HMDA Reporting Change: Loan-Volume Thresholds | Wolters Kluwer Financial Services
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  • HMDA Reporting Change: Loan-Volume Thresholds

    Amy Downey

    by Amy Downey

    Published March 15, 2016

    As part of Wolters Kluwer’s continuing efforts to keep lenders informed of key developments relating to the Home Mortgage Disclosure Act Rule changes, regulatory expert Amy Downey notes that the Consumer Financial Protection Bureau has recently changed its stance on the use of home equity lines of credit in the institutional coverage definition. These thresholds are effective starting January 1, 2018 and are calculated using lending volumes for the previous two calendar years—2017 and 2016. This clarification comes from the final rule (pages 79-82;)

    Loan-Volume Threshold for Open-End Lines of Credit

    “The loan-volume threshold provided in proposed § 1003.2(g)(1)(v) excluded open-end lines of credit from the loans that would count toward the threshold. The Bureau solicited feedback on what types of loans should count toward the proposed loan-volume threshold and, in particular, whether open-end lines of credit should count toward the proposed loan-volume threshold. The final rule incorporates an institution’s origination of open-end lines of credit into HMDA’s institutional coverage criteria. Under the final rule, a financial institution will be required to report HMDA data on open-end lines of credit if it meets the other applicable criteria and originated at least 100 open-end lines of credit in each of the two preceding calendar years.”

    The CFPB explained in the final rules commentary that the previous exclusion may have excluded “institutions with significant open-end lending, whose data may provide valuable insights into the open-end dwelling-secured market. The proposed test may also create an incentive for institutions to change their business practices to avoid reporting open-end data (e.g., by transferring all open-end lending to a separate subsidiary). This result would undermine the goals articulated in the section-by-section analysis of § 1003.2(o) to increase visibility into open-end dwelling-secured lending.”

    Under the final rule, the closed-end mortgage and open-end line of credit thresholds are two distinct tests:  “a financial institution will report closed-end mortgage loans only if it satisfies the closed-end mortgage threshold and will report open-end lines of credit only if it satisfies the separate open-end line credit threshold.”

    The 2018 institutional coverage can be found here.

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