Changes to the Home Mortgage Disclosure Act (HMDA): Are You Obligated to Report?
Since it was first enacted in 1975, the Home Mortgage Disclosure Act (HMDA) has undergone several changes. The 40-year-old regulation's most recent changes, which went into effect on October 15, 2015, are just the beginning of reporting modifications set to roll out in the coming years. What changes are coming and what does your financial institution need to do to prepare?
For decades, the HMDA's reporting bar was set to meet the needs of the home loan market. Depositories and non-depositories diligently disclosed information to the Federal Reserve Bank around their originations, mortgage purchases and applications, with the goal of being transparent to the public and regulators.
The Dodd-Frank Act of 2010 (Dodd-Frank Act) produced the first sweeping modifications to HMDA, transferring rulemaking authority and governance from the Federal Reserve to the Consumer Financial Protection Bureau (CFPB), effective July 2011. Additionally, the Dodd-Frank Act gave the CFPB authorization to significantly expand the information all reporters are required to disclose, as well as the number of institutions required to report.
Last year's HMDA update from the CFPB broadened the scope of nondepository institutions subject to reporting regulations and narrowed the scope of depositories subject to the reporting regulations. The HMDA rule narrowed the scope of depository institutions based on asset size, location, loan activity tests and other criteria.
So, are you obligated to report? It depends.
One of the key criteria for whether or not a depository may be required to report goes into effect in 2018 and asks, "Did the institution originate at least 25 covered closed-end mortgage loans in each of the two preceding calendar years, or 100 covered open-end lines of credit in each of the two preceding calendar years?"
If the answer is yes to either of these statements, and the institution meets other applicable coverage requirements, then the institution may be covered by Regulation C. The precise criteria for whether or not an institution is covered by Regulation C are codified in the definition of financial institution in the regulation.
Several coverage and disclosure changes go into effect over the next four years, beginning January 1, 2017. This includes more than 15 new data points, as well as revisions to current data points, which will need to be collected starting in January 2017 for reporting in 2018.