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  • FDIC to Host Teleconference on HMDA Implementation

    Federal Issues

    On October 26, the FDIC’s Division of Depositor and Consumer Protection is scheduled to host a teleconference that will focus on the implementation of the 2015 HMDA Final Rule requirements scheduled to take effect January 1, 2018. The FDIC encourages financial institutions to submit questions prior to October 20 to be included during a Q&A segment following the formal presentation. Registration is required.

    Federal Issues FDIC HMDA Mortgages

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  • CFPB Publishes Updated Reference Material for HMDA

    Agency Rule-Making & Guidance

    On September 28, the CFPB released, on its website, updates to the reference material for the Home Mortgage Disclosure Act (HMDA). The Bureau updated the, (i) institutional coverage criteria; (ii) transactional coverage criteria; and (iii) key dates timeline.

    These updates are associated with the changes, previously reported in InfoBytes, that the CFPB made in the 2017 HMDA final rule.

    Agency Rule-Making & Guidance CFPB HMDA Consumer Finance Compliance Mortgages

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  • CFPB Announces Final Rule Modifying ECOA Regulations, Seeks Public Comment on Proposed Disclosure of HMDA Data

    Agency Rule-Making & Guidance

    On September 20, the CFPB announced its Final Rule amending Regulation B, which implements the Equal Credit Opportunity Act (ECOA), as well as a notice of proposed policy guidance requesting public comment on modifications to loan-level HMDA data that will be made publicly available beginning in 2019.

    Amendments to Regulation B. The Final Rule, among other things, permits institutions not subject to HMDA reporting requirements to choose, on an “application-by-application basis,” between two approaches to collecting race and ethnicity data from applicants for certain dwelling-secured loans: either collect such data in the aggregate or use the disaggregated and more expansive categories required for HMDA-reporting institutions under revisions to Regulation C effective in 2018.  According to the Final Rule, this means that creditors that are not HMDA reporters could transition to using the 2016 Uniform Residential Loan Application, which was updated to comply with the upcoming changes to Regulation C. As previously covered in InfoBytes, the justification for the change was to provide consistency and clarity with respect to other Bureau rules.

    Proposed Policy Guidance Regarding Publicly Available Loan-Level HMDA Data. The CFPB has issued a notice of proposed policy guidance with a request for public comment concerning modifications that it intends to apply to publicly available loan-level HMDA data that financial institutions will be required to report in connection with the new HMDA data reporting requirements that become effective January 1, 2018. The CFPB is specifically seeking comment on whether certain data fields should be included or modified in the publicly available loan-level HMDA data; these fields include the universal loan identifier, application date, loan amount, action taken date, property address, age, credit score, debt-to-income ratio, and property value, among others. As previously covered in InfoBytes, the CFPB issued its final rule amending Regulation C in August. Comments on the proposed guidance are due 60 days after publication in the Federal Register.

    Agency Rule-Making & Guidance Consumer Finance CFPB ECOA HMDA Mortgages Regulation B Regulation C

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  • CFPB’s Summer Edition of Supervisory Highlights Discloses Findings Across Many Financial Services Areas

    Consumer Finance

    On September 12, the CFPB released its summer 2017 Supervisory Highlights, which outlines its supervisory and oversight actions in areas such as auto loan servicing, credit card account management, debt collection, deposit account supervision, mortgage origination and servicing, remittances, service provider programs, short-term small-dollar lending, and fair lending. According to the Supervisory Highlights, recent supervisory resolutions have “resulted in total restitution payments of approximately $14 million to more than 104,000 consumers during the review period” between January 2017 and June 2017.

    As examples, in the area of auto loan servicing, examiners discovered vehicles were being repossessed even though the repossession should have been cancelled. Coding errors, document mishandling, and failure to timely cancel the repossession order were cited causes. Regarding fair lending examination findings, the CFPB discovered, in general, “deficiencies in oversight by board and senior management, monitoring and corrective action processes, compliance audits, and oversight of third-party service providers.” Examiners also conducted ECOA Baseline Reviews on mortgage servicers and discovered weaknesses in servicers’ fair lending compliance management systems. Findings in other areas include the following:

    • consumers were provided inaccurate information about when bank checking account service fees would be waived, and banks misrepresented overdraft protection;
    • debt collectors engaged in improper debt collection practices related to short-term, small-dollar loans, including attempts to collect debts owed by a different person or contacting third parties about consumers’ debts;
    • companies overcharged mortgage closing fees or wrongly charged application fees that are prohibited by the Bureau’s Know Before You Owe mortgage disclosure rules; and
    • borrowers were denied the opportunity to take full advantage of the mortgage loss mitigation options, and mortgage servicers failed to “exercise reasonable diligence in collecting information needed to complete the borrower’s application.”

    The Bureau also set forth new examination procedures for HMDA data collection and reporting requirements as well as student loan servicers, in addition to providing guidance for covered persons and service providers regarding pay-by-phone fee assessments.

    Consumer Finance CFPB Enforcement Auto Finance Credit Cards Debt Collection Fair Lending ECOA Compliance Mortgage Origination Mortgage Servicing HMDA Student Lending

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  • Agencies Issue Proposed Rulemaking to Amend CRA Regulations to Conform With HMDA Regulation Changes

    Lending

    On September 13, the Federal Reserve Board, the FDIC, and the OCC (Agencies) issued a joint notice of proposed rulemaking to amend Community Reinvestment Act (CRA) regulations to conform to the CFPB’s changes to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The proposed amendments revise the definition of “home mortgage loan” and “consumer loan,” update the public file content requirements to comply with recent Regulation C changes, and make various technical corrections. In addition, the proposal will eliminate obsolete references to the Neighborhood Stabilization Program (NSP), an initiative created by HUD to help stabilize communities contending with foreclosures and abandonment. In 2016, under CRA regulations, NSP-eligible activities were no longer considered “community development.” The Agencies anticipate that the proposed rule will become effective on January 1, 2018, when most of the changes to the HMDA rules go into effect.

    Home Mortgage Loan. Under the 2015 HMDA Rule changes, “most consumer-purpose transactions, including closed-end mortgage loans, closed-end home equity loans, home-equity lines of credit, and reverse mortgages will be reported under HMDA if they are secured by a dwelling.” To conform to the Regulation C amendments, effective January 1, 2018, for purposes of CRA regulations, a “home mortgage loan” will now mean a “closed-end mortgage loan” or an “open-end line of credit,” both of which will now apply only to loans that are secured by a dwelling. Financial institutions will now have the option to decide whether they want home improvement loans that are not secured by a dwelling, which will no longer be HMDA, considered for CRA purposes, although the Agencies note that they may choose to still evaluate some of these loans in certain circumstances “where the consumer lending is so significant a portion of an institution’s lending by activity and dollar volume of loans that the lending test evaluation would not meaningfully reflect lending performance if consumer loans were excluded.”

    Consumer Loan. The proposed rulemaking would no longer include “home equity loans” in the list of “consumer loan” categories for CRA purposes, as it will now be included within the proposed revised definition of a “home mortgage loan.”  

    Comments on the proposal will be accepted for 30 days after publication in the Federal Register.

    Lending Agency Rule-Making & Guidance OCC Federal Reserve FDIC CFPB CRA HMDA Mortgages

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  • FFIEC Releases Guidelines on HMDA Data Testing and Resubmission Standards

    Agency Rule-Making & Guidance

    Earlier this week the Federal Financial Institutions Examination Council (FFIEC) issued new FFIEC Home Mortgage Disclosure Act Examiner Transaction Testing Guidelines (guidelines). Examiners will use the new guidelines to assess the accuracy of the HMDA data recorded and reported by financial institutions and determine when an institution must correct and resubmit its HMDA Loan Application Register. The guidelines will apply to data collected beginning January 1, 2018. As further explained in a CFPB blog post issued the same day, this will be the first time all federal HMDA supervisory agencies—including the CFPB, FDIC, Federal Reserve, NCUA, and the OCC—will adopt uniform guidelines, which are designed to ensure HMDA data integrity (HMDA data includes certain information financial institutions are required to collect, record, and report about their home mortgage lending activity). The purpose for collecting the HMDA data is to evaluate housing trends and issues to monitor lending patterns, assist agencies with fair lending and Community Reinvestment Act examinations, and help identify discriminatory lending practices. According to a FDIC financial institution letter (FIL-36-2017) released on August 23, the highlights of the guidelines include, among other things, a data sampling process, error threshold levels, tolerance levels for minor errors, and the ability of examiners to direct a financial institution to make appropriate change to its compliance management system to prevent recurring HMDA data errors.

    As previously discussed in InfoBytes, in 2016 the CFPB issued a request for public feedback on the resubmission of mortgage lending data reported under HMDA.

    Agency Rule-Making & Guidance HMDA Mortgages CFPB FDIC Federal Reserve NCUA OCC CRA

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  • CFPB Issues Final Rule Amending 2015 HMDA Rule

    Agency Rule-Making & Guidance

    On August 24, the CFPB issued a final rule amending Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The changes are primarily for the purpose of clarifying the new data collection and reporting requirements published in October 2015, with most of the clarifications and revisions taking effect January 1, 2018. The CFPB released a proposed version of the clarifications  on April 13 (April Proposed Rule)—on which it solicited public comments—to address technical errors, ease the burden of certain reporting requirements, and clarify certain key terms. A detailed look at the April Proposed Rule was provided in an InfoBytes Special Alert earlier this year. An additional request for comments was issued July 14 on proposed amendments to ease the burden on community banks and credit unions by temporary raising the HMDA reporting threshold for open-end lines of credit. (See previous InfoBytes coverage here.) The CFPB adopted the April Proposed Rule and July amendments largely as written, however, a limited number of substantive changes were made. In order to assist filers, the CFPB released a comprehensive summary of the changes and reference charts to help institutions determine whether they are covered by Regulation C for 2017 or 2018 and beyond. The CFPB also released updated filing instruction guidelines for data collected in 2017 and 2018. The guidelines list changes to the reported data fields and valid values, and covers guidance for HMDA data collected in 2017 and thereafter that must be submitted to the CFPB on March 1 of each calendar year following the year of data collection.

    Highlights of changes made to the rule include:

    • Amendments to Regulation C that temporarily increase the threshold for the collection and reporting of data about open-end lines of credit, for a period of two years. Financial institutions originating fewer than 500 open-end lines of credit in either 2018 or 2019 will not be obligated to begin collecting such data until January 1, 2020. During this time, the Bureau will consider whether to make the increase permanent;     
    • Clarification to several aspects concerning the collecting and reporting of race and ethnicity information, including (i) that applicants are not required to select an aggregate race or ethnicity category as a precondition to selecting a race or ethnicity subcategories; (ii) that applicants may provide a particular “other” ethnicity or race in the free-form field, whether or not the applicant selects the “Other Hispanic or Latino,” “Other Asian,” or “Other Pacific Island” subcategory; and (iii) how financial institutions should report ethnicity—following the outlined methods—if an applicant selects more than five ethnicity categories and subcategories combined; and
    • Clarification to certain key terms defined in the 2015 HMDA Rule, including “temporary financing, automated underwriting system, multifamily dwelling, extension of credit, income, and mixed-use property.”

    Buckley Sandler will release a more comprehensive analysis of the rule and its impact on financial institutions next week.

    Agency Rule-Making & Guidance HMDA Mortgages Fair Lending CFPB

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  • Buckley Sandler Insights: CFPB Updates Rulemaking Agenda

    Consumer Finance

    On July 20, the CFPB released its Spring 2017 rulemaking agenda. The agenda was last updated in Fall 2016. The summer release date, and the fact that certain deadlines listed in the updated agenda have already passed, indicates that the agenda’s release may have been delayed after the CFPB drafted it. The following aspects of the updated agenda are particularly noteworthy:

    • Regulation Reviews: The Bureau plans to begin “the first in a series of reviews of existing regulations that we inherited from other agencies through the transfer of authorities under the Dodd-Frank Act,” noting that “other federal financial services regulators have engaged in these types of reviews over time, and believe that such an initiative would be a natural complement to our work to facilitate implementation of new regulations.” The Bureau has formed “an internal task force to coordinate and deepen the agency’s focus on concerns about regulatory burdens and projects to identify and reduce unwarranted regulatory burdens….” The agenda lists “pre-rule activities” as continuing through September 2017. Separately, the Bureau notes its ongoing assessments of the effectiveness of the Mortgage Servicing Rules, the Ability-to-Repay/Qualified Mortgage Rule, and the Remittance Transfer Rule pursuant to the Dodd-Frank Act’s five-year lookback provision.
    • Small Dollar Lending: The Bureau reports that it received more than one million comments on its June 2016 proposed rule to impose ability-to-repay requirements for payday, vehicle title, and similar installment loans. The Bureau states that it “continue[s] to believe that the concerns articulated in the [proposed rule] are substantial” but does not provide an expected release date for a final rule.
    • “Larger Participants” in Installment Lending: The agenda lists September 2017 as the expected release date for “a proposed rule that would define non-bank ‘larger participants’ in the market for personal loans, including consumer installment loans and vehicle title loans.” Designation as a larger participant brings a non-bank entity within the CFPB’s supervisory jurisdiction. The agenda indicates that a companion rule requiring payday, vehicle title lenders, and other non-bank entities to register with the Bureau is also underway, as noted below.
    • Debt Collection: In July 2016, the Bureau released an outline of proposals under consideration for debt collection and convened a panel under the Small Business Regulatory Enforcement Fairness Act in conjunction with the Office of Management and Budget and the Small Business Administration’s Chief Counsel for Advocacy to consult with representatives of small businesses that might be affected by the rulemaking. The Bureau notes that, “[b]uilding on feedback received through [that] panel, we have decided to issue a proposed rule later in 2017 concerning debt collectors’ communications practices and consumer disclosures.” The agenda states that a proposed rule is expected in September 2017. The Bureau also states that, in a departure from the July 2016 outline of proposals, the Bureau “intend[s] to follow up separately at a later time about concerns regarding information flows between creditors and FDCPA collectors and about potential rules to govern creditors that collect their own debts.”
    • Overdrafts: The Bureau states that the current opt-in regime “produces substantially different opt-in rates across different depository institutions” and that its “supervisory and enforcement work indicates that some institutions are aggressively steering consumers to opt in.” The Bureau reports that it is “engaged in consumer testing of revised opt-in forms and considering whether other regulatory changes may be warranted to enhance consumer decision making.” The agenda lists “pre-rule activities” as continuing through June 2017.
    • Small Business Lending: The agenda lists “pre-rule activities” on the implementation of the small business data reporting provisions of the Dodd-Frank Act as continuing through June 2017. Specifically, the agenda states that, at this juncture, the CFPB “is focusing on outreach and research to develop its understanding of the players, products, and practices in the small business lending market and of the potential ways to implement section 1071.”
    • HMDA & ECOA Amendments: The agenda lists October 2017 as the expected release date for the April 2017 proposed ECOA amendments to clarify requirements for collecting information on ethnicity, race, and sex, but does not list an expected release date for finalization of the April 2017 proposed technical corrections to the 2015 HMDA rule, or the July 2017 proposed amendments to the 2015 HMDA rule’s requirements for reporting home equity lines of credit. 
    • TRID/Know Before You Owe Amendments: The agenda lists March 2018 as the expected release date for finalization of the July 2017 proposed rule addressing the “black hole” issue, which is discussed in our special alert.
    • Mortgage Servicing Amendments: The Bureau states that it expects to issue a proposal in September 2017 “to make one or more substantive changes to the rule in response to . . . concerns” raised by the industry. 
    • Arbitration: Interestingly, the agenda states that the Bureau’s final rule on mandatory arbitration clauses, which was released this month to significant controversy, was not expected until August.
    • Non-Bank Registration: The Bureau states that it is “considering whether rules to require registration of [installment lenders] or other non-depository lenders would facilitate supervision, as has been suggested to us by both consumer advocates and industry groups.”
    • Prepaid Cards: The agenda does not provide an expected release date for finalization of the June 2017 proposed amendments addressing error resolution and limitations on liability, application of the rule’s credit-related provisions to digital wallets, and other issues. 
    • Credit Card Agreement Submission: The Bureau is “considering rules to modernize our database of credit card agreements to reduce burden on issuers that submit credit card agreements to us and make the database more useful for consumers and the general public.” The agenda lists “pre-rule activities” as continuing through October 2017.

    Consumer Finance Agency Rule-Making & Guidance CFPB Regulator Enforcement Lending Installment Loans Debt Collection Overdraft Small Business Lending HMDA ECOA TRID Mortgages Arbitration Prepaid Cards Credit Cards

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  • ABA, CFPB to Host Webinar for Financial Institutions on New HMDA Submission Platform

    Agency Rule-Making & Guidance

    On July 17, the ABA and CFPB announced a joint webinar on August 8 at 2:00 pm EDT, which will instruct compliance, operations, and loan processing professionals on how to use the new platform for submitting HMDA data. The webinar will provide an overview of the new tool and data collection process that all financial institutions must use to submit HMDA data beginning January 1, 2018 for data collected during 2017 and going forward.

    Notably, however, on July 14, the CFPB issued a request for comments on proposed amendments to its HMDA reporting threshold for calendar years 2018 and 2019 to ease the burden on small-volume lenders. The comment period ends July 31, 2017. (See previous InfoBytes summary here.)

    Agency Rule-Making & Guidance CFPB ABA HMDA Mortgages Bank Compliance

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  • ABA, State Banking Associations Request HMDA Implementation Delay

    Lending

    Following up on comments submitted to the CFPB on its proposal to amend the 2015 HMDA rule (see previous InfoBytes coverage here), the American Bankers Association (ABA)—along with state banking associations representing all 50 states and Puerto Rico—sent a letter on July 12 to the Bureau requesting that the new “complex” and “substantive” requirements scheduled to take effect January 1, 2018 be delayed to allow banks time to comply. The associations claim the Bureau (i) failed to sufficiently conduct industry research to identify and address questions and proposed solutions concerning the proposed changes, and (ii) inadequately addressed issues related to the protection of borrower data. The ABA also stresses that the software systems banks need to incorporate into their platforms to ensure compliant data collection will not be available in time “because the industry and systems vendors are still awaiting rule changes that will necessitate system adaptations.” The Bureau has been asked to announce its intention for a delay within the next month.

    Lending HMDA ABA CFPB Bank Compliance Mortgages Agency Rule-Making & Guidance

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