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HMDA Reporting Threshold Changes Due to Court Ruling

On April 16, 2020, the CFPB released a final rule affecting the thresholds for HMDA reporting. Effective July 1, 2020 the number of closed-end loans originated to be considered a “financial institution” was increased from 25 to 100 for each of the two preceding years for both depository and non-depository institutions.

On September 23, 2022, the United States District Court issued an order vacating the loan volume reporting threshold for closed-end mortgage loans from the 2020 Home Mortgage Disclosure Act (HMDA) Final Rule. The 200 open-end threshold was left in place.

The decision means that the threshold for reporting data on closed-end mortgage loans was lowered to 25 loans in each of the two preceding calendar years, the threshold established by the 2015 HMDA Final Rule, rather than the 100 loan threshold set by the 2020 HMDA Final Rule. Regulation C was amended on December 21, 2022 in the Federal Register. The amendment reverses the 25-to-100 threshold effective July 1, 2020. The typical rulemaking and comment period is bypassed because “… the Bureau is updating the published Code of Federal Regulations so that it accurately reflects the court’s vacatur of part of the underlying 2020 HMDA Rule.”

The CFPB said in a blog post on December 6, 2022 the CFPB will not take action (i.e.. enforcement actions/cite HMDA violations) against any institutions they regulate with more than 25 (2015 rule) but less than 100 (2020 rule) originated loans threshold for failing to file in 2020, 2021 and 2022. The Bureau’s decision to not do this does not necessarily extend to the other regulators or the courts.

So, what does this mean for your institution? Institutions who have exceeded the 25 closed-end mortgage loan threshold in each of the prior two calendar years, be prepared to file HMDA data for 2023 in March 2024. This may require changes to policies, procedures and updated training if your institution has been out of the HMDA game for the past couple of years.

While we cannot be sure if the other prudential regulators (OCC, FRB, FDIC) will require reporting for years 2020 – 2022, TCA will advise when/if there is any further guidance but at this point, just be ready for 2023 and don’t worry about 2020 – 2022 until we have something to worry about.

TCA is A Better Way for your compliance information. Contact us at (800) 934-7347 or at [email protected].

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