Credit Union trade organizations praised the CFPB for its proposal to ease up on Home Mortgage Disclosure Act reporting for home equity lines of credit — then they urged the agency to go further.
In letters sent to the Consumer Finance Protection Bureau in the last week, CUNA and NAFCU said they would prefer the reporting requirement be dropped in its entirety, but if that is not possible, the CFPB should exempt more credit unions.
On July 10, Consumer Financial Protection Bureau Director Richard Cordray proposed raising the home equity line of credit (HELOC) reporting threshold under HMDA, which is designed to prevent discrimination in lending.
The current rule requires credit unions to report data from home equity lines of credit to the CFPB starting in 2018. It now exempts credit unions only if they grant fewer than 100 HELOCs per year. But CUNA and other industry groups had been pushing for a higher threshold and a later start.
Citing concerns voiced by small banks and credit unions about the regulatory burden, Cordray proposed exempting institutions that originate fewer than 500 HELOCs in either of the previous two calendar years from reporting in 2018 and 2019. The bureau would then have time to decide where the level should be set starting in 2020, he said.
Cordray’s proposal would provide regulatory relief to about 480 credit unions with $299.2 billion in assets and 24.7 million of the nation’s 108 million members, based on NCUA data for credit unions granting 100 to 499 open-end real estate lines of credit in 2016.
“While we believe the proposed threshold increase is a step in the right direction, we ask the CFPB to consider whether more can be done in this area,” CUNA lawyer Luke Martone wrote in a July 27 letter to the agency.
CUNA suggested increasing the exemption class to include credit unions that issue 500 to 1,000 HELOCs per year. Based on 2016 data, that would include another 107 credit unions with $152 million in assets and 11 million members. They granted 75,787 HELOCs worth $3 billion out of the 605,548 HELOCs worth $21.5 million granted by all credit unions last year.
“Elimination of the HELOC reporting requirement for those institutions,” Martone wrote, “would be statistically insignificant to the collected data and would not significantly hamper the CFPB or any prudential regulator’s ability to monitor an institution for purposes of enforcing fair lending laws. Yet, such relief would encourage and allow institutions to continue to serve their members who often are in underserved markets.”
If the $1 billion threshold were adopted, the remaining 131 credit unions that would remain under regulation encompass $481 billion in assets and 35 million members. They granted 374,514 HELOCs last year for a total of $12 billion.
The rule also exempts credit unions with less than $44 million in assets. NAFCU proposed increasing the asset-based exemption to $100 million, a threshold set by NCUA to define small credit unions eligible for regulatory exemptions.
“This definition was set after rigorous study of the credit union industry and the capabilities of small credit unions,” NAFCU lawyer Andrew Morris wrote in a letter sent Monday.
