Rule2022-27204
Home Mortgage Disclosure (Regulation C); Judicial Vacatur of Coverage Threshold for Closed-End Mortgage Loans
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 21, 2022
Effective
December 21, 2022
Issuing agencies
Consumer Financial Protection Bureau
Abstract
In April 2020, the Consumer Financial Protection Bureau (Bureau or CFPB) issued a final rule (2020 HMDA Rule) to amend Regulation C to increase the threshold for reporting data about closed- end mortgage loans. The 2020 HMDA Rule increased the closed-end mortgage loan reporting threshold from 25 loans to 100 loans in each of the two preceding calendar years, effective July 1, 2020. On September 23, 2022, the United States District Court for the District of Columbia vacated the 2020 HMDA Rule as to the increased loan-volume reporting threshold for closed-end mortgage loans. As a result of the September 23, 2022 order, the threshold for reporting data about closed-end mortgage loans is 25, the threshold established by the 2015 HMDA Rule. Accordingly, this technical amendment updates the Code of Federal Regulations to reflect the closed-end mortgage loan reporting threshold of 25 mortgage loans in each of the two preceding calendar years.
Full Text
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<title>Federal Register, Volume 87 Issue 244 (Wednesday, December 21, 2022)</title>
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[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Rules and Regulations]
[Pages 77980-77982]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27204]
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BUREAU OF CONSUMER FINANCIAL PROTECTION
12 CFR Part 1003
[Docket No. CFPB-2019-0021]
RIN 3170-AA76
Home Mortgage Disclosure (Regulation C); Judicial Vacatur of
Coverage Threshold for Closed-End Mortgage Loans
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Technical amendment.
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SUMMARY: In April 2020, the Consumer Financial Protection Bureau
(Bureau or CFPB) issued a final rule (2020 HMDA Rule) to amend
Regulation C to increase the threshold for reporting data about closed-
end mortgage loans. The 2020 HMDA Rule increased the closed-end
mortgage loan reporting threshold from 25 loans to 100 loans in each of
the two preceding calendar years, effective July 1, 2020. On September
23, 2022, the United States District Court for the District of Columbia
vacated the 2020 HMDA Rule as to the increased loan-volume reporting
threshold for closed-end mortgage loans. As a result of the September
23, 2022 order, the threshold for reporting data about closed-end
mortgage loans is 25, the threshold established by the 2015 HMDA Rule.
Accordingly, this technical amendment updates the Code of Federal
Regulations to reflect the closed-end mortgage loan reporting threshold
of 25 mortgage loans in each of the two preceding calendar years.
DATES: This technical amendment is effective December 21, 2022.
FOR FURTHER INFORMATION CONTACT: Jaclyn Maier or Alexandra Reimelt,
Senior Counsels, Office of Regulations, at 202-435-7700 or <a href="https://reginquiries.consumerfinance.gov">https://reginquiries.consumerfinance.gov</a>. If you require this document in an
alternative electronic format, please contact
<a href="/cdn-cgi/l/email-protection#fab9bcaab8a5bb99999f898993989396938e83ba999c8a98d49d958c"><span class="__cf_email__" data-cfemail="c88b8e988a9789ababadbbbba1aaa1a4a1bcb188abaeb8aae6afa7be">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
I. Background
The Home Mortgage Disclosure Act (HMDA) requires certain banks,
savings associations, credit unions, and for-profit nondepository
institutions to collect, report, and disclose data about originations
and purchases of mortgage loans, as well as mortgage loan applications
that do not result in originations (for example, applications that are
denied or withdrawn).\1\ The Bureau's Regulation C, 12 CFR part 1003,
implements HMDA, 12 U.S.C. 2801 through 2810.
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\1\ HMDA requires financial institutions to collect, record, and
report data. The Bureau generally refers herein to the obligation to
report data instead of listing all of these obligations in each
instance.
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In October 2015, the Bureau issued a final rule (2015 HMDA Rule)
that, among other things, established institutional and transactional
loan-volume coverage thresholds in Regulation C that determine whether
financial institutions are required to report certain HMDA data on
closed-end mortgage loans or open-end lines of credit.\2\ These
thresholds apply uniformly to covered depository and nondepository
institutions; they took effect for depository institutions on January
1, 2017, and for nondepository institutions on January 1, 2018. The
loan-volume thresholds in the 2015 HMDA Rule required an institution
that originated at least 25 closed-end mortgage loans or at least 100
open-end lines of credit in each of the two preceding calendar years to
report HMDA data, provided that the institution meets all other
criteria for institutional coverage.
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\2\ Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct.
28, 2015). The reporting thresholds for closed-end mortgage loans
and open-end lines of credit operate independently. Thus, an
institution that meets the threshold for closed-end mortgage loans
but not the threshold for open-end lines of credit is a covered
institution and required to report HMDA data about its closed-end
loans, provided it meets the other criteria for institutional
coverage. Conversely, an institution that meets the threshold for
open-end lines of credit but not the threshold for closed-end loans
is a covered institution and required to report HMDA data about its
open-end lines of credit, provided it meets the other criteria for
institutional coverage.
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In April 2020, the Bureau issued a final rule (2020 HMDA Rule) to
amend Regulation C to increase the thresholds for reporting data about
both closed-end mortgage loans and open-end lines of credit.\3\ In
particular, the 2020 HMDA Rule set the closed-end mortgage loan
reporting threshold at 100 in each of the two preceding calendar years,
effective July 1, 2020, and the open-end line of credit reporting
threshold at 200 in each of the two preceding calendar years, effective
January 1, 2022.
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\3\ Home Mortgage Disclosure (Regulation C), 85 FR 28364 (May
12, 2020), vacated in part by Nat'l Cmty. Reinvestment Coal., et al.
v. Consumer Fin. Prot. Bureau, No. 20-cv-2074, 2022 WL 4447293
(D.D.C. Sept. 23, 2022).
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On July 30, 2020, five nonprofit organizations and the City of
Toledo, Ohio, initiated a lawsuit challenging the 2020 HMDA Rule.\4\ On
September 23, 2022, the United States District Court for the District
of Columbia concluded that the 2020 HMDA Rule's increased reporting
threshold for closed-end mortgage loans was arbitrary and capricious.
The Court issued an order vacating and remanding the loan-volume
reporting threshold for closed-end mortgage loans under the 2020 HMDA
Rule. Accordingly, the threshold for reporting data about closed-end
mortgage loans is 25 in each of the two preceding calendar years, which
is the threshold set by the 2015 HMDA Rule. This technical amendment
reflects the vacatur in the Code of Federal Regulations by replacing
the closed-end reporting threshold numbers in Sec. Sec.
1003.2(g)(1)(v)(A) and (2)(ii)(A), and 1003.3(c)(11), and comments
2(g)-5 and 3(c)(11)-2 with those in effect on June 30, 2020; and
replacing in their entirety, comments 2(g)-1 and 3(c)(11)-1 with the
versions in effect on June 30, 2020.
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\4\ The five nonprofit organizations are the National Community
Reinvestment Coalition, Montana Fair Housing, the Texas Low Income
Housing Information Service, Empire Justice Center, and the
Association for Neighborhood & Housing Development.
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[[Page 77981]]
II. Regulatory Requirements
This action is not a rule under the Administrative Procedure Act
(APA), because the Bureau is not interpreting, implementing, or
prescribing law or policy.\5\ Instead, the Bureau is updating the
published Code of Federal Regulations so that it accurately reflects
the court's vacatur of part of the underlying 2020 HMDA Rule. In the
alternative, if this action were a rule, the Bureau finds that notice
and comment would be unnecessary under the APA, because there is no
basis for disagreement that the court's ruling vacates the relevant
portion of the 2020 HMDA Rule.\6\
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\5\ 5 U.S.C. 551(4).
\6\ 5 U.S.C. 553(b)(B).
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List of Subjects in 12 CFR Part 1003
Banks, Banking, Credit unions, Mortgages, National banks, Reporting
and recordkeeping requirements, Savings associations.
Authority and Issuance
For the reasons set forth in the preamble, the CFPB amends
Regulation C, 12 CFR part 1003, as set forth below:
PART 1003--HOME MORTGAGE DISCLOSURE (REGULATION C)
0
1. The authority citation for part 1003 continues to read as follows:
Authority: 12 U.S.C. 2803, 2804, 2805, 5512, 5581.
0
2. Section 1003.2 is amended by revising paragraphs (g)(1)(v)(A) and
(g)(2)(ii)(A) to read as follows:
Sec. 1003.2 Definitions.
* * * * *
(g) * * *
(1) * * *
(v) * * *
(A) In each of the two preceding calendar years, originated at
least 25 closed-end mortgage loans that are not excluded from this part
pursuant to Sec. 1003.3(c)(1) through (10) or (c)(13); or
* * * * *
(2) * * *
(ii) * * *
(A) In each of the two preceding calendar years, originated at
least 25 closed-end mortgage loans that are not excluded from this part
pursuant to Sec. 1003.3(c)(1) through (10) or (c)(13); or
* * * * *
0
3. Section 1003.3 is amended by revising paragraph (c)(11) to read as
follows:
Sec. 1003.3 Exempt institutions and excluded and partially exempt
transactions.
* * * * *
(c) * * *
(11) A closed-end mortgage loan, if the financial institution
originated fewer than 25 closed-end mortgage loans in either of the two
preceding calendar years; a financial institution may collect, record,
report, and disclose information, as described in Sec. Sec. 1003.4 and
1003.5, for such an excluded closed-end mortgage loan as though it were
a covered loan, provided that the financial institution complies with
such requirements for all applications for closed-end mortgage loans
that it receives, closed-end mortgage loans that it originates, and
closed-end mortgage loans that it purchases that otherwise would have
been covered loans during the calendar year during which final action
is taken on the excluded closed-end mortgage loan;
* * * * *
0
4. Supplement I to part 1003 is amended as follows:
0
a. Under Section 1003.2--Definitions, revise 2(g) Financial
Institution.
0
b. Under Section 1003.3--Exempt Institutions and Excluded and Partially
Exempt Transactions, under 3(c) Excluded Transactions, revise Paragraph
3(c)(11).
The revisions read as follows:
Supplement I to Part 1003--Official Interpretations
* * * * *
Section 1003.2--Definitions
* * * * *
2(g) Financial Institution
1. Preceding calendar year and preceding December 31. The
definition of financial institution refers both to the preceding
calendar year and the preceding December 31. These terms refer to
the calendar year and the December 31 preceding the current calendar
year. For example, in 2019, the preceding calendar year is 2018 and
the preceding December 31 is December 31, 2018. Accordingly, in
2019, Financial Institution A satisfies the asset-size threshold
described in Sec. 1003.2(g)(1)(i) if its assets exceeded the
threshold specified in comment 2(g)-2 on December 31, 2018.
Likewise, in 2020, Financial Institution A does not meet the loan-
volume test described in Sec. 1003.2(g)(1)(v)(A) if it originated
fewer than 25 closed-end mortgage loans during either 2018 or 2019.
2. Adjustment of exemption threshold for banks, savings
associations, and credit unions. For data collection in 2022, the
asset-size exemption threshold is $50 million. Banks, savings
associations, and credit unions with assets at or below $50 million
as of December 31, 2021, are exempt from collecting data for 2022.
3. Merger or acquisition--coverage of surviving or newly formed
institution. After a merger or acquisition, the surviving or newly
formed institution is a financial institution under Sec. 1003.2(g)
if it, considering the combined assets, location, and lending
activity of the surviving or newly formed institution and the merged
or acquired institutions or acquired branches, satisfies the
criteria included in Sec. 1003.2(g). For example, A and B merge.
The surviving or newly formed institution meets the loan threshold
described in Sec. 1003.2(g)(1)(v)(B) if the surviving or newly
formed institution, A, and B originated a combined total of at least
200 open-end lines of credit in each of the two preceding calendar
years. Likewise, the surviving or newly formed institution meets the
asset-size threshold in Sec. 1003.2(g)(1)(i) if its assets and the
combined assets of A and B on December 31 of the preceding calendar
year exceeded the threshold described in Sec. 1003.2(g)(1)(i).
Comment 2(g)-4 discusses a financial institution's responsibilities
during the calendar year of a merger.
4. Merger or acquisition--coverage for calendar year of merger
or acquisition. The scenarios described below illustrate a financial
institution's responsibilities for the calendar year of a merger or
acquisition. For purposes of these illustrations, a ``covered
institution'' means a financial institution, as defined in Sec.
1003.2(g), that is not exempt from reporting under Sec. 1003.3(a),
and ``an institution that is not covered'' means either an
institution that is not a financial institution, as defined in Sec.
1003.2(g), or an institution that is exempt from reporting under
Sec. 1003.3(a).
i. Two institutions that are not covered merge. The surviving or
newly formed institution meets all of the requirements necessary to
be a covered institution. No data collection is required for the
calendar year of the merger (even though the merger creates an
institution that meets all of the requirements necessary to be a
covered institution). When a branch office of an institution that is
not covered is acquired by another institution that is not covered,
and the acquisition results in a covered institution, no data
collection is required for the calendar year of the acquisition.
ii. A covered institution and an institution that is not covered
merge. The covered institution is the surviving institution, or a
new covered institution is formed. For the calendar year of the
merger, data collection is required for covered loans and
applications handled in the offices of the merged institution that
was previously covered and is optional for covered loans and
applications handled in offices of the merged institution that was
previously not covered. When a covered institution acquires a branch
office of an institution that is not covered, data collection is
optional for covered loans and applications handled by the acquired
branch office for the calendar year of the acquisition.
iii. A covered institution and an institution that is not
covered merge. The institution that is not covered is the surviving
institution, or a new institution that is not covered is formed. For
the calendar year of the merger, data collection is required for
covered loans and applications handled in offices of the previously
covered institution that took place prior to the merger. After the
merger date, data collection is optional for
[[Page 77982]]
covered loans and applications handled in the offices of the
institution that was previously covered. When an institution remains
not covered after acquiring a branch office of a covered
institution, data collection is required for transactions of the
acquired branch office that take place prior to the acquisition.
Data collection by the acquired branch office is optional for
transactions taking place in the remainder of the calendar year
after the acquisition.
iv. Two covered institutions merge. The surviving or newly
formed institution is a covered institution. Data collection is
required for the entire calendar year of the merger. The surviving
or newly formed institution files either a consolidated submission
or separate submissions for that calendar year. When a covered
institution acquires a branch office of a covered institution, data
collection is required for the entire calendar year of the merger.
Data for the acquired branch office may be submitted by either
institution.
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 200 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 Sec. 1003.2(g).
6. Branches of foreign banks--treated as banks. A Federal branch
or a State-licensed or insured branch of a foreign bank that meets
the definition of a ``bank'' under section 3(a)(1) of the Federal
Deposit Insurance Act (12 U.S.C. 1813(a)) is a bank for the purposes
of Sec. 1003.2(g).
7. Branches and offices of foreign banks and other entities--
treated as nondepository financial institutions. A Federal agency,
State-licensed agency, State-licensed uninsured branch of a foreign
bank, commercial lending company owned or controlled by a foreign
bank, or entity operating under section 25 or 25A of the Federal
Reserve Act, 12 U.S.C. 601 and 611 (Edge Act and agreement
corporations) may not meet the definition of ``bank'' under the
Federal Deposit Insurance Act and may thereby fail to satisfy the
definition of a depository financial institution under Sec.
1003.2(g)(1). An entity is nonetheless a financial institution if it
meets the definition of nondepository financial institution under
Sec. 1003.2(g)(2).
* * * * *
Section 1003.3--Exempt Institutions and Excluded and Partially
Exempt Transactions
* * * * *
3(c) Excluded Transactions
* * * * *
Paragraph 3(c)(11)
1. General. Section 1003.3(c)(11) provides that a closed-end
mortgage loan is an excluded transaction if a financial institution
originated fewer than 25 closed-end mortgage loans in either of the
two preceding calendar years. For example, assume that a bank is a
financial institution in 2018 under Sec. 1003.2(g) because it
originated 600 open-end lines of credit in 2016, 650 open-end lines
of credit in 2017, and met all of the other requirements under Sec.
1003.2(g)(1). Also assume that the bank originated 10 and 20 closed-
end mortgage loans in 2016 and 2017, respectively. The open-end
lines of credit 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
Sec. 1003.3(c). However, the closed-end mortgage loans that the
bank originated or purchased, or for which it received applications,
during 2018 are excluded transactions under Sec. 1003.3(c)(11) and
need not be reported. See comments 4(a)-2 through -4 for guidance
about the activities that constitute an origination.
2. Optional reporting. A financial institution may report
applications for, originations of, or purchases of closed-end
mortgage loans that are excluded transactions because the financial
institution originated fewer than 25 closed-end mortgage loans in
either of the two preceding calendar years. However, a financial
institution that chooses to report such excluded applications for,
originations of, or purchases of closed-end mortgage loans must
report all such applications for closed-end mortgage loans that it
receives, closed-end mortgage loans that it originates, and closed-
end mortgage loans that it purchases that otherwise would be covered
loans for a given calendar year. Note that applications which remain
pending at the end of a calendar year are not reported, as described
in comment 4(a)(8)(i)-14.
Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-27204 Filed 12-20-22; 8:45 am]
BILLING CODE 4810-AM-P
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