The Consumer Financial Protection Bureau (CFPB) recently issued two final rules regarding annual threshold adjustments under the implementing regulations for the Home Mortgage Disclosure Act and the Truth in Lending Act.
Home Mortgage Disclosure Act
The CFPB issued a final rule regarding the asset-size exemption threshold for banks, savings associations, and credit unions under Regulation C, which implements the Home Mortgage Disclosure Act (HMDA).
HMDA requires that the CFPB adjust this threshold yearly by the annual percentage change in the average of Consumer Price Index for Urban Wage Earners and Clerical Workers for each 12-month period ending in November, rounded to the nearest million dollars. This results in a change of zero for this period when rounded to the nearest million.
The asset-size exemption for banks, savings associations, and credit unions will remain at $44 million. As a result, these institutions with assets of $44 million or less as of December 31, 2015, are exempt from collecting HMDA data in 2016. An institution’s exemption from collecting data in 2016 does not affect its responsibility to report the data it was required to collect in 2015.
HMDA and the CFPB’s Regulation C require most mortgage lenders located in metropolitan areas to collect, report, and disclose data about mortgage loan applications, originations, and purchases. The data cover home purchase loans, home improvement loans, and refinancings. Data reported include the type, purpose, and amount of the loan; the race, ethnicity, sex, and income of the loan applicant; the location of the property; and loan pricing information for some loans. HMDA data are used to help determine whether financial institutions are serving the housing needs of their communities and to assist in identifying possible discriminatory lending patterns.
The rule will be effective Jan. 1, 2016 and will apply to data collection in 2016. The final rule is available here.
Truth in Lending Act
The CFPB issued a final rule adjusting the asset-size threshold for certain creditors to qualify for an exemption from the requirement to establish an escrow account for a higher-priced mortgage loan under Regulation Z, which implements the Truth in Lending Act (TILA).
The Bureau established the threshold at $2 billion as part of its 2013 Escrows Final Rule, which implemented the Dodd-Frank Wall Street Reform and Consumer Protection Act. Each year, this threshold will automatically adjust based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers for each 12-month period ending in November, rounded to the nearest million dollars.
Based on the adjustment announced today, the asset-size threshold exemption for certain creditors will decrease from $2.060 billion to $2.052 billion for 2016. As a result, these creditors with assets of less than $2.052 billion (including assets of certain affiliates) as of December 31, 2015, that also meet other requirements of Regulation Z will be exempt from the requirement to establish escrow accounts for higher-priced mortgage loans in 2016.
The adjustment to this asset-size threshold will also decrease the threshold for small-creditor and balloon payment Qualified Mortgages. Balloon-payment qualified mortgages that satisfy all applicable criteria are also excepted from the prohibition on balloon payments for high-cost mortgages.
The rule will be effective January 1, 2016, and will apply to whether a creditor is eligible for the exemption in 2016 and during a grace period for part of 2017. The final rule is available here.