CFPB Proposes New HMDA Requirements: Changes exemption threshold and Increases Required Disclosures

On July 24, the CFPB published a proposed rule that, if later adopted, would change the reporting requirements for those who provide loans to purchase homes.  The proposed rule changes the current standard in two significant ways: 1) lowering the threshold that requires reporting to any lender who does more than 25 loans per year; and 2) increasing the amount of information a lender will have to submit to the CFPB.

The proposed changes are in Regulation C, which is derived from the Home Mortgage Disclosure Act (HMDA).  The rule is open for public comment until October 22.

All larger lenders in the manufactured housing space were previously required to report HMDA data.  However, under the current regulations a for-profit mortgage lending institution who isn’t a bank, credit union, or savings association (such as a person or entity owner-financing manufactured home loans) with less than $10 million in total assets or who originates less than 100 home loans per year is excluded from having to report.  For most small and medium sized owner-financing operators the current exclusion thresholds mean they don’t currently have to report. 

However, the proposed rule would change these thresholds requiring reporting of anyone who originates more than 25 loans per year.  Many owner-financed operators would stay excluded under the proposed rule, assuming the 25 loan amount is eventually adopted in a final rule, because they do not originate more than 25 loans per year.  However, for those lenders who exceed 25 loans per year, they would be required to report if the proposed rule becomes final.

Manufactured housing was clearly an area of significant importance and focus in the proposed rule.  Within the 573 pages of the proposed rule there are 206 references to manufactured housing and another 28 mentions of modular homes.  Generally, the proposed rule is seeking to require financial institutions to provide more information on the loans they are making, their processes, their underwriting, loan pricing, and borrower specific information such as debt-to-income ratios and loan terms.  There are several proposed reporting requirements specific to manufactured home loans.  The proposed rule would require information on manufactured home loans indicating if the dwelling is classified as real or personal property, as well as if the borrower owns or is leasing the land on which the manufactured home will be installed.

>> Read the CFPB announcement
>> Read the proposed rule

For those mostly interested in the specific reporting items, scroll to page 463.  The proposed rule also contains Appendix A beginning on page 474 that provides “FORM AND INSTRUCTIONS FOR COMPLETION OF HMDA LOAN APPLICATION REGISTER.” 

TMHA will continue to inform our members as this proposed rule progresses through the rule making process.