CFPB to be lenient on enforcing changes from 2020 HMDA Final Rule 

The agency recognizes that financial institutions affected by this change may need time to implement changes in the closed-end loan reporting threshold

The Consumer Financial Protection Bureau stated on Tuesday that it will be lenient when enforcing changes made in the 2020 Home Mortgage Disclosure Act Final Rule on the closed-end loan reporting threshold. 

On September 23, 2020, the U.S. District Court for the District of Columbia issued an order vacating the 2020 HMDA Final Rule, changing the reporting data on closed-end mortgage loans to 25 from 100 in each of the two preceding years going back to the threshold set in 2015.

The 2015 HMDA Rule required the financial institutions that originated no fewer than 25 closed-end mortgage loans in each of the two preceding calendar years and meet other reporting criteria, such as asset and location tests, to report their closed-end mortgage activities. 

“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,” the agency said in a statement.

The agency added it “does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data collected in 2020, 2021, or 2022 for institutions subject to the CFPB’s enforcement” as it “does not view action regarding these institutions’ HMDA data as a priority.”

A report released by the CFPB in 2021 found that in general, lenders that are newly exempted under the 2020 HMDA Rule – with annual origination volumes that exceed the 25-loan threshold but fall below the 100-loan threshold – didn’t appear to be more likely to lend to Black and non-White Hispanic borrowers than larger volume lenders, the agency said.

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Lenders below the 100-loan threshold appear to make more investment purpose loans to higher income borrowers, trusts, partnerships, and corporations, as well as more loans secured by properties in low-to-moderate income census tracts, according to the report. 

“These findings are consistent with a possible explanation that lenders below the 2020 rule’s 100-loan closed-end threshold are making more loans to investors buying up property in low-to-moderate income census tracts for rental or resale,” the agency said in the report.

The HMDA, enacted by Congress in 1975 following the public’s concerns of the lack of mortgages often in minority neighborhoods, is a data collection, reporting, and disclosure statute that requires certain financial institutions to publicly disclose information about home mortgages. 

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