On June 27, 2017, WBA submitted a comment letter regarding CFPB’s proposed temporary increase in institutional and transactional coverage thresholds for open-end lines of credit. While WBA agrees with CFPB that the open-end lines of credit threshold must be increased to realize the goal of eliminating unnecessary burden on financial institutions, WBA informed CFPB that an increase to 500 was inadequate. Ultimately, WBA suggested the threshold be increase to 1,000. 

Below is a copy of the text of WBA's comment letter.

VIA ELECTRONIC DELIVERY
Ms. Monica Jackson, Office of the Executive Secretary
Consumer Financial Protection Bureau
1700 G Street N.W.,
Washington, DC 20552
www.regulations.gov 
Docket No.  CFPB-2017-0021; RIN 3170-AA76

RE: Home Mortgage Disclosure (Regulation C) Temporary Increase in Institutional and Transactional Coverage Thresholds for Open-End Lines of Credit.
Dear Ms. Jackson:


The Wisconsin Bankers Association (WBA) is the largest financial trade association in Wisconsin, representing approximately 250 state and nationally chartered banks, savings and loan associations, and savings banks located in communities throughout the state. WBA appreciates the opportunity to comment on the Bureau of Consumer Financial Protection’s (CFPB’s) proposed temporary increase in institutional and transactional coverage thresholds for open-end lines of credit. 


WBA agrees with CFPB that the open-end lines of credit threshold must be increased to realize the goal of eliminating unnecessary burden on financial institutions. However, WBA believes this goal is not realized by increasing the threshold so that financial institutions would be exempt if originating fewer than 500 open-end lines of credit in either of the preceding years. WBA believes the threshold must be increased to 1,000 to meaningfully eliminate unnecessary burden.

As stated by CFPB, since 2013, the number of dwelling-secured open-end lines of credit increased by 36% and continues to grow. It follows that institutions have easily crossed over the open-end transactional threshold in the 2015 HMDA Final Rule. Consequently, these many small institutions, that exceeded the threshold, have been burdened with unnecessary compliance costs. The initial inadequate threshold and CFPB’s data regarding the rate at which such lines of credit are increasing, indicate that raising the threshold to 500 will not be enough. Too many institutions still will not have the capabilities or resources to meet the imposed time cost burdens of the 2015 HMDA Final Rule, even if raised to 500. Therefore, failure to adequately increase the threshold to 1,000 may deprive consumers of options when lenders drop out of the market due to burdensome compliance costs.

CFPB believes that increasing the threshold to 1,000 open-end lines of credit per year, instead of the proposed 500 threshold, would diminish the value of the HMDA data since it would reflect coverage of 68% of the open-end line of credit market. WBA respectfully disagrees. First, as stated in CFPB’s footnotes 60 and 61, CFPB made its calculations based on credit unions’ originations of open-end lines of credit. WBA believes that relying only on credit union data for this valuation analysis ignores the full scope of the market, such that coverage would really be higher than 68%. 

Second, if CFPB were to make its calculations based on banks’ originations of open-end lines of credit, by all institutions, CFPB’s own calculations would illustrate a need for a 1,000 threshold. Even if CFPB were to rely on just credit union data, WBA believes that 68% is a significant percentage of the market and would accurately provide CFPB with adequate information while reducing unnecessary burden for many institutions. 

For the listed reasons, WBA believes that CFPB should increase the threshold for collecting and reporting data with respect to open-end lines of credit so that financial institutions originating fewer than 1,000 open-end lines of credit in either of the preceding years would not be required to begin collecting data until January 1, 2020. Increasing the threshold to 1,000 is the only way to meaningfully achieve CFPB’s goal of reducing unnecessary burden.