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  • FDIC FIL provides guidance on HMDA partial exemptions

    Agency Rule-Making & Guidance

    On October 10, the FDIC issued FIL-58-2018 which summarizes guidance provided by the CFPB on the implementation of partial exemptions from certain of HMDA’s reporting requirements for specific insured depository institutions and insured credit unions pursuant to Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act. On August 31, as previously covered in InfoBytes here, the Bureau issued an interpretive and procedural rule to implement and clarify recent HMDA amendments and outline exemption qualification requirements. FIL-58-2018 reminds FDIC-supervised institutions subject to HMDA and Regulation C of the following clarifications made by the Bureau: (i) there are 26 data points covered by the partial exemptions and 22 other data points that all HMDA reporters must collect, record, and report”; (ii) loans counted towards partial exemption thresholds must otherwise be reportable under Regulation C; (iii) exception based on Community Reinvestment Act examination reports will be determined by the two most recent CRA ratings as of December 31 of the preceding calendar year; (iv) if an institution eligible for a partial exemption chooses not to report a universal loan identifier, it must report a non-universal loan identifier unique within the institution; and (v) institutions exempt from certain reporting requirements may still report exempt data fields so long as they “report all data fields associated with that data point.”

    Agency Rule-Making & Guidance FDIC CFPB HMDA EGRRCPA S. 2155 Mortgages CRA

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  • CFPB issues HMDA interpretive rule to implement EGRRCPA amendments

    Agency Rule-Making & Guidance

    On August 31, the CFPB issued an interpretive and procedural rule to implement and clarify the HMDA amendments included in Section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act) (previously Senate bill S. 2155). Section 104(a) of the Act amends section 304(i) of HMDA by adding partial exemptions from some of HMDA’s reporting requirements for certain insured depository institutions and insured credit unions. Specifically, banks and credit unions that originate fewer than 500 open-end lines of credit in each of the two preceding calendar years and/or 500 closed-end mortgages in each of the two preceding calendar years are exempt from HMDA’s expanded data disclosures. The exemption does not apply to nonbanks and does not exempt institutions from HMDA reporting altogether. Notwithstanding the new partial exemptions, the insured institution must comply with HMDA’s expanded data disclosures if it received a rating of “needs to improve record of meeting community credit needs” during each of its two most recent CRA examinations or a rating of “substantial noncompliance in meeting community credit needs” on its most recent CRA examination. These partial exemptions to HMDA took effect when the Act became law on May 24, 2018.

    In response to industry questions on the application of the exemptions, the Bureau released an interpretive and procedural rule. The following are key highlights of the rule:

    • Institutions exempt from certain reporting requirements may still report exempt data fields so long as they “report all data fields within any exempt data point for which they report data.” For example, if a partially exempt institution reports a data field that is part of the property address, the institution must report all other data fields that are part of the property address (e.g., city, state, zip code). The Bureau notes that institution may be particularly inclined to report exempt data fields with their 2019 submissions, as 2018 data collection was already in process when the Act took effect;
    • To count towards the 500 loan or line of credit threshold, loans and lines of credit must be otherwise HMDA-reportable loans;
    • The partial exemption applies to new data points that were implemented by the Bureau’s 2015 HMDA Final Rule, but institutions covered by the partial exemption are still required to report the 22 data points previously established by the Federal Reserve Board;
    • The rule provides requirements for a non-universal loan identifier for any partially exempt loan or application; and
    • The CRA ratings used to determine whether the CRA reporting exception applies are the two most recent CRA ratings as of December 31 of the preceding calendar year.

    The Bureau notes that it intends to initiate a notice-and-comment rulemaking to incorporate these interpretations and procedures into Regulation C at a later date.

    Additionally, the Bureau also released updates to the Filing Instructions Guide (FIG) for HMDA data collected in 2018 to incorporate the Act as implemented and clarified by the interpretive rule.

    Agency Rule-Making & Guidance CFPB HMDA S. 2155 Mortgages EGRRCPA

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  • CFPB announces HMDA File Format Verification Tool and new 2017 data reports and datasets

    Agency Rule-Making & Guidance

    On August 9, the CFPB released the 2018 File Format Verification Tool (FFVT). The FFVT tests whether HMDA reporters’ files meet formatting requirements, specifically whether the file (i) is pipe-delimited; (ii) has the proper number of data fields; and (iii) has data fields formatted as integers, where necessary. It does not include any data validation or consistency tests. Because the tool has no login functions, no federal agency will receive or review the files tested. Additionally, earlier in the week, the Bureau announced the release of the 2017 HMDA Dynamic National Loan-Level Dataset and the Aggregate & Disclosure reports. The Dynamic National Loan-Level Dataset contains the raw HMDA data reported by all HMDA reporters, redacted by the Bureau to protect applicant and borrower privacy. The Disclosure Reports summarize lending activity for individual institutions by MSA or MD and nationwide and the National Aggregate Reports summarize aggregate lending activity of all institutions, tabulated by a variety of loan, borrower, and geographical characteristics.

    Agency Rule-Making & Guidance CFPB HMDA Mortgages

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  • Federal Reserve Board launches inaugural Consumer Compliance Supervision Bulletin

    Agency Rule-Making & Guidance

    On July 26, the Federal Reserve Board released its inaugural Consumer Compliance Supervision Bulletin (Bulletin) to share information about the agency’s supervisory observations and other noteworthy developments related to consumer protection, and provide practical steps for banking organizations to consider when addressing consumer compliance risk. The first Bulletin focuses on fair lending issues related to the practice of redlining and outlines key risk factors the Fed considers in its review, such as (i) whether a bank’s Community Reinvestment Act (CRA) assessment areas inappropriately exclude minority census tracts; (ii) whether a bank’s Home Mortgage Disclosure Act or CRA lending data show “statistically significant disparities in majority minority census tracts when compared with similar lenders”; or (iii) whether the bank’s branches, loan production offices, or marketing strategies appear to exclude majority minority census tracts. Practical steps for mitigating redlining risk are also provided. The Bulletin also discusses fair lending risk related to mortgage pricing discrimination against minority borrowers, small dollar loan pricing that discriminates against minorities and women, disability discrimination, and maternity leave discrimination.

    The Bulletin additionally addresses unfair or deceptive acts or practices risks related to overdrafts, misrepresentations made by loan officers, and the marketing of student financial products and services. The Bulletin also highlights regulatory and policy developments related to the Federal Financial Institutions Examination Council’s updated Uniform Interagency Consumer Compliance Rating System along with recent changes to the Military Lending Act.

    Agency Rule-Making & Guidance Federal Reserve Bank Supervision Redlining Fair Lending Consumer Finance Military Lending Act FFIEC HMDA CRA Overdraft

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  • CFPB, OCC, and FDIC release statement on HMDA exemption in regulatory relief act

    Federal Issues

    On July 5, the CFPB issued a statement regarding the implementation of the partial HMDA exemptions in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the Act), S.2155/ P.L. 115-174, which was signed into law by President Trump on May 24. As previously covered by InfoBytes, the Act provides an exemption from HMDA’s expanded data reporting requirements for banks and credit unions that originate fewer than 500 open-end and 500 closed-end mortgages (the provision would not apply to nonbanks and would not exempt institutions from HMDA reporting altogether). Although the statement emphasizes that the Act will not affect the format of the Loan/Application Register (LAR) for HMDA data collected in 2018—which should still be formatted in accordance with the Filing Instructions Guide issued in February (covered by InfoBytes here)—the Bureau stated that it intends to provide guidance later this summer on the Act, including an exemption code for institutions that are not reporting a particular field due to the Act’s partial exemptions.

    Additionally, the statement reiterated the Bureau’s December 2017 announcement that it will not require resubmissions for 2018 HMDA data, unless there are material errors; and penalties will not be assessed with respect to errors in the 2018 data. The CFPB notes that institutions should focus the 2018 data collection on identifying areas for improvement in their HMDA compliance management systems for future years. The Bureau further advised that it expects that supervisory examinations of 2018 HMDA data will be “diagnostic” to help “identify compliance weaknesses, and will credit good-faith compliance efforts.”

    The OCC issued a similar announcement with OCC Bulletin 2018-19. The FDIC issued a similar announcement with FIL-36-2018.

    Federal Issues CFPB CFPB Succession HMDA S. 2155 OCC Trump Mortgages EGRRCPA

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  • Trump signs legislation enacting bipartisan regulatory relief bill

    Federal Issues

    On May 24, President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) (the bill) — which modifies provisions of the Dodd-Frank Act and eases certain regulations on certain smaller banks and credit unions. Upon signing, the White House released a statement quoting the president, “[c]ommunity banks are the backbone of small business in America. We are going to preserve our community banks.”

    The House, on May 22, passed the bipartisan regulatory reform bill by a vote of 258-159. The bill was crafted by Senate Banking, Housing, and Urban Affairs Committee Chairman Mike Crapo, R-Idaho and passed by the Senate in March. The House passed the bill without any changes to the Senate version, even though House Financial Services Chairman, Jeb Hensarling, originally pushed for additional reform provisions to be included. Specifically, the bill does not include certain provisions that were part of Hensarling’s Financial CHOICE Act, such as (i) a complete repeal of the Volker Rule; (ii) subjecting the CFPB to the Congressional appropriations process and restructure the agency with a bipartisan commission; and (iii) reducing the Financial Stability Oversight Council’s (FSOC) authority to designate nonbank financial institutions as Systemically Important Financial Institutions (SIFIs).

    In response to the bill’s passage, the OCC’s Comptroller of Currency, Joseph Otting, issued a statement supporting the regulatory changes and congratulating the House, “[t]his bill restores an important balance to the business of banking by providing meaningful reductions of regulatory burden for community and regional institutions while safeguarding the financial system and protecting consumers.” Additionally, acting Director of the CFPB, Mick Mulvaney, applauded Congress, noting that the reforms to mortgage lending were “long overdue” and called the bill “the most significant financial reform legislation in recent history.”

    As previously covered by InfoBytes, the highlights of the bill include:

    • Improving consumer access to mortgage credit. The bill’s provisions state, among other things, that: (i) banks with less than $10 billion in assets are exempt from ability-to-repay requirements for certain qualified residential mortgage loans held in portfolio; (ii) appraisals will not be required for certain transactions valued at less than $400,000 in rural areas; (iii) banks and credit unions that originate fewer than 500 open-end and 500 closed-end mortgages are exempt from HMDA’s expanded data disclosures (the provision would not apply to nonbanks and would not exempt institutions from HMDA reporting altogether); (iv) amendments to the S.A.F.E. Mortgage Licensing Act will provide registered mortgage loan originators in good standing with 120 days of transitional authority to originate loans when moving from a federal depository institution to a non-depository institution or across state lines; and (v) the CFPB must clarify how TRID applies to mortgage assumption transactions and construction-to-permanent home loans, as well as outline certain liabilities related to model disclosure use.
    • Regulatory relief for certain institutions. Among other things, the bill simplifies capital calculations and exempts community banks from Section 13 of the Bank Holding Company Act if they have less than $10 billion in total consolidated assets. The bill also states that banks with less than $10 billion in assets, and total trading assets and liabilities not exceeding more than five percent of their total assets, are exempt from Volcker Rule restrictions on trading with their own capital.
    • Protections for consumers. Included in the bill are protections for veterans and active-duty military personnel such as: (i) permanently extending from nine months to one year the protection that shields military personnel from foreclosure proceedings after they leave active military service; and (ii) adding a requirement that credit reporting agencies provide free credit monitoring services and credit freezes to active-duty military personnel. The bill also addresses the creation of an identity theft protection database. Additionally, the bill instructs the CFPB to draft federal rules for the underwriting of Property Assessed Clean Energy loans (PACE loans), which would be subject to the TILA ability-to-repay requirement.
    • Changes for bank holding companies. Among other things, the bill raises the threshold for automatic designation as a SIFI from $50 billion in assets to $250 billion. The bill also subjects banks with $100 billion to $250 billion in total consolidated assets to periodic stress tests and exempts from stress test requirements entirely banks with under $100 billion in assets. Additionally, certain banks would be allowed to exclude assets they hold in custody for others—provided the assets are held at a central bank—when computing the amount such banks must hold in reserves.
    • Protections for student borrowers. The bill’s provisions include measures to prevent creditors from declaring an automatic default or accelerating the debt against a borrower on the sole basis of bankruptcy or cosigner death, and would require the removal of private student loans on credit reports after a default if the borrower completes a loan rehabilitation program and brings payments current.

    Each provision of the bill will take effect at various intervals from the date of enactment up to 18 months after.

     

    Federal Issues Federal Legislation Consumer Finance CFPB HMDA Volcker Rule Dodd-Frank SIFIs TRID U.S. House U.S. Senate S. 2155 Community Banks EGRRCPA

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  • CFPB Succession: Bureau dismantles Office for Students; no longer plans student loan regulations; and more

    Federal Issues

    On May 9, according to multiple reports, the CFPB internally announced that the Bureau would eliminate the Office of Students & Younger Consumers and move its staff into the Office of Financial Education as part of acting Director Mulvaney’s agency reorganization. The Bureau will continue to have a Student Loan Ombudsman position, which is required by the Dodd-Frank Act. It is also reported that the Bureau intends to create a new “Office of Cost Benefit Analysis” and rename certain existing offices. As previously covered by InfoBytes, acting Director Mulvaney plans to move the Office of Fair Lending and Equal Opportunity from the Division of Supervision, Enforcement and Fair Lending to the Office of the Director, in order to focus on “advocacy, coordination and education.”  Day-to-day responsibility for enforcement and supervision oversight will remain in the renamed Division of Supervision and Enforcement (SE).

    The Office of Management Budget (OMB) released the CFPB’s Spring 2018 rulemaking agenda, which no longer includes “Student Loan Servicing” as a Long-Term Action. In previous agendas, the Bureau described its plan for Student Loan Servicing as “The CFPB will continue to monitor the student loan servicing market for trends and developments.  As this work continues, the Bureau will evaluate possible policy responses, including potential rulemaking.  Possible topics for consideration might include specific acts or practices and consumer disclosures.” In addition to dropping Student Loan Servicing, the Spring 2018 agenda also no longer lists plans for Supervision of Larger Participants in Markets for Personal Loans, Overdraft Services, or Submission of Credit Card Agreements under TILA (more information on the CFPB’s previous plans for these rules can be found here).

    As expected, the Spring 2018 agenda also included two new additions to the Proposed Rule Stage:

    • HMDA. The Bureau has previously announced it intends to engage in a broader rulemaking to (i) re-examine the criteria determining whether institutions are required to report data; (ii) adjust the requirements related to reporting certain types of transactions; and (iii) re-evaluate the required reporting of additional information beyond the data points required by the Dodd-Frank Act (InfoBytes coverage here). The Bureau indicates it expects a Notice of Proposed Rulemaking (NPRM) on any changes to the HMDA rule before 2019. 
    • Payday, Vehicle Title, and Certain High-Cost Installment Loans. In January, the Bureau announced the intention to reconsider the 2017 payday rule (covered by InfoBytes here). The OMB agenda indicates the Bureau expects a NPRM by February 2019.

    Notably, the CFPB continues to include “Debt Collection Rule” in a Proposed Rule Stage, as it has in previous agenda iterations. However, the Bureau has extended the deadline for its NPRM to February 2019.

      

    Federal Issues CFPB Succession Student Lending CFPB Overdraft Debt Collection Payday Lending HMDA

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  • FFIEC releases 2017 HMDA data; CFPB releases new annual report on mortgage market activity and trends

    Federal Issues

    On May 7, the Federal Financial Institutions Examinations Council released the 2017 Home Mortgage Disclosure Act (HMDA) data on mortgage lending transactions covering information submitted by financial institutions on or before April 18. The data will not remain static, but instead will be updated on an on-going basis to reflect late submissions and resubmissions. The data currently include information on 14.1 million actions: 12.1 million home loan applications, 7.3 million of which resulted in loan originations, and 2.1 million in purchased loans. Observations from the CFPB on the data include: (i) total number of originated loans decreased by 12.4 percent; home-purchase lending increased by 4 percent; (ii) nondepository, independent mortgage companies accounted for 56.1 percent of first-lien owner-occupied home purchase loans (up from 53.3 percent in 2016); and (iii) the share of refinance loans to low- and moderate-income borrowers increased from 16.9 percent to 22.9 percent.

    On the same day, the CFPB also released its first annual series of data points describing mortgage market activity based on data reported under HMDA. The report summarizes the 2017 HMDA data and recent trends in the mortgage market.

     

    Federal Issues CFPB FFIEC HMDA Mortgages Mortgage Origination

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  • Senate passes bipartisan financial regulatory reform bill

    Federal Issues

    On March 14, by a vote of 67-31, the Senate passed the Economic Growth, Regulatory Relief, and Consumer Protection Act (S. 2155) (the bill)—a bipartisan regulatory reform bill crafted by Senate Banking, Housing, and Urban Affairs Committee Chairman Mike Crapo, R-Idaho—that would repeal or modify provisions of Dodd-Frank and ease regulations on all but the biggest banks. (See previous InfoBytes coverage here.) The bill’s highlights include:

    • Improving consumer access to mortgage credit. The bill’s provisions state, among other things, that: (i) banks with less than $10 billion in assets are exempt from ability-to-repay requirements for certain qualified residential mortgage loans; (ii) appraisals will not be required for certain transactions valued at less than $400,000 in rural areas; (iii) banks and credit unions that originate fewer than 500 open-end and 500 closed-end mortgages are exempt from HMDA’s expanded data disclosures (the provision would not apply to nonbanks and would not exempt institutions from HMDA reporting altogether); (iv) amendments to the S.A.F.E. Mortgage Licensing Act will provide registered mortgage loan originators in good standing with 120 days of transitional authority to originate loans when moving from a federal depository institution to a non-depository institution or across state lines; and (v) the CFPB must clarify how TRID applies to mortgage assumption transactions and construction-to-permanent home loans, as well as outline certain liabilities related to model disclosure use.
    • Regulatory relief for certain institutions. Among other things, the bill simplifies capital calculations and exempts community banks from Section 13 of the Bank Holding Company Act if they have less than $10 billion in total consolidated assets. The bill also states that banks with less than $10 billion in assets, and total trading assets and liabilities not exceeding more than five percent of their total assets, are exempt from Volcker Rule restrictions on trading with their own capital.
    • Protections for consumers. Included in the bill are protections for veterans and active-duty military personnel such as: (i) permanently extending the protection that shields military personnel from foreclosure proceedings after they leave active military service from nine months to one year; and (ii) adding a requirement that credit reporting agencies provide free credit monitoring services and credit freezes to active-duty military personnel. The bill also addresses general consumer protection options such as expanded credit freezes and the creation of an identity theft protection database. Additionally, the bill instructs the CFPB to draft federal rules for the underwriting of Property Assessed Clean Energy loans (PACE loans), which would be subject to TILA consumer protections.
    • Changes for bank holding companies. Among other things, the bill raises the threshold for automatic designation as a systemically important financial institution from $50 billion in assets to $250 billion. The bill also subjects banks with $100 billion to $250 billion in total consolidated assets to periodic stress tests and exempts from stress test requirements entirely banks with under $100 billion in assets. Additionally, certain banks would be allowed to exclude assets they hold in custody for others—provided the assets are held at a central bank—when computing the amount such banks must hold in reserves.
    • Protections for student borrowers. The bill’s provisions include measures to prevent creditors from declaring an automatic default or accelerating the debt against a borrower on the sole basis of bankruptcy or cosigner death, and would require the removal of private student loans on credit reports after a default if the borrower completes a loan rehabilitation program and brings payments current.

    The bill now advances to the House where both Democrats and Republicans think it is unlikely to pass in its current form.

    Federal Issues Federal Legislation Bank Regulatory Dodd-Frank S. 2155 CFPB HMDA Mortgages Licensing TILA TRID Servicemembers Volcker Rule Student Lending Consumer Finance Bank Holding Companies Community Banks Privacy/Cyber Risk & Data Security EGRRCPA

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  • GAO recommends the CFPB review the effectiveness of TRID guidance for small institutions

    Federal Issues

    On February 27, the U.S. Government Accountability Office (GAO) released a report of recommendations to financial regulators on actions to take related to the compliance burdens faced by certain small financial institutions. The report is the result of a study the GAO initiated with over 60 community banks and credit unions (collectively, “institutions”) regarding which financial regulations were viewed as the most burdensome. Among others, the report includes a recommendation to the CFPB that it should assess the effectiveness of its TILA/RESPA Integrated Disclosure Rule (TRID) guidance and take affirmative steps to address any issues that are necessary. In a response to the GAO that is included in the report, the CFPB Associate Director David Silberman said, “the Bureau agrees with this recommendation and commits to evaluating the effectiveness of its guidance and updating it as appropriate.” Among other recommendations, the GAO highlights the need for the CFPB to coordinate with the other financial regulators on their periodic Economic Growth and Regulatory Paperwork Reduction Act (EGRPRA) reviews.

    In addition to the compliance concerns with TRID disclosures, the GAO reports that the institutions also consider the data reporting requirements under HMDA, and the transaction reporting and customer due diligence requirements of the Bank Secrecy Act and related anti-money laundering laws the most burdensome. The GAO includes specific recommendations to the other financial regulators to strengthen and streamline regulations through the EGRPRA process.

    Federal Issues GAO CFPB Mortgages TRID HMDA Bank Secrecy Act Anti-Money Laundering EGRPRA Customer Due Diligence

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