By Elva M. Coffey-Sears, CRCM, CRP
On August 23 the CFPB published amendments to the 2015 HMDA Final Rule. These amendments supplement the 2015 amendments, most of which are scheduled to go into effect in January 2018. The amendments impact institutional and transactional coverage, clarify key terms, provide guidance for reporting demographic information, establish transition rules for specific data points, create a safe harbor for census tract errors, and make other technical corrections.
The 2015 Rule changed data collection and reporting of certain dwelling-secured, open-end lines of credit from optional to mandatory for institutions originating at least 100 covered open-end lines of credit in each of the two preceding calendar years. This threshold is temporarily increased from 100 to 500 for 2018 and 2019, meaning institutions originating less than 500 open-end lines of credit will not be required to collect data on these transactions until January 1, 2020. The threshold for closed-end loans remains unchanged at 25 loans in each of the preceding two calendar years. The amendments further clarify that institutions are not required to report transactions for which the reporting threshold is not met for two consecutive years.
The 2017 amendment creates reporting exceptions for certain transactions. While institutions continue to be required to report New York Consolidation, Extension and Modification Agreements (New York CEMA) transactions, additional advances prior to consolidation into a New York CEMA are excluded from reporting. The amendment also clarifies that transactions financing construction of a dwelling intended for sale and transactions designed to be replaced by separate permanent financing by any lender to the same borrower in the future are covered by the temporary financing exclusion.
The amendment clarifies that transactions secured by five or more separate dwellings in multiple locations are not to be reported as a multifamily dwelling. Further, multifamily dwelling would not be reported for a transaction secured by five or more dwellings within a single multifamily dwelling structure unless the entire multifamily dwelling is taken as security. In addition, clarification is provided that transactions financing improvements to a commercial space within a multifamily dwelling, such as a storefront in an apartment building, are not reported as home improvement loans. However, credit to improve a commercial space inside of a dwelling, such as an office inside a single family dwelling, is reported as a home improvement loan. The amendment provides guidance relating to race and ethnicity reporting. The guidance explains how to handle situations such as an applicant selecting subcategories without selecting an aggregate category, entering information in to the free-form field without making a selection of a subcategory, or reporting more than five total ethnicity categories.
This amendment also establishes a safe harbor for census tract errors obtained from the CFPB’s geocoding tool, provided that accurate information was entered into the tool. Finally, the amendment makes several additional technical corrections and establishes transition rules for specific data points.
The amendment is available at https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201708_cfpb_final-rule_home-mortgage-disclosure_regulation-c.pdf
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