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#2234952 - 04/16/20 02:50 PM New Final Rule
David Dickinson Offline
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Just came out:
https://files.consumerfinance.gov/f...gage-disclosure_regulation-c_2020-04.pdf

Don't have any analysis yet other than institutions that make less than 100 closed-end loans are exempt.
Open-end lines move to 200 in 2022.

I'll start reading. Stay tuned.
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#2234955 - 04/16/20 03:14 PM Re: New Final Rule David Dickinson
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200? Drat!

Thanks Dave!
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#2234958 - 04/16/20 03:32 PM Re: New Final Rule David Dickinson
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OK
Ok, so if in 2019, we originated less than 100 closed end loans, (and we were already way below the threshold for open end loans and have never reported them), then ...what? it says this is effective as of July 1, 2020. I report loans up to July 1, 2020 and then don't have to report for the rest of the year? Or i don't have to report loans for all of 2020?
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#2234960 - 04/16/20 03:38 PM Re: New Final Rule David Dickinson
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OK
Ok....so upon a quick peruse, it looks like it'll be our option....but if we report, we'd report the entire year.
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#2234980 - 04/16/20 05:07 PM Re: New Final Rule David Dickinson
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Yes raitchjay.
Quick summary of what I know so far:
If you are under 100 for the last 2 year ends (closed-end), then you are exempt BEGINNING 7/1/2020.You still must record the 1 quarter data (but don't have to submit it), but you don't have to record the 2nd quarter data as that is technically not due until 7/31/2020.
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#2234981 - 04/16/20 05:08 PM Re: New Final Rule David Dickinson
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If you are close to 100 and want to continue on a voluntary basis, you must be "all in." Same rules as they had for banks that were close to 25 closed-end loans.
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#2235038 - 04/16/20 08:10 PM Re: New Final Rule David Dickinson
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We were supposed to start collecting data in 2021 to report in 2022. In 2019 we made 64 qualifying closed-end loans. We didn't even get close on HELOC's in 2019. Are we now exempt from data collection in 2021?
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#2235081 - 04/17/20 12:34 PM Re: New Final Rule David Dickinson
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If you didn't make 100 qualifying closed-end loans in both of the last 2 years, then you are not subject to reporting loans.
If you didn't make 500 qualifying open-end lines in both of the last 2 years, then you are not subject to reporting lines.

Sounds like you are exempt.
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#2235113 - 04/17/20 04:42 PM Re: New Final Rule David Dickinson
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When counting closed-end or open-end loans each year to determine the number of qualifying loans, we should only includ originated loans in that total correct? In other words, we wouldn't include HMDA reportable denials and withdrawals in that total.

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#2235115 - 04/17/20 04:46 PM Re: New Final Rule David Dickinson
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OK
Correct.
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#2235171 - 04/17/20 08:54 PM Re: New Final Rule David Dickinson
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I will admit that I thoroughly enjoyed sending out my announcement e-mail to our lending staff instructing them to cease collecting HMDA data. I sent that announcement with a big fat stupid grin on my face.

You see, HMDA and I have had a continuous relationship for over 21 years. In fact, she was the very first regulation I was introduced to on Day 1 of banking. That first week our lenders/lending assistants did not like this young handsome fella (my story) telling them they needed to treat HMDA right and correct all their LAR errors. Over the years we've generally had the same routing keeping it spicy by ending things with a "submission" ritual that has changed a few times over the years. But that hasn't been enough. Frankly I've wanted to part ways with her long ago... but legally, I've just been unable to. It's been a one sided relationship with me putting in all the work and not getting much out of HMDA in return. In all my years of dealing with her, I've yet to hear one single person from the general public utter her name "Hum-duh" much less request to see our records of her. The only people interested in her have been the Examiners... and let's be honest, they don't truly care about her, they just want to use her to try to see if we're cheating on Fair Lending.

I'll stop with the reminiscing and cut to chase... the Compliance Gods have finally spoken... HMDA...IT WAS NICE KNOWING YA, BUT WE'RE DONE!!!

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#2235176 - 04/17/20 09:15 PM Re: New Final Rule David Dickinson
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OK
laugh Good stuff Glutes.
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#2235198 - 04/18/20 07:22 PM Re: New Final Rule David Dickinson
Adam Witmer Offline
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Glutes, not too crash the party (and you probably already know this, so this is for fun and clarification for others)...

...but your divorce lawyer called and said she won't sign the papers yet - as terms of the separation, Mrs. Hum-duh wants you to update your quarterly LAR by April 30 and then keep collecting up to July 1, 2020. I guess its just her terms or the highway. wink

From the final rule:
"The final rule relieves newly excluded institutions of the obligation to collect, record, and report data for their 2020 closed-end mortgage loans effective July 1, 2020. Newly excluded institutions may cease collecting 2020 data for closed-end mortgage loans as of July 1, 2020. Pursuant to § 1003.4(f), newly excluded institutions must still record data on a loan/application register for the first quarter of 2020 by 30 calendar days after the end of the first quarter. They will not, however, be required to record closed-end data for the second quarter of 2020 because the deadline under § 1003.4(f) for recording such data falls after July 1, 2020.
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#2235274 - 04/20/20 06:30 PM Re: New Final Rule David Dickinson
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Adam: As you know there's no requirement to record or report any HMDA data after 3/31/2020. I agree with you the final rule said banks couldn't stop until 7/1/2020, but If I collect demographic information for applications between now and June 30th, I think that's all I have to do. If an auditor or examiner said "where's this or that," I'd reply, "It's in the loan file. There's no requirement that I record it anywhere."

What do you think?
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#2235285 - 04/20/20 08:01 PM Re: New Final Rule David Dickinson
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I think it is crazy, but I think the CFPB was clear that collection must continue until July 1, 2020.

From p81 of the final rule:
"The Bureau therefore requested additional comment on the appropriate effective date for any change to the closed-end threshold, should the Bureau decide to finalize a change. The Bureau specifically requested comment on the costs and benefits of a mid-year effective date during 2020 versus a January 1, 2021 effective date..... Most commenters did not address the effective date question, and those that did expressed differing views. A number of banks requested an immediate effective date upon publication of the final rule and requested elimination of any reporting requirement for 2020 data collected prior to that date to provide more immediate regulatory relief......The Bureau has considered the comments received and concludes that a mid-year effective date for the closed-end threshold is appropriate to provide burden relief quickly to institutions that would have to report under the threshold of 25 closed-end mortgage loans but will not have to report under the threshold of 100 closed-end mortgage loans. 153."

Then footnote 153 says this:
"153 The Bureau declines, however, the suggestion of some commenters that the rule should take immediate or even retroactive effect. The Bureau believes that the roughly 75-day period between the final rule’s issuance and effective date will provide time for affected institutions to review the final rule and adjust their operations in accordance with it."

That said, I'm not sure how picky examiners will be...
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#2235289 - 04/20/20 08:11 PM Re: New Final Rule David Dickinson
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I agree with you. I'm just connecting some dots that I don't think the CFPB though through (unless I missing something). I collect Demographic Info. (DI) at application. Remember, these are "small filers" (limited data). They don't have to have many of the HMDA data points. What is an examiner going to ask for that the lender couldn't pull out of the loan file? Other than DI, I don't think there's a data point the file wouldn't have in in and if the regulation says I don't have to record or report data, why would I do anything more for HMDA.

I believe footnote #153 is really in reference to DI. I believe they were giving banks a few months to train and stop the procedures of collecting DI and starting complying with Reg B's GMI requirements.

Thoughts?
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#2235291 - 04/20/20 08:52 PM Re: New Final Rule David Dickinson
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This is a good discussion, Dave. I agree that most small filers mainly need to worry about DI, but depending on the shop there could be some things that don't fully get pulled in (property type, loan type, etc.). I've also had plenty of discussions over the years with auditors and examiners who feel that "collection" is transferring the info into the LAR format (i.e. codes) whether or not in the LAR format. Again, I'm not too sure how picky examiners will be on this (and I don't think they should but fear some might), but if a newly exempt filer isn't doing their normal "pre-scrub" activities, they may not really have some info in the file. I know a lot of small HMDA folk that are "fixing" every file because the data just doesn't come in well and they are still small enough to manage it that way.

Also, I'm not positive that footnote 153 is talking specifically to DI as CFPB makes it clear elsewhere that DI can still be collected (temporarily) after July 1, 2020 due to the transition rules in 1002.5(a)(4)(iii) of Reg B.

So, while it seems silly and pointless to continue to "collect" everything as is until July 1, 2020, I see this as the safest approach as I'm not fully convinced you can pull the trigger quite yet. If I were in a HMDA shop, I would just keep doing everything the way I did it until 7/1/2020 and then pull the plug. The engine is already running so coasting to the finish line, while slightly annoying, isn't disruptive.
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#2235316 - 04/21/20 03:14 PM Re: New Final Rule David Dickinson
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This is a good discussion. You said:
I've also had plenty of discussions over the years with auditors and examiners who feel that "collection" is transferring the info into the LAR format (i.e. codes) whether or not in the LAR format.

I agree, but the new rules state banks DON'T have to record or report. If I don't have to record any data, what do they want a lender to do? I think it's simply a matter of collecting. So then the next question is "collect what?" The only thing I can come up with is the DI as everything else would automatically be collected, IF it is relied upon. Many of HMDA data points are contingent upon "relied upon" as you know.

I don't disagree with your "safe approach" thought process. I'm trying to connect dots, as I mentioned earlier and save my clients time and money. Right now, things are very busy for most lenders (as you also know), so this could be a big relief for them - effective immediately. I agree with your "coasting to teh finish line" through (cute too). smile
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#2235351 - 04/21/20 07:56 PM Re: New Final Rule David Dickinson
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Another way to look at this is that the rule doesn't change until 7/1/2020. Therefore it can only affect things going forward from that date. So much in HMDA is either annual or quarterly, and we are already into the 2nd quarter, so it makes sense that the amendments are effective 7/1/20. Of course it would not make sense at all to change the threshold for open end until 1/1/22, when the temporary 500 limit expires.
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#2235543 - 04/23/20 07:12 PM Re: New Final Rule David Dickinson
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For those that are wiser and more experienced than I. My institution went several years without meeting the 25 closed end threshold. The slightly exceeded in both 2018 & 2019 (in the thirties both years) so I was anticipating needing to report in 2021 for 2020. I believe that now we are off the hook for LAR entry but I'm not 100% confident. Can someone please confirm/reassure me? Thank you!

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#2235553 - 04/23/20 07:38 PM Re: New Final Rule David Dickinson
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From the summary:

Reporting: Because newly excluded institutions collecting HMDA data in 2020 would not otherwise report those data until early 2021, the final rule relieves newly excluded institutions of the obligation to report by March 1, 2021 data collected in 2020 on closed-end mortgage loans (including data collected in 2020 before July 1, 2020). Under the final rule, a newly excluded institution may report voluntarily HMDA data on closed-end mortgage loans in 2021 as long as the institution reports data for the full calendar year 2020.
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#2235561 - 04/23/20 08:02 PM Re: New Final Rule David Dickinson
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TaraSue: If you originated only 30-40 closed-end loans in the last 2 years, you will be exempt from HMDA beginning 7/1/2020 and through at least 12/31/2021. If you exceed 100 applicable originations in 2020 and do it again in 2021, then you would be subject to HMDA beginning 1/1/2022.
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#2235571 - 04/23/20 08:24 PM Re: New Final Rule David Dickinson
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To be clear, originated means loans we closed and kept in-house.If we closed a loan and immediately sold it (we did not have final approval and we did not report them under HMDA) then we do not count the loan as part of the 100 originated, correct?

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#2235574 - 04/23/20 08:30 PM Re: New Final Rule David Dickinson
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You may not have reported them due to your FI not making the credit decision but you originated the loan and then sold it. Those count as originations.
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#2235578 - 04/23/20 08:54 PM Re: New Final Rule David Dickinson
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Dan: I disagree that these count toward the 100 originations for HMDA coverage. §1003.2(g) defines a financial institution. Comment #5 to this section states:

5. Originations. Whether an institution is a financial institution depends in part on whether the institution originated at least 25 closed-end mortgage loans in each of the two preceding calendar years or at least 100 open-end lines of credit in each of the two preceding calendar years. Comments 4(a)-2 through -4 discuss whether activities with respect to a particular closed-end mortgage loan or open-end line of credit constitute an origination for purposes of § 1003.2(g).

The last sentence of this commentary points to 1003.4(a) #2-#4. Comment #3 give numerous examples. Look at the first example (which is wha I believe DiDi MN is describing):

i. Financial Institution A received an application for a covered loan from an applicant and forwarded that application to Financial Institution B. Financial Institution B reviewed the application and approved the loan prior to closing. The loan closed in Financial Institution A's name. Financial Institution B purchased the loan from Financial Institution A after closing. Financial Institution B was not acting asFinancial Institution A's agent. Since Financial Institution B made the credit decision prior to closing, Financial Institution B reports the transaction as an origination, not as a purchase. Financial Institution A does not report the transaction.

When you "connect these dots" I read this to say that an application that is approved by another institution does NOT count toward your "coverage originations" for HMDA, even if you originated that loan. IOW, you don't count them for coverage or put them on repot them.
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