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CFPB Finalizes Update to Home Mortgage Disclosure Act

The Consumer Financial Protection Bureau recently issued a rule which finalizes certain aspects of its May 2019 Notice of Proposed Rulemaking under the Home Mortgage Disclosure Act (HMDA). It extends for two years the current temporary threshold for collecting and reporting data about open-end lines of credit under HMDA. The rule also clarifies partial exemptions from certain HMDA requirements which Congress added in the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA).

For open-end lines of credit, the rule extends for another two years, until January 1, 2022, the current temporary coverage threshold of 500 open-end lines of credit. For data collection years 2020 and 2021, financial institutions that originated fewer than 500 open-end lines of credit in either of the two preceding calendar years will not need to collect and report data with respect to open-end lines of credit.

For the partial exemptions under the EGRRCPA, the rule incorporates into Regulation C the clarifications from the Bureau’s August 2018 interpretive and procedural rule. This final rule further effectuates the burden relief for smaller lenders provided by the EGRRCPA by addressing certain issues relating to the partial exemptions that the August 2018 rule did not address.

This rule finalizes the above aspects of the May 2019 Notice of Proposed Rulemaking, which also proposed raising the permanent coverage thresholds for closed-end mortgage loans and open-end lines of credit.  On July 31, 2019, the Bureau reopened the comment period until October 15, 2019 for aspects of the May 2019 Notice of Proposed Rulemaking related to raising the permanent coverage thresholds. The Bureau intends to issue a separate final rule in 2020 addressing these thresholds.

Earlier this year, the CFPB issued three new policies to promote innovation and compliance: the No-Action Letter (NAL) Policy; Trial Disclosure Program (TDP) Policy; and the Compliance Assistance Sandbox (CAS) Policy.

According to the CFPB, regulatory uncertainty can “hinder the development” of innovative products and services that benefit consumers.

NALs provide increased regulatory certainty through a statement that the CFPB will not bring a supervisory or enforcement action against a company for providing a product or service under certain circumstances.

“The new NAL Policy improves on the Bureau’s 2016 NAL Policy by having, among other things, a more streamlined review process focusing on the consumer benefits and risks of the product or service in question.” the CFPB says.

About Author: Seth Welborn

Seth Welborn is a Reporter for DS News and MReport. A graduate of Harding University, he has covered numerous topics across the real estate and default servicing industries. Additionally, he has written B2B marketing copy for Dallas-based companies such as AT&T. An East Texas Native, he also works part-time as a photographer.

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