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BCFP Issues Advisory on HMDA Exceptions

BCFP guidelinesThe Bureau of Consumer Financial Protection (BCFP) has issued guidelines on partial exceptions for small banks and credit unions under the Home Mortgage Disclosure Act (HMDA) rules of the amended Dodd-Frank Act, that is now also known as the Economic Growth, Regulatory Relief, and Consumer Protection Act.

According to the BCFP guidance, small banks and credit unions get a partial exemption from HMDA reporting procedures if the institution originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years. These institutions are also eligible for a partial exemption if they originated fewer than 500 open-end lines of credit in each of the two preceding calendar years.

Citing the amendments in the Act BCFP stated that for closed-end mortgage loans or open-end lines of credit subject to the partial exemptions, the “requirements of [HMDA section 304(b)(5) and (6)] shall not apply. Accordingly, for these transactions, those institutions are exempt from the collection, recording, and reporting requirements for some, but not all, of the data points specified in current Regulation C.”

The guidance also stressed on the fact that the amendments to the Act would not affect the format of the  Loan Application Registers (LARs) "for all institutions filing HMDA data collected in 2018." Additionally, BCFP stated that while LARs would be formatted according to the previously-related 2018 filings instructions guide for HMDA data collected in 2018, issued by the bureau, institutions that were partially exempted would enter an exemption code for the field specified in a revised 2018 filing instructions guide that the Bureau would be releasing in the coming months this year.

In terms of compliance, the bureau said that it did not intend to require data resubmission for HMDA data collected in 2018 and reported in 2019 unless "data errors are material."Collection and submission of the 2018 HMDA data will provide financial institutions an opportunity to identify any gaps in their implementation of amended Regulation C and make improvements in their HMDA compliance management systems for future years," BCFP said in its guidance. "Any examinations of 2018 HMDA data will be diagnostic to help institutions identify compliance weaknesses, and the Bureau will credit good-faith compliance efforts."

Recently the Federal Reserve, FDIC, and OCC also released guidance for banks on the amended rules of the Act, which included advisories on Bank Stress Tests, Resolution Plans, Volcker Rule, High Volatility Commercial Real Estate Exposures, and examination cycles of banks.

About Author: Radhika Ojha

Radhika Ojha, Online Editor at the Five Star Institute, is a graduate of the University of Pune, India, where she received her B.A. in Commerce with a concentration in Accounting and Marketing and an M.A. in Mass Communication. Upon completion of her master’s degree, Ojha worked at a national English daily publication in India (The Indian Express) where she was a staff writer in the cultural and arts features section. Ojha also worked as Principal Correspondent at HT Media Ltd and at Honeywell as an executive in corporate communications. She and her husband currently reside in Dallas, Texas. You can contact her at Radhika.Ojha@theMReport.com.

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