The Consumer Financial Protection Bureau (CFPB) recently announced a new proposal that may alter the reporting requirements for banks and credit unions that issue home-equity lines of credit.

The Home Mortgage Disclosure Act (HMDA) requires lending institutions to report information about the home loans that they originate or purchase, as well as applications received. The regulation provides banking regulators and the public with data that can be utilized to assist:

  • In determining whether banks and credit unions are serving the housing needs of their communities
  • Public officials in distributing public-sector investments to attract private investment to areas needed
  • In detecting and identifying possible discriminatory lending patterns

To improve the quality and type of data reported, the CFPB made updates to the HMDA regulation in 2015. A significant change taking effect in 2018 is a requirement for some lenders to collect, report and disclose data on certain open-ended lines of credit, including home-equity lines of credit. Presenting a significant compliance burden on smaller institutions, the CFPB had limited the requirement to lenders that originated a minimum of 100 dwelling-secured open-end lines of credit in each of the last two calendar years.

Due to rising concerns from community banks and credit unions regarding the new challenges and costs of reporting they would face, the Bureau is now proposing a new threshold of 500 loans through calendar years 2018 and 2019  ̶  at least for now.

If you’re a smaller-volume institution you may not want to breathe a sigh of relief yet. The CFPB is seeking comments on whether to postpone collection of information from smaller-volume institutions so they can review whether the threshold should be permanently adjusted. Should the Bureau increase the threshold, there’s a chance you may not have to do HMDA reporting.

Learn more about the proposed reporting threshold and how to submit comments. Doeren Mayhew will keep you updated as additional information becomes available. If you have any questions on how this might impact your institution, please contact one of our Financial Institutions Group specialists.