Compliance Blog

Recently, we received a great question from a NAFCU member on HMDA implementation. While the new HMDA rules change the lobby notice disclosures, what about the current rule's requirement? Specifically, the rule requires credit unions that are subject to HMDA reporting make modified data available to the public to 3 years and post a disclosure statement for 5 years. Here are some key excerpts from section 1003.5:

(d) Availability of data. A financial institution shall make its modified register available to the public for a period of three years and its disclosure statement available for a period of five years. An institution shall make the data available for inspection and copying during the hours the office is normally open to the public for business. It may impose a reasonable fee for any cost incurred in providing or reproducing the data.

(e) Notice of availability. A financial institution shall post a general notice about the availability of its HMDA data in the lobby of its home office and of each branch office located in an MSA and Metropolitan Division. An institution shall provide promptly upon request the location of the institution's offices where the statement is available for inspection and copying, or it may include the location in the lobby notice. (Emphasis added).

Currently the Federal Financial Institutions Examination Council (FFIEC) prepares the disclosure statements and Regulation C requires credit unions to make this statement available to the public within 3 business days after receiving the disclosure from the FFIEC. Section 1003.5(b) also requires the credit union to either:

• Making available to the public in the credit union's home office and at least one branch office in each Metropolitan Statistical Area (MSA) and Metropolitan District (MD) where the credit union has offices the disclosure statement within 10 business days of receiving the statement; or

• Post the address for sending written requests in the lobby of each branch office and provide a copy of the disclosure statement within 15 calendar days of receipt for the MSA or MD for which the request was made.

Beginning January 1, 2018, the CFPB's suggested text for the lobby notice required under paragraph 1003.5(e) will point consumers to the CFPB's website. However, access to prior years' disclosure statements and modified LARs will not be available via the Bureau's website. It seems the amended HMDA rule did not clearly contemplate that there would be a few years where prior years' data would still need to be available as the suggested language for the lobby notices only seem to look forward based on data collected in 2017 and beyond.  However, there are a couple of blurbs in the preamble to the 2015 HMDA rule(links below) clarifying that current Regulation C will apply to requests for HMDA data collected prior to 2017:

"The Bureau notes that §1003.5(b) is effective January 1, 2018 and thus applies to the disclosure of 2017 HMDA data. Current Regulation C applies to requests received by financial institutions for HMDA data for calendar years prior to 2017.

Financial institutions will make available to the public their 2017 HMDA data pursuant to §1003.5(b) through (e) of this final rule. Financial institutions make available to the public their HMDA data for calendar years prior to 2017 pursuant to current Regulation C."

It will be important to keep in mind that current HMDA requires making a modified LAR available to the public for 3 years and the disclosure statement for 5 years. As a result, the CFPB's suggested text for the lobby notice only tells half the story.

After hearing others had received information from the CFPB on this, NAFCU reached out to the CFPB using its regulatory inquiries system and received non-binding, informal guidance on whether lobby notices will continue to be required for both versions of HMDA.  In speaking to CFPB staff, based on the language in the preamble referencing the current rule, it seems credit can have both notices available one for the timeframe required by current Regulation C and one for amended Regulation C. Alternatively, credit unions may be able to develop a combined statement. Here is the "suggested text" under the current rule:

5(e) Notice of availability.                                                       

1. Poster suggested text. An institution may use any text that meets the requirements of the regulation. Some of the Federal agencies that receive HMDA data provide HMDA posters that an institution can use to inform the public of the availability of its HMDA data, or the institution may create its own posters. If an institution prints its own, the following language is suggested but is not required:

Home Mortgage Disclosure Act Notice

The HMDA data about our residential mortgage lending are available for review. The data show geographic distribution of loans and applications; ethnicity, race, sex, and income of applicants and borrowers; and information about loan approvals and denials. Inquire at this office regarding the locations where HMDA data may be inspected.

2. Additional language for institutions making the disclosure statement available on request. An institution that posts a notice informing the public of the address to which a request should be sent could include the following sentence, for example, in its general notice: To receive a copy of these data send a written request to [address].

Here is the suggested text from the amended rule:

5(b) Disclosure Statement

2. Format of notice. A financial institution may make the written notice required under §1003.5(b)(2) available in paper or electronic form.
3. Notice suggested text. A financial institution may use any text that meets the requirements of §1003.5(b)(2). The following language is suggested but is not required:

Home Mortgage Disclosure Act Notice

The HMDA data about our residential mortgage lending are available online for review. The data show geographic distribution of loans and applications; ethnicity, race, sex, age, and income of applicants and borrowers; and information about loan approvals and denials. These data are available online at the Consumer Financial Protection Bureau's Web site (www.consumerfinance.gov/hmda). HMDA data for many other financial institutions are also available at this Web site.

4. Combined notice. A financial institution may use the same notice to satisfy the requirements of both §1003.5(b)(2) and §1003.5(c)."

Credit unions could consider indicating which years' data particular statements would apply to when determining whether to have two separate notices or combine notice statements. Either way, it will be important to be mindful of properly handling requests for HMDA data for years prior to 2017 given the length of time the rule requires financial institutions to make this information available.

Palate Cleanser.

If I'm going to blog about HMDA on a Friday, the least I can do is share a cute Lemmy picture. He decided to perch on the refurbished toy storage bench to peek outside, maybe to look at our holiday lights or maybe to stare down a package delivery person. Either way, he swears this is a comfortable fit!