Tag Archive for: HMDA

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Executive Letter: Agency Guidance Regarding Lower Closed-End Mortgage Loan HMDA Reporting Threshold

Rose Oswald PoelsBy Rose Oswald Poels

New guidance has been issued from both the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC) regarding the recently lowered reporting threshold for closed-end mortgage loans under the Home Mortgage Disclosure Act (HMDA), Regulation C. The reduction of the reporting threshold was swiftly imposed, and I believe the new agency guidance will be helpful for members impacted by the change.

As previously reported in my November 1 and December 29 Executive Letters, the Bureau of Consumer Financial Protection (CFPB) lowered the reporting threshold due to an action by the United States District Court for the District of Columbia, which vacated a 2020 HMDA-related rule that had increased the loan volume reporting threshold for closed-end mortgage loans. As a result of the court’s order, the threshold for reporting data about closed-end mortgage loans was lowered to 25 — a threshold established by a 2015 HMDA-related rule. A technical amendment was made to the Code of Federal Regulations to reflect the lower reporting threshold near the end of 2022.

Just this past week, both OCC and FDIC issued guidance regarding the lower reporting threshold. I have outlined each agency’s guidance below.

OCC
In its release (Bulletin 2023-5), OCC stated that banks that originated at least 25 closed-end mortgage loans in each of the two preceding calendar years, but fewer than 100 closed-end mortgage loans in either or both of the two preceding calendar years, may need to make adjustments to policies and procedures to comply with reporting obligations.

OCC stated it recognizes the changes may require time to implement. OCC also stated that it does not intend to assess penalties for failures to report closed-end mortgage loan data on reportable transactions conducted in 2022, 2021, or 2020 for banks affected by the change that meet Regulation C’s other coverage requirements. OCC examinations conducted in affected banks regarding HMDA reportable transactions from 2022, 2021, or 2020 will be diagnostic to help banks identify compliance weaknesses. OCC stated that the collection and submission of 2023 HMDA data will provide affected banks with an opportunity to identify gaps in and make improvements to their HMDA compliance management systems.

FDIC
In its release (Financial Institutions Letter 06-2023), FDIC outlined its supervisory approach to the HMDA reporting changes to closed-end mortgage loans. FDIC also stated recognition that banks affected by the threshold change need time to implement or adjust policies, procedures, systems, and operations to come into compliance with reporting obligations. Accordingly, for closed-end mortgage loan data, FDIC plans to implement a supervisory approach consistent with CFPB’s approach.

As such, for FDIC-supervised banks that (1) are subject to Regulation C’s other coverage requirements, and (2) originated at least 25 closed-end mortgage loans in each of the two preceding calendar years, but fewer than 100 closed-end mortgage loans in either of the two preceding calendar years, FDIC does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data for 2022, 2021, or 2020. Any FDIC-supervised bank may elect to report data voluntarily for those years; however, FDIC stated it does not expect those banks to collect and report data retroactively for closed-end mortgage loans covered by the court’s order vacating CFPB’s 2020 HMDA-related rule.

FDIC has clarified that banks affected by the court’s order, and that meet the reporting threshold of 25 closed-end mortgage loans in each of the two proceeding calendar years as of 2023, should start collecting data in 2023 and reporting data in 2024.

As is always the case, when working with your regulatory agencies, I recommend frank conversations with your examiner in charge (EIC) regarding agency expectations and findings. While being respectful, members should not be shy about questioning the EIC about examiners’ rationale or interpretations and to ask for regulatory citations for the bank to then separately, further research and confirm whether examiner instruction or finding is correct.

If you have questions regarding the recently issued guidance, about HMDA reporting requirements, or other compliance-related questions, be sure to reach out to the WBA Legal team.

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Executive Letter: Technical Amendment Lowers Closed-End Mortgage Loan HMDA Reporting Threshold

Rose Oswald PoelsBy Rose Oswald Poels

As I first reported in the November 1 Executive Letter, a recent court case resulted in the lowering of the reporting threshold for close-end mortgage loans under HMDA. I wanted to alert you to a technical amendment recently issued by CFPB to Regulation C. The technical amendment followed a previously issued blog post by CFPB. The amendment is effective December 21, 2022.

Summary

In April 2020, CFPB issued a final rule (2020 HMDA Rule) to amend Regulation C to increase the threshold for reporting data about closed-end mortgage loans. The 2020 HMDA Rule increased the closed-end mortgage loan reporting threshold from 25 loans to 100 loans in each of the two preceding calendar years, effective July 1, 2020.

On September 23, 2022, the United States District Court for the District of Columbia vacated the 2020 HMDA Rule as to the increased loan-volume reporting threshold for closed-end mortgage loans. As a result of the September 23, 2022 order, the threshold for reporting data about closed-end mortgage loans is 25, the threshold established by the 2015 HMDA Rule. Accordingly, the technical amendment updates the Code of Federal Regulations to reflect the closed-end mortgage loan reporting threshold of 25 mortgage loans in each of the two preceding calendar years.

Background

HMDA requires certain banks, savings associations, credit unions, and for-profit non-depository institutions to collect, report, and disclose data about originations and purchases of mortgage loans, as well as mortgage loan applications that do not result in originations (for example, applications that are denied or withdrawn). CFPB’s Regulation C, 12 CFR part 1003, implements HMDA, 12 U.S.C. 2801 through 2810.

In October 2015, CFPB issued a final rule (2015 HMDA Rule) that, among other things, established institutional and transactional loan-volume coverage thresholds in Regulation C that determine whether financial institutions are required to report certain HMDA data on closed-end mortgage loans or open-end lines of credit. The thresholds apply uniformly to covered depository and non-depository institutions; they took effect for depository institutions on January 1, 2017, and for non-depository institutions on January 1, 2018. The loan-volume thresholds in the 2015 HMDA Rule required an institution that originated at least 25 closed-end mortgage loans or at least 100 open-end lines of credit in each of the two preceding calendar years to report HMDA data, provided that the institution meets all other criteria for institutional coverage.

In April 2020, CFPB issued a final rule (2020 HMDA Rule) to amend Regulation C to increase the thresholds for reporting data on both closed-end mortgage loans and open-end lines of credit. In particular, the 2020 HMDA Rule set the closed-end mortgage loan reporting threshold at 100 in each of the two preceding calendar years, effective July 1, 2020, and the open-end line of credit reporting threshold at 200 in each of the two preceding calendar years, effective January 1, 2022.

On July 30, 2020, five nonprofit organizations and the City of Toledo, Ohio, initiated a lawsuit challenging the 2020 HMDA Rule. On September 23, 2022, the United States District Court for the District of Columbia concluded that the 2020 HMDA Rule’s increased reporting threshold for closed-end mortgage loans was arbitrary and capricious. The court issued an order vacating and remanding the loan-volume reporting threshold for closed-end mortgage loans under the 2020 HMDA Rule. Accordingly, the threshold for reporting data about closed-end mortgage loans is 25 in each of the two preceding calendar years, which is the threshold set by the 2015 HMDA Rule.

The technical amendment reflects the vacatur in the Code of Federal Regulations by replacing the closed-end reporting threshold numbers in Regulation C sections 1003.2(g)(1)(v)(A), (2)(ii)(A), and 1003.3(c)(11) as well as comments 2(g)–5 and 3(c)(11)–2 which became effective on June 30, 2020; and replacing in their entirety, comments 2(g)–1 and 3(c)(11)–1 with the versions in effect on June 30, 2020.

Separate CFPB Statement

On December 6, 2022, a blog post appeared on CFPB’s website regarding the change to HMDA’s closed-end reporting threshold as a result of the court case. In that post, CFPB stated:

“The CFPB recognizes that financial institutions affected by this change may need time to implement or adjust policies, procedures, systems, and operations to come into compliance with their reporting obligations. In these limited circumstances, in allocating the CFPB’s enforcement and supervisory resources, the CFPB does not view action regarding these institutions’ HMDA data as a priority. Thus, the CFPB does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data collected in 2022, 2021, or 2020 for institutions subject to the CFPB’s enforcement or supervisory jurisdiction that meet Regulation C’s other coverage requirements and originated at least 25 closed-end mortgage loans in each of the two preceding calendar years but fewer than 100 closed-end mortgage loans in either or both of the two preceding calendar years.”

Unfortunately, the blog post did not offer further guidance to first assist small banks with how best to proceed given the new lower threshold. No other banking regulator has issued guidance as a result of the court case or CFPB’s releases. Given the impact of the court case and technical amendment to Regulation C, I recommend that banks which meet the 25 closed-end mortgage loan threshold for 2021 and 2022 should look to collect and report closed-end mortgage loan HMDA data for 2023. The exemption threshold for open-end lines of credit remains untouched at 200 open-end lines of credit originated in each of the prior two years.

View the Technical Amendments View the Blog Post
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Tis the Season – To prepare your HMDA LAR

If you are like most banks running a large mortgage pipeline over the last ten months, you have had very little time to catch your breath before accepting that next application. And like most banks, your back-office support staff have had to adjust their processes and resources just to keep up the rate locks, TRID disclosures, and timely mortgage closing, all during a pandemic. But what about that pesky HMDA LAR we have all come to love and adore? It’s the last regulation down the mortgage production trough and comes in a close second to post-closing internal quality control that is required during the same time period. We really don’t have time or staff for either.

But don’t get yourself on the naughty list this close to the holidays. Unless your bank is considered a large institution, compliance with every aspect of updating your HMDA within thirty days of each calendar quarter is still in play. And even for large institutions, the only regulatory relief they saw due to COVID-19 is that their regulator would not cite it as a violation if they did not file their quarterly LAR timely. How many banks, large and small, can proudly raise their hand and say they nailed it? Not as many as you would think based on my observations.

For those of you who are required to file a HMDA LAR, we all know it was made much more difficult once the extra sets of data points were introduced, and accounting for up to five applicants on one mortgage has made your HMDA LAR as long as Santa’s list, making it almost impossible to keep it up-to-date. And while the adoption to automate HMDA systems has made reporting more efficient, we still need a few extra elves to edit, review and if necessary, scrub the LAR before it can be wrapped up with a pretty bow. Without further regulatory relief or extension of filing your 2020 HMDA LAR, bank management should consider now how to reallocate staff and resources as we head into the holiday season. Getting your HMDA LAR’s caught up in time for 2021 filing may just be a Christmas miracle.

For those banks who have seen their HMDA LAR grow three times it’s normal size, this is not necessarily a bad thing. Remember, your bank’s HMDA LAR tells a story. Not one of a baby born in a manger, but one of hundreds of people being homeowners. And as bankers, we helped those wishes come true.

So, if your bank lacks the necessary resources, or elves, to review your 2020 HMDA LAR before submission, don’t fret, ShareFI is here to help. Please contact Jeff Schmid, Director of Compliance and Management Services via email to learn how we can help your bank check this list twice.

Schmid, CRCM, CERP is director of compliance and management services at FIPCO. He can be reached via email or 608-441-1220. 

By, Eric Skrum

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Events

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2022 HMDA Submission Due March 1, 2023: Updates, Challenges, & Real-Life Examples

Confused about HMDA reporting? You’re not alone. The real-life examples used in this timely webinar will help clarify the confusion on the top five issues — before the March 1 reporting deadline.

After This Webinar You’ll Be Able To:

  • Submit the 2022 data with added confidence and improved data integrity
  • Effectively use the HMDA resources in the CFPB’s 2022 FIG (Filing Instructions Guide)
  • Interpret several confusing issues such as what is and isn’t a dwelling, mixed-use property scenarios, and complex demographic information collection
  • Explain how to handle quality edits
  • Understand clarifications for complicated data points

Webinar Details
HMDA reporting continues to be a challenge for many financial institutions. Most importantly, this public data can be scrutinized for potential discriminatory practices that can challenge your financial institution’s reputation. Join this fast-paced webinar to learn about issues that challenge HMDA reporters and receive valuable tools to submit your 2022 HMDA data by March 1, 2023. The presentation will include citations, tips, and real-life examples. You will learn important information about the causes of reporting errors, including these top five issues:

  • Secondary market reporting rules
  • Dwelling definitions and mixed-use property scenarios
  • Demographic information collection tips
  • Reporting tips for applications made in the commercial loan area
  • Data integrity challenges — submission and resubmission steps

Who Should Attend?
This informative session is designed for all employees who need to understand and manage HMDA reporting, including loan operations staff, loan officers, loan assistants, processors, compliance officers, fair lending officers, IT support staff, and auditors.

Take-Away Toolkit

  • HMDA worksheets and flow chart for 2022 activity, including updated resources from the CFPB
  • Lists of data fields for each data point
  • Helpful HMDA compliance resources, including checklists for submission and fair lending considerations
  • Employee training log
  • Interactive quiz
  • PDF of slides and speaker’s contact info for follow-up questions
  • Attendance certificate provided to self-report CE credits

NOTE: All materials are subject to copyright. Transmission, retransmission, or republishing of any webinar to other institutions or those not employed by your agency is prohibited. Print materials may be copied for eligible participants only.

Presenter
Susan Costonis, CRCM – Compliance Training & Consulting for Financial Institutions
Susan Costonis is a compliance consultant and trainer who began her career in 1978. She specializes in compliance management along with deposit and lending regulatory training. Costonis has successfully managed compliance programs and exams for institutions that ranged from a community bank to large multi-state bank holding companies. She has been a compliance officer for institutions supervised by the OCC, FDIC, and Federal Reserve. Costonis has been a Certified Regulatory Compliance Manager since 1998, completed the ABA Graduate Compliance School, and graduated from the University of Akron and the Graduate Banking School of the University of Colorado. She regularly presents to financial institution audiences in several states and “translates” complex regulations into simple concepts by using humor and real-life examples.

Registration Options

  • $245 – Live Webinar Access
  • $245 – OnDemand Access + Digital Download
  • $350 – Both Live & On-Demand Access + Digital Download
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State of HMDA in 2023

We’re now a few years into the new age of HMDA — increased coverage requirements, data collection, and submission, as well as risk. How are you doing with all this? The rules regarding reporting thresholds are in flux for small banks as a result of a recent federal court decision, so we’ll have to wait for the outcome there. But for 2022’s submission season, it’s the same as in years past. In this webinar, we’ll review all the pain points of HMDA, including actions taken and a variety of data points. We’ll also address a number of questions — What will examiners be looking at it? What are the fair lending issues and risks you need to be aware of after submission? We’ll discuss the current state of HMDA so close to submission in this session, and get some of your questions answered.

Covered Topics

  • Rules around thresholds and data elements, including legal challenges and what to do if you’re caught in the middle
  • Private vs. public data
  • Details of the coverage rules – who collects and submits information, and when
  • What types of applications are reportable?
  • The dwelling-secured loan standard – what does this impact?
  • Effects in the commercial loan area
  • How to handle HELOCs
  • LAR fields, including common errors and pain points
  • Categories of reporting, including information on the property, loan type, and loan features; plus identification information
  • Reporting GMI
  • Changes to the submission process
  • Quarterly reporting for some institutions
  • How the public obtains HMDA information changes
  • Practical and compliance implications

Who Should Attend?
Loan officers, managers, and processors, compliance and fair lending officers, auditors, counsel, and anyone else with HMDA-related responsibilities, including data collection, reporting, analysis, and disclosure.

Presenter
Carl Pry is a Certified Regulatory Compliance Manager (CRCM) and Certified Risk Professional (CRP) who is a Managing Director for Treliant LLC in Washington, D.C. Through his working career, as well as through his experience as a banking attorney and officer, he has provided a variety of regulatory compliance and financial performance services to financial institutions and other clients throughout the country. He has written extensively regarding consumer and commercial compliance, tax, audit, and financial institution legal issues, and is a frequent contributor to and currently serves on the Editorial Advisory Board for the ABA Bank Compliance magazine. He has spoken at scores of banking, compliance, and state bar associations, and has conducted training sessions for financial institutions across the country.

Registration Options

Live Access, 30 Days OnDemand Playback, Presenter Materials and Handouts $279

  • Available Upgrades:
    • 12 Months OnDemand Playback + $110
    • 12 Months OnDemand Playback + Digital Download +$140
    • 12 Months OnDemand Playback + CD + $140
    • Additional Live Access + $75 per person
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HMDA Reporting Part 2: Collecting Demographic Information

The Home Mortgage Disclosure Act (HMDA) is a complex, data-driven process. The CFPB has published many FAQs to clarify the correct codes and collection process. This webinar will provide effective training to help staff correctly document the demographic information based on the various types of application submission. These methods include in-person, phone, internet, and “hybrid” submissions. This is the second webinar in a three-part series. Attend Parts 1 and 3 to learn more about application basics and commercial lending issues.

HIGHLIGHTS

Successfully use toolkit resources to collect complex demographic information
Define the terms ethnicity, race, and gender
Explain the collection process to employees and accountholders
Distinguish between the requirements for various application channels
Realize the importance of collecting and reporting accurate information

TAKE-AWAY TOOLKIT

Step-by-step data collection definitions and important tips to avoid mistakes
Tool for collecting demographic information
Helpful HMDA compliance resources
Employee training log
Interactive quiz

WHO SHOULD ATTEND?
This informative session is designed for all employees who need to understand and manage HMDA reporting, including loan operations, loan officers, loan assistants, processors, compliance officers, and auditors.

ABOUT THE PRESENTER – Susan Costonis, CRCM
Susan Costonis is a compliance consultant and trainer who began her career in 1978. She specializes in compliance management along with deposit and lending regulatory training. Susan has successfully managed compliance programs and exams for institutions that ranged from a community bank to large multi-state bank holding companies. She has been a compliance officer for institutions supervised by the OCC, FDIC, and Federal Reserve. Susan has been a Certified Regulatory Compliance Manager since 1998, completed the ABA Graduate Compliance School, and graduated from the University of Akron and the Graduate Banking School of the University of Colorado. She regularly presents to financial institution audiences in several states and “translates” complex regulations into simple concepts by using humor and real-life examples.

REGISTRATION OPTIONS

Live Webinar – $245
Recorded Webinar and Digital Download – $245 plus tax
Live Webinar, Recorded Webinar and Digital Download – $320 plus tax

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