Compliance “Stocking Stuffers”
As we approach year end 2022, sugar plums may dance and chestnuts may roast over an open fire, but the tides of compliance do not recede for the holidays. Here are three “stocking stuffers” to consider.
CFPB and HMDA: On September 23, 2022, the federal D.C. District Court held that the CFPB’s change to its HMDA rule’s closed-end loan threshold from 25 to 100 closed-end loans in each of the past two calendar years was “arbitrary and capricious.” The court found that the CFPB “exaggerated the savings to ‘covered persons’ under the new rule, and did not engage appropriately with the nonquantifiable ‘harms’ of the 2020 Rule, and the disparate impact of those harms on the traditionally underserved populations HMDA is intended to protect….” The court found the 2020 rule’s new 200 loan-threshold for open-end credit to be valid, in part because it decreased the threshold from the then-current 500 loans to 200. The court stated that, “given the positive effects of the 2020 Rule on the availability of HMDA data on open-end lines of credit, plaintiffs’ challenge to the Rule on these grounds is unpersuasive.” But this ruling’s invalidation of the closed-end threshold left questions for the industry, as many institutions suddenly found themselves subject to HMDA reporting.
On December 13, 2022, the CFPB published an announcement that it made a technical amendment to its HMDA rule to reflect the 25-loan threshold for closed-end loans. The open-end reporting threshold remains at 200 lines of credit originated in the preceding two calendar years. The technical amendment to the Rule becomes effective upon publication in the Federal Register. The CFPB also posted a blog post on December 6, 2022, in which the CFPB stated that it, “recognizes that financial institutions affected by this change may need time to implement or adjust policies, procedures, systems, and operations to come into compliance with their reporting obligations.” The CFPB stated that it does not view enforcement actions against such newly-subject institutions for HMDA reporting to be a “priority” and that it “does not intend to initiate enforcement actions or cite HMDA violations for failures to report closed-end mortgage loan data collected in 2022, 2021, or 2020” for such newly-subject institutions.
If you have originated 25 or more covered closed-end mortgage loans in 2021 and 2022, you will be required to file a HMDA LAR by March 1, 2024 for your 2023 covered closed-end loan data.
Click here to read the CFPB’s press release for the technical amendment: https://www.consumerfinance.gov/rules-policy/final-rules/hmda-reg-c-judicial-vacatur-of-coverage-threshold-for-closed-end-mortgage-loans/
Click here to read the CFPB’s blog post about this change: https://www.consumerfinance.gov/about-us/blog/changes-to-hmda-closed-end-loan-reporting-threshold/
FHA Mortgagees to obtain Unique Entity Identifier: In its Mortgagee Letter 2002-14, issued August 23, 2022, HUD announced its requirement for FHA Mortgagees to obtain and maintain a Unique Entity Identifier (UEI) and to update their company’s profile in the LEAP system by December 31, 2022. In order to maintain an active mortgagee approval, FHA lenders access the LEAP system to submit their annual FHA Mortgagee recertification. Annual recertification is due within 90 days following your institution’s fiscal year end as reported in LEAP. Prospective Mortgagees will also need to obtain a UEI along with their application for FHA mortgagee approval.
The UEI is issued and administered through the SAM.gov site.
Ø Caution: The UEI is different than your institution’s Legal Entity Identifier (LEI).
Ø You may already have a UEI. Confirm this by following the instructions in the Mortgagee Letter.
Click here to read the full ML 2022-14: 2022-14hsngml.pdf (hud.gov)
NMLS Annual License Renewals: This is not news, but it may be worth a follow up to confirm compliance within your institution. The annual NMLS license renewal cycle is ending December 31, 2022. Company and loan originator licenses maintained in the NMLS are subject to annual renewal. Any license not in Approved status with a Renewed Through Date of 2023 is not an active license on January 1, 2023 (certain exceptions may apply). At a moment past midnight ET December 31, 2022, the NMLS system will change license statuses to Inactive for any company and MLO licenses not in the status of Approved and Renewed Through 2023.
Check with your institution’s NMLS Administrator for confirmation of the progress of your annual license renewals.
You can access the NMLS Renewals resources here: https://mortgage.nationwidelicensingsystem.org/slr/common/renewals/Pages/default.aspx
Or check your company and MLOs license statuses at: Consumer Access (nmlsconsumeraccess.org)
For related documents, or other information, contact Troy Garris at 301-461-8952 or troy@garrishorn.com.
