Relief law’s partial HMDA exemption explained in FDIC Financial Institution Letter

The partial exemption from Home Mortgage Disclosure Act (HMDA) reporting of certain data points, as provided under the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, S. 2155), and limitations on its applicability is explained in a Financial Institution Letter issued Wednesday by the Federal Deposit Insurance Corp. (FDIC).

The letter notes the Aug. 31 interpretive ruling issued by the Bureau of Consumer Financial Protection (BCFP, formerly known as CFPB), and which took effect Sept. 7. The partial exemption itself was effective upon enactment of EGRRCPA.

The letter notes that FDIC-insured institutions will not be eligible for the partial exemption if their Community Reinvestment Act (CRA) ratings are too low.

“To be eligible for a partial exemption with respect to a particular type of loan, an IDI [insured depository institution] must have originated fewer than 500 loans of that type in each of the two preceding calendar years,” FDIC says in FIL 58-2018. “The partial exemptions, however, are not available for an IDI that received a rating of ‘needs to improve record of meeting community credit needs’ during each of its two most recent CRA examinations, or a rating of ‘substantial noncompliance in meeting community credit needs’ in its most recent CRA examination.”

FDIC’s letter also notes clarifications provided in the bureau’s interpretive ruling, as follows:

  • Data Points Covered by the Partial Exemptions: The rule identifies 26 data points covered by the partial exemptions and 22 other data points that all HMDA reporters must collect, record, and report.
  • Loans Counted Toward the Partial Exemptions’ Thresholds. The bureau interprets the terms “closed-end mortgage loan” and “open-end line of credit” in EGRRCPA to include only those closed-end mortgage loans and open-end lines of credit that otherwise are reportable under Regulation C (the implementing rule for HMDA).
  • Exception Based on Community Reinvestment Act Examination Reports. The bureau interprets the act to provide that the determination of which CRA examinations are the two most recent is made as of Dec. 31 of the preceding calendar year.
  • Non-Universal Loan Identifier. If an IDI eligible for a partial exemption chooses not to report a universal loan identifier, the IDI must report a non-Universal Loan Identifier unique within the IDI.
  • Permissible Optional Reporting of Exempt Data Points. An eligible IDI may voluntarily report data points that are covered by the Act’s partial exemptions. However, if the IDI reports any data field for such a data point, it must report all data fields associated with that data point. For example, if an IDI voluntarily reports street address for a transaction, it must also report zip code, city, and state for that transaction.

It also reminds that the bureau, when it issued the interpretive ruling, noted it would issue a notice-and-comment rulemaking later to incorporate its interpretations and procedures related to the exemption into Regulation C.

FDIC FIL 58-2018 – Home Mortgage Disclosure Act (HMDA): Bureau of Consumer Financial Protection Interpretive and Procedural Rule on Partial Exemptions from HMDA Requirements

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