Removing Barriers Blog

CFPB Finalizes HMDA Rule
Posted October 15, 2015 by CUNA Advocacy

Earlier today, the CFPB finalized its Home Mortgage Disclosure Act (HMDA) rule. Since the rule was first proposed in July of 2014, we have strongly advocated for credit unions to be exempt from the numerous requirements under HMDA. Unfortunately the rule as finalized would add yet another layer of expense and burden to the mortgage process. 

We have personally met with and written the Bureau a number of times over the past year, urging it to use its authority to exempt credit unions from HMDA provisions. Specifically, we 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. We 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.

Unfortunately, CFPB decided to include HELOCs as part of the required information, which will present a significant challenge to credit unions which originate HELOCs on their consumer lending platforms. The final rule also did not raise the loan volume threshold as we requested, establishing it instead at 25 closed end mortgage loans or 100 open-end LOCs. The 25 closed-end loan-volume threshold will go into effect on January 1, 2017, one year earlier than the effective date for most of the remaining rule.

Our Chief Advocacy Officer Ryan Donovan had this to say about the final rule: “It is disappointing that at a time when the CFPB should be working to increase the availability of credit to middle class America, they choose to impose more and more regulatory burden on credit unions, particularly since credit unions were not engaged in those practices that lead to the imposition of HMDA and CRA on banks.”

“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," he added. The rule itself is 797 pages long, and 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.

Thankfully, the Bureau did pare back on some of the proposed data points, such as “risk-adjusted, pre-discounted interest rate." The CFPB also backed away from the proposal to require reporting of all dwelling-secured transactions made for commercial purposes, and moved back the first reporting date under the new rule to 2019 (for 2018 originations). Despite these tweaks, the final HMDA rule will be extremely burdensome to credit unions who are already struggling with the added burdens from previous mortgage rulemakings. We will continue to express our concerns about this rule to the CFPB, and point out areas where it impacts the ability of credit unions to serve members. You can read the text of the final rule here. The CFPB's Implementation page for this rule is here