ABA, trade groups call for formal HMDA guidance

The American Bankers Association and two other financial trade groups on Friday wrote to the heads of the Consumer Financial Protection Bureau, Federal Reserve, FDIC, National Credit Union Administration, and the OCC, urging the agencies to issue a formal statement published in the Federal Register addressing the prospective application of the Home Mortgage Disclosure Act.

In September, a federal judge vacated CFPB regulations that expanded the number of small-volume lenders deemed exempt from HMDA reporting requirements, which reverted the threshold for data reporting on closed-end mortgages to 25 loans in each of the two preceding calendar years, rather than the 100-loan threshold rule set in 2020. At the beginning of December, the CFPB issued a blog post noting that financial institutions may need time to implement or adjust policies, procedures, systems and operations to come into compliance with reporting obligations and that the agency does not view action regarding institutions’ HMDA data as a current priority. The associations are advocating a more official, detailed response.

“We ask the Federal Financial Institutions Examinations Council to consider the extraordinary impact of this decision and issue formal guidance that allows small banks and credit unions a reasonable transition period to comply with the sudden changes occasioned by the ruling,” the associations wrote, adding that the effect on banks is “severe,” citing staff shortages, a short timeline with which to comply, and other challenges. Ideally, the associations wrote, a formal notice would explicitly state, with respect to lenders affected by the court’s ruling, that calendar year 2023 will be a supervisory transition period during which the agencies will expect “good faith” efforts to comply with the pre-2020 HMDA rule, and that the agencies will not cite HMDA violations or initiate enforcement actions against lenders that act appropriately to develop and implement reporting programs.

This approach, they said, would give lenders “needed assurances regarding legal and examination risk and allow adequate opportunity for lenders to install or refine HMDA systems and achieve compliance.”