[Federal Register Volume 83, Number 174 (Friday, September 7, 2018)]
[Rules and Regulations]
[Pages 45325-45333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-19244]



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Rules and Regulations
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains regulatory documents 
having general applicability and legal effect, most of which are keyed 
to and codified in the Code of Federal Regulations, which is published 
under 50 titles pursuant to 44 U.S.C. 1510.

The Code of Federal Regulations is sold by the Superintendent of Documents. 

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Federal Register / Vol. 83, No. 174 / Friday, September 7, 2018 / 
Rules and Regulations

[[Page 45325]]



BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1003

RIN 3170-AA81


Partial Exemptions From the Requirements of the Home Mortgage 
Disclosure Act Under the Economic Growth, Regulatory Relief, and 
Consumer Protection Act (Regulation C)

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Interpretive and procedural rule.

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SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is 
issuing an interpretive and procedural rule to implement and clarify 
the requirements of section 104(a) of the Economic Growth, Regulatory 
Relief, and Consumer Protection Act, which amended certain provisions 
of the Home Mortgage Disclosure Act.

DATES: This interpretive and procedural rule is effective on September 
7, 2018.

FOR FURTHER INFORMATION CONTACT: Rachel Ross, Project Analyst; 
Alexandra Reimelt, Counsel; or Amanda Quester, Senior Counsel, Office 
of Regulations, at 202-435-7700 or https://reginquiries.consumerfinance.gov/. If you require this document in an 
alternative electronic format, please contact 
<a href="/cdn-cgi/l/email-protection#6c2f2a3c2e332d0f0f091f1f050e05000518152c0f0a1c0e420b031a"><span class="__cf_email__" data-cfemail="5714110715081634343224243e353e3b3e232e173431273579303821">[email protected]</span></a>.

SUPPLEMENTARY INFORMATION:

I. Summary

    On May 24, 2018, the President signed the Economic Growth, 
Regulatory Relief, and Consumer Protection Act (the Act) into law.\1\ 
Section 104(a) of the Act amends section 304(i) of the Home Mortgage 
Disclosure Act (HMDA) by adding partial exemptions from HMDA's 
requirements for certain insured depository institutions and insured 
credit unions. Financial institutions have raised questions about the 
new partial HMDA exemptions and how the exemptions affect collection 
and reporting of data for transactions with final action taken in 2018 
or subsequent years. To provide timely answers to these questions, the 
Bureau is issuing this interpretive and procedural rule that implements 
and clarifies section 104(a) of the Act and effectuates the purposes of 
the Act and HMDA.
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    \1\ Public Law 115-174, 132 Stat. 1296 (2018).
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    The rule clarifies that insured depository institutions and insured 
credit unions covered by a partial exemption have the option of 
reporting exempt data fields as long as they report all data fields 
within any exempt data point for which they report data; clarifies that 
only loans and lines of credit that are otherwise HMDA reportable count 
toward the thresholds for the partial exemptions; clarifies which of 
the data points in Regulation C are covered by the partial exemptions; 
designates a non-universal loan identifier for partially exempt 
transactions for institutions that choose not to report a universal 
loan identifier; and clarifies the exception to the partial exemptions 
for negative Community Reinvestment Act examination history. At a later 
date, the Bureau anticipates that it will initiate a notice-and-comment 
rulemaking to incorporate these interpretations and procedures into 
Regulation C and further implement the Act.

II. Background

A. Home Mortgage Disclosure Act and Regulation C

    The Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 through 
2810, requires certain depository institutions 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). The purposes of HMDA are to 
provide the public with loan data that can be used: (i) To help 
determine whether financial institutions are serving the housing needs 
of their communities; (ii) to assist public officials in distributing 
public-sector investment so as to attract private investment to areas 
where it is needed; and (iii) to assist in identifying possible 
discriminatory lending patterns and enforcing antidiscrimination 
statutes.\2\ Regulation C, 12 CFR part 1003, implements HMDA. Prior to 
enactment of the Dodd-Frank Wall Street Reform and Consumer Protection 
Act (Dodd-Frank Act), Regulation C required reporting of 22 data points 
and allowed for optional reporting of reasons an institution denied an 
application.\3\
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    \2\ 12 CFR 1003.1.
    \3\ As used in this interpretive and procedural rule, the term 
``data point'' refers to items of information that entities are 
required to compile and report, generally listed in separate 
paragraphs in Regulation C. Some data points are reported using 
multiple data fields.
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B. Dodd-Frank Act

    In 2010, Congress enacted the Dodd-Frank Act, which amended HMDA 
and also transferred HMDA rulemaking authority and other functions from 
the Board of Governors of the Federal Reserve System (Board) to the 
Bureau.\4\ Among other changes, the Dodd-Frank Act expanded the scope 
of information relating to mortgage applications and loans that 
institutions must compile, maintain, and report under HMDA. 
Specifically, the Dodd-Frank Act amended HMDA section 304(b)(4) by 
adding one new data point, the age of loan applicants and mortgagors. 
The Dodd-Frank Act also added new HMDA section 304(b)(5) and (6), which 
requires the following additional new data points: information relating 
to the total points and fees payable at origination (total loan costs 
or total points and fees); the difference between the annual percentage 
rate (APR) associated with the loan and a benchmark rate or rates for 
all loans (rate spread); the term of any prepayment penalty; the value 
of real property to be pledged as collateral; the term of the loan and 
of any introductory interest rate on the loan; the presence of contract 
terms allowing non-amortizing payments; the channel through which the 
application was made; and the credit scores of applicants and 
mortgagors.\5\ New HMDA section 304(b)(6) in addition authorizes the 
Bureau to require, ``as [it] may determine to be appropriate,'' a 
unique identifier that identifies the loan originator, a universal loan 
identifier (ULI), and the parcel number that corresponds to the real 
property pledged

[[Page 45326]]

as collateral for the mortgage loan.\6\ New HMDA section 304(b)(5)(D) 
and (b)(6)(J) further provides the Bureau with the authority to mandate 
reporting of ``such other information as the Bureau may require.'' \7\
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    \4\ Public Law 111-203, 124 Stat. 1376, 1980, 2035-38, 2097-101 
(2010).
    \5\ Dodd-Frank Act section 1094(3), amending HMDA section 
304(b), 12 U.S.C. 2803(b).
    \6\ Id.
    \7\ Id.
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C. 2015 and 2017 HMDA Final Rules

    In October 2015, the Bureau issued a final rule implementing the 
Dodd-Frank Act amendments to HMDA (2015 HMDA Final Rule).\8\ The 2015 
HMDA Final Rule implemented the new data points specified in the Dodd-
Frank Act,\9\ added a number of additional data points pursuant to the 
Bureau's discretionary authority under HMDA section 304(b)(5) and 
(6),\10\ and made revisions to certain pre-existing data points to 
clarify their requirements, provide greater specificity in reporting, 
and align certain data points more closely with industry data 
standards,\11\ among other changes.
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    \8\ Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct. 
28, 2015).
    \9\ The following 12 data points in 12 CFR 1003.4(a) implement 
specific provisions in HMDA section 304(b)(5)(A) through (C) or 
(b)(6)(A) through (I): ULI (1003.4(a)(1)(i)); property address 
(1003.4(a)(9)(i)); rate spread (1003.4(a)(12)); credit score 
(1003.4(a)(15)); total loan costs or total points and fees 
(1003.4(a)(17)); prepayment penalty term (1003.4(a)(22)); loan term 
(1003.4(a)(25)); introductory rate period (1003.4(a)(26)); non-
amortizing features (1003.4(a)(27)); property value (1003.4(a)(28)); 
application channel (1003.4(a)(33)); and mortgage loan originator 
identifier (1003.4(a)(34)). Id.
    \10\ For example, the 2015 HMDA Final Rule added a requirement 
to report debt-to-income ratio in Sec.  1003.4(a)(23). Id. at 66218-
20.
    \11\ For example, the 2015 HMDA Final Rule replaced property 
type with number of total units and construction method in Sec.  
1003.4(a)(5) and (31). Id. at 66180-81, 66227. It also requires 
disaggregation of ethnicity and race information in Sec.  
1003.4(a)(10)(i). Id. at 66187-94.
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    The 2015 HMDA Final Rule also established transactional thresholds 
that determine whether financial institutions are required to collect 
and report data on open-end lines of credit or closed-end mortgage 
loans.\12\ The 2015 HMDA Final Rule set the closed-end threshold at 25 
loans in each of the two preceding calendar years and the open-end 
threshold at 100 open-end lines of credit in each of the two preceding 
calendar years.\13\ Most of the 2015 HMDA Final Rule took effect on 
January 1, 2018.\14\
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    \12\ Id. at 66128.
    \13\ Id.
    \14\ Id. at 66128, 66256-58.
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    After issuing the 2015 HMDA Final Rule, the Bureau heard concerns 
that the open-end threshold of 100 transactions was too low. In August 
2017, the Bureau finalized a rule after notice and comment (2017 HMDA 
Final Rule) that temporarily increases the open-end threshold to 500 
open-end lines of credit for calendar years 2018 and 2019.\15\ In doing 
so, the Bureau indicated that the two-year period would allow time for 
the Bureau to decide, through an additional rulemaking, whether any 
permanent adjustments to the open-end threshold are needed.\16\
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    \15\ Home Mortgage Disclosure (Regulation C), 82 FR 43088 (Sept. 
13, 2017).
    \16\ Id. at 43095. The 2017 HMDA Final Rule also, among other 
things, replaced ``each'' with ``either'' in Sec.  1003.3(c)(11) and 
(12) to correct a drafting error and to ensure that the exclusion 
provided in that section mirrors the loan-volume threshold for 
financial institutions in Sec.  1003.2(g). Id. at 43100, 43102.
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    Recognizing the significant systems and operations challenges 
needed to adjust to the revised regulation, the Bureau issued a 
statement in December 2017 indicating that, for HMDA data collected in 
2018 and reported in 2019, the Bureau does not intend to require data 
resubmission unless data errors are material.\17\ The statement also 
explained that the Bureau does not intend to assess penalties with 
respect to errors in data collected in 2018 and reported in 2019.\18\ 
As explained in the statement, any supervisory examinations of 2018 
HMDA data will be diagnostic to help institutions identify compliance 
weaknesses and will credit good-faith compliance efforts. The Board, 
the Federal Deposit Insurance Corporation (FDIC), the National Credit 
Union Administration (NCUA), and the Office of the Comptroller of the 
Currency (OCC) released similar statements.
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    \17\ Bureau of Consumer Fin. Prot., ``Statement with Respect to 
HMDA Implementation'' (Dec. 21, 2017), https://files.consumerfinance.gov/f/documents/cfpb_statement-with-respect-to-hmda-implementation_122017.pdf.
    \18\ The statement also indicated that collection and submission 
of the 2018 HMDA data will provide financial institutions an 
opportunity to identify any gaps in their implementation of amended 
Regulation C and make improvements in their HMDA compliance 
management systems for future years. Id.
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D. Economic Growth, Regulatory Relief, and Consumer Protection Act

    Section 104(a) of the Act amends HMDA section 304(i) by adding 
partial exemptions from HMDA's requirements for certain insured 
depository institutions and insured credit unions.\19\ New HMDA section 
304(i)(1) provides that the requirements of HMDA section 304(b)(5) and 
(6) shall not apply with respect to closed-end mortgage loans of an 
insured depository institution or insured credit union if it originated 
fewer than 500 closed-end mortgage loans in each of the two preceding 
calendar years. New HMDA section 304(i)(2) provides that the 
requirements of HMDA section 304(b)(5) and (6) shall not apply with 
respect to open-end lines of credit of an insured depository 
institution or insured credit union if it originated fewer than 500 
open-end lines of credit in each of the two preceding calendar years. 
Notwithstanding the new partial exemptions, new HMDA section 304(i)(3) 
provides that an insured depository institution must comply with HMDA 
section 304(b)(5) and (6) if it has received a rating of ``needs to 
improve record of meeting community credit needs'' during each of its 
two most recent examinations or a rating of ``substantial noncompliance 
in meeting community credit needs'' on its most recent examination 
under section 807(b)(2) of the Community Reinvestment Act of 1977.\20\
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    \19\ For purposes of HMDA section 104, the Act provides that the 
term ``insured credit union'' has the meaning given the term in 
section 101 of the Federal Credit Union Act, 12 U.S.C. 1752, and the 
term ``insured depository institution'' has the meaning given the 
term in section 3 of the Federal Deposit Insurance Act, 12 U.S.C. 
1813.
    \20\ 12 U.S.C. 2906(b)(2).
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    The Act does not provide an effective date for section 104(a). 
Because there is no specific effective date and because there are no 
other statutory indications that section 104(a) becomes effective upon 
regulatory action or some other event or condition, the Bureau believes 
that the best interpretation is that section 104(a) took effect when 
the Act became law on May 24, 2018. On July 5, 2018, the Bureau, the 
Board, the FDIC, the NCUA, and the OCC released statements reiterating 
or referring to their December 2017 compliance statements, providing 
information about formatting and submission of 2018 loan/application 
registers, and indicating that the Bureau expected to issue guidance 
this summer on the applicability of the Act to HMDA data collected in 
2018.\21\
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    \21\ See, e.g., Bureau of Consumer Fin. Prot., ``Statement on 
the Implementation of the Economic Growth, Regulatory Relief, and 
Consumer Protection Act Amendments to the Home Mortgage Disclosure 
Act'' (July 25, 2018), https://www.consumerfinance.gov/about-us/newsroom/bureau-consumer-financial-protection-issues-statement-implementation-economic-growth-regulatory-relief-and-consumer-protection-act-amendments-home-mortgage-disclosure-act/.
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III. Legal Authority

    The Bureau issues this rule pursuant to the authority granted by 
the Dodd-Frank Act and HMDA. HMDA authorizes the Bureau to prescribe 
regulations that it finds necessary to carry out HMDA's purposes.\22\ 
As mentioned earlier, the Dodd-Frank Act transferred to the Bureau the 
``consumer financial protection functions'' previously vested in 
certain other

[[Page 45327]]

Federal agencies, including the Board.\23\ The term ``consumer 
financial protection function'' includes ``all authority to prescribe 
rules or issue orders or guidelines pursuant to any Federal consumer 
financial law, including performing appropriate functions to promulgate 
and review such rules, orders, and guidelines.'' \24\ The Dodd-Frank 
Act authorizes the Bureau's Director to prescribe rules ``as may be 
necessary or appropriate to enable the Bureau to administer and carry 
out the purposes and objectives of the Federal consumer financial laws, 
and to prevent evasions thereof.'' \25\ HMDA is an ``enumerated 
consumer law'' and therefore a ``Federal consumer financial law.'' \26\ 
Accordingly, the Bureau has authority to issue regulations to 
administer HMDA under both HMDA and the Dodd-Frank Act.
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    \22\ 12 U.S.C. 2804(a).
    \23\ 12 U.S.C. 5581. The Dodd-Frank Act also replaced the term 
``Board'' with ``Bureau'' in most places in HMDA.
    \24\ 12 U.S.C. 5581(a)(1)(A).
    \25\ 12 U.S.C. 5512(b)(1).
    \26\ 12 U.S.C. 5481(12)(K); 12 U.S.C. 5481(14).
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IV. Permissible Optional Reporting

    Section 104(a) of the Act provides that the requirements of HMDA 
section 304(b)(5) and (6) shall not apply to closed-end mortgage loans 
of an insured depository institution or insured credit union if the 
institution originated fewer than 500 closed-end mortgage loans in each 
of the two preceding calendar years, and it includes a similar partial 
exemption with respect to open-end lines of credit.\27\ Whether a 
partial exemption applies to an institution's lending activity for a 
particular calendar year depends on an institution's origination 
activity in each of the preceding two years and, in some cases, cannot 
be determined until just before data collection must begin for that 
particular calendar year. For example, whether a partial exemption 
applies to closed-end loans for which final action is taken in 2019 
depends on the number of closed-end loans originated by the insured 
depository institution or insured credit union in 2017 and 2018. Thus, 
an insured depository institution or insured credit union might not 
know until the end of 2018 what information it needs to collect in 2019 
and report in 2020. Some insured depository institutions and insured 
credit unions eligible for a partial exemption under the Act may 
therefore find it less burdensome to report all of the data including 
the exempt data points than to separate the exempt data points from the 
required data points and exclude the exempt data points from their 
submissions. This may be particularly true with respect to data 
submission in 2019, as collection of 2018 data was already underway 
when the Act took effect, and system changes implementing the new 
partial exemptions may take time to complete.\28\ Even after insured 
depository institutions and insured credit unions have had time to 
adjust their systems, some may still find it less burdensome to report 
data covered by a partial exemption, especially if their loan volumes 
tend to fluctuate above or below the threshold from year to year. The 
Bureau believes that section 104(a) is best interpreted as permitting 
optional reporting of data covered by the Act's partial exemptions. 
Section 104(a) provides that certain requirements do not apply to 
affected institutions but does not prohibit those affected institutions 
from voluntarily reporting data. This interpretation is consistent not 
only with the statutory text but also with the apparent congressional 
intent to reduce burden on certain institutions. Accordingly, the 
Bureau interprets the Act to permit insured depository institutions and 
insured credit unions voluntarily to report data that are covered by 
the Act's partial exemptions.
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    \27\ The Act's two partial exemptions operate independently of 
one another. Thus, an insured depository institution or insured 
credit union could be eligible in a given calendar year for one of 
the partial exemptions but not the other. For example, if an insured 
depository institution that does not have a negative Community 
Reinvestment Act examination history originated fewer than 500 
closed-end mortgage loans in each of the two preceding calendar 
years but originated 500 or more open-end lines of credit in either 
of the two preceding calendar years, it is eligible for the partial 
exemption for its closed-end loans but is not eligible for the 
partial exemption for its open-end lines of credit. In this 
circumstance, the institution is not required to collect and report 
exempt data for its closed-end loans. It also collects and reports 
complete data for its open-end lines of credit unless it qualifies 
for a complete regulatory exclusion under Regulation C, Sec. Sec.  
1003.2(g)(1)(v) and 1003.3(c)(12).
    \28\ The Bureau interprets the Act to apply to data that are 
collected or reported under HMDA on or after May 24, 2018. Because 
data collected from January 1, 2018, to May 23, 2018, would not be 
reported until early in 2019, the Act relieves insured depository 
institutions and insured credit unions that are eligible for a 
partial exemption under the Act of the obligation to report certain 
data in 2019 that may have been collected before May 24, 2018. If 
optional reporting of data covered by a partial exemption were not 
permitted, such institutions would have to remove exempt data 
previously collected, before submitting their 2018 data in early 
2019, a process that could be burdensome for some institutions.
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    Aspects of the Bureau's HMDA platform used for receiving HMDA 
submissions, including edit checks \29\ performed on incoming 
submissions, are set up with the expectation that HMDA reporters will 
provide data for an entire data point when data are reported for any 
data field within that data point. Adjusting the HMDA platform to 
accept submissions for 2018 and all future submissions in which 
affected institutions report some, but not all, data fields in a data 
point covered by a partial exemption for a specific transaction would 
increase operational complexity and costs associated with changing the 
HMDA edits in the Filing Instructions Guide for HMDA Data Collected in 
2018 (2018 FIG). Doing so would result in a less efficient 
implementation and submission process for the Bureau, HMDA reporters, 
their vendors, and other key stakeholders. Accordingly, the HMDA 
platform will continue to accept submissions of a data field that is 
covered by a partial exemption under the Act for a specific loan or 
application as long as those insured depository institutions and 
insured credit unions that choose to voluntarily report the data 
include all other data fields that the data point comprises. For 
example, if a partially exempt institution reports a data field that is 
part of the property address data point (such as street address) for a 
partially exempt loan or application, it will report all other data 
fields that are part of the property address data point (including zip 
code, city, and State \30\) for that transaction in accordance with the 
2018 FIG.
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    \29\ The HMDA edit checks are rules to assist filers in checking 
the accuracy of HMDA data prior to submission. The Filing 
Instructions Guide for HMDA Data Collected in 2018 (2018 FIG), a 
compendium of resources to help financial institutions file HMDA 
data collected in 2018 with the Bureau in 2019, explains that there 
are four types of edit checks: syntactical, validity, quality, and 
macro quality. Table 2 (Loan/Application Register) in the 2018 FIG 
identifies the data fields currently associated with each data 
point. See Fed. Fin. Insts. Examination Council, ``Filing 
Instructions Guide for HMDA Data Collected in 2018'' (2018 FIG), at 
21-54, https://www.consumerfinance.gov/data-research/hmda/static/for-filers/2018/2018-hmda-fig.pdf; see also supra note 3 (discussing 
the relationship between data points and data fields).
    \30\ Reporting the State data field is subject to the 
requirements both for property address, provided in Sec.  
1003.4(a)(9)(i), and property location, provided in Sec.  
1003.4(a)(9)(ii).
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V. Loans Counted Toward Partial Exemptions' Thresholds

    Section 104(a) of the Act does not define the term ``closed-end 
mortgage loan'' or ``open-end line of credit.'' It also does not 
specify whether these terms include loans or lines of credit that would 
otherwise not be subject to HMDA reporting under Regulation C, such as 
loans used primarily for agricultural purposes.\31\ The Bureau believes 
that the terms ``closed-end

[[Page 45328]]

mortgage loan'' and ``open-end line of credit'' as used in the Act are 
best interpreted to include only those closed-end mortgage loans and 
open-end lines of credit that would otherwise be reportable under HMDA. 
This interpretation is consistent with how loans and lines of credit 
are counted for purposes of the thresholds in Regulation C's existing 
complete regulatory exclusions, which are independent of the Act's new 
partial exemptions and unaffected by the Act.\32\ Accordingly, the 
Bureau interprets the term ``closed-end mortgage loan'' to include any 
closed-end mortgage loan as defined in Sec.  1003.2(d) that is not 
excluded from Regulation C pursuant to Sec.  1003.3(c)(1) through (10) 
or (13) and interprets the term ``open-end line of credit'' to include 
any open-end line of credit as defined in Sec.  1003.2(o) that is not 
excluded from Regulation C pursuant to Sec.  1003.3(c)(1) through (10).
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    \31\ 12 CFR 1003.3(c)(9).
    \32\ The definition of ``depository financial institution'' in 
Sec.  1003.2(g)(1)(v) is currently limited to institutions that 
either (1) originated in each of the preceding two years at least 25 
closed-end mortgage loans that are not excluded from Regulation C 
pursuant to Sec.  1003.3(c)(1) through (10) or (13); or (2) 
originated in each of the two preceding calendar years at least 500 
open-end lines of credit that are not excluded from Regulation C 
pursuant to Sec.  1003.3(c)(1) through (10). See also 12 CFR 
1003.3(c)(11), (12) (excluding closed-end mortgage loans from the 
requirements of Regulation C if the financial institution originated 
fewer than 25 closed-end mortgage loans in either of the two 
preceding calendar years, and excluding open-end lines of credit 
from the requirements of Regulation C if the financial institution 
originated fewer than 500 open-end lines of credit in either of the 
two preceding calendar years). As noted above, the threshold of 500 
open-end lines of credit for the complete regulatory exclusion is 
temporary, and absent further Bureau action the permanent threshold 
for the Bureau's complete regulatory exclusion will be 100 open-end 
lines of credit beginning January 1, 2020. While the temporary 
Regulation C threshold is in place, all of the open-end lines of 
credit that would be covered by the Act's partial exemption for 
open-end lines of credit in HMDA section 304(i)(2) are excluded from 
the requirements of part 1003 under current Sec. Sec.  
1003.2(g)(1)(v) and 1003.3(c)(12).
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VI. Data Points Covered by the Partial Exemptions

    If a transaction qualifies for one of the Act's partial exemptions, 
section 104(a) of the Act provides that the requirements of HMDA 
section 304(b)(5) and (6) shall not apply. For the reasons explained 
below, the Bureau interprets the requirements of HMDA section 304(b)(5) 
and (6) to include the 26 data points listed in the first column of 
table 1 at the end of this part VI. For loans or applications covered 
by a partial exemption, insured depository institutions and insured 
credit unions therefore are required to collect and report only the 
remaining 22 data points specified in the 2015 and 2017 HMDA Final 
Rules, which are identified in the second column of table 1 below.
    As explained in part II.B above, the Dodd-Frank Act added HMDA 
section 304(b)(5) and (6), which requires certain data points and 
provides the Bureau discretion to require additional data points.\33\ 
In the 2015 HMDA Final Rule, the Bureau implemented the new data points 
specified in the Dodd-Frank Act (including those added in new HMDA 
section 304(b)(5) and (6)), added a number of additional data points 
pursuant to the Bureau's discretionary authority, and made revisions to 
certain pre-existing data points to clarify the requirements, provide 
greater specificity in reporting, and align certain data points more 
closely with industry data standards.
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    \33\ HMDA section 304(b)(5) requires disclosure of the number 
and dollar amount of mortgage loans grouped according to 
measurements of:
    <bullet> The total points and fees payable at origination;
    <bullet> The difference between the APR associated with the loan 
and a benchmark rate or rates for all loans;
    <bullet> The term in months of any prepayment penalty or other 
fee or charge payable on repayment of some portion of principal or 
the entire principal in advance of scheduled payments; and
    <bullet> Such other information as the Bureau may require.
    HMDA section 304(b)(6) requires disclosure of the number and 
dollar amount of mortgage loans and completed applications grouped 
according to measurements of:
    <bullet> The value of the real property pledged or proposed to 
be pledged as collateral;
    <bullet> The actual or proposed term in months of any 
introductory period after which the rate of interest may change;
    <bullet> The presence of contractual terms or proposed 
contractual terms that would allow the mortgagor or applicant to 
make payments other than fully amortizing payments during any 
portion of the loan term;
    <bullet> The actual or proposed term in months of the mortgage 
loan;
    <bullet> The channel through which application was made;
    <bullet> As the Bureau may determine to be appropriate, a unique 
identifier that identifies the loan originator as set forth in 
section 5102 of this title;
    <bullet> As the Bureau may determine to be appropriate, a 
universal loan identifier;
    <bullet> As the Bureau may determine to be appropriate, the 
parcel number that corresponds to the real property pledged or 
proposed to be pledged as collateral;
    <bullet> The credit score of mortgage applicants and mortgagors; 
and
    <bullet> Such other information as the Bureau may require.
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    For purposes of the Act, the Bureau interprets the requirements of 
HMDA section 304(b)(5) and (6) to include the 12 data points that the 
Bureau added to Regulation C in the 2015 HMDA Final Rule to implement 
data points specifically identified in HMDA section 304(b)(5)(A) 
through (C) or (b)(6)(A) through (I), which are the following: ULI; 
property address; rate spread \34\; credit score; total loan costs or 
total points and fees; prepayment penalty term; loan term; introductory 
rate period; non-amortizing features; property value; application 
channel; and mortgage loan originator identifier.\35\ The Bureau also 
interprets the requirements of HMDA section 304(b)(5) and (6) to 
include the 14 data points that were not found in Regulation C prior to 
the Dodd-Frank Act and that the Bureau required in the 2015 HMDA Final 
Rule citing its discretionary authority under HMDA section 304(b)(5)(D) 
and (b)(6)(J). Specifically, these data points are the following: the 
total origination charges associated with the loan; the total points 
paid to the lender to reduce the interest rate of the loan (discount 
points); the amount of lender credits; the interest rate applicable at 
closing or account opening; the debt-to-income ratio; the ratio of the 
total amount of debt secured by the property to the value of the 
property (combined loan-to-value ratio); for transactions involving 
manufactured homes, whether the loan or application is or would have 
been secured by a manufactured home and land or by a manufactured home 
and not land (manufactured home secured property type); the land 
property interest for loans or applications related to manufactured 
housing (manufactured home land property interest); the number of 
individual dwellings units that are income-restricted pursuant to 
Federal, State, or local affordable housing programs (multifamily 
affordable units); information related to the automated underwriting 
system used in evaluating an application and the result generated by 
the automated underwriting system; whether the loan is a reverse 
mortgage; whether the loan is an open-end line of credit; whether the 
loan is primarily for a business or commercial purpose; and the reasons 
for

[[Page 45329]]

denial of a loan application, which were optionally reported under the 
Board's rule but became mandatory in the 2015 HMDA Final Rule.\36\ 
Pursuant to the Act, insured depository institutions and insured credit 
unions need not collect or report these 26 data points for transactions 
that qualify for a partial exemption under the Act, unless otherwise 
required by their regulator.\37\
---------------------------------------------------------------------------

    \34\ Prior to the passage of the Dodd-Frank Act, the Board 
required financial institutions to report rate spread for higher-
priced mortgage loans. 67 FR 7222 (Feb. 15, 2002); 67 FR 43218 (June 
27, 2002). In doing so, the Board noted that ``the collection of 
loan pricing information is necessary to fulfill the statutory 
purposes of HMDA and to ensure the continued utility of the HMDA 
data.'' 67 FR 7222, 7228 (Feb. 15, 2002). The Bureau may propose in 
a future notice-and-comment rulemaking to use its HMDA authority 
other than HMDA section 304(b)(5) and (6) to reinstate the Board's 
requirement to report rate spread for higher-priced mortgage loans 
covered by the partial exemptions so the Bureau can receive data and 
views bearing on the costs and benefits of such a proposal. As 
explained in part IV above, insured depository institutions and 
insured credit unions may voluntarily report rate spread for 
transactions covered by the Act's partial exemptions.
    \35\ 12 CFR 1003.4(a)(1)(i), (a)(9)(i), and (a)(12), (15), (17), 
(22), (25), (26), (27), (28), (33), (34).
    \36\ 12 CFR 1003.4(a)(16), (18), (19), (20), (21), (23), (24), 
(29), (30), (32), (35), (36), (37), (38).
    \37\ Certain financial institutions supervised by the OCC and 
the FDIC are required by those agencies to report reasons for denial 
on their HMDA loan/application registers. 12 CFR 27.3(a)(1)(i), 
128.6, 390.147.
---------------------------------------------------------------------------

    The Bureau interprets the requirements of HMDA section 304(b)(5) 
and (6) not to include four other data points that are similar or 
identical to data points added to Regulation C by the Board and that 
the Bureau re-adopted in the 2015 HMDA Final Rule: lien status of the 
subject property; whether the loan is subject to the Home Ownership and 
Equity Protection Act of 1994 (HOEPA); construction method for the 
dwelling related to the subject property; and the total number of 
individual dwelling units contained in the dwelling related to the loan 
(number of units).\38\ The 2015 HMDA Final Rule did not alter the pre-
existing Regulation C HOEPA status and lien status data 
requirements.\39\ Construction method and total units, together, 
replaced property type, the pre-existing Regulation C data point; the 
information required by the new data points is very similar to what the 
Board required, but institutions now must report the precise number of 
units rather than categorizing dwellings into one-to-four family 
dwellings and multifamily dwellings.\40\
---------------------------------------------------------------------------

    \38\ 12 CFR 1003.4(a)(5), (13), (14), (31).
    \39\ The 2015 HMDA Final Rule extends the requirement to report 
lien status to purchased loans and no longer requires reporting of 
information about unsecured loans. 80 FR 66128, 66201 (Oct. 28, 
2015).
    \40\ Prior to 2018, Regulation C required reporting of property 
type as one-to-four family dwelling (other than manufactured 
housing), manufactured housing, or multifamily dwelling, whereas the 
current rule requires reporting of whether the dwelling is site-
built or manufactured home, together with the number of individual 
dwelling units.
---------------------------------------------------------------------------

    The Board adopted its versions of these data points before HMDA 
section 304(b)(5) and (6) was added to HMDA by the Dodd-Frank Act, 
pursuant to HMDA authority that pre-existed section 304(b)(5) and (6). 
Although the Bureau cited HMDA section 304(b)(5) and (6) as additional 
support for these four data points in the 2015 HMDA Final Rule, the 
Bureau relied on HMDA section 305(a), which pre-existed the Dodd-Frank 
Act and independently provides legal authority for their adoption.\41\ 
Given that these data points were not newly added by the Dodd-Frank Act 
or the Bureau, the Bureau does not interpret the Act as affecting them. 
This interpretation is consistent with the Act's legislative history, 
which suggests that Congress was focused on relieving regulatory burden 
associated with the Dodd-Frank Act.\42\
---------------------------------------------------------------------------

    \41\ 80 FR 66128, 66180-81, 66199-201, 66227 (Oct. 28, 2015).
    \42\ See, e.g., 164 Cong. Rec. S1423-24 (daily ed. Mar. 7, 2018) 
(statement of Sen. Crapo), S1529-30 (statement of Sen. McConnell), 
S1532-33 (statement of Sen. Cornyn), S.1537-39 (statement of Sen. 
Lankford), S1619-20 (statement of Sen. Cornyn).
---------------------------------------------------------------------------

    The requirements of HMDA section 304(b)(5) and (6), and thus the 
partial exemptions, also do not include 17 other data points included 
in the 2015 HMDA Final Rule that are similar or identical to pre-
existing Regulation C data points established by the Board and that 
were not required by HMDA section 304(b)(5) and (6) or promulgated 
using discretionary authority under HMDA section 304(b)(5)(D) and 
(b)(6)(J). These are: the Legal Entity Identifier (which replaced the 
pre-existing respondent identifier); application date; loan type; loan 
purpose; preapproval; occupancy type; loan amount; action taken; action 
taken date; State; county; census tract; ethnicity; race; sex; income; 
and type of purchaser.\43\ Additionally, the requirements of HMDA 
section 304(b)(5) and (6), and thus the partial exemptions, do not 
include age because the Dodd-Frank Act added that requirement instead 
to HMDA section 304(b)(4).\44\
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    \43\ 12 CFR 1003.4(a)(1)(ii), (a)(2), (3), (4), (6), (7), (8), 
(a)(9)(ii), (a)(10), (11), 1003.5(a)(3).
    \44\ Dodd-Frank Act section 1094(3)(A)(i).
---------------------------------------------------------------------------

    With respect to transactions covered by one of the Act's new 
partial exemptions, insured depository institutions and insured credit 
unions are therefore required to report 22 of the 48 data points 
currently set forth in Regulation C, as indicated in table 1 below. 
Because the Act does not make any changes with respect to these 22 data 
points, insured depository institutions and insured credit unions that 
are eligible for a partial exemption under the Act must continue to 
report these 22 data points in the manner currently specified in 
Regulation C. For example, insured depository institutions and insured 
credit unions that are eligible for a partial exemption under the Act 
are still required to report a Legal Entity Identifier as well as lien 
status for purchased loans.\45\
---------------------------------------------------------------------------

    \45\ 12 CFR 1003.4(a)(14), 1003.5(a)(3).

   Table 1--Effect of the Act's Partial Exemptions on HMDA Data Points
------------------------------------------------------------------------
   Covered by the Act's partial exemptions        Unchanged by the Act
------------------------------------------------------------------------
<bullet> Universal Loan Identifier (ULI)       <bullet> Application Date
 (1003.4(a)(1)(i)) \46\.                        (1003.4(a)(1)(ii)).
<bullet> Property Address (1003.4(a)(9)(i))..  <bullet> Loan Type
                                                (1003.4(a)(2)).
<bullet> Rate Spread (1003.4(a)(12)).........  <bullet> Loan Purpose
                                                (1003.4(a)(3)).
<bullet> Credit Score (1003.4(a)(15))........  <bullet> Preapproval
                                                (1003.4(a)(4)).
<bullet> Reasons for Denial (1003.4(a)(16))..  <bullet> Construction
                                                Method (1003.4(a)(5)).
<bullet> Total Loan Costs or Total Points and  <bullet> Occupancy Type
 Fees (1003.4(a)(17)).                          (1003.4(a)(6)).
<bullet> Origination Charges (1003.4(a)(18)).  <bullet> Loan Amount
                                                (1003.4(a)(7)).
<bullet> Discount Points (1003.4(a)(19)).....  <bullet> Action Taken
                                                (1003.4(a)(8)(i)).
<bullet> Lender Credits (1003.4(a)(20))......  <bullet> Action Taken
                                                Date (1003.4(a)(8)(ii)).
<bullet> Interest Rate (1003.4(a)(21)).......  <bullet> State
                                                (1003.4(a)(9)(ii)(A)).
<bullet> Prepayment Penalty Term               <bullet> County
 (1003.4(a)(22)).                               (1003.4(a)(9)(ii)(B)).
<bullet> Debt-to-Income Ratio (1003.4(a)(23))  <bullet> Census Tract
                                                (1003.4(a)(9)(ii)(C)).
<bullet> Combined Loan-to-Value Ratio          <bullet> Ethnicity
 (1003.4(a)(24)).                               (1003.4(a)(10)(i)).
<bullet> Loan Term (1003.4(a)(25))...........  <bullet> Race
                                                (1003.4(a)(10)(i)).
<bullet> Introductory Rate Period              <bullet> Sex
 (1003.4(a)(26)).                               (1003.4(a)(10)(i)).
<bullet> Non-Amortizing Features               <bullet> Age
 (1003.4(a)(27)).                               (1003.4(a)(10)(ii)).
<bullet> Property Value (1003.4(a)(28))......  <bullet> Income
                                                (1003.4(a)(10)(iii)).
<bullet> Manufactured Home Secured Property    <bullet> Type of
 Type (1003.4(a)(29)).                          Purchaser
                                                (1003.4(a)(11)).
<bullet> Manufactured Home Land Property       <bullet> HOEPA Status
 Interest (1003.4(a)(30)).                      (1003.4(a)(13)).
<bullet> Multifamily Affordable Units          <bullet> Lien Status
 (1003.4(a)(32)).                               (1003.4(a)(14)).

[[Page 45330]]

 
<bullet> Application Channel (1003.4(a)(33)).  <bullet> Number of Units
                                                (1003.4(a)(31)).
<bullet> Mortgage Loan Originator Identifier   <bullet> Legal Entity
 (1003.4(a)(34)).                               Identifier
                                                (1003.5(a)(3)).
<bullet> Automated Underwriting System
 (1003.4(a)(35)).
<bullet> Reverse Mortgage Flag
 (1003.4(a)(36)).
<bullet> Open-End Line of Credit Flag
 (1003.4(a)(37)).
<bullet> Business or Commercial Purpose Flag
 (1003.4(a)(38)).
------------------------------------------------------------------------

VII. Non-Universal Loan Identifier

    In the 2015 HMDA Final Rule, the Bureau interpreted ``universal 
loan identifier'' (ULI) as used in HMDA section 304(b)(6)(G) to mean an 
identifier that is unique within the industry and required that the ULI 
include the Legal Entity Identifier of the institution that assigned 
the ULI.\47\ As explained in part VI above, insured depository 
institutions and insured credit unions are not required to report a ULI 
for loans or applications that are partially exempt. Some insured 
depository institutions and insured credit unions may prefer to report 
a ULI for partially exempt loans or applications even if they are not 
required to do so. As explained in part IV above, voluntary reporting 
of ULIs for partially exempt loans and applications is permissible 
under the Act.
---------------------------------------------------------------------------

    \46\ See infra part VII (Non-Universal Loan Identifier).
    \47\ 80 FR 66128, 66176 (Oct. 28, 2015).
---------------------------------------------------------------------------

    Regardless, as was true prior to the Dodd-Frank Act HMDA amendments 
and under Regulation C as it existed prior to the 2015 HMDA Final Rule, 
loans and applications must be identifiable in the HMDA data to ensure 
proper HMDA submission, processing, and compliance.\48\ The Bureau does 
not interpret the Act to change this baseline component of data 
collection and reporting. Accordingly, while insured depository 
institutions and insured credit unions that are eligible for partial 
exemptions under the Act do not have to report a ULI for partially 
exempt transactions, they must continue to provide information so that 
each loan and application they report for HMDA purposes is 
identifiable. The ability to identify individual loans and applications 
is necessary to facilitate efficient and orderly submission of HMDA 
data and communications between the institution, the Bureau, and other 
applicable regulators. For example, identification of loans and 
applications is necessary to ensure that it is possible to address 
problems identified when edit checks are done upon submission or 
questions that arise at a later time as HMDA submissions are reviewed 
by regulators. To ensure the orderly administration of the HMDA 
program, insured depository institutions and insured credit unions must 
provide a non-universal loan identifier that complies with the 
requirements identified below for any partially exempt loan or 
application for which they do not report a ULI.
---------------------------------------------------------------------------

    \48\ HMDA requires that covered loans and applications be 
``itemized in order to clearly and conspicuously disclose'' the 
applicable data for each loan or application. 12 U.S.C. 2803(a)(2).
---------------------------------------------------------------------------

    A non-universal loan identifier does not need to be unique within 
the industry and therefore does not need to include a Legal Entity 
Identifier as the ULI does.\49\ The non-universal loan identifier may 
be composed of up to 22 characters to identify the covered loan or 
application, which:
---------------------------------------------------------------------------

    \49\ Additionally, if a financial institution that is subject to 
HMDA and not eligible for a partial exemption purchases a loan 
originated by a partially exempt institution that assigned a non-
universal loan identifier rather than a ULI, the purchasing 
institution does not report the non-universal loan identifier 
previously assigned. Instead, the purchasing institution assigns its 
own ULI because no ULI was assigned by the institution that 
originated the loan. See comment 4(a)(1)(i)-3.
---------------------------------------------------------------------------

    1. May be letters, numerals, or a combination of letters and 
numerals;
    2. Must be unique within the insured depository institution or 
insured credit union; and
    3. Must not include any information that could be used to directly 
identify the applicant or borrower.\50\
---------------------------------------------------------------------------

    \50\ A check digit is not required as part of a non-universal 
loan identifier, as it is for a ULI under 12 CFR 1003.4(a)(1)(i)(C), 
but may be voluntarily included in a non-universal loan identifier 
provided that the non-universal loan identifier, including the check 
digit, does not exceed 22 characters.
---------------------------------------------------------------------------

Information that could be used to directly identify the applicant or 
borrower includes, but is not limited to, the applicant's or borrower's 
name, date of birth, Social Security number, official government-issued 
driver's license or identification number, alien registration number, 
government passport number, or employer or taxpayer identification 
number.
    To ensure that a non-universal loan identifier is unique within the 
insured depository institution or insured credit union, the institution 
must assign only one non-universal loan identifier to any particular 
covered loan or application, and each non-universal loan identifier 
must correspond to a single application and ensuing loan in the case 
that the application is approved and a loan is originated. Similarly, 
refinancings or applications for refinancing should be assigned a 
different non-universal loan identifier than the loan that is being 
refinanced. An insured depository institution or insured credit union 
with multiple branches must ensure that its branches do not use the 
same non-universal loan identifier to refer to multiple covered loans 
or applications. An institution may not use a non-universal loan 
identifier previously reported if the institution reinstates or 
reconsiders an application that was reported in a prior calendar 
year.\51\
---------------------------------------------------------------------------

    \51\ For example, if an insured depository institution or 
insured credit union reports a denied application in its annual 2020 
data submission, pursuant to Sec.  1003.5(a)(1), but then 
reconsiders the application, resulting in an origination in 2021, 
the institution reports a denied application under the original non-
universal loan identifier in its annual 2020 data submission and an 
origination with a different non-universal loan identifier in its 
annual 2021 data submission, pursuant to Sec.  1003.5(a)(1).
---------------------------------------------------------------------------

VIII. Exception Based on Community Reinvestment Act Exam Reports

    Notwithstanding the new partial exemptions, new HMDA section 
304(i)(3) provides that an insured depository institution must comply 
with HMDA section 304(b)(5) and (6) if it has received a rating of 
``needs to improve record of meeting community credit needs'' during 
each of its two most recent Community Reinvestment Act (CRA) 
examinations or a rating of ``substantial noncompliance in meeting 
community credit needs'' on its most recent CRA examination. The Act 
does not specify as of what date an insured depository institution's 
two most recent CRA examinations must be assessed for purposes of this 
exception. The Bureau interprets the Act to require that this 
assessment be made as of December 31 of the preceding calendar year. 
This is consistent with Regulation C's asset-size threshold and 
requirement that a financial institution have a home or branch office 
located in a Metropolitan

[[Page 45331]]

Statistical Area, which are both assessed as of the preceding December 
31.\52\
---------------------------------------------------------------------------

    \52\ 12 CFR 1003.2(g)(1)(i)-(ii), 1003.2(g)(2)(i), comment 2(g)-
1.
---------------------------------------------------------------------------

    For example, in 2020, the preceding December 31 is December 31, 
2019. Assume Insured Depository Institution A received a rating of 
``needs to improve record of meeting community credit needs'' during 
each of its two most recent examinations under section 807(b)(2) of the 
CRA \53\ that occurred on or before December 31, 2019. Accordingly, in 
2020, Insured Depository Institution A is not eligible for the Act's 
partial exemptions.
---------------------------------------------------------------------------

    \53\ 12 U.S.C. 2906(b)(2).
---------------------------------------------------------------------------

IX. Effective Date

    Because this rule is solely interpretive and procedural, it is not 
subject to the 30-day delayed effective date for substantive rules 
under section 553(d) of the Administrative Procedure Act.\54\ The 
Bureau also believes that this rule meets the requirements for the 
section 553(d)(3) exception for good cause. As noted above, the Bureau 
believes that the best interpretation of the Act is that section 104(a) 
took effect when the Act became law on May 24, 2018. Because of HMDA's 
ongoing collection and reporting requirements, the impact of the Act on 
the collection and reporting of data for transactions with final action 
in 2018, and the related questions raised by financial institutions, 
there is good cause to implement and clarify section 104(a) of the Act 
without delay. The Bureau therefore finds that there is good cause to 
make this rule effective on September 7, 2018.
---------------------------------------------------------------------------

    \54\ 5 U.S.C. 553(d).
---------------------------------------------------------------------------

X. Dodd-Frank Act Section 1022(b) Analysis

    Section 1022(b)(2)(A) of the Dodd-Frank Act calls for the Bureau to 
consider the potential benefits and costs of a regulation to consumers 
and covered persons, including the potential reduction of access by 
consumers to consumer financial products or services; the impact on 
depository institutions and credit unions with $10 billion or less in 
total assets as described in section 1026 of the Dodd-Frank Act; and 
the impact on consumers in rural areas. Section 1022(b)(2)(B) directs 
the Bureau to consult with the appropriate prudential regulators or 
other Federal agencies regarding consistency with objectives those 
agencies administer. The manner and extent to which these provisions 
apply to a rulemaking of this kind, which interprets and provides 
guidance regarding existing law and establishes Bureau procedures but 
does not establish standards of conduct, is unclear. Nevertheless, to 
inform this rulemaking more fully, the Bureau performed the analyses 
and consultations described in those provisions of the Dodd-Frank Act.

A. Overview

    Section 104(a) of the Act amends HMDA section 304(i) by adding 
partial exemptions from HMDA's requirements for certain institutions. 
This interpretive and procedural rule implements the requirements of 
section 104(a). The rule provides clarification and guidance to all 
affected entities on the institutions covered by the partial exemption 
and what data must be collected, recorded, and reported.
    The rule provides clarification and guidance on five general items:
    1. Partially exempt institutions have the option to report data 
points covered by the partial exemption. If a data point covered by the 
partial exemption includes multiple data fields, partially exempt 
institutions report all of the data fields if they choose to report at 
least one of the data fields.
    2. The terms ``closed-end mortgage loan'' and ``open-end line of 
credit'' include only loans and lines of credit that are otherwise 
reportable under HMDA.
    3. Partially exempt institutions are not required to report 26 data 
points specified in this rule.
    4. Partially exempt institutions are required to report a non-
universal loan identifier if they choose not to report a ULI.
    5. For a given reporting year, the CRA ratings used to determine 
whether the CRA reporting exception applies are the two most recent CRA 
ratings as of December 31 of the preceding calendar year.
    In developing this rule, the Bureau has considered potential 
benefits, costs, and impacts of these clarifications and guidance. The 
Bureau has consulted with, or offered to consult with, the Board, the 
Federal Deposit Insurance Corporation, the Office of the Comptroller of 
the Currency, the National Credit Union Administration, the Department 
of Housing and Urban Development, the Securities and Exchange 
Commission, the Department of Justice, the Department of Veterans 
Affairs, the Federal Housing Finance Agency, the Department of the 
Treasury, the Department of Agriculture, the Federal Trade Commission, 
and the Federal Financial Institutions Examination Council.

B. Institutions Affected by Rule or Act

    Under section 104(a) of the Act, an insured depository institution 
or insured credit union is eligible for a partial exemption for its 
closed-end mortgage loans if it originated fewer than 500 closed-end 
mortgage loans in each of the two preceding calendar years and did not 
receive a rating of ``needs to improve record of meeting community 
credit needs'' during both of its two most recent CRA examinations or a 
rating of ``substantial noncompliance in meeting community credit 
needs'' during its most recent CRA examination. After applying all 
current HMDA reporting requirements, including Regulation C's complete 
regulatory exclusion for institutions that originated fewer than 25 
closed-end mortgage loans in either of the two preceding calendar 
years, the Bureau estimates that section 104(a) of the Act provides a 
partial exemption with respect to collection, recording, and reporting 
of 2018 HMDA data to approximately 3,300 institutions.\55\ As a point 
of reference, 5,852 institutions reported data under HMDA in 2018.
---------------------------------------------------------------------------

    \55\ To generate this estimate, the Bureau first identified all 
depository institutions (including credit unions) that met all 
reporting requirements and reported 2017 HMDA data in 2018. From 
this set of depository institutions, the Bureau then excluded all 
depository institutions that do not have to report 2018 HMDA data in 
2019 because they originated fewer than 25 closed-end mortgage loans 
in either 2016 or 2017. Of the remaining depository institutions, 
approximately 3,300 originated fewer than 500 closed-end mortgage 
loans in each of 2016 and 2017. For purposes of this estimate, the 
Bureau assumes that these institutions are insured and do not have a 
negative CRA examination history and are partially exempt.
---------------------------------------------------------------------------

    For open-end lines of credit, the Bureau estimates that the new 
reporting criteria in section 104(a) of the Act will not have any 
effect on data collected in 2018. Regulation C currently provides a 
complete regulatory exclusion for open-end lines of credit for 
institutions that originated fewer than 500 open-end lines of credit in 
either of the preceding two years, and this exclusion applies to more 
institutions than the section 104(a) partial exemption criterion of 
fewer than 500 originations in each of the two preceding calendar 
years. The effect that section 104(a) will have on data collected for 
open-end lines of credit on or after January 1, 2020, is unclear 
because the temporary threshold of 500 open-end lines of credit for the 
complete regulatory exclusion applies only for 2018 and 2019. The 
Bureau has indicated that it intends to reconsider the threshold for 
the permanent regulatory exclusion for open-end lines of credit, which 
is currently set at 100

[[Page 45332]]

open-end lines of credit starting in 2020.\56\
---------------------------------------------------------------------------

    \56\ 82 FR 43088 (Sept. 13, 2017).
---------------------------------------------------------------------------

C. Potential Benefits and Costs to Consumers and Covered Persons

    The Bureau is using a post-statute baseline to assess the impact of 
this rule because the rule merely interprets and provides guidance 
regarding what Congress required in section 104(a) of the Act and 
provides procedures related to applying those requirements.\57\ It does 
not impose new, or change existing, substantive requirements that would 
require exercise of the Bureau's legislative rulemaking authority. 
Using a post-statute baseline, the analysis evaluates the benefits, 
costs, and impacts of the rule as compared to the state of the world if 
the proposed interpretive and procedural rule were not adopted. Without 
this interpretive and procedural rule, affected institutions would lack 
authoritative clarification and guidance regarding how to comply with 
certain changes to HMDA made by section 104(a) of the Act.
---------------------------------------------------------------------------

    \57\ The Bureau has discretion in any rulemaking to choose an 
appropriate scope of analysis with respect to potential benefits, 
costs, and impacts and an appropriate baseline. As noted earlier, 
the Bureau anticipates an upcoming notice-and-comment rulemaking and 
expects that the accompanying 1022(b) analysis will assess the 
benefits, costs, and impacts of the statute as well as the 
implementing regulation.
---------------------------------------------------------------------------

    Covered persons should benefit from this rule because it will ease 
review, understanding, and compliance with section 104(a) of the Act, 
which will in turn reduce the likelihood of potentially inconsistent or 
incorrect implementation. It is not practicable to quantify the precise 
magnitude of these informational benefits; however, they will likely 
vary over time, with earlier guidance providing higher benefits because 
covered persons have more time to incorporate this information into 
their planning and preparation. Without this rule, covered persons 
would either need to rely more heavily on their own independent 
evaluations of the statute, which would increase the likelihood of 
inconsistent or incorrect implementation and non-compliance, or wait 
for guidance in the anticipated notice-and-comment rulemaking, which 
would provide covered persons less time to incorporate authoritative 
guidance while adopting the changes under the Act.
    These short-run benefits of the rule are somewhat offset by 
guidance the Bureau provided in December 2017, indicating that it does 
not intend to require data resubmission of 2018 HMDA data unless data 
errors are material or to assess penalties for data errors. The Board, 
the Office of the Comptroller of the Currency, the Federal Deposit 
Insurance Corporation, and the National Credit Union Administration 
released similar statements. Decreased potential for data resubmission 
and penalties in the short-run reduces the value to covered persons of 
receiving earlier guidance and clarification.
    An additional benefit is that this rule provides covered persons 
with additional options, and increased options generally translate into 
increased benefits. For example, the rule allows for voluntary 
reporting of partially exempt data points such as ULI. During the 2015 
HMDA rulemaking process, however, some commenters suggested that 
options increased reporting burden, because they added uncertainty and 
required more interpretation.
    The Bureau expects this rule to impose negligible costs on covered 
persons. There are three items of note here. First, this rule provides 
specific definitions of the terms ``closed-end mortgage loan'' or 
``open-end line of credit,'' which are not defined in section 104(a) of 
the Act. The Bureau is interpreting these terms to include only loans 
and lines of credit that would otherwise be reportable under Regulation 
C. The Bureau believes that tying the definitions to the same criteria 
that already determines HMDA reportability will not impose any 
additional costs. By contrast, if the Bureau had interpreted these 
terms to have a broader meaning, the rule would have resulted in fewer 
covered persons being eligible for the Act's partial exemptions and 
additional costs for covered persons.
    Second, requiring partially exempt institutions that choose not to 
report a ULI (an exempt data point) to report a non-universal loan 
identifier, consistent with criteria specified in the rule, could 
potentially increase burden. However, the Bureau believes that this 
burden, if any, will be negligible, because most institutions will 
already have a loan identifier for internal processing and tracking 
purposes, and, for those that do not, creating and reporting a loan 
identifier will be low cost.
    Third, requiring a partially exempt institution to report all data 
fields for an exempt data point if it voluntarily chooses to report at 
least one of the data fields could increase burden. In some 
circumstances, the institution could face increased costs in having to 
report all data fields rather than only the data fields it chooses to 
report. However, the Bureau believes that this additional burden will 
be small. This requirement will affect only partially exempt 
institutions that would prefer to voluntarily report some, but not all, 
data fields for a particular data point, and the number of such 
institutions is likely small. In addition, of the 26 exempt data 
points, only seven have multiple data fields (property address, credit 
score, reason for denial, total loan costs or total points and fees, 
non-amortizing features, application channel, and automated 
underwriting system), which also serves to limit the burden associated 
with this provision.
    In addition to effects on covered persons discussed above, this 
rulemaking is expected to have negligible impact on consumers, in terms 
of either costs or benefits.

D. Impact on Depository Institutions With No More Than $10 Billion in 
Assets

    The Bureau estimates that approximately 3,300 institutions are 
partially exempt under section 104(a) of the Act, and that most of 
these institutions are depository institutions with no more than $10 
billion in assets. The benefits of this rule to these institutions are 
summarized in part X.C. The Bureau expects the burden of this rule on 
these institutions to be negligible.

E. Impact on Access to Credit

    The Bureau does not expect this rule to affect consumers' access to 
credit. The scope of the rulemaking is limited to clarification of 
reporting requirements that would not be of sufficient magnitude to 
materially affect access to credit.

F. Impact on Consumers in Rural Areas

    The Bureau does not believe that this rule will have a unique 
impact on consumers in rural areas. Any potential effects on consumers, 
expected to be negligible in all cases, would be indirect effects 
passed through by HMDA reporters, and any impact on HMDA reporters is 
not expected to vary by geographic area. In addition, many rural 
lenders are not required to report because of HMDA's requirement that a 
financial institution have a home or branch office located in a 
Metropolitan Statistical Area, so the rule would have no specific 
impacts on rural areas.

XI. Regulatory Requirements

    This rule articulates the Bureau's interpretation of section 104(a) 
of the Economic Growth, Regulatory Relief, and Consumer Protection Act. 
It also alters the manner and procedure in which insured depository 
institutions and insured credit unions eligible for

[[Page 45333]]

the Act's new partial exemptions may present their data to the Bureau, 
but it does not alter those institutions' rights or interests or encode 
substantive value judgments beyond furthering efficiency and 
operational goals. This interpretive and procedural rule is exempt from 
notice-and-comment rulemaking requirements under the Administrative 
Procedure Act, 5 U.S.C. 553(b). Because no notice of proposed 
rulemaking is required, the Regulatory Flexibility Act does not require 
an initial or final regulatory flexibility analysis.\58\
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    \58\ 5 U.S.C. 603(a), 604(a).
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    The Bureau has determined that this interpretive and procedural 
rule does not impose any new or revise any existing recordkeeping, 
reporting, or disclosure requirements on covered entities or members of 
the public that would be collections of information requiring approval 
by the Office of Management and Budget under the Paperwork Reduction 
Act, 44 U.S.C. 3501 through 3521. To the extent that eligible reporters 
may take advantage of the Act's partial exemptions, the Bureau lacks 
sufficient information at present to estimate the potential burden 
reduction. When the Bureau has sufficient data to make an estimate, it 
will revise its burden estimates as appropriate.

XII. Congressional Review Act

    Pursuant to the Congressional Review Act,\59\ the Bureau will 
submit a report containing this interpretive rule and other required 
information to the U.S. Senate, the U.S. House of Representatives, and 
the Comptroller General of the United States prior to the rule's 
published effective date. The Office of Information and Regulatory 
Affairs has designated this interpretive rule as not a ``major rule'' 
as defined by 5 U.S.C. 804(2).
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    \59\ 5 U.S.C. 801-808.

    Dated: August 30, 2018.
Mick Mulvaney,
Acting Director, Bureau of Consumer Financial Protection.
[FR Doc. 2018-19244 Filed 9-6-18; 8:45 am]
 BILLING CODE 4810-AM-P


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