The closed-end reporting threshold for reporting under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA), has decreased from 100 to 25 originations. This means that more lenders will be required to submit HMDA data.
History of Regulation C and the HMDA
HMDA has been around since 1975, but let’s fast forward a bit. When Regulation C was significantly revised beginning with 2018 data, the closed-end threshold was set at 25. Then, in 2020 the Consumer Financial Protection Bureau (CFPB) increased the threshold to 100, relieving many of the smallest reporters from their HMDA reporting obligations.
Earlier this year the United States District Court for the District of Columbia issued an order vacating that increase. Next, the CFPB announced last week that the closed-end threshold was returning to the previous level of 25 originations, and finally, a technical amendment to Regulation C was announced last week to reflect this change.
How Amendment to Regulation C Affects HMDA in 2023
2023 Closed-End Data – To establish whether your institution will be a reporter for 2023 data to be submitted in 2024, you will need to determine the number of closed-end mortgage loans that were originated in 2021 and 2022.
If that number is 25 or more in each of those years, then you must begin collecting data related to applications for which final action (origination, denial, withdrawal, etc.) was taken in 2023. Don’t forget to include commercial loans that would be reportable when determining whether you had 25 originations in each of those years.
Will HMDA Regulation C Amendment Apply Retroactively to 2020-2022?
2020 -2022 Data – The next question is whether data for past years must be reported now based on this retroactive change if your institution did not report, but would have been a reporter in any one of those three years with a threshold of 25 rather than 100. Technically, the answer is probably yes. That being said, the CFPB’s blog stated that the Bureau does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end data based on this development.
We are not aware of any other agency (FDIC, OCC, FRB, NCUA, etc.) that has issued a similar statement, so keep your eyes open for such an announcement if one of these other agencies is your primary HMDA regulator. Perhaps consider giving your local examiner a call to see what their position is.
What About Open-End Loans?
For 2022 data that must be submitted by March 1, 2023, the open-end threshold dropped from 500 to 200 originations in each of the past two years. However, that change was known heading into 2022 and is not affected by this ruling.
The Anders team of Banking and Financial Institutions compliance specialists closely follow changes to HMDA and related guidance. Contact Anders below to discuss your unique situation and reporting requirements.
Meet our HMDA professionals
Within our Banking and Financial Institutions industry group, we have four advisors who specialize in HMDA:
Brad Stumpe, CPA and CRCM is an Anders Partner with over 30 years in the industry, including 12 as an FDIC examiner.
Sandra Lane, a 2013 graduate of the Graduate School of Banking, is an Anders Compliance Supervisor with over 40 years in the industry, including 33 years working in a bank.
Sadie Carrera is an Anders Compliance Supervisor with over 25 years in the industry, including nearly 20 working in a bank, mortgage company or credit union.
Jessica Lyeki is an Anders Compliance Specialist with 12 years in the industry, including 10 working in a bank.All Insights