Final HMDA Thresholds Issued

by C/A Staff

After much anticipation, on April 16 the CFPB issued the 2020 HMDA Final Rule which adjusts Regulation C’s institutional and transactional coverage thresholds for closed-end mortgage loans and open-end lines of credit. With respect to open-end lines of credit, the CFPB decided that 500 was not the magic number, and the final rule will decrease this number to 200 beginning January 1, 2022 when the temporary threshold of 500 open-end lines of credit expires.

As expected, for closed-end loans the threshold is increasing from 25 to 100. What was not expected is the effective date for this increase, which is July 1, 2020. It seems the CFPB is becoming infamous for having effective dates for HMDA rules begin mid-year, which can create confusion for how to collect and report information. So how is the threshold going to work?

First, let’s take a look at those banks that were subject to the closed-end requirements on January 1, because they originated at least 25 closed-end mortgage loans in each of prior two years (2018 and 2019), but will no longer be subject on July 1 because they originated fewer than 100 closed-end loans. These banks will be able to stop collecting HMDA data on closed-end loans beginning July 1. They should still have recorded the data already collected during the first quarter 2020 on a LAR by April 30 (30 calendar days of the end of that first quarter), but they will not have to have to do this for the second quarter since the deadline for recording that data would be after July 1. When it comes to reporting, these banks will not have to report any closed-end loans next year on March 1 unless they choose to do so optionally. If they do choose to report optionally, they must report data for the full calendar year and not just data collected up until the effective date.

Here’s an example to make sure these requirements make sense: 

  • ABC Bank originated 50 closed-end loans in 2018 and 65 closed-end loans in 2019. 
  • Under the current rules they are subject to collecting, recording and reporting closed-end loans. As of July 1, they will be exempt. 
  • They must still collect data through June 30, 2020, but any data collected after March 31 will not have to be recorded. 
  • ABC has decided not to optionally report this collected data on their closed-end loans because doing so would require them to report data for the full calendar year on closed-end loans.

For the open-end threshold, nothing will be affected in the collecting, reporting and recording arenas until 2022. Beginning January 1, 2022, those banks that originated at least 200 open-end lines of credit in each of the two preceding calendar years (2020 and 2021) must begin collecting data on their open-end lines of credit and recording the data within 30 calendar data after the end of each quarter. This recorded data will then be due to be reported by March 1, 2023.

That covers the 2020 HMDA Final Rule and the new thresholds.  As always, if you have questions, our Hotline staff is always there to assist you.