One of the ever-changing Home Mortgage Disclosure Act (HMDA) thresholds is changing again. This time it is the open-end threshold. You’ll recall that the Consumer Financial Protection Bureau (CFPB) issued a final rule in April 2020 which increased the closed-end threshold. Beginning July 1, 2020 an institution that originated at least 100 closed-end loans in each of the two preceding calendar years and met all other HMDA (Regulation C) institutional coverage criteria was required to collect, record and report data about its closed-end loans. The previous threshold in effect prior to July 2020 was 25 closed-end loans, so this increase will likely result in fewer institutions collecting, recording and reporting HMDA data about their closed-end loans since more loans can be made without triggering the HMDA requirements. Because the change to the closed-end threshold was a mid-year change, institutions were given the option to report closed-end data collected in 2020 if they were HMDA reporters as of January 1, 2020 (i.e., made more than 25 closed-end loans in 2018 and 2019), but were no longer required HMDA reporters as of July 1, 2020 because they made fewer than 100 closed-end loans in either 2018 or 2019, due to the increasing threshold. Any institution that opted to voluntarily report closed-end data for 2020 was expected to report closed-end data for the full calendar year.
That same final rule from April 2020 also adjusted the open-end threshold for HMDA reporting, but unlike the closed-end change which was effective in July 2020, the open-end threshold is not effective until January 1, 2022. In January 2022 the open-end threshold will decrease from its current temporary threshold of 500 open-end lines of credit to a permanent threshold of 200 open-end lines of credit. This decrease will likely result in a greater number of institutions collecting, recording and reporting HMDA data about their open-end lines of credit. Beginning January 1, 2022, an institution that originates at least 200 open-end lines of credit in each of the two preceding calendar years, and meets all other HMDA institutional coverage criteria, will be required to collect, record, and report data about its open-end lines of credit. For example, an institution that originated at least 200 open-end lines of credit in both calendar years 2020 and 2021, and meets all other HMDA institutional coverage criteria, will be required to collect, record, and report data about its open-end lines of credit for calendar year 2022 to be submitted by March 1, 2023.
In anticipation of the soon-to-be-changing-thresholds, the CFPB updated their HMDA FAQs in November 2021. These updated FAQs address the changing thresholds as well as a few different HMDA reporting scenarios. Additionally, Compliance Alliance can answer any questions you have about the existing thresholds, the new thresholds, reporting requirements and other HMDA-related questions.