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CFPB opens HMDA data filing period
On January 4, the CFPB announced that the filing period for HMDA data collected in 2021 opened on January 1. According to the CFPB, submissions will be considered timely if received by March 1. As previously covered by InfoBytes, in September 2020, the CFPB released the Filing Instructions Guide for HMDA data collected in 2022 that must be reported in 2023. The guide states that there are no significant changes to the submission process and that the required data fields to be collected and reported have not changed. Instructions for quarterly reporting can be found in the Supplemental Quarterly Reporting Guide. According to the CFPB’s recent announcement, passwords are reset every 90 days and users will receive a confirmation email upon submission of their HMDA data. The CFPB also noted that the 2021 Beta Platform is available on an ongoing basis for filers intending to test their submissions, however, “[n]o data submitted on the Beta Platform will be considered for compliance with HMDA data reporting requirements.”
CFPB releases annual HMDA and TILA adjustments
On December 23, the CFPB announced final rules adjusting the asset-size thresholds under HMDA (Regulation C) and TILA (Regulation Z). Both rules took effect January 1, 2022. Under HMDA, institutions with assets below certain dollar thresholds are exempt from the collection and reporting requirements. The final rule increases the asset-size exemption threshold for banks, savings associations, and credit unions from $48 million to $50 million, thereby exempting institutions with assets of $50 million or less as of December 31, 2021, from collecting and reporting HMDA data in 2022. TILA, likewise, exempts certain entities from the requirement to establish escrow accounts when originating higher-priced mortgage loans (HPMLs), including entities with assets below the asset-size threshold established by the CFPB. The final rule increases this asset-size exemption threshold from $2.230 billion to $2.336 billion, thereby exempting creditors with assets of $2.336 billion or less as of December 31, 2021, from the requirement to establish escrow accounts for HPMLs in 2022.
OCC updates HMDA examination procedures
On December 17, the OCC released revised interagency HMDA examination procedures for HMDA compliance. The revised examination procedures address changes made to the effective dates for banks meeting or exceeding either the closed-end mortgage loans or the open-end lines of credit loan-volume threshold in each of the two preceding calendar years. Effective July 1, 2020, a bank that “originated at least 100 closed-end mortgage loans in each of the two preceding calendar years, or originated at least 500 open-end lines of credit in each of the two preceding calendar years meets or exceeds the loan-volume threshold.” Effective January 1, 2022, the temporary 500 open-end lines of credit provision expires, and a bank that “originated at least 100 closed-end mortgage loans in each of the two preceding calendar years, or originated at least 200 open-end lines of credit in each of the two preceding calendar years” will now meet or exceed the loan-volume threshold. The revised examination procedures also outline changes to partial exemptions for an application or covered loan. A partial exemption applies to: (i) applications for originations of, and purchases of closed-end mortgage loans when the bank originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years, and (ii) applications for originations of, and purchases of open-end lines of credit provided the bank originated fewer than 500 open-end lines of credit in each of the two preceding calendar years.
Bulletin 2021-63 rescinds OCC Bulletin 2010-8, “Compliance Policy: Revised Home Mortgage Disclosure Act Examination Procedures,” as well as OCC Bulletin 2019-19, “Home Mortgage Disclosure Act: Revised Interagency Examination Procedures.”
CFPB publishes fall 2021 rulemaking agenda
On December 13, the Office of Information And Regulatory Affairs released the CFPB’s fall 2021 rulemaking agenda. According to a Bureau announcement, the information released represents regulatory matters the Bureau plans to pursue during the period from November 2, 2021 to October 31, 2022. Additionally, the Bureau stated that the latest agenda reflects continued rulemakings intended to further its consumer financial protection mission and help advance the country’s economic recovery from the Covid-19 pandemic. Promoting racial and economic equity and supporting underserved and marginalized communities’ access to fair and affordable credit continue to be Bureau priorities.
Key rulemaking initiatives include:
- Small Business Rulemaking. This fall, the Bureau issued its long-awaited proposed rule (NPRM) for Section 1071 regulations, which would require a broad swath of lenders to collect data on loans they make to small businesses, including information about the loans themselves, the characteristics of the borrower, and demographic information regarding the borrower’s principal owners. (Covered by a Buckley Special Alert.) The NPRM comment period goes through January 6, 2022, after which point the Bureau will review comments as it moves to develop a final rule. Find continuing Section 1071 coverage here.
- Consumer Access to Financial Records. The Bureau noted that it is working on rulemaking to implement Section 1033 of Dodd-Frank in order to address the availability of electronic consumer financial account data. The Bureau is currently reviewing comments received in response to an Advance Notice of Proposed Rulemaking (ANPR) issued fall 2020 regarding consumer data access (covered by InfoBytes here). Additionally, the Bureau stated it is monitoring the market to consider potential next steps, “including whether a Small Business Review Panel is required pursuant to the Regulatory Flexibility Act.”
- Property Assessed Clean Energy (PACE) Financing. As previously covered by InfoBytes, the Bureau published an ANPR in March 2019 seeking feedback on the unique features of PACE financing and the general implications of regulating PACE financing under TILA (as required by Section 307 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended TILA to mandate that the Bureau issue certain regulations relating to PACE financing). The Bureau noted that it continues “to engage with stakeholders and collect information for the rulemaking, including by pursuing quantitative data on the effect of PACE on consumers’ financial outcomes.”
- Automated Valuation Models (AVM). Interagency rulemaking is currently being pursued by the Bureau, Federal Reserve Board, OCC, FDIC, NCUA, and FHFA to develop regulations for AVM quality control standards as required by Dodd-Frank amendments to FIRREA. The standards are designed to, among other things, “ensure a high level of confidence in the estimates produced by the valuation models, protect against the manipulation of data, seek to avoid conflicts of interest, require random sample testing and reviews,” and account for any other appropriate factors. An NPRM is anticipated for June 2022.
- Amendments to Regulation Z to Facilitate LIBOR Transition. As previously covered by InfoBytes, the Bureau issued a final rule on December 7 to facilitate the transition from LIBOR for consumer financial products, including “adjustable-rate mortgages, credit cards, student loans, reverse mortgages, [and] home equity lines of credit,” among others. The final rule amended Regulation Z, which implements TILA, to generally address LIBOR’s eventual cessation for most U.S. dollar settings in June 2023, and establish requirements for how creditors must select replacement indices for existing LIBOR-linked consumer loans. The final rule generally takes effect April 1, 2022.
- Reviewing Existing Regulations. The Bureau noted in its announcement that it decided to conduct an assessment of a rule implementing HMDA (most of which took effect January 2018), and referred to a notice and request for comments issued last month (covered by InfoBytes here), which solicited public comments on its plans to assess the effectiveness of the HMDA Rule. Additionally, the Bureau stated that it finished a review of Regulation Z rules implementing the Credit Card Accountability Responsibility and Disclosure Act of 2009, and that “[a]fter considering the statutory review factors and public comments,” it “determined that the CARD Act rules should continue without change.”
Notably, there are 14 rulemaking activities that are listed as inactive on the fall 2021 agenda, including rulemakings on overdraft services, consumer reporting, student loan servicing, Regulation E modernization, abusive acts and practices, loan originator compensation, and TILA/RESPA mortgage disclosure integration.
CFPB seeks input on HMDA
On November 16, the CFPB issued a notice and request for comments regarding the rules for implementing the Home Mortgage Disclosure Act (HMDA). The Request for Information (RFI) solicits public comments on its plans to assess the effectiveness of the HMDA Rule, focusing on, among other things: (i) institutional and transactional coverage; (ii) data points; (iii) benefits of the new data and disclosure requirements; and (iv) operational and compliance costs. According to the CFPB, the RFI follows a 2021 HMDA report, which found that mortgage lenders deny credit and charge higher interest rates to Black and Hispanic applicants more often than white applicants, and a July 2021 report that analyzed 2020 HMDA loan data and examined the differences in mortgage characteristics across Asian American and Pacific Islander subgroups. (Covered previously by InfoBytes here and here.) Additionally, the RFI notes that the Bureau expects to issue a report on the findings of its assessment of the HMDA Rule by January 1, 2023. The Bureau also notes that it “plans to review recent changes to the rule and evaluate their effectiveness,” and that the assessment “will strengthen the CFPB’s ability to maintain a fair, competitive, and non-discriminatory mortgage market.” The deadline for submitting comments on the RFI is 60 days after the notice is published in the Federal Register.
CFPB releases FAQs on HMDA requirements
On November 10, the CFPB updated its FAQs on the Home Mortgage Disclosure Act (HMDA) reporting requirements to clarify institutional and transactional coverage. The updated FAQs, among other things, highlighted that the final rule, issued in April 2020, established the closed-end mortgage loan threshold to be 100 in each of the two preceding calendar years, effective July 2020, and the open-end line of credit threshold at 200 in each of the two preceding calendar years, effective January 1, 2022, upon the expiration of the temporary threshold of 500 open-end lines of credit. (Covered by InfoBytes here). Additionally, the FAQs presented circumstance-based questions and answers applying the threshold rules to scenarios with varying originations of closed-end mortgage loans and open-end lines of credit and addressed voluntary reporting.
On November 12, the CFPB sent a reminder to institutions that the threshold for reporting HMDA data for open-end lines of credit will adjust to 200 open-end lines of credit in each of the two preceding calendar years effective January 1, 2022. According to the reminder, starting January 1, 2022, an institution that meets the new threshold and all other Regulation C institutional coverage criteria, must collect, record, and report data about its open-end lines of credit.
NCRC files fair housing complaints with HUD against mortgage lenders
On November 1, the National Community Reinvestment Coalition (NCRC) announced it had filed fair housing complaints with HUD against two mortgage lenders for allegedly engaging in discriminatory behavior against prospective Black clients. The first complaint is based on a matched-pair test conducted in the Seattle/Tacoma, Washington area, which allegedly demonstrated that lending specialists provided different lending product information to prospective borrowers based on race. NCRC also alleged that the lender’s HMDA data showed lending behaviors consistent with discriminatory practices. NCRC also conducted matched-pair testing on a second lender’s practices in the Charlotte, North Carolina area. According to the complaint, the lender also allegedly provided different information and more favorable services to White testers. An examination of the lender’s HMDA data similarly showed alleged discriminatory lending patterns.
CFPB updates 2022 HMDA filing instructions
On October 20, the CFPB released three updates regarding the Filing Instructions Guide for HMDA data collected in 2022 that must be reported in 2023. As previously covered by InfoBytes, the CFPB released the Filing Instructions Guide for HMDA, which states that there are no significant changes to the submission process and that the required data fields to be collected and reported have not changed. Instructions for quarterly reporting can be found in the Supplemental Quarterly Reporting Guide.
On October 25, the CFPB reminded that, "[f]or data collected beginning January 1, 2022, financial institutions should use census tract information provided in the 2020 Census." In addition, the FFIEC’s Geocoder will utilize census tract information from the 2020 Census beginning January 1, 2022.
CFPB releases 2022 HMDA filing instructions
On September 9, the CFPB released the Filing Instructions Guide for HMDA data collected in 2022 that must be reported in 2023. The guide states that there are no significant changes to the submission process and that the required data fields to be collected and reported have not changed. Instructions for quarterly reporting can be found in the Supplemental Quarterly Reporting Guide, which was issued the same day. According to the most recent HMDA reporting guide by the FFIEC, the next HMDA report is due for entities on March 1, 2022.
CFPB releases HMDA data report
On August 19, the CFPB released a Data Point report titled, 2020 Mortgage Market Activity and Trends, which finds that the total number of closed-end originations, as well as applications, increased substantially between 2019 and 2020. The 2020 HMDA data encompasses the third year of data that incorporates amendments to HMDA by Dodd-Frank. The changes include new data points, revisions to some existing data points, and authorizing the CFPB to require new data points. As covered by a Buckley Special Alert, the CFPB issued a final rule that implemented significant changes that reflected the needs of homeowners and the evolution in the mortgage market.
According to the report, trends in mortgage applications and originations found in the 2020 HMDA data point include:
- 4,472 financial institutions reported at least one closed-end record in 2020, which is a decrease from 5,505 in 2019;
- “The number of home-purchase loans secured by site-built, one-to-four-family properties increased by about 387,000, whereas the number of refinance loans increased by 149.1 percent from 3.4 million in 2019 to 8.4 million in 2020”;
- In 2020, the number of open-end line-of-credit originations, besides reverse mortgages, fell by 16.6 percent to 869,000, from 1.04 million in 2019;
- “The share of loans secured by closed-end home-purchase loans for site-built, one-to-four-family, first lien, principal-residence properties for Black borrowers increased in 2020 and the share of refinance loans for Asian borrowers increased in 2020”; and
- In 2020, the refinance boom largely continued the trends since the second quarter of 2019.
According to CFPB Acting Director Dave Uejio, “initial observations about the nation’s mortgage market in 2020 are welcome news, with improvements in the overall volume of home-purchase and refinance loans compared to 2019.” He also noted that “Black and Hispanic borrowers continued to have fewer loans, [are] more likely to be denied than non-Hispanic White and Asian borrowers, and pay higher median interest rates and total loan costs. It is clear from that data that our economic recovery from the COVID-19 pandemic won’t be robust if it remains uneven for mortgage borrowers of color.”