By Bill Elliott, CRCM; Director of Compliance Education
On September 23, 2022, the United States District Court for the District of Columbia issued an order vacating (cancelling) the 2020 Home Mortgage Disclosure Act (HMDA) Final Rule. That final rule changed the limits for closed-end mortgage loans. At the time, that final rule raised the “minimum” for mandatory reporting from 25 to 100 closed-end mortgage loans in each of the two preceding years.
The court vacated that change, and so the threshold for HMDA reporting in the regulation for 2023 and into the future has been reset back to 25 closed-end loans. Banks that have been able to avoid HMDA because they made fewer than 100 loans are required to comply in 2023. A blog entry issued by the Consumer Financial Protection Bureau (CFPB) on December 8, 2022 stated that the CFPB (and we presume the prudential regulators) will not require backfiling, nor would they cite banks for the absence of 2020, 2021, and 2022 filing data, but said nothing about 2023. Therefore, if your bank made more than 25 closed-end mortgage loans in 2021 and 2022, HMDA is now a requirement for closed-end mortgage loan reporting for your institution – starting January 1, 2023.
We are unsure why the CFPB waited about 10 weeks to inform us. But you will need to dust off those old policies, procedures, systems, and operations to come into compliance, or perhaps create new policies, procedures, and operations in a hurry. Additionally, there may be applications from 2022 that do not have the government monitoring information in file, because it would have been a violation for non-HMDA banks to collect that information. We believe that your institution needs to go back and collect that information for all loans that had an application in 2022, but that close in 2023.
The 25 vs. 100 threshold was a decision made by the CFPB, and that was reversed. The partial exemption changes – impacting a number of the data elements required to be collected – were the result of a change in law, so the partial exemption remains unaffected by this reversal.
Do you need a validation of your HMDA data prior to the 3/1/23 filing deadline? Young & Associates offers an off-site compliance review of your institution’s HMDA data. Using our secure file transfer system, we will validate your HMDA data to detect errors and issues before the filing deadline. For more information on our HMDA Review service, click here or contact Karen Clower, Director of Compliance, at 330.422.3444 or firstname.lastname@example.org.