HMDA Threshold Change: CFPB Weighs In

After delaying writing on the topic as long as we felt appropriate, in last week’s newsletter we wrote about the impending changes to the closed-end HMDA threshold, while still awaiting thoughts from the Consumer Financial Protection Bureau (CFPB) on the matter. For a brief refresher from last week, recently a federal court ruled that the CFPB’s 2020 increase of the closed-end reporting threshold from 25 to 100 was done without proper authority, so the court reversed the change and once again made the closed-end reporting threshold 25 closed-end loans in each of the two previous years. Without any feedback on the matter from the CFPB, however, it was not known when these changes would go into effect for financial institutions.

Well, better late than never, this week the CFPB finally broke their silence on the matter. In a blog post the CFPB indicated that they do not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data collected in 2022, 2021, or 2020 for institutions that originated at least 25 closed-end mortgage loans in each of the two preceding calendar years but fewer than 100 closed-end mortgage loans in either or both of the two preceding calendar years.

What is unspoken in the CFPB’s post is when the collection and reporting begin for those institutions who originated at least 25 closed-end mortgage loans in 2022 and 2021. The assumption, based on what the CFPB has said is that as of January 1, 2023, the collection of data should begin, in anticipation of being reported in March 2024.

For those institutions that had 25 or more covered transactions in each of the previous two years, now is the time to work on implementing a full HMDA program (policies, training, third parties, etc.), because if anything could make the rushed nature of HMDA data collection more troublesome it is trying to implement changes during the last three weeks of the year when so many people seem to be out due to illness, holidays or vacations.

Whether you’re a new HMDA reporter or were previously a reporter and will once again be a reporter in 2023, it is a good time to review our HMDA tools, specifically our Regulation C HMDA Procedures, and our Regulation C Policy. See also our HMDA toolkit for other valuable tools as you re-find your stride for HMDA reporting. For a refresher on training see our HMDA Basics webinar, our HMDA Data Points / Loan Application Register webinar, or our General HMDA webinar.

If you have questions about how these changes might impact you or your HMDA reporting, feel free to reach out to us on the Hotline and we’ll walk you through the best information currently available.