Compliance Blog

I hope everyone had a safe and enjoyable holiday. As many credit unions are finalizing implementation of HMDA changes ahead of the January 1, 2018 deadline, some had hoped for a broader delay of HMDA given new leadership at the CFPB. Instead on December 21, just in time for the holidays, the CFPB expanded on its previous (and buried) supervisory guidance. Here is an excerpt from the press release:

"The Bureau recognizes the significant systems and operational challenges needed to meet the impending requirements under the rule. Accordingly, for HMDA data collected in 2018 and reported in 2019, the Bureau does not intend to require financial institutions to resubmit data unless data errors are material, or to pay penalties with respect to data errors. Accordingly, collection and submission of the 2018 HMDA data will provide financial institutions an opportunity to focus on identifying any gaps in their implementation of the additional requirements and making improvements in their HMDA compliance management systems for future years. The Bureau expects that any supervisory examinations of 2018 HMDA data will be diagnostic, to help institutions identify compliance weaknesses, and will credit good-faith compliance efforts." (Emphasis added.)

Note that the focus for examining compliance with 2018 data collection will be "diagnostic" for "identifying any gaps" in implementation. Most credit unions are not examined by the CFPB, but NCUA indicated a very similar stance in its 2018 supervisory priorities, also issued on Thursday:

Beginning in the second quarter, examiners will perform limited reviews of quarterly Loan/Application Registers (LAR), when applicable, to evaluate federal credit unions good faith efforts to comply with€ amendments to Regulation C. The NCUA's review of 2018 HMDA data will be diagnostic in nature, designed to help credit unions identify compliance weaknesses in collecting 2018 data for submission in 2019, and will credit good faith compliance efforts.

Recognizing the impending January 1, 2018 effective date of the Bureau's amendments to Regulation C and the significant systems and operational challenges needed to adjust to the revised regulation, for HMDA data collected in 2018 and reported in 2019, the NCUA does not intend to cite violations for data errors found in the quarterly LARs, nor require data resubmission unless data errors are material. Furthermore, the NCUA does not intend to assess penalties with respect to errors in data collected in 2018 and reported in 2019. However, credit unions subject to HMDA reporting must still collect the data, establish a quarterly LAR, and submit 2018 data by the March 1, 2019 deadline.

Collection and submission of the 2018 HMDA data will provide credit unions an opportunity to identify any gaps in their implementation of amended Regulation C and make improvements in their HMDA compliance management systems for future years (Emphasis added.)

In addition, the CFPB indicated its intent to initiate rulemaking to "reconsider various aspects" of the HMDA rule including the scope of reportable transactions, institutions that must report, and the number of discretionary data points:

"More specifically, the rulemaking may re-examine lending-activity criteria that determine whether institutions are required to report mortgage data. The rulemaking may also look at adjusting the new requirements to report certain types of transactions. Finally, the rulemaking may re-assess the additional information that the rule requires beyond the new data points specified under the Dodd-Frank Act."

We'll keep members posted as this develops and in the meantime, we're here if anyone has any last minute HMDA questions.

***

Tax Bill Impacts Executive Compensation. The recent tax reform bill made certain executive compensation taxable which may impact some credit unions. The year is ending soon though, so credit unions using non-qualified deferred compensation plans may want to reach out to their plan providers before the end of the year to discuss possible changes to make prior to January 1, 2018.

***

Programming Note. In observance of the New Year, NAFCU will be closed on Friday, December 29 and Monday, January 1. We'll be back to blogging next Wednesday, January 3. We wish you all a safe and happy New Year!

***

Sled Ride. We took Nolan on a pre-holiday trip to Ohio, where he got to experience his first sled ride. He had a blast.