Compliance Blog

Recently we blogged about the Home Mortgage Disclosure Act (HDMA) and the reporting thresholds found in Regulation C. Today, we’ll focus on another set of thresholds in Regulation C – those which determine whether a credit union qualifies for the “partial exemption.”

First, let’s quickly review what was covered in that previous blog: Regulation C sets out activity thresholds which determine if a credit union is required to collect, record, and report certain data under HMDA. These thresholds look back at the credit union’s number of originations in the preceding two years – so when determining whether a credit union is required to collect HMDA data for applications received in 2022, the credit union will look at the number of originations in 2020 and 2021.  For 2022, the thresholds are currently set at 100 originations for closed-end mortgages and 200 originations for home-secured open-end credit.

So where does the “partial exemption” come in? If a credit union determines that it is required to collect, record, and report HMDA data, then the partial exemption determines which HMDA datapoints it must collect, record and report.

Under section 1003.3(d) of Regulation C, an insured credit union can qualify for the partial exemption if it originated fewer than 500 closed-end mortgages or 500 home-secured open end lines of credit in each of the preceding two calendar years. As you can see, these thresholds work similarly to the activity thresholds mentioned above – they look at originations made in each of the previous two years, and they also operate independently (meaning that a credit union could receive the exemption for just closed-end credit, just open-end credit, or for both).

Thus, there is a three-tiered system created by these thresholds. Here’s a chart (using the 2022 numbers and thresholds):

If a credit union receives the partial exemption, then it will be exempt from collecting, recording or reporting certain data points. The regulation identifies the following data points as being covered by the exemption:

• A universal loan identifier (though section 1003.3(d)(5) notes that credit unions which decide not to report this would need to use a non-universal loan identifier (NULI));
• The property address;
•  The difference between the APR and APOR;
• ·The data points covered in section 1003.4(a)(15) through section 1003.4(a)(30), which include (among other things):
  • The credit score relied on in making the credit decision;
  • The principal reasons for denial (if applicable);
  • Total loan costs or total points and fees;
  • The interest rate;
  • Any prepayment penalty (if applicable);
  • Monthly debt-to-income ratios;
  • The number of months until maturity;
  • Whether the contract terms include a balloon payment, interest-only payments, negative amortization, or other terms that would allow for payments other than fully amortizing payments;
  • The value of the property securing the loan;
• The datapoints covered in section 1003.4(a)(32) through section 1003.4(a)(38):
  • The number of units in a multifamily dwelling (if applicable);
  • The Mortgage loan originator’s NMLS unique identifier;
  • The name of the automated underwriting system used by the credit union;
  • Whether the loan is a reverse mortgage;
  • Whether the loan is for business or commercial purposes.

If a credit union falls below the partial exemption threshold, then it would not be required to collect, record and report the datapoints listed above. Conversely, if a credit union’s originations exceed the partial exemption threshold, then it would be required to collect, record and report all of the datapoints listed in section 1003.4, including those listed above.

Finally, it should be noted that credit unions which qualify for the partial exemption could still choose to voluntarily report the exempt data points, though certain requirements described in section 1003.3(d)(4) will be triggered if a credit union choose to report voluntarily.