Proposal Eases HELOC HMDA Threshold

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MORTGAGE EXPERT
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Fewer home-equity line of credit lenders will be subject to Home Mortgage Disclosure Act requirements under a proposed change.

HMDA was updated by the Consumer Financial Protection Bureau in 2015 as required by the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Under rules scheduled to go in effect at the beginning of next year, lenders that make at least 100 HELOCs a year for two consecutive years are subject to HMDA.

So the CFPB is soliciting comments for a proposal to raise the threshold to 500 loans per year. The increase would be in effect in 2018 and 2019 while the regulator decides whether to make it permanent.

The bureau said it recognized when the rule was adopted that smaller institutions would suffer a bigger burden for compliance.

But it stands behind HMDA reporting requirements.

“Home-equity lines of credit worsened the foreclosure crisis that swept the country in 2008 and 2009,” CFPB Director Richard Cordray said in the notice. “We need to keep track of the responsible use of these loans for consumers, but after hearing from community banks and credit unions we want to reconsider whether that goal can be achieved with a higher reporting threshold.”

Comments are being taken by the CFPB until July 31.

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Mortgage Daily Staff

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