On December 6, 2022, the Consumer Financial Protection Bureau (CFPB) addressed Home Mortgage Disclosure Act (HMDA) threshold changes through a blogpost on its website. The post confirms that the thresholds will move from the current 100 closed-end reportable mortgage loans to 25 closed-end mortgage loans in each of the two preceding calendar years. This is in response to the September 23, 2022 order vacating the 2020 HMDA Final Rule (2020 Rule) by the U.S. District Court for the District of Columbia. The order indicates that the 2020 HMDA rule change by the CFPB did not adequately support its justification to increase the threshold.
In April 2020, the CFPB issued a final rule (2020 HMDA rule) increasing the permanent threshold from 25 to 100 closed-end mortgage loans effective July 1, 2020 to reduce regulatory burden on certain institutions. The threshold has now reverted back to the 25 closed-end mortgage loans in accordance with the order vacating the 2020 rule. The court agreed that the “CFPB failed adequately to explain or support its rationales for adoption of the closed-end reporting thresholds under the 2020 Rule.”
The CFPB recognized in its announcement that it would take time for institutions to update their policies, procedures, and systems, and that the CFPB does not intend to enact enforcement actions or cite HMDA violations for failures to report data collected in 2020, 2021, or 2022 for institutions of at least 25 but fewer than 100 originations of closed-end mortgage loans.
In addition, on December 12, 2022, the CFPB issued a technical amendment to Regulation C in response to the judicial vacatur. Through the technical amendment, the CFPB is aligning the code of federal regulations so that it reflects the court’s vacatur of the 2020 HMDA rule and indicates the current exemption from collecting and reporting data for closed-end mortgage loans for institutions that originate less than 25 closed-end mortgage loans in each of the two preceding calendar years.
The court did not, however, vacate the threshold of 200 open-end lines of credit originated in each of the prior two years. This limit is still in effect.