NEWS: The Consumer Financial Protection Bureau (CFPB) has released its annual updates to two regulatory exemption amounts that affect credit unions making mortgage loans:
- The asset-size exemptions for collecting Home Mortgage Disclosure Act (HMDA) data, and
- The asset size limits for lenders to be considered “small creditors” under certain provisions of Reg. Z.
HMDA exemption threshold increased
HMDA and the CFPB’s Reg. C require some financial institutions to collect, record, report, and disclose information about their mortgage lending activity. Reg. C applies to credit unions that meet several tests. For example, the credit union is only covered if (among other things) it was of a certain asset size on the preceding Dec. 31. The CFPB has increased that asset size threshold to $50 million for 2022 (up from $48 million in 2021).
Credit unions with assets of $50 million or less as of Dec. 31, 2021 will be exempt from collecting HMDA data in 2022. (A credit union’s exemption from collecting data in 2022 does not affect its duty to report data it was required to collect in 2021.) For details on HMDA compliance, see The League’s ii Release No. B017 – “Reg. C – Home Mortgage Disclosure Act.”“
Reg. Z “small creditor” caps increased
The CFPB also adjusted two thresholds for lenders to be considered “small creditors” under certain provisions of Reg. Z (the Truth in Lending regulations).
First, the escrow requirements for higher-priced mortgage loans (HPMLs) includes an exception for insured depository institutions, including insured credit unions. As the CFPB explains: “[I]nsured depository institutions and insured credit unions that during calendar year 2021 had assets of $10.473 billion or less on December 31, 2021, will meet the asset-size exemption threshold for purposes of any loan consummated in 2022 and for purposes of any loan secured by a first lien on a principal dwelling of a consumer consummated in 2023 for which the application was received before April 1, 2023.” This is an increase from $10 billion in 2021. For details, see The League’s ii Release No. B068 – “Reg. Z – Higher-Priced Mortgage Loans.”
Second, the CFPB increased the threshold for small-creditor portfolio and balloon-payment qualified mortgages under Regulation Z. It adjusted the threshold to $2.336 billion for 2022, up from $2.230 billion in 2021. This impacts two sets of rules:
- The ability to repay / qualified mortgage rules, which allow small creditors to make portfolio and balloon payment loans that may be considered “qualified mortgages” (QMs) if the loans meet certain criteria. Please see The League’s ii Release No. B074 – “Reg. Z – Ability-to-Repay / Qualified Mortgage Rule” for more information.
- The high-cost mortgage rules required by the Home Ownership and Equity Protection Act (HOEPA), which prohibit balloon payments on high-cost mortgage loans but make an exemption for small creditors, as explained in The League’s ii Release No. B062 – “High-Cost Mortgage Loans Under HOEPA.”