On October 15, 2015, the Consumer Financial Protection Bureau (CFPB) released the anticipated final rule amending Regulation C, 12 C.F.R. part 1003, which implements the Home Mortgage Disclosure Act (HMDA).
HMDA and Regulation C have long required covered lenders to collect and report certain data about mortgage applications, which the federal government uses to assess a covered institution’s fair lending risk. The new rule, which is intended to implement amendments made to HMDA by the Dodd-Frank Act, makes several important changes to Regulation C. These changes include:
- dramatically broadening the data that covered institutions must collect (around 25 new data points are added and around a dozen existing data points are modified);
- effectively expanding the scope of covered non-depository institutions and slightly narrowing the scope of covered depository institutions through implementation of loan-volume thresholds for triggering application of Regulation C; and
- modifying the scope of covered products.
The rule is also intended to streamline the process for reporting data to the government.
Complying with these expanded collection and reporting requirements will likely require significant changes to covered lenders’ existing systems. The changes will be phased in between 2017 and 2020, with the key provisions that expand the data collection obligations taking effect on January 1, 2018, and the first reporting obligations for the expanded data accordingly due on March 1, 2019. This timeline is intended to allow lenders sufficient time to implement the required process, and will also allow the CFPB to make adjustments to the rule to address issues that lenders experience in preparing for the new requirements. That said, compliance with the revised Regulation C is a significant undertaking for lenders.