CFPB Adjusts HMDA and TILA Asset Exemption Thresholds

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The CFPB recently issued a final rule increasing the asset exemption threshold under the Home Mortgage Disclosure Act (HMDA) and a final rule increasing the asset exemption threshold for the Truth in Lending Act (TILA) requirement to maintain an escrow account for a higher-priced mortgage loan.

Banks, savings associations, and credit unions are not subject to HMDA for a calendar year if their assets as of December 31, of the prior calendar year did not exceed an asset threshold. The asset threshold is subject to annual adjustment based on inflation. The asset threshold for calendar year 2020 HMDA data collection and reporting was $47 million. The final rule increases the asset threshold for calendar year 2021 HMDA data collection and reporting to $48 million. As a result, banks, savings associations, and credit unions with assets of $48 million or less as of December 31, 2020, are exempt from collecting and reporting HMDA data for 2021 activity.

Regulation Z, which implements the TILA, generally requires creditors to maintain an escrow account for the payment of taxes and insurance on a first lien, higher-priced mortgage loan. There is an exception to the escrow account requirement for creditors with assets below a certain threshold that also meet additional criteria. The asset threshold is subject to annual adjustment based on inflation. For purposes of the asset threshold, a creditor’s assets include the assets of any affiliate that regularly extends first lien mortgage loans that are subject to the Regulation Z ability to repay rule. The asset threshold for 2020 was $2.02 billion. The final rule increases the asset threshold for 2021 to $2.230 billion. As a result, if a creditor’s assets, together with the assets of its applicable affiliates, are less than $2.230 billion on December 31, 2020, and the creditor satisfies the additional criteria, the creditor will be exempt from the escrow account requirement for higher-priced mortgage loans in 2021. Additionally, based on a grace period in the higher-priced mortgage rule, such a creditor will also be exempt from such requirements for purposes of any loan consummated in 2022 if the application was received before April 1, 2022.

The asset size threshold for purposes of the exemption from the higher-priced mortgage loan escrow account requirement also is one of the criteria that determines whether a creditor qualifies under the ability to repay rule to make loans based on the small creditor portfolio, and small creditor balloon payment, qualified mortgage loan provisions. As a result, for 2021 the $2.230 billion threshold will apply for purposes of determining if a creditor is a small creditor under such provisions.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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