lifes financial journey. In the May 2019 Proposal, the Bureau estimated that if the closed-end threshold were increased from 25 to 100, the aggregate savings on the operational costs associated with reporting closed-end mortgage loans would be approximately $8.1 million per year. In the May 2019 Proposal, the Bureau estimated that with the proposed threshold of 50 closed-end mortgage loans, about 760 institutions would be completely excluded from reporting closed-end mortgage data compared to the current level. 144. A threshold of 100 closed-end mortgage loans also facilitates compliance with HMDA by reducing burden on smaller institutions and excluding nondepository institutions that are not engaged for profit in the business of mortgage lending. Start Printed Page 28405. b. Was the home built on site or manufactured and transported? In the May 2019 Proposal, the Bureau provided a similar table that included a breakdown of open-end reporters by agency. The Home Mortgage Disclosure Act covers data that qualified lenders must report to the federal government. per year, for representative low-, moderate-, and high-complexity financial institutions, respectively. 143. The Bureau estimates that approximately 4,120 of these current reporters are depository institutions and approximately 740 are nondepository institutions. Potential clients can also look up individual lending institutions. However, as the Bureau noted in the May 2019 Proposal, circumstances have somewhat changed since the 2015 HMDA Rule. HMDA sections 303(3)(B) and 303(5) require persons other than banks, savings associations, and credit unions that are engaged for profit in the business of mortgage lending to report HMDA data. Comment 2(g)-4 discusses a financial institution's responsibilities during the calendar year of a merger. By submitting your contact information you agree to ourTerms of Useand ourPrivacy Policy, which includes using arbitration to resolve claims related to the Telephone Consumer Protection Act.! [86], The Bureau recognized in the 2015 HMDA Rule that the one-time cost of reporting open-end lines of credit could be substantial because most financial institutions had not reported open-end lines of credit and thus would have to Start Printed Page 28376develop completely new systems to begin reporting these data. 22. For estimates that are comprehensive of depository and nondepository institutions, see part VII.E.2 below. [87] for Home Mortgage Disclosure Act (HMDA)-related data collected in 2021 and reported in 2022. The covered institution is the surviving institution, or a new covered institution is formed. With less data required to be collected and reported under HMDA, the HMDA data available to serve HMDA's statutory purposes will decline. The Policy Guidance applies to HMDA data compiled by financial institutions in or after 2018 that will be made available to the public beginning in 2019. The Bureau believes that the roughly 75-day period between the final rule's issuance and effective date will provide time for affected institutions to review the final rule and adjust their operations in accordance with it. Have in-depth accuracy and fair lending audit. Because most of the data points under HMDA are required for all loan/application register records, not just originated loans, the Bureau has updated the estimates of cost and cost savings for open-end lines of credit based on the number of loan/application register records instead of originations. Specific types of data. 24. The HMDA was enacted into law by Congress upon the presidents signature December 31, 1975, and went into effect June 28 of the following year. The Home Mortgage Disclosure Act was created to uphold the Equal Credit Opportunity Act and the 1968 Fair Housing Act, both of which prohibit discrimination in mortgage lending. Troy Segal is a senior editor for Bankrate. This discussion relies on data that the Bureau has obtained from industry, other regulatory agencies, and publicly available sources. 352 (2007). A Red Ventures company. [179] Relation to State laws. In developing the final rule, the Bureau has consulted with or offered to consult with the prudential regulators (the Board, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration, and the Office of the Comptroller of the Currency), the Department of Agriculture, the Department of Housing and Urban Development (HUD), the Department of Justice, the Department of the Treasury, the Department of Veterans Affairs, the Federal Housing Finance Agency, the Federal Trade Commission, and the Securities and Exchange Commission regarding, among other things, consistency with any prudential, market, or systemic objectives administered by such agencies. HMDA was originally enacted by Congress in 1975 and is implemented by Regulation C (12 CFR Part 1003)). The covered institution is the surviving institution, or a new covered institution is formed. [5] Federal Register provide legal notice to the public and judicial notice The Bureau is also incorporating into Regulation C the interpretations and procedures from the interpretive and procedural rule that the Bureau issued on August 31, 2018, and implementing further section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act. [146] These amendments thus permit an institution that was a financial institution as of January 1, 2020, but is not a financial institution on July 1, 2020, because it originated fewer than 100 closed-end mortgage loans in either 2018 or 2019 to report voluntarily in 2021 its closed-end HMDA data collected in 2020, as long as the institution reports such closed-end data for the full calendar year 2020. Among the comments received were a number of letters expressing concern that the national loan level dataset for 2018 and the Bureau's annual overview of residential mortgage lending based on that data (collectively, the 2018 HMDA Data[23] This has been some fairly dense information, so lets take a look at how this works in practice. Other commenters, including at least one bank, a State credit union league, and a joint comment submitted on behalf of consumer groups, civil rights groups, and other organizations, favored a January 1, 2021 effective date. How Trans and Nonbinary Homebuyers Can Navigate Mortgage Applications, Why LGBTQ+ Homeownership Is Below the National Average, How Racism, Segregation, and Redlining Has Widened the Homeownership Gap, How To Build Your Homebuying Support System, Addressing the Racial Homeownership Gap in America, Home Appraisers Shown Using Race in Valuations, discriminatory lending practices, such as redlining, Federal Financial Institutions Examination Council, An Updated Review of the New and Revised Data Points in HMDA, FFIEC Announces Availability of 2020 Data on Mortgage Lending. In the May 2019 Proposal, the Bureau estimated that if the closed-end threshold were increased to 100, the total number of financial institutions that would be required to report closed-end mortgage loans would drop to about 3,240, a decrease of about 1,720 financial institutions compared to the current level. Comments received regarding the Bureau's proposal to increase the closed-end threshold are discussed in more detail in the section-by-section analysis of 1003.2(g)(1)(v)(A) above. This is the case regardless of whether the open-end reporters also report closed-end mortgage loans under HMDA. As noted above, small financial institutions and trade associations commented on the cost of HMDA reporting, suggesting that compliance costs have had an impact on the ability of small financial institutions to serve their communities. The Bureau may establish an alternative definition after consulting with the Small Business Administration and providing an opportunity for public comment. The womens housing gap has large, long-term effects on financial growth and retirement. Specifically, the Bureau assumed the lenders that originated fewer than 200 but more than 100 open-end lines of credit were tier 3 (low-complexity) open-end reporters; lenders that originate between 200 and 7,000 open-lines of credit were tier 2 (moderate-complexity) open-end reporters; and lenders that originated more than 7,000 open-end lines of credit were tier 1 (high-complexity) open-end reporters. The Bureau notes that the market structure in the consumer mortgage lending markets may differ from that of a perfectly competitive market (for instance due to information asymmetry between lenders and borrowers) in which case the pass-through to the consumers would most likely be smaller than the pass-through under the perfect competition assumption.[167]. and Call Reports, the Bureau developed estimates for the two thresholds the Bureau proposed in the alternative, 50 and 100, as well as the thresholds of 250 and 500, which many commenters suggested the Bureau consider. All but about 20 of these 760 institutions would be eligible for a partial exemption under the EGRRCPA and the 2018 HMDA Rule. Users can develop some understanding of the effect of various loan-volume thresholds, for individual institutions, by analyzing the publicly available modified loan/application register data or, for all institutions, by analyzing the publicly available national loan-level dataset. In addition, the Bureau is releasing an unofficial, informal redline to assist industry and other stakeholders in reviewing the changes that it is finalizing to the regulatory text and commentary of Regulation C. This redline can be found on the Bureau's regulatory implementation page for the HMDA Rule at https://www.consumerfinance.gov/policy-compliance/guidance/hmda-implementation/. Dwelling category: This has multiple purposes as well, stating whether the home is. [68] electronic version on GPOs govinfo.gov. Newly excluded institutions may cease collecting 2020 data for closed-end mortgage loans as of July 1, 2020. For example, an institution must have had a home or . Yet several recent studies using HMDA data still detect racial and ethnic disparities in lending activity, even when factors such as income are accounted for statistically. Although less data will be available regarding multifamily housing and manufactured housing lending at the threshold of 100 than at the current threshold, the Bureau believes that the limited decreases in the amount of data are justified by the benefits of relieving smaller-volume institutions of the burdens of HMDA reporting. 79. HMDA section 303(5) (defining other lending institutions). Hispanics) or genders (typically women) then there is reason to suspect that the institution may be discriminating against these classes of borrowers by unfairly discouraging them from applying for mortgage loans. The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. [154] As a point of reference, the median loan amount of Start Printed Page 28402open-end lines of credit (excluding reverse mortgages) in the 2018 HMDA data was $75,000. 80 FR 66128, 66153 (Oct. 28, 2015) (citing 54 FR 51356, 51358-59 (Dec. 15, 1989)). This does not include the costs of quarterly reporting for financial institutions that have annual origination volume greater than 60,000. NMLS #3030. Our goal is to help you make smarter financial decisions by providing you with interactive tools and financial calculators, publishing original and objective content, by enabling you to conduct research and compare information for free - so that you can make financial decisions with confidence. 171. However, the Bureau determined that a higher closed-end threshold would have a material negative impact on the availability of data about patterns and trends at the local level and the data about local communities are essential to achieve HMDA's purposes. Home Mortgage Disclosure Act data includes information about applicants age, sex, race, ethnicity, income, and religion, as well as details about loan approval rates, credit scores, loan costs and rates, and much more. NARA files include the statistical aggregates collected prior to 1990, the transaction level data collected in 1990 and onward, and the Aggregate[25][26] and Disclosure[27][28] reports produced from those data. 1. HMDA was originally enacted by the Congress in 1975 and is implemented by Regulation C (12 CFR Part 1003).

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