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#2217381 - 07/10/19 07:34 PM Partial Exemption - M & A
Compliance NABW Offline
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I am not coming across anything related to what the Regulation requires when a partially exempt institution is acquired by an institution that must report all data fields. As it is not really like a totally exempt institution being acquired by a HMDA reporter, the closest analogy I could think of is taking applications in 2017 and having action taken in 2018. Institutions had to report all 2018 fields, except the Official Interpretation provided specific guidance for the GMI fields. However, I could also see it being like the Transition Rule for May 24, 2018, where institutions had the option to report on the expanded data set (because they collected this info up until May 24) or only report the data points that were associated with the partial exemption. Has anybody come across anything on M & A related to partial exemptions?
Last edited by Compliance NABW; 07/10/19 07:41 PM.
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#2217391 - 07/10/19 09:30 PM Re: Partial Exemption - M & A Compliance NABW
rlcarey Online
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rlcarey
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Galveston, TX
You lose the exemption and have to report for the entire year. Read comments 3 and 4 to 1003.2(g).
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#2217409 - 07/11/19 01:31 PM Re: Partial Exemption - M & A rlcarey
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I did read those comments, very in-depth actually. They seem to deal solely with institutions that are HMDA reporters and those that are not HMDA reporters. My question relates to being "partially" exempt, i.e. both institutions are HMDA reporters, but one has to collect data for the entire set of 48 data points (110 fields), while the other is only required to (and chose to) only collect on the 22 Data Points that all HMDA reporters have to collect and report on.

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#2217410 - 07/11/19 01:34 PM Re: Partial Exemption - M & A Compliance NABW
rlcarey Online
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rlcarey
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Galveston, TX
After a merger or acquisition, the surviving or newly formed institution is a financial institution under § 1003.2(g) if it, considering the combined assets, location, and lending activity of the surviving or newly formed institution and the merged or acquired institutions or acquired branches, satisfies the criteria included in § 1003.2(g).

The surviving or newly formed institution is a covered institution. Data collection is required for the entire calendar year of the merger.
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#2217413 - 07/11/19 02:36 PM Re: Partial Exemption - M & A Compliance NABW
Compliance NABW Offline
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I don't know if you are avoiding the question, or trying to guide me in some off-hand way, or I am not clearly conveying the situation, lol. I am talking about the partial exemption rule. This is not even dealt with at all in the Regulation itself. Regardless though, even with the reference you gave above, it directs the reader further to look at Comment #4 to determine what to do in the Calendar Tear of the merger, which is what I am asking about. When the surviving FI needs to report the 2019 HMDA LAR for both institutions as required by the 2020 filing date, what are they supposed to report for the acquired institution's loans? Considering that the acquired institution only collected for the 22 data points, it would be very difficult, if not impossible to go back and get the information for the remaining 26 data points.

I understand the institution is an FI and must report HMDA data, even though the actual statement you made above is not totally accurate, depending on the situation. The entirety of the data may not need to be collected for the calendar year of the merger. As you can see in the example below, the data for the acquired institution is optional in year of the merger:

ii. A covered institution and an institution that is not covered merge. The covered institution is the surviving institution, or a new covered institution is formed. For the calendar year of the merger, data collection is required for covered loans and applications handled in the offices of the merged institution that was previously covered and is optional for covered loans and applications handled in offices of the merged institution that was previously not covered. When a covered institution acquires a branch office of an institution that is not covered, data collection is optional for covered loans and applications handled by the acquired branch office for the calendar year of the acquisition.

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#2217419 - 07/11/19 03:14 PM Re: Partial Exemption - M & A Compliance NABW
Adam Witmer Offline
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As you suspected in your OP, you are asking for an answer that isn't yet available. The interpretive and procedural rule doesn't address this, so there is nothing concrete at this time. That said, the May 13, 2019 proposal looks like it is going to address this, though that is only a proposal and not a final rule. See proposed comment 3 to 1003.3(d) where they propose to provide a number of scenarios to determine how the partial exemption applies during the current calendar year of a merger. That comment is titled ". Merger or acquisition—applicability of partial exemptions during calendar year of merger or acquisition."
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#2217504 - 07/12/19 02:03 PM Re: Partial Exemption - M & A Compliance NABW
Compliance NABW Offline
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Thank you Adam! I tend not to look much at the Proposed Rules because there is often substantial change prior to the Final Rule, and some don't even end up becoming Final at all. They came up with what is the most sensible/practical way to deal with it. It would be very difficult to go back and collect the additional data points if the partially exempt merged institution was not already doing so.

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#2223859 - 10/16/19 10:18 PM Re: Partial Exemption - M & A Compliance NABW
Reads Regs Offline
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The CFPB announced the final rule on 10/10/19. https://www.consumerfinance.gov/abo...ule-provide-relief-smaller-institutions/ It has not yet been published in the Federal Register.
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