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Legal Q&A: Partial Exemption for HMDA

Q: When does the HMDA Partial Exemption Apply?

A: The Home Mortgage Disclosure Act’s (HMDA) partial exemption applies based on a loan-volume threshold for originations made during each of the two preceding calendar years. The Economic Growth, Regulatory Relief, and Consumer Protection Act created partial exemptions from some of HMDA’s requirements for certain financial institutions. In order for a partial exemption to apply, an eligible financial institution must meet a loan-volume threshold. The threshold is whether the institution originated fewer than 500 of closed-end loans and open-end lines of credit, counted separately, during each of the two preceding calendar years. For example, a partial exemption applies to an eligible financial institution’s applications for originations of, and purchases of closed-end mortgage loans if the institution originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years. To illustrate, consider the following two scenarios:

  • Bank A originated 490 closed-end loans during 2019, and 499 closed-end loans during 2020.
  • Bank B originated 490 closed-end loans during 2019, and 501 closed-end loans during 2020.

Bank A would receive the partial exemption in 2021 for closed-end mortgage loans. Bank B would not. Furthermore, Bank B would not receive the partial exemption in 2022. A similar analysis would need to be performed for open-end lines of credit. Banks should carefully consider their loan-volume thresholds in each given year if they are looking to take advantage of a partial exemption. Exceeding the threshold would mean required reporting of additional data fields.

If you have any questions on this topic or other matters of compliance, contact WBA’s legal call program at 608-441-1200 or wbalegal@wisbank.com.

By, Alex Paniagua