Compliance Blog

Written by Brandy Bruyere, Regulatory Compliance Counsel

I usually try to find happy news for Friday, but today the best I can do is a mix that ends on a positive note. Today we’ll highlight two items—yesterday’s CFPB HMDA proposal and potential regulatory relief from NCUA including a proposal for this month’s Board meeting on fixed assets.

CFPB Issues Proposed Changes to Home Mortgage Disclosure Act (HMDA) Rules

Yesterday, the CFPB announced a proposed rule that the Bureau claims would “simply the reporting process” under HMDA and Regulation C. Here are some highlights from the proposal:

• Adoption of a uniform loan-volume threshold of 25 loans—entities categorized as financial institutions under Regulation C would need to report HMDA data if they originated 25 qualifying closed-end loans in the last calendar year.
• Expansion of the types of transactions subject to Regulation C—financial institutions would have to report all closed-end loans, open-end lines of credit including HELOCs, and reverse mortgages. However, unsecured home improvement loans would no longer need to be reported.

The CFPB is also proposing to require reporting for several new data points as required by Dodd-Frank, as well as additional data that the CFPB “believes may be necessary to carry out the purposes of HMDA.” These data points can be grouped into four broad categories:

1. Information about applicants, borrowers, and the underwriting process, such as age, credit score, debt-to-income ratio, reasons for denial if the application was denied, the application channel, and automated underwriting system results.
2. Information about the property securing the loan, such as construction method, property value, lien priority, the number of individual dwelling units in the property, and additional information about manufactured and multifamily housing.
3. Information about the features of the loan, such as additional pricing information, loan term, interest rate, introductory rate period, non-amortizing features, and the type of loan.
4. Certain unique identifiers, such as a universal loan identifier, property address, loan originator identifier, and a legal entity identifier for the financial institution

Financial institutions with at least 75,000 reported transactions in the prior calendar will also be required to submit their data quarterly instead of annually. Reported transactions include covered loans, applications, and purchased covered loans.

Finally, on a positive note, the CFPB proposes to add an instructions section to Appendix A and the Staff Commentary to Regulation C in order to address questions and concerns that have been raised by commenters over the years. Again, this is a 600 page proposal so this blog is just a very broad overview. However, NAFCU’s Regulatory Affairs team will work on a Regulatory Alert for our members that provides further details.

Matz Addresses NAFCU’s Annual Conference.  Yesterday, NCUA Chairman Debbie Matz addressed NAFCU’s Annual Conference and as part of her comments provided some details relating to regulatory relief. While discussing recent proposals designed to provide such as last month’s appraisals and asset securitization rules, Matz said the Board plans additional actions to reduce burdens in the areas of caps on fixed asset purchases, the member business loan (MBL) rule, and the advertising rule. Here is a brief summary of NCUA’s plans for these rulemakings:

• Fixed assets—The Board is planning a proposal to “effectively eliminate” the 5% cap on fixed-asset purchases, allowing credit unions to “manage their own fixed-asset purchases without having to seek permission or waivers from NCUA.” This proposed change to Section 701.36 of NCUA’s rules is on the July NCUA Board Agenda.
• Member Business Loans—The Board will propose a rule in the future to provide “greater flexibility” for credit unions that offer MBLs;
• Advertising rules—NCUA plans to update its advertising rule to address modern technology like social media.

Summer Garden. We’ve had a good bit of rain lately, and when weeding my garden I found my first two zucchinis of the summer. I thought the first one was pretty large, and as you can see, so did Lemmy. Then I came across zucchini #2, which had to weigh at least eight pounds!