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From Banking and Finance Law Daily, July 14, 2017

CFPB moves to ease HMDA reporting duties for small lenders

By Richard A. Roth, J.D.

The Consumer Financial Protection Bureau has offered community banks and credit unions some regulatory relief by proposing a temporary 400-percent increase in the Home Mortgage Disclosure Act reporting threshold for home equity lines of credit. Under the current Reg. C—Home Mortgage Disclosure (12 CFR Part 1003), financial institutions that made at least 100 home equity line of credit loans in the two prior years are required to make reports, but the CFPB is proposing to increase that threshold in 2018 and 2019 to 500 lines of credit. The bureau added that during the two-year period it will consider whether to raise the threshold permanently.

Showing an intent to move quickly on the proposal, the bureau set an unusually short comment deadline—July 31, 2017.

Reporting duty added. While HMDA has been in effect for more than 40 years, the home equity line of credit reporting requirement is new, having been required for the first time under Reg. C amendments that were adopted in 2015, the bureau said (see Banking and Finance Law Daily, Oct. 15, 2015). The initial 100-loan threshold was intended to avoid imposing a significant reporting burden on small-volume lenders because the resulting regulatory burden would not be justified by the value of the data to be reported.

In its proposal, the CFPB concedes that it "did not have robust data" when it selected the 100-line of credit threshold. It now believes the threshold might be too high. According to the CFPB, increasing the threshold to 500 lines of credit still will provide information on about 75 percent of the line of credit market.

The proposal affects only open-end home equity lines of credit; reporting requirements for closed-end loans are not affected.

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