Can someone help - I've gotten myself confused, which isn't hard these days!! I understood the reg change to say, if you are a HMDA reporter, you must report HELOCs, period. Last week I spoke with a bank who said they won't report HELOCs this year because they didn't originate 500 in 2016 but did in 2017. They expect to reach 500 in 2018 so in 2019 they will have to report. They meet the closed end threshold.

We originated well under 500 in 2016 and 2017, and likely will be under in 2018 as well.

Again, my understanding was if you are a HMDA reporter, you report HELOCs regardless of the number but now I'm questioning that. We more than qualify for the closed end mortgages. Do we report HELOCs for 2018 or not???

Help!!

No. Totally optional.

Official Interpretation

Paragraph 3(c)(12)

1. General. Section 1003.3(c)(12) provides that an open-end line of credit is an excluded transaction if a financial institution originated fewer than 500 open-end lines of credit in either of the two preceding calendar years. For example, assume that a bank is a financial institution in 2018 under § 1003.2(g) because it originated 50 closed-end mortgage loans in 2016, 75 closed-end mortgage loans in 2017, and met all of the other requirements under § 1003.2(g)(1). Also assume that the bank originated 75 and 85 open-end lines of credit in 2016 and 2017, respectively. The closed-end mortgage loans that the bank originated or purchased, or for which it received applications, during 2018 are covered loans and must be reported, unless they otherwise are excluded transactions under § 1003.3(c). However, the open-end lines of credit that the bank originated or purchased, or for which it received applications, during 2018 are excluded transactions under § 1003.3(c)(12) and need not be reported. See comments 4(a)-2 through -4 for guidance about the activities that constitute an origination.

I'm in shock. I'm happy, but in shock. I'm so glad we checked. Thanks so much!!

Now you are making me second guess myself and our practice as well!!!

We are in the same boat as you are. We will not come close to hitting the 500 HELOC mark. We do not file HMDA data on open end as a result. I am going to do some reading today/tonight it seems.

Looking forward to a more practiced opinion though.

Edit: rlcarey is super fast at responding. Appreciate it sir

Randy's right. Let me clarify and provide some citations in case anyone needs to research this. Here's how our HMDA training manual explains it (read the "or" and "and" carefully in Section B). The part about loans vs. lines is in C.

B. Is My Financial Institution Subject to HMDA? [§1003.2(g)]:

1. Asset Test:
Your bank’s size exceeds the annual asset threshold; and,

2. Metropolitan Statistical Area (MSA) Test:
Your bank has either a home office or branch office located in an MSA; and,


3. Loan Volume Test:
Your bank originated at least:

a. One:
One home purchase loan or refinance of a home purchase loan secured by a first-lien 1-4 family dwelling in the prior calendar year; and,

b. 25:
Closed-end dwelling secured loans (“loan”) in each of the prior two calendar years; or,

c. 500:
Open-end lines of credit secured by a dwelling (“line”) in each of the prior two calendar years.



4. 25 / 500 Calculation:
Do not include any of the following loans or lines of credit:

a. Denied or withdrawn applications;

b. Secured by bare land;

c. Primarily for agricultural purposes;

d. Secured by a dwelling located on land used primarily for agricultural purposes;

e. Primarily for business purpose (except Home Purchase, Home Improvement and Refinance);

f. Temporary Financing;

g. Less than $500;

h. Originated or purchased by the bank acting in a fiduciary capacity;

i. The purchase solely of the right to service a closed-end loan or open-end line of credit;

j. Purchased as part of merger or acquisition; or,

k. Purchased as a partial interest.

l. The purchase of an interest in a pool of closed-end loans or open-end lines of credit.



C. What Do I Report?

1. Closed-End Loans vs. Open-End Lines of Credit:
If you originate at least 25 closed-end loans, but not 500 open-end lines of credit, you only report closed-end loans. [Commentary to §1003.3(c)(12) #1] If you originate at least 500 open-end lines of credit, but not 25 closed-end loans, you only report open-end lines of credit. If you originated > 25 loans and > 500 lines, you report both loans and lines. [Commentary to §1003.3(c)(11) #1]


2. Small Filer Data Exemption
If you originate 25-499 closed-end loans, you are subject to HMDA reporting, but you only collect and report limited data. [Economic Growth, Regulatory Relief, and Consumer Protection Act, Pub. L. 115-174, section 104(a) (to be codified at 12 USC 2803)]
*Your institution must have received at least a Satisfactory CRA rating to qualify for the limited data reporting exemption.

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We have a chart that summarizes all of this, but it won't copy/paste here well.

Thank you Dave. I have to say, this was news to me. The next question is will they revert back to the 100 threshold for HELOCs in 2020? I guess we won't know for a while.

The original rule was 25 closed-end loans and 100 HELOCs. In August, 2017, the CFPB raised HELOC's to 500 as a temporary rule. The Regulatory Relief Act created a new tier: between 25-500 loans and 500 lines is considered a small filer. Therefore, when the temporary rule of 500 lines is reduced back to 100, there will be a new small filer tier for Lines. Today it's a moot issue as anyone that has <500 lines (in both of the last 2 years) does not report them at all.

I hope that makes sense.

How does the Small Filer Exemption apply to this? Are banks still exempt from reporting HELOCs if they originate less than 500 until 2020 or is reporting required before then using the limited data?

The total exemption for <500 LOCs is still in place until 2020, so the small filer exemption won't have any effect on open-end reporting until then. In 2020, <500 LOCs report the limited data; >500 LOCs report the full data.

Thank you TMatt87!!!