It appears as though this bill will be getting onto the Senate floor next week. Right now, it also appears as though it has the bipartisan support needed in order to pass. If it does, it's expected the House will pass also and the President would sign.

https://www.congress.gov/bill/115th-congress/senate-bill/2155/text

This does quite a bit, but the parts that are important to me are:

QM if held in portfolio (and meets other minor requirements)
HMDA reporting threshold changes (although we don't have to report now)
Additional higher threshold requirements to require banks to escrow

There are also a bunch of other changes, including changes on capital levels, call reports, freezes on credit reports, etc.

Also, hope this is the correct spot for this even though it hasn't passed yet.

So, if this passes, if you originate fewer than 500 closed-end mortgage loans for 2 consecutive years, you are no longer a HMDA reporter?

And by "mortgage loans", do we mean secured by a dwelling? Sorry, i haven't worried too much about coverage in the past because we were always well above the requirements, but we might not be if this passes.

I think you would be exempt from the new data points, but maybe not the old ones???? It looks like it would only exempt paragraphs 5 and 6.

The act defines as -

Thanks.....i guess i need a little help figuring out exactly what parts "paragraphs 5 and 6" are referring to.

I have understood it you are exempt from all reporting if fewer than 500. Either way, if it is exempt from all or only the new xdata, it would cut down work. I have been working on our LAR for January and the process has definitely slowed compared to December.

No doubt.

I think it could be a logistical nightmare for the vendors if it's only partly affected...meaning data point changes only.

As far as mortgages, we are so close to that number even though my LAR lines cut down this year...if you consider how many were exempt but were still 'mortgage loan's, I'm just not sure how it would fall out. If they go by hard fact LAR lines, it might be easier to judge.

Although that document just made my eyes hurt, I'm not seeing any wonderful revelations in it. I believe fmissles assessment is right...it's just a cut back to the old reporting points at best.

The it's a "QM" if held in portfolio is not all that "meets the eyes" either, I'd say.

Hard to say RR, I thought it would give Banks a way to make QM loans that can be held in portfolio (which is what we would want), but I didn't dissect it enough to be sure.

As an update, this passed Senate cloture yesterday, which means it can be voted on at anytime now. If passed, it will either go to the House or go to conference where it will be reconciled with any number of House Bills that have already been voted on, on that side.

Well, we currently make QM loans held in portfolio [small creditor, at least] and I guess that's how I was looking at it...I just didn't see any real change there...at least not for us.

I had thought by reading our state magazine and other things that the difference on the portfolio QM front was that any loan kept in portfolio would AUTOMATICALLY be a QM.

That's not how I read it. Seemed it still has to be underwritten properly, [ATR] etc.

If so, (and you may well be right), i don't understand what would be so great for community banks. As you say, we already qualify just about every one we do as a balloon or SC QM.

The best chance of seeing this passed may have gone by...

https://www.housingwire.com/articles/42723-senate-postpones-vote-for-dodd-frank-reform-bill

Looks like it is on to the house...

http://www.icba.org/news/news-details/2018/03/14/icba-thanks-senate-for-passing-s.-2155

http://www.icba.org/news/news-details/20...vote-approaches

http://www.icba.org/docs/default-source/...ry.pdf?sfvrsn=0

Yep. Now to see if the house will take it up as is, move it to conference, or let it sit.

I haven't studied this in-depth, but the bill approved by the Senate merely exempts small reporters (Originating 500 or less closed-end loans and open-end LOCs) from the new data points. Now we will have two sets of rules for data points and reporting – one for large reporters using the 2018 rules and ones for small volume reporters using the previous data points.

There will be lots of questions to answer: When can the small reporter stop collecting the other data points? Do they have to report for 2018 under the current rules? Guess we wait and see when they reconcile the house and senate versions and when President Trump signs it into law (provides an effective date for the changes).

I shot a video blog that summarizes the bill. It's not just HMDA, but there are exemptions for appraisals in rural areas, escrows and QM's for banks <$10B and TRID clarification on construction loans. The blog will be up shortly. Go to our website to view it.

I think we'd be a "small reporter" under this change......things like this are actually sort of annoying....the time to "fix" this is before implementation. Changing it after implementation causes as many problems as it "fixes".

I think how many banks the 'small reporter' exemption is going to relieve will depend on if they mean 500 covered loans BEFORE the 2018 rules kicked in (meaning everything consumer with a house on it) or not. We were under 500 for 2017, but I'm pretty sure the 'all-in' reporting is going to put us over.

Would you basically just count your LAR entries (for either 2017 if defined one way, or 2018 if defined the other)? I think either way, we'd be below 500....i've never had a LAR over about 225, and that includes non-originated....i don't expect this year to be over 500 on my LAR either.

This could end up being a mess and I am interested to see how the dust settles. Questions I will be interested to have answered in time:
- When will the rules be effective? Basically, will small reporters continue with the new rules and then revert at the end of 2018 or will they revert mid-year, meaning a corrected LAR is in order for later this year? We saw how long it took the CFPB to issue the last HMDA changes required from a law (Dodd-Frank).
- Will small reporters revert to pre-2018 rules (unlearning everything they just learned), or will they keep the existing rules but only report for similar fields as to what was added? As I recall, only a small handful of fields didn't have any change at all.
- How will DI come into play?
- Will the purpose hierarchy stay the same or revert?

Etc., Etc., Etc.

While this rollback sounds nice in theory, it could create a sizable amount of additional work before any relief is obtain - especially since lenders and vendors will have most of the bugs worked out by the time any rules become final.

Rather than have two different data systems, one for lenders who have to report all of the data fields and another for "small lenders" who are exempt from reporting the 2018+ additional fields, I wonder if they would add a code to those fields indicating that the data was not reported because the lender is a "small reporter".

Yeah, if they aren't really careful, they are going to build a tangled enough web that the vendors will not be able to work it out to fit all.

Becca, I'm in the same boat as you. I'm close enough to 500 to feel very borderline on over/under.

They could make it like IS CRA and allow you to be Large if you want to !

And like RJ, it's annoying to mess with stuff after the fact. GEEZ!

We need to wait & see what the House of Rep's does with this before we can even begin to answer questions. Here's a link to a video blog I did on the Senate Bill:
https://www.bankerscompliance.com/hmda-drive-update/

As suggested above, this is an interesting development, but it is a total waste of time to dive into it in any detail because if anything final develops from it, it's likely to look very different from what you see here. No reason to have nightmares over stuff that might not ever happen.

Just got word that S2155 passed the US House!!!

The White House has indicated that the President will sign the bill before Memorial Day.

There's a lot to unpack in this Bill, and here are some things that I really like,

QM changes for community banks, which will essentially allow a portfolio loan to be QM, with some minor exceptions.

HMDA reporting threshold is 500 for Closed End and 500 for Open end each of the previous 2 years, unless you are "needs to improve" in CRA. I guess this is probably only for the new data points. We don't report, but I actually thought this was for any reporting at all.

Escrow requirements for community banks looks to have eased.

I will reserve the jumping up and down...I have a sinking feeling this is going to be a major cluster.

What escrow relief is being given? For us I don't see any change because we have always required an escrow for loans with PMI and flood insurance (before the flood amendments requiring escrows) so .35(b)(2)(iii)(D) disqualifies us for any relief if I'm reading this correctly.

SEC. 108. Escrow requirements relating to certain consumer credit transactions.

Section 129D of the Truth in Lending Act (15 U.S.C. 1639d) is amended—

“(2) TREATMENT OF LOANS HELD BY SMALLER INSTITUTIONS.—The Bureau shall, by regulation, exempt from the requirements of subsection (a) any loan made by an insured depository institution or an insured credit union secured by a first lien on the principal dwelling of a consumer if—

“(A) the insured depository institution or insured credit union has assets of $10,000,000,000 or less;

“(B) during the preceding calendar year, the insured depository institution or insured credit union and its affiliates originated 1,000 or fewer loans secured by a first lien on a principal dwelling; and

“(C) the transaction satisfies the criteria in sections 1026.35(b)(2)(iii)(A), 1026.35(b)(2)(iii)(D), and 1026.35(b)(2)(v) of title 12, Code of Federal Regulations, or any successor regulation.”;



.35(b)(2)(iii)(A) addresses making loans in rural or underserved areas.

.35(b)(2)(iii)(D) addresses the FI maintaining escrow accounts other than for HPMLs

.35(b)(2)(v) addresses the requirement to escrow for HPMLs

Dan - I so appreciate you inserting the specific text to the sections. For me who is not a CRCM (see user name :)) it can be challenging to follow regulations sometimes because they continually refer to this subsection or that subsection. By the time I have flipped back and forth between this and that paragraph and the lower case/capital letters, numbers vs roman numerals I am so lost that I forgot what I was trying to figure out! 3 hours have gone by and I haven't found the answer to my issue because I am lost in navigating through regulation sections/subsections. Thank you Dan!

Just finished analyzing that section (dissecting all of the references), and I agree, Dan - our bank also will not get the escrow relief since we escrowed for more than just HPML (voluntary escrows and various situations). I don't think we'll get to reap a lot of benefit from this Act on the compliance side of our bank, but we still see it as a positive change for the industry.

Some sections do not appear to have mandatory effective dates. When will the HMDA changes become effective?

It should be effective immediately, as it is now the law. However, I would suggest giving the CFPB a few days to give some guidance as to the next steps.

Is "a few days" defined in people years or dog years?

"Section 213 - Making Online Banking Initiation Legal and Easy" allows FIs to make a copy or receive an image of an individual's drivers license when opening an account online. Was this prohibited before? It also states that FIs must permanently delete the image after using it for online account opening. Why? Wouldn't we want to retain this information?

I too have a question regarding Section 213 and I seriously doubt how it makes opening products through an online service "easier."

My actual question is about the retention of a DL or ID scanned image. Am I correct in reading that once we've used as allowed, we must then delete the image forever?

My understanding is that you can image the ID, but if you make a copy, you must destroy it.

You might want to re-read that portion of the law:

(b) Use of a driver's license or personal identification card.—

(1) IN GENERAL.—When an individual initiates a request through an online service to open an account with a financial institution or obtain a financial product or service from a financial institution, the financial institution may record personal information from a scan of the driver’s license or personal identification card of the individual, or make a copy or receive an image of the driver’s license or personal identification card of the individual, and store or retain such information in any electronic format for the purposes described in paragraph (2).

(2) USES OF INFORMATION.—Except as required to comply with Federal bank secrecy laws, a financial institution may only use the information obtained under paragraph (1)—

(A) to verify the authenticity of the driver’s license or personal identification card;

(B) to verify the identity of the individual; and

(C) to comply with a legal requirement to record, retain, or transmit the personal information in connection with opening an account or obtaining a financial product or service.

(3) DELETION OF IMAGE.—A financial institution that makes a copy or receives an image of a driver’s license or personal identification card of an individual in accordance with paragraphs (1) and (2) shall, after using the image for the purposes described in paragraph (2), permanently delete—

(A) any image of the driver’s license or personal identification card, as applicable; and

(B) any copy of any such image.

This provision doesn't make it easier, it makes it more difficult.
We retain images from in branch account opening, so I expect my director to not be keen on this element.
Thank you.

RLCarey - paragraph 1 expressly states opened on-line or with an on-line service, and the section on deletion points right back to paragraph 1, so I interpret it to mean that I have to destroy any image made from an on-line account opening. If I'm correct, I'm a happy camper because we don't open account on-line (yet). Do you agree with my interpretation?

That is how I interpret it too, it is specific to accounts opened online. But that now means two separate archive process for my FI for what it is supposed to do with scanned DL's. One process for ID's received via Online services, and one for in-branch...not the end of the world, but...

Surely is not the least bit logical.

For argument sake, 2(B) indicates “to verify the identity of the individual” As the purpose of digital imaging the DL is used to help identify the transactor when and any time they do come in a branch, couldn’t you argue that you are keeping the info until the relationship is closed for the purpose of verifying the individuals identity throughout the relationship 2(B)? (3) Indicates it is to be destroyed only after the purpose of paragraph (2) is completed which again won’t be until the relationship is completed. Am I grasping here, or does this seem feasible?

You only verify the identity of a person once.

Does anyone know the effective date of this provision?

Presumably when the law was enacted, but there has been no word from the regulators.