The CFPB released the final rule amending and expanding reporting requirements under Regulation C and the Home Mortgage Disclosure Act. The 797 page rule includes the threshold for covered institution reporting, changes to covered transactions, requirements for large volume reporters, new reporting procedures, disclosure and privacy, along with new and modified data fields.
Dates:
Most provisions of the final rule become effective on January 1, 2018. Accordingly, covered institutions will be required to begin collecting information under the new requirements throughout 2018, for submission on or before March 1, 2019.
- Submissions due by March 1, 2016 and 2017 (2015 and 2016 data) will use the current collection requirements and submission process.
- Submissions due by March 1, 2018 (2017 data) will use the current collection requirements, but must be submitted using the new CFPB tool.
- Submission due by March 1, 2019 (2018 data) will use the new collection requirements and must be submitted using the new CFPB tool.
Recommended Actions:
Credit unions should begin assessing the impact of the requirements.
While the CFPB has not yet released a Filing Instruction Guide, vendors should be monitoring in anticipation of the new requirements. Credit unions should verify with their data processing vendors to ensure the new and modified fields will be included in reporting.
Detailed Analysis:
Covered Institutions
Starting with data collection obligations in 2018, a credit union will be subject to the HMDA/Regulation C requirements if it originated at least 25 covered closed-end mortgage loans, or at least 100 covered open-end lines of credit in each of the two preceding calendar years. The triggers will be applied separately – the credit union will report closed-end loan and reverse mortgages only if it meets the 25 closed-end mortgage threshold. The credit union will report open-end lines of credit only if it meets the 100 open-end threshold. Credit unions must also meet the current Regulation C asset-size, location, federally related, and loan activity tests.
Covered Transactions
Covered transactions include most closed-end mortgage loans and open-end lines of credit that are secured by a dwelling. However, dwelling-secured business-purpose loans and lines of credit will be covered only if they are home purchase loans, home improvement loans, or refinancings. The final rule also exempts agriculture-purpose transactions generally, as well as other types of transactions.
The final rule also revises HMDA/Regulation C coverage of preapproval requests. Currently, it is optional whether or not to report preapproval requests that are approved but not accepted. Beginning 2018 credit unions will be required to collect, record, and report information for approved but not accepted preapproval requests for home purchase loans. Preapproval requests for open-end lines of credit, reverse mortgages, and home purchase loans secured by multifamily dwellings will not be reported.
Large-Volume Reporters
The final rule introduces a quarterly filing requirement for covered institutions reporting at least 60,000 applications and covered loans (open-end and closed-end combined) in the preceding calendar year. The metric excludes, however, covered loans purchased in the preceding year. The new quarterly reporting requirements will become effective on January 1, 2020, with the first quarterly report due by May 30, 2020.
New Reporting Procedures, Disclosure, and Privacy
The CFPB is developing a web-based submission tool for reporting HMDA data. The CFPB indicates that it will use a “balancing test” to weigh public disclosure against the need to protect applicant and borrower privacy. However, the exact nature of this balancing test remains to be determined—the CFPB states that it will “provide a process for the public to provide input regarding the application of this balancing test to determine the HMDA data to be publicly disclosed.”
Beginning in 2018:
- Credit unions will no longer be required to provide a modified LAR to the public upon request. Rather, they must provide a notice that clearly states that its modified LAR may be obtained from the CFPB’s website.
- For information collected in 2017, credit unions will report the currently required fields using the new electronic submission tool that will be available from the CFPB.
Beginning in 2019:
- Credit unions will report the using the new required fields and the new electronic submission tool, for information collected in 2018.
New & Modified Data Fields
The final rule greatly expands the information required to be collected and reported pursuant to HMDA/Regulation C. The CFPB states that the expanded data fields will enable the public, the Bureau, and other financial institution regulators to “identify emerging risks and potential discriminatory lending practices,” as well as “screen for possible fair lending problems.” The chart below identifies the existing, modified, and new data points that will be required:
| Data Point | Status | Description | Reference | |
| 1 | Legal Entity Identifier (LEI) | Modified | Identifier issued to the financial institution (FI) by a utility endorsed by the Global LEI Foundation or LEI Regulatory Oversight Committee | § 1003.4(a)(1)(i)(A) |
| 2 | Universal Loan Identifier (ULI) | Modified | Identifier assigned to identify and retrieve a loan or application that contains the FI’s LEI, an internally generated sequence of characters, and a check digit | § 1003.4(a)(1)(i),
Comments 4(a)(1)(i)-1 through -5, and appendix C |
| 3 | Application Date | Existing | Date the application was received or the date on the application form | § 1003.4(a)(1)(ii),
Comments 4(a)(1)(ii)-1 through -3 |
| 4 | Loan Type | Existing | Whether the loan or application is insured by the Federal Housing Administration, guaranteed by the Veterans Administration, Rural Housing Service, or Farm Service Agency | § 1003.4(a)(2),
Comment 4(a)(2)-1 |
| 5 | Loan Purpose | Modified | Whether the transaction is for home purchase, home improvement, refinancing, cash-out refinancing, or another purpose | § 1003.4(a)(3),
Comments 4(a)(3)-1 through -5
|
| 6 | Preapproval | Modified | Whether the transaction involved a preapproval request for a home purchase loan under a preapproval program | § 1003.4(a)(4),
Comments 4(a)(4)-1 and -2 |
| 7 | Construction Method | Modified | Whether the dwelling is site-built or a manufactured home | § 1003.4(a)(5),
Comments 4(a)(5)-1 through -3 |
| 8 | Occupancy Type | Modified | Whether the property will be used as a principal residence, second residence, or investment property | § 1003.4(a)(6),
Comments 4(a)(6)-1 through -5 |
| 9 | Loan Amount | Modified | Amount of the loan or the amount applied for | § 1003.4(a)(7),
Comments 4(a)(7)-1 through -9 |
| 10 | Action Taken | Existing | Type and date of action the FI took on the loan, application, or preapproval request | § 1003.4(a)(8),
Comments 4(a)(8)(i)-1 through -14 and 4(a)(8)(ii)-1 through -6 |
| 11 | Action Taken Date | Existing | ||
| 12 | Property Address | New | Address of the property securing the loan (or proposed to secure a loan) | § 1003.4(a)(9)(i),
Comments 4(a)(9)-1 through -5 and 4(a)(9)(i)-1 through -3 |
| 13 | Property Location | Existing | Location of the property securing the loan (or proposed to secure a loan) by state, county, and census tract | § 1003.4(a)(9)(ii),
Comments 4(a)(9)-1 through -5, 4(a)(9)(ii)(B)-1, and 4(a)(9)(ii)(C)-1 |
| 14 | ||||
| 15 | ||||
| 16 | Ethnicity | Modified | Applicant’s or borrower’s ethnicity, race, and sex, and if information was collected by visual observation or surname | § 1003.4(a)(10)(i),
Comments 4(a)(10)(i)-1 and -2 and appendix B |
| 17 | Race | Modified | ||
| 18 | Sex | Modified | ||
| 19 | Age | New | Applicant’s or borrower’s age | § 1003.4(a)(10)(ii),
Comments 4(a)(10)(ii)-1 through -5 |
| 20 | Income | Existing | If credit decision is made, gross annual income relied on in making the credit decision; Or, if a credit decision was not made, the gross annual income relied on in processing the application | § 1003.4(a)(10)(iii),
Comments 4(a)(10)(iii)-1 through -10 |
| 21 | Type of Purchaser | Modified | Type of entity that purchased the loan | § 1003.4(a)(11),
Comments 4(a)(11)-1 through -10 |
| 22 | Rate Spread | Modified | Difference between the annual percentage rate and average prime offer rate for a comparable transaction | § 1003.4(a)(12),
Comments 4(a)(12)-1 through -8 |
| 23 | HOEPA Status | Existing | Whether the loan is a high-cost mortgage under the Home Ownership and Equity Protection Act (HOEPA) | § 1003.4(a)(13),
Comment 4(a)(13)-1
|
| 24 | Lien Status | Modified | Whether the property is a first or subordinate lien | § 1003.4(a)(14),
Comments 4(a)(14)-1 and -2 |
| 25 | Credit Score | New | Credit score(s) relied on and the name and version of the credit scoring model | § 1003.4(a)(15),
Comments 4(a)(15)-1 through -7 |
| 26 | Reason for Denial | Modified | Reason(s) the application was denied | § 1003.4(a)(16),
Comments 4(a)(16)-1 through -4 |
| 27 | Total Loan Costs or Total Points and Fees | New | Either total loan costs, or total points and fees charged | § 1003.4(a)(17),
Comments 4(a)(17)(i)-1 through -3 and 4(a)(17)(ii)-1 through -2 |
| 28 | Origination Charges | New | Total borrower-paid origination charges | § 1003.4(a)(18),
Comments 4(a)(18)-1 through -3 |
| 29 | Discount Points | New | Points paid to the creditor to reduce the interest rate | § 1003.4(a)(19),
Comments 4(a)(19)-1 through -3 |
| 30 | Lender Credits | New | Amount of lender credits | § 1003.4(a)(20),
Comments 4(a)(20)-1 through -3 |
| 31 | Interest Rate | New | Interest rate on the approved application or loan | § 1003.4(a)(21),
Comments 4(a)(21)-1 through -3 |
| 32 | Prepayment Penalty Term | New | Term in months of any prepayment penalty | § 1003.4(a)(22),
Comments 4(a)(22)-1 through -2 |
| 33 | Debt-to-Income Ratio | New | Ratio of the applicant’s or borrower’s total monthly debt to total monthly income relied on | § 1003.4(a)(23),
Comments 4(a)(23)-1 through -7 |
| 34 | Combined Loan-to- Value Ratio | New | Ratio of the total amount of debt that is secured by the property to the value of the property that was relied on | § 1003.4(a)(24),
Comments 4(a)(24)-1 through -5 |
| 35 | Loan Term | New | Number of months after which the legal obligation will mature or terminate | § 1003.4(a)(25),
Comments 4(a)(25)-1 through -5 |
| 36 | Introductory Rate Period | New | Number of months until the first date the interest rate may change | § 1003.4(a)(26),
Comments 4(a)(26)-1 through -4 |
| 37 | Non-Amortizing Features | New | Whether the transaction involves a balloon payment, interest-only payments, negative amortization, or any other type of non-amortizing feature | § 1003.4(a)(27),
Comment 4(a)(27)-1 |
| 38 | Property Value | New | Value of the property relied on that secures the loan | § 1003.4(a)(28),
Comments 4(a)(28)-1 through -4 |
| 39 | Manufactured Home Secured Property Type | New | Whether the covered loan is secured by a manufactured home and land or a manufactured home and not land | § 1003.4(a)(29),
Comments 4(a)(29)-1 through -4
|
| 40 | Manufactured Home Land Property Interest | New | Information about the applicant’s or borrower’s ownership or leasehold interest in the land where the manufactured home is located | § 1003.4(a)(30),
Comments 4(a)(30)-1 through -6 |
| 41 | Total Units | New | Number of individual dwelling units related to the property | § 1003.4(a)(31),
Comments 4(a)(31)-1 through -4 |
| 42 | Multifamily Affordable Units | New | Number of individual dwelling units related to the property that are income-restricted under federal, state, or local affordable housing programs | § 1003.4(a)(32),
Comments 4(a)(32)-1 through -6 |
| 43 | Application Channel (Submission of Application and Initially Payable to Your Institution) | New | Indicators of whether the application was submitted directly to the FI, and whether the obligation was initially payable to the FI | § 1003.4(a)(33), Comments 4(a)(33)-1, 4(a)(33)(i)-1, and 4(a)(33)(ii)-1 through -2 |
| 44 | Mortgage Loan Originator NMLSR Identifier | New | National Mortgage Licensing System & Registry
(NMLSR) identifier for the mortgage loan originator |
§ 1003.4(a)(34), Comments 4(a)(34)-1 through -3 |
| 45 | Automated Underwriting System | New | Name of the automated underwriting system used by the FI to evaluate the application and the result generated by that system | § 1003.4(a)(35),
Comments 4(a)(35)-1 through -6 |
| 46 | Reverse Mortgage | New | Indicator of whether the transaction is for a reverse mortgage | § 1003.4(a)(36) |
| 47 | Open-End Line of Credit | New | Indicator of whether the transaction is for an open-end line of credit | § 1003.4(a)(37), Comment 4(a)(37)-1 |
| 48 | Business or Commercial Purpose | New | Indicator of whether the transaction is primarily for a business or commercial purpose | § 1003.4(a)(38), Comment 4(a)(38)-1 |
