HMDA has gone through many revisions since it was rewritten in 2018. One revision, in 2020, raised the HMDA closed-end loan volume threshold from 25 to 100. With that change, institutions were only subject to HMDA reporting for closed-end loans if they had originated at least 100 closed-end, reportable loans in each of the prior two calendar years. Prior to that, institutions were subject to HMDA reporting for closed-end loans if they had originated at least 25 closed-end, reportable loans in each of the prior two calendar years. This change helped 1700 financial institutions become exempt from HMDA reporting.
Now, the Federal District Court for the District of Columbia has “invalidated” the 2020 increase in the HMDA closed-end loan volume threshold. In doing so, the Court criticized the cost-benefit analysis the CFPB used to support the increased threshold.
At this point, we have heard nothing from the CFPB on this. Theoretically, the CFPB could appeal the ruling, but we guess they won’t since the 2020 “relief” was provided under a different administration and a different Director. If the Court’s ruling is not appealed, the CFPB will need to re-implement the previous closed-end loan volume threshold of 25. We are just going to have to wait and see how they will unravel this mess.
We disagree with the Court that the CFPB “exaggerated” the cost benefits of increasing the threshold. We do, however, want to make you aware of what may be on the horizon, even though this feels like a gut punch. Stay tuned, especially if this could impact you! While we don’t agree, we’re here to help!
Published
2022/10/05
