Compliance Alert: CA Letter 23-1 Issued for Revised HMDA Reporting Threshold for Closed-End Loans
On January 31, 2023, the Division of Consumer and Community Affairs of the Board of Governors of the Federal Reserve System (Board) issued CA letter 23-1 Changes to Home Mortgage Disclosure Act (HMDA) Loan Volume Reporting Threshold for Closed-end Mortgage Loans. This letter, reprinted here, addresses the impact on Federal Reserve-supervised financial institutions of recent changes resulting from a court decision concerning the HMDA reporting threshold for closed-end mortgage loans.
Here is the original CA letter 23-1 text:
“Background
In May 2020, the Consumer Financial Protection Bureau (Bureau) published a final rule amending Regulation C (Home Mortgage Disclosure) to, among other things, increase the threshold from 25 to 100 for reporting data about closed-end mortgage loans so that institutions originating fewer than 100 closed-end mortgage loans in either of the two preceding calendar years would not have to report such data effective July 1, 2020.1 In September 2022, the U.S. District Court for the District of Columbia vacated that portion of the rule.2
As a result of the court’s order, the Bureau published a technical amendment in December 2022 updating the Code of Federal Regulations to reflect a reporting threshold of 25 closed-end mortgage loans in each of the two preceding calendar years.3 Separately, the Bureau 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.4
Guidance for Financial Institutions Supervised by the Federal Reserve
Like the Bureau, the Board recognizes that financial institutions affected by the change to the HMDA reporting threshold for closed-end mortgage loans may need time to implement or adjust policies and procedures, systems, and operations to come into compliance with their reporting obligations. This letter serves as a notice that, consistent with the Bureau, the Board does not intend to cite HMDA violations or take enforcement action for not collecting or reporting closed-end mortgage loan data originated in 2022, 2021, or 2020 by Federal Reserve-supervised financial institutions 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.
If supervised financial institutions have questions about the guidance set forth in this letter, they are encouraged to contact the responsible Federal Reserve Bank. In addition, questions may be sent via the Board’s public website.”5
ENDNOTES
1 See 85 Federal Register 28364 (May 12, 2020); see also 12 C.F.R. §1003.2(g)(1)(v)(A) and (g)(2)(ii)(A). Under the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010, the Bureau is responsible for rulemaking under HMDA. See 12 U.S.C. §§5481(12)(K) and (14) and 5512.
2 See National Community Reinvestment Coalition v. CFPB (D.D.C. 2022). The court upheld the Bureau’s May 2020 changes to the threshold for reporting open-end lines of credit.
3 See 87 Federal Register 77980 (December 21, 2022).
4 See “Changes to HMDA’s Closed-end Reporting Threshold” (December 6, 2022).
5 See Board of Governors: Contact Us.