The CFPB has issued final rules that adjust the asset-size exemption threshold for banks under Regulation C (Home Mortgage Disclosure), and the asset-size threshold for lenders to qualify for an exemption from the requirement to establish an escrow account for a higher-priced mortgage loan under Regulation Z (Truth in Lending). The adjustments announced on December 30, 2013 raise the Home Mortgage Disclosure Act (“HMDA”) asset-size exemption threshold to $43 million, meaning that banks with assets of $43 million or less as of December 31, 2013 are exempt from collecting HMDA data in 2014. An exemption from 2014 HMDA data collection requirements does not impact a bank’s responsibility to report the data it was required to collect in 2013. 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. HMDA and its implementing rules, the CFPB’s Regulation C, require most mortgage lenders to collect, report and disclose data about mortgage loan applications, originations and purchases. The data cover home purchase loans, home improvement loans and refinancing loans. 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. The final rule adjusting the HMDA asset-size exemption threshold became effective on January 1, 2014.
Nutter Notes: The CFPB increased the asset-size threshold for exemption from the requirement to establish an escrow account for a higher-priced mortgage loan under the Regulation Z to $2.028 billion, meaning that banks with assets of $2.028 billion or less as of December 31, 2013, and that also meet other requirements under Regulation Z, will be exempt from the requirement to establish escrow accounts for higher-priced mortgage loans in 2014. The Dodd-Frank Act amended the Truth in Lending Act (“TILA”) to impose a general requirement that an escrow account must be established by a lender to pay for property taxes and insurance premiums for certain first-lien higher-priced mortgage loan transactions. The Dodd-Frank Act also generally permits an exemption from the higher-priced mortgage loan escrow requirement for a lender that operates predominantly in rural or underserved areas, has total annual mortgage loan originations that do not exceed a limit set by the CFPB, retains its mortgage obligations in portfolio, and meets the asset-size threshold established by the CFPB. The adjustment to this asset-size threshold also increases the threshold that applies to determine whether small lenders that originate fewer than 500 mortgage loans annually and primarily serve rural or under-served areas are eligible to originate loans with balloon payment features that will still be considered Qualified Mortgages under Regulation Z. The final rule adjusting the TILA escrow asset-size exemption threshold became effective on January 1.