By, Gina Ellis
The Consumer Financial Protection Bureau (CFPB) has issued the final rule amending Regulation C, or the Home Mortgage Disclosure Act (HMDA). The amendments change institutional coverage in two phases. Under current rules, the asset size threshold may change annually based on changes in the average Consumer Price Index for Urban Wage Earners and Clerical Workers, measured as of the preceding December 31st. A main or branch office must also be located in a Metropolitan Statistical Area (MSA) to meet the location test. If the institution is federally insured or regulated or the mortgage loan is insured, guaranteed or supplemented by a Federal agency or was intended for sale to Fannie Mae or Freddie Mac, it meets the federally related test. If the institution originates at least one home purchase loan or the refinancing of a home purchase loan secured by a first lien on a one-to four-family dwelling in the preceding calendar year, it meets the loan activity test.
Depository institutions will not be subject to Regulation C in 2017 under phase one, unless they meet the asset size, location, federally-related and loan activity tests under current rules and originate at least 25 home purchase loans, including refinancings of home purchase loans as defined in the current regulation in both 2015 and 2016.
Then, beginning January 1, 2018, a uniform loan volume threshold for all institutions will be effective. Depository institutions will be subject to Regulation C if they 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, while meeting the current asset size, location, federally-related and loan activity tests outlined above. These loan volume thresholds are separate tests, meaning if less than 25 closed-end loans are originated but 100 or more open-end loans originated, the depository institution will report only the open-end. Similarly, if 25 or more closed-end loans are originated but less than 100 open-end, only the closed-end loans will be reported.
Determining institutional coverage will be the first step in implementing the amended HMDA rules. The amendments also expand transactional coverage and the collection and reporting of applicant and borrower information. We will be dissecting the changes in detail in future blog posts, so stay tuned. In the meantime, the CFPB has provided two charts to assist depository institutions in determining institutional coverage, check them out below.