CFPB Issues Interpretive Rule on Partial HMDA Exemptions for Certain Depository Institutions

In an interpretive rule published on September 7, 2018, the CFPB clarified aspects of the partial HMDA exemptions for certain depository institutions that were created under the Economic Growth, Regulatory Relief, and Consumer Protection Act, including which data points are covered and certain procedures for voluntary reporting.

The Act, which was signed into law on May 24, 2018, created exemptions from some, but not all, of the collection, recording, and reporting requirements for insured depository institutions and insured credit unions that originate 500 or fewer closed-end mortgage loans or open-end lines of credit in each of the proceeding two years and meet certain Community Reinvestment Act performance evaluation rating standards.

Because financial institutions raised questions about the new partial exemptions and how they affect collection and reporting of 2018 data, the CFPB issued the interpretive rule to implement and clarify the Act’s HMDA amendments.  In particular, the rule:

• Clarifies that insured depository institutions and credit unions covered by a partial exemption under the Act have the option of reporting exempt data points, as long as they report all data fields within any exempt data point for which they report data (e.g., if voluntarily reporting a street address, the institution must report the entire property address including zip code, city, and state);
• Clarifies that only loans and lines of credit that are otherwise HMDA reportable count toward the thresholds for the partial exemptions;
• Identifies 26 data points in Regulation C that are covered by the partial exemptions (partially exempt institutions are still required to collect and report 22 remaining data points, including the borrower’s race, ethnicity, sex, and age);
• Designates requirements for using a non-universal loan identifier for partially exempt transactions for institutions that choose not to report a universal loan identifier; and
• Clarifies the exception to the partial exemptions for institutions with certain negative Community Reinvestment Act performance evaluation ratings.

In a previous statement issued on July 5, 2018, the CFPB also clarified that the Act will not affect the format of the Loan/Application Registers (LARs) for institutions filing HMDA data collected in 2018, but certain updates are anticipated to the 2018 Filing Instructions Guide (FIG) to allow exemption codes to be entered for the impacted fields.

In the rule, the CFPB expresses its belief that the partial exemptions under the Act took effect when the Act became law on May 24, 2018.  The CFPB also anticipates initiating a future notice-and-comment rulemaking to incorporate the above interpretations and procedures into Regulation C.

The rule, which went into effect upon publication on September 7, 2018, is available here.