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As NAFCU continues to monitor the litigation landscape for issues that could impact credit unions' operating environment, there are two recent updates related to the Department of Housing and Urban Development's (HUD) disparate impact rule and the CFPB's rule to increase reporting thresholds under the Home Mortgage Disclosure Act (HMDA).

Disparate Impact

HUD is facing two legal challenges – one in California and one in Connecticut – that allege the final rule violates the Administrative Procedure Act and is contrary to the FHA and the Supreme Court's 2015 decision in a related case. HUD has filed motions to stay both cases as President Joe Biden issued a memorandum last month directing the HUD secretary to review the final rule and ensure the department implements the Fair Housing Act and administers its programs to fulfill the fair housing mission, "including by preventing practices with an unjustified discriminatory effect."

HUD issued the rule in September. Consistent with NAFCU's recommendation, the final rule aligns standards for disparate impact claims more closely with the 2015 Supreme Court decision.

NAFCU sent a Final Regulation Alert to members after the rule was released and noted that the agency's "more descriptive articulation of pleading requirements potentially reduces the risk of speculative litigation, reaffirming the Supreme Court’s observation that liability in disparate impact cases cannot be 'imposed based solely on a showing of a statistical disparity.'"

NAFCU supports strong and effective fair lending rules for credit unions that are responsive to technological change and will continue to work with HUD to ensure credit unions concerns are heard.

HMDA Thresholds

In April 2020, the CFPB issued its final rule to increase the reporting threshold for closed-end dwelling secured loans from 25 loans in the preceding two calendar years to 100 loans. This change took effect July 1.

In addition, the rule increases the threshold for reporting open-end lines of credit, including home equity lines of credit (HELOCs), from the original threshold of 100 loans in the 2015 rule to 200 loans effective Jan. 1, 2022. Until the new threshold takes effect, the temporary threshold of 500 open-end lines of credit, which was extended until 2022 in October, will remain in place.

The lawsuit brought by the National Community Reinvestment Coalition argues that this rule violates the Administrative Procedure Act. Both the coalition and the bureau requested a 45-day stay for the proceedings due to the change in leadership at the bureau. CFPB Acting Director Dave Uejio is reviewing the rule and litigation, according to the bureau, and may pursue further rulemaking activity related to the rule.

NAFCU has flagged for the bureau credit unions' high compliance cost of HMDA reporting and, while it is supportive of the increased thresholds, had recommended even higher thresholds to provide more regulatory relief.

NAFCU will keep credit unions informed of litigation that may alter the regulatory or operating environments.