Comment Period For Proposed Amendments To The Home Mortgage Disclosure 2015 Final Rule Closes Soon

Greg Jones

CRCM- Directory Regulatory Compliance Services

May 16, 2017

The opportunity to let the Consumer Financial Protection Bureau (“CFPB” or “The Bureau”) know what you think about the proposed changes to the HMDA 2015 Final Rule is passing quickly, with the comment period ending on May 25, 2017.

At a lengthy 37 pages, it’s safe to say the proposed changes are not insignificant. While we recommend a thorough reading of any regulation or proposed change, below are some highlights from the proposed changes for motivation.

The CFPB attempts to clarify the definition of a “multi-family dwelling” and the data points that are excluded as a result, for example “debt-to-income ratio.”

In addition to the five or more unit apartment complexes and mobile home parks, the Bureau states that five or more separate single family dwellings taken as collateral for a single loan would be considered a “multi-family dwelling” even if those dwellings were not located close to one another. Furthermore, factors for determining whether or not a mixed-use property should be reported are proposed. The Bureau seeks to make it clear that funds used for the purpose of improving an office in a residential single family dwelling would be considered a reportable home improvement loan, while funds used primarily for improving the commercial space in a mixed use apartment complex containing residential dwellings and commercial space, would not be considered a reportable loan.

More light is shed on commercial-purpose loan reporting with proposed amendments concerning temporary financing.

The Bureau proposes to illustrate that short term loans made for the sole purpose of constructing a dwelling for sale is not meant to be a reportable loan under HMDA. However, a short term loan by an investor for the purpose of purchasing and renovating a dwelling for sale prior to the loan maturing is considered a HMDA reportable loan.

Not only commercial loans receive clarification in the HMDA 2015 Final Rule.

There are additional proposed amendments to further explain what constitutes an automated underwriting system (AUS), how to report composite credit scores, how and when to report total loan costs, and how to correctly calculate combined loan-to-value ratios (CLTV). Additionally, the Bureau plans to include a geocoding tool on their website that will be provide a “safe harbor” if used correctly to obtain census tract codes.

It’s not too late to reach out to the CFPB with your Feedback.

It is definitely worth the time and effort to fully read the proposed changes, especially since the CFPB is aiming to have the proposed changes take effect at the same time that the new rule takes effect on January 1, 2018. It’s easier than ever to submit a comment as well. If a proposed change seems like it will cause an undue burden on your institution, or if a proposed change still seems unclear or muddles the regulation even further, take a few minutes to let the CFPB know what you think!