[Federal Register Volume 87, Number 244 (Wednesday, December 21, 2022)]
[Rules and Regulations]
[Pages 77980-77982]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27204]


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BUREAU OF CONSUMER FINANCIAL PROTECTION

12 CFR Part 1003

[Docket No. CFPB-2019-0021]
RIN 3170-AA76


Home Mortgage Disclosure (Regulation C); Judicial Vacatur of 
Coverage Threshold for Closed-End Mortgage Loans

AGENCY: Bureau of Consumer Financial Protection.

ACTION: Technical amendment.

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SUMMARY: In April 2020, the Consumer Financial Protection Bureau 
(Bureau or CFPB) issued a final rule (2020 HMDA Rule) to amend 
Regulation C to increase the threshold for reporting data about closed-
end mortgage loans. The 2020 HMDA Rule increased the closed-end 
mortgage loan reporting threshold from 25 loans to 100 loans in each of 
the two preceding calendar years, effective July 1, 2020. On September 
23, 2022, the United States District Court for the District of Columbia 
vacated the 2020 HMDA Rule as to the increased loan-volume reporting 
threshold for closed-end mortgage loans. As a result of the September 
23, 2022 order, the threshold for reporting data about closed-end 
mortgage loans is 25, the threshold established by the 2015 HMDA Rule. 
Accordingly, this technical amendment updates the Code of Federal 
Regulations to reflect the closed-end mortgage loan reporting threshold 
of 25 mortgage loans in each of the two preceding calendar years.

DATES: This technical amendment is effective December 21, 2022.

FOR FURTHER INFORMATION CONTACT: Jaclyn Maier or Alexandra Reimelt, 
Senior Counsels, Office of Regulations, at 202-435-7700 or https://reginquiries.consumerfinance.gov. If you require this document in an 
alternative electronic format, please contact 
[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

    The Home Mortgage Disclosure Act (HMDA) requires certain banks, 
savings associations, credit unions, 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denied or withdrawn).\1\ The Bureau's Regulation C, 12 CFR part 1003, 
implements HMDA, 12 U.S.C. 2801 through 2810.
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    \1\ HMDA requires financial institutions to collect, record, and 
report data. The Bureau generally refers herein to the obligation to 
report data instead of listing all of these obligations in each 
instance.
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    In October 2015, the Bureau issued a final rule (2015 HMDA Rule) 
that, among other things, established institutional and transactional 
loan-volume coverage thresholds in Regulation C that determine whether 
financial institutions are required to report certain HMDA data on 
closed-end mortgage loans or open-end lines of credit.\2\ These 
thresholds apply uniformly to covered depository and nondepository 
institutions; they took effect for depository institutions on January 
1, 2017, and for nondepository institutions on January 1, 2018. The 
loan-volume thresholds in the 2015 HMDA Rule required an institution 
that originated at least 25 closed-end mortgage loans or at least 100 
open-end lines of credit in each of the two preceding calendar years to 
report HMDA data, provided that the institution meets all other 
criteria for institutional coverage.
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    \2\ Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct. 
28, 2015). The reporting thresholds for closed-end mortgage loans 
and open-end lines of credit operate independently. Thus, an 
institution that meets the threshold for closed-end mortgage loans 
but not the threshold for open-end lines of credit is a covered 
institution and required to report HMDA data about its closed-end 
loans, provided it meets the other criteria for institutional 
coverage. Conversely, an institution that meets the threshold for 
open-end lines of credit but not the threshold for closed-end loans 
is a covered institution and required to report HMDA data about its 
open-end lines of credit, provided it meets the other criteria for 
institutional coverage.
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    In April 2020, the Bureau issued a final rule (2020 HMDA Rule) to 
amend Regulation C to increase the thresholds for reporting data about 
both closed-end mortgage loans and open-end lines of credit.\3\ In 
particular, the 2020 HMDA Rule set the closed-end mortgage loan 
reporting threshold at 100 in each of the two preceding calendar years, 
effective July 1, 2020, and the open-end line of credit reporting 
threshold at 200 in each of the two preceding calendar years, effective 
January 1, 2022.
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    \3\ Home Mortgage Disclosure (Regulation C), 85 FR 28364 (May 
12, 2020), vacated in part by Nat'l Cmty. Reinvestment Coal., et al. 
v. Consumer Fin. Prot. Bureau, No. 20-cv-2074, 2022 WL 4447293 
(D.D.C. Sept. 23, 2022).
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    On July 30, 2020, five nonprofit organizations and the City of 
Toledo, Ohio, initiated a lawsuit challenging the 2020 HMDA Rule.\4\ On 
September 23, 2022, the United States District Court for the District 
of Columbia concluded that the 2020 HMDA Rule's increased reporting 
threshold for closed-end mortgage loans was arbitrary and capricious. 
The Court issued an order vacating and remanding the loan-volume 
reporting threshold for closed-end mortgage loans under the 2020 HMDA 
Rule. Accordingly, the threshold for reporting data about closed-end 
mortgage loans is 25 in each of the two preceding calendar years, which 
is the threshold set by the 2015 HMDA Rule. This technical amendment 
reflects the vacatur in the Code of Federal Regulations by replacing 
the closed-end reporting threshold numbers in Sec. Sec.  
1003.2(g)(1)(v)(A) and (2)(ii)(A), and 1003.3(c)(11), and comments 
2(g)-5 and 3(c)(11)-2 with those in effect on June 30, 2020; and 
replacing in their entirety, comments 2(g)-1 and 3(c)(11)-1 with the 
versions in effect on June 30, 2020.
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    \4\ The five nonprofit organizations are the National Community 
Reinvestment Coalition, Montana Fair Housing, the Texas Low Income 
Housing Information Service, Empire Justice Center, and the 
Association for Neighborhood & Housing Development.

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[[Page 77981]]

II. Regulatory Requirements

    This action is not a rule under the Administrative Procedure Act 
(APA), because the Bureau is not interpreting, implementing, or 
prescribing law or policy.\5\ Instead, the Bureau is updating the 
published Code of Federal Regulations so that it accurately reflects 
the court's vacatur of part of the underlying 2020 HMDA Rule. In the 
alternative, if this action were a rule, the Bureau finds that notice 
and comment would be unnecessary under the APA, because there is no 
basis for disagreement that the court's ruling vacates the relevant 
portion of the 2020 HMDA Rule.\6\
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    \5\ 5 U.S.C. 551(4).
    \6\ 5 U.S.C. 553(b)(B).
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List of Subjects in 12 CFR Part 1003

    Banks, Banking, Credit unions, Mortgages, National banks, Reporting 
and recordkeeping requirements, Savings associations.

Authority and Issuance

    For the reasons set forth in the preamble, the CFPB amends 
Regulation C, 12 CFR part 1003, as set forth below:

PART 1003--HOME MORTGAGE DISCLOSURE (REGULATION C)

0
1. The authority citation for part 1003 continues to read as follows:

    Authority:  12 U.S.C. 2803, 2804, 2805, 5512, 5581.


0
2. Section 1003.2 is amended by revising paragraphs (g)(1)(v)(A) and 
(g)(2)(ii)(A) to read as follows:


Sec.  1003.2   Definitions.

* * * * *
    (g) * * *
    (1) * * *
    (v) * * *
    (A) In each of the two preceding calendar years, originated at 
least 25 closed-end mortgage loans that are not excluded from this part 
pursuant to Sec.  1003.3(c)(1) through (10) or (c)(13); or
* * * * *
    (2) * * *
    (ii) * * *
    (A) In each of the two preceding calendar years, originated at 
least 25 closed-end mortgage loans that are not excluded from this part 
pursuant to Sec.  1003.3(c)(1) through (10) or (c)(13); or
* * * * *

0
3. Section 1003.3 is amended by revising paragraph (c)(11) to read as 
follows:


Sec.  1003.3   Exempt institutions and excluded and partially exempt 
transactions.

* * * * *
    (c) * * *
    (11) A closed-end mortgage loan, if the financial institution 
originated fewer than 25 closed-end mortgage loans in either of the two 
preceding calendar years; a financial institution may collect, record, 
report, and disclose information, as described in Sec. Sec.  1003.4 and 
1003.5, for such an excluded closed-end mortgage loan as though it were 
a covered loan, provided that the financial institution complies with 
such requirements for all applications for closed-end mortgage loans 
that it receives, closed-end mortgage loans that it originates, and 
closed-end mortgage loans that it purchases that otherwise would have 
been covered loans during the calendar year during which final action 
is taken on the excluded closed-end mortgage loan;
* * * * *

0
4. Supplement I to part 1003 is amended as follows:
0
a. Under Section 1003.2--Definitions, revise 2(g) Financial 
Institution.
0
b. Under Section 1003.3--Exempt Institutions and Excluded and Partially 
Exempt Transactions, under 3(c) Excluded Transactions, revise Paragraph 
3(c)(11).
    The revisions read as follows:

Supplement I to Part 1003--Official Interpretations

* * * * *

Section 1003.2--Definitions

* * * * *

2(g) Financial Institution

    1. Preceding calendar year and preceding December 31. The 
definition of financial institution refers both to the preceding 
calendar year and the preceding December 31. These terms refer to 
the calendar year and the December 31 preceding the current calendar 
year. For example, in 2019, the preceding calendar year is 2018 and 
the preceding December 31 is December 31, 2018. Accordingly, in 
2019, Financial Institution A satisfies the asset-size threshold 
described in Sec.  1003.2(g)(1)(i) if its assets exceeded the 
threshold specified in comment 2(g)-2 on December 31, 2018. 
Likewise, in 2020, Financial Institution A does not meet the loan-
volume test described in Sec.  1003.2(g)(1)(v)(A) if it originated 
fewer than 25 closed-end mortgage loans during either 2018 or 2019.
    2. Adjustment of exemption threshold for banks, savings 
associations, and credit unions. For data collection in 2022, the 
asset-size exemption threshold is $50 million. Banks, savings 
associations, and credit unions with assets at or below $50 million 
as of December 31, 2021, are exempt from collecting data for 2022.
    3. Merger or acquisition--coverage of surviving or newly formed 
institution. After a merger or acquisition, the surviving or newly 
formed institution is a financial institution under Sec.  1003.2(g) 
if it, considering the combined assets, location, and lending 
activity of the surviving or newly formed institution and the merged 
or acquired institutions or acquired branches, satisfies the 
criteria included in Sec.  1003.2(g). For example, A and B merge. 
The surviving or newly formed institution meets the loan threshold 
described in Sec.  1003.2(g)(1)(v)(B) if the surviving or newly 
formed institution, A, and B originated a combined total of at least 
200 open-end lines of credit in each of the two preceding calendar 
years. Likewise, the surviving or newly formed institution meets the 
asset-size threshold in Sec.  1003.2(g)(1)(i) if its assets and the 
combined assets of A and B on December 31 of the preceding calendar 
year exceeded the threshold described in Sec.  1003.2(g)(1)(i). 
Comment 2(g)-4 discusses a financial institution's responsibilities 
during the calendar year of a merger.
    4. Merger or acquisition--coverage for calendar year of merger 
or acquisition. The scenarios described below illustrate a financial 
institution's responsibilities for the calendar year of a merger or 
acquisition. For purposes of these illustrations, a ``covered 
institution'' means a financial institution, as defined in Sec.  
1003.2(g), that is not exempt from reporting under Sec.  1003.3(a), 
and ``an institution that is not covered'' means either an 
institution that is not a financial institution, as defined in Sec.  
1003.2(g), or an institution that is exempt from reporting under 
Sec.  1003.3(a).
    i. Two institutions that are not covered merge. The surviving or 
newly formed institution meets all of the requirements necessary to 
be a covered institution. No data collection is required for the 
calendar year of the merger (even though the merger creates an 
institution that meets all of the requirements necessary to be a 
covered institution). When a branch office of an institution that is 
not covered is acquired by another institution that is not covered, 
and the acquisition results in a covered institution, no data 
collection is required for the calendar year of the acquisition.
    ii. A covered institution and an institution that is not covered 
merge. The covered institution is the surviving institution, or a 
new covered institution is formed. For the calendar year of the 
merger, data collection is required for covered loans and 
applications handled in the offices of the merged institution that 
was previously covered and is optional for covered loans and 
applications handled in offices of the merged institution that was 
previously not covered. When a covered institution acquires a branch 
office of an institution that is not covered, data collection is 
optional for covered loans and applications handled by the acquired 
branch office for the calendar year of the acquisition.
    iii. A covered institution and an institution that is not 
covered merge. The institution that is not covered is the surviving 
institution, or a new institution that is not covered is formed. For 
the calendar year of the merger, data collection is required for 
covered loans and applications handled in offices of the previously 
covered institution that took place prior to the merger. After the 
merger date, data collection is optional for

[[Page 77982]]

covered loans and applications handled in the offices of the 
institution that was previously covered. When an institution remains 
not covered after acquiring a branch office of a covered 
institution, data collection is required for transactions of the 
acquired branch office that take place prior to the acquisition. 
Data collection by the acquired branch office is optional for 
transactions taking place in the remainder of the calendar year 
after the acquisition.
    iv. Two covered institutions merge. The surviving or newly 
formed institution is a covered institution. Data collection is 
required for the entire calendar year of the merger. The surviving 
or newly formed institution files either a consolidated submission 
or separate submissions for that calendar year. When a covered 
institution acquires a branch office of a covered institution, data 
collection is required for the entire calendar year of the merger. 
Data for the acquired branch office may be submitted by either 
institution.
    5. Originations. Whether an institution is a financial 
institution depends in part on whether the institution originated at 
least 25 closed-end mortgage loans in each of the two preceding 
calendar years or at least 200 open-end lines of credit in each of 
the two preceding calendar years. Comments 4(a)-2 through -4 discuss 
whether activities with respect to a particular closed-end mortgage 
loan or open-end line of credit constitute an origination for 
purposes of Sec.  1003.2(g).
    6. Branches of foreign banks--treated as banks. A Federal branch 
or a State-licensed or insured branch of a foreign bank that meets 
the definition of a ``bank'' under section 3(a)(1) of the Federal 
Deposit Insurance Act (12 U.S.C. 1813(a)) is a bank for the purposes 
of Sec.  1003.2(g).
    7. Branches and offices of foreign banks and other entities--
treated as nondepository financial institutions. A Federal agency, 
State-licensed agency, State-licensed uninsured branch of a foreign 
bank, commercial lending company owned or controlled by a foreign 
bank, or entity operating under section 25 or 25A of the Federal 
Reserve Act, 12 U.S.C. 601 and 611 (Edge Act and agreement 
corporations) may not meet the definition of ``bank'' under the 
Federal Deposit Insurance Act and may thereby fail to satisfy the 
definition of a depository financial institution under Sec.  
1003.2(g)(1). An entity is nonetheless a financial institution if it 
meets the definition of nondepository financial institution under 
Sec.  1003.2(g)(2).
* * * * *

Section 1003.3--Exempt Institutions and Excluded and Partially 
Exempt Transactions

* * * * *

3(c) Excluded Transactions

* * * * *

Paragraph 3(c)(11)

    1. General. Section 1003.3(c)(11) provides that a closed-end 
mortgage loan is an excluded transaction if a financial institution 
originated fewer than 25 closed-end mortgage loans in either of the 
two preceding calendar years. For example, assume that a bank is a 
financial institution in 2018 under Sec.  1003.2(g) because it 
originated 600 open-end lines of credit in 2016, 650 open-end lines 
of credit in 2017, and met all of the other requirements under Sec.  
1003.2(g)(1). Also assume that the bank originated 10 and 20 closed-
end mortgage loans in 2016 and 2017, respectively. The open-end 
lines of credit that the bank originated or purchased, or for which 
it received applications, during 2018 are covered loans and must be 
reported, unless they otherwise are excluded transactions under 
Sec.  1003.3(c). However, the closed-end mortgage loans that the 
bank originated or purchased, or for which it received applications, 
during 2018 are excluded transactions under Sec.  1003.3(c)(11) and 
need not be reported. See comments 4(a)-2 through -4 for guidance 
about the activities that constitute an origination.
    2. Optional reporting. A financial institution may report 
applications for, originations of, or purchases of closed-end 
mortgage loans that are excluded transactions because the financial 
institution originated fewer than 25 closed-end mortgage loans in 
either of the two preceding calendar years. However, a financial 
institution that chooses to report such excluded applications for, 
originations of, or purchases of closed-end mortgage loans must 
report all such applications for closed-end mortgage loans that it 
receives, closed-end mortgage loans that it originates, and closed-
end mortgage loans that it purchases that otherwise would be covered 
loans for a given calendar year. Note that applications which remain 
pending at the end of a calendar year are not reported, as described 
in comment 4(a)(8)(i)-14.

Rohit Chopra,
Director, Consumer Financial Protection Bureau.
[FR Doc. 2022-27204 Filed 12-20-22; 8:45 am]
BILLING CODE 4810-AM-P