In July, the Consumer Financial Protection Bureau (CFPB) said it was rethinking implementation of its rules changing reporting requirements for the Home Mortgage Disclosure Act (HMDA).  The new rule was authorized in 2015, and will, for the first time, require community banks and credit unions to report information on home equity lines of credit (HELOC) lending. The rule promulgated by CFPB put a threshold on the reporting requirements, exempting institutions if they had originated fewer than 100 HELOCS during each of the previous two years. The new rule is scheduled to take effect in January 2018.

In last month's announcement CFPB said it was proposing a two-year test run of a higher threshold, increasing it to 500 loans in each of the previous two years, while stressing the importance of including data on HELOC lending in the HMDA database given the role those loans played in the housing crisis. However, CFPB Director Richard Cordray said feedback from community banks and credit unions indicated that the new rule presented a significant compliance burden to smaller banks; larger than CFPB had foreseen.  The agency estimated that raising the threshold would still allow capture of about three-quarters of the home-equity lending market.  The estimate with the lower threshold was 88 percent. Public comment on this temporary change ended on July 31.

The final rule, announced on Thursday, formalizes the temporary new threshold through calendar years 2018 and 2019, during which time CFPB will consider the appropriate level for data collected beginning January 1, 2020.  The final rule also contains clarifications of certain key terms, such as "temporary financing" and "automated underwriting system," technical corrections, and minor changes to the HMDA regulation.  Included as well are changes that establish transition rules for reporting certain loans purchased by financial institutions and a geocoding tool, available on the Bureau's website, to facilitate reporting the census tract information.

The final rule can be downloaded here.