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Financial Services Law Insights and Observations

Consumer groups sue CFPB over HMDA threshold increase

Courts CFPB HMDA Administrative Procedures Act Agency Rule-Making & Guidance Mortgages

Courts

On July 30, a group of consumer fair housing associations (collectively, “plaintiffs”) filed suit against the CFPB, challenging the Bureau’s final rule permanently raising coverage thresholds for collecting and reporting data about closed-end mortgage loans and open-end lines of credit under HMDA. As previously covered by InfoBytes, the final rule, which amends Regulation C, permanently increases the reporting threshold from the origination of at least 25 closed-end mortgage loans in each of the two preceding calendar years to 100, and permanently increases the threshold for collecting and reporting data about open-end lines of credit from the origination of 100 lines of credit in each of the two preceding calendar years to 200. In the complaint, the plaintiffs argue that the Bureau, among other things, (i) failed to provide a “reasoned explanation” for the changes to the original threshold requirements; (ii) conducted a “flawed analysis of the costs and benefits” of the final rule; and (iii) failed to “adequately consider comments” that were submitted in response to the rule’s proposal. According to the complaint, the final rule “exempts about 40 percent of depository institutions that were previously required to report.” The plaintiffs assert this result “undermines the purpose[]” of HMDA by allowing potential violations of fair lending laws to go undetected. The plaintiffs argue that because the CFPB allegedly violated to the Administrative Procedures Act, the final rule should be vacated and set aside.

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