FR 2024-30652

The document titled "Home Mortgage Disclosure (Regulation C) Adjustment to Asset-Size Exemption Threshold" from the Consumer Financial Protection Bureau (CFPB) provides an update to the asset-size exemption threshold for banks, savings associations, and credit unions. This change, effective January 1, 2025, adjusts the threshold from $56 million to $58 million, allowing smaller institutions with assets at or below the threshold to be exempt from collecting certain data in the year 2025. This adjustment reflects a 2.9% increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers.

The rules categorizations included in the document indicate that these changes are administrative and technical in nature, meaning that they are mandated by an existing formula and therefore do not necessitate public commentary or feedback. This method lessens the burden on smaller financial institutions by eliminating the need for extensive compliance with data collection when their asset sizes fall below the newly set threshold.

A significant concern within the document is the complexity of procedural language and the references to various administrative acts, such as the Administrative Procedure Act (APA), which could be challenging for a general audience or those without a legal or financial background to fully understand. The document does mention a "good cause" for bypassing the usual requirement for public notice and comment, but it doesn't elaborate on what constitutes this "good cause," potentially leading to a lack of transparency for the public.

The adjustment of the asset-size threshold is a somewhat routine action, but its implications are twofold. On one hand, smaller financial institutions will benefit by being relieved of certain regulatory burdens, likely freeing up resources for other operational aspects. This could promote more competitive opportunities for these institutions against larger competitors who must comply with extensive regulatory requirements.

On the other hand, there might be less transparency and available data concerning mortgage lending in areas served by exempt institutions, which could affect community groups and researchers relying on such data to assess local economic conditions or fair lending practices.

For stakeholders such as smaller banks, savings associations, and credit unions, this rule is broadly favorable as it reduces the compliance burden. However, larger institutions remain unaffected by this threshold increase and, accordingly, this adjustment continues a complexity in financial oversight where rules differ based on the size of the financial entity.

In conclusion, while the adjustment is presented as a necessary technical update reflecting inflation measures, it serves a broader role in streamlining operations for smaller financial institutions while potentially affecting the granularity of public data on mortgage lending. The CFPB thereby ensures regulatory compliance reflects economic changes while simultaneously maintaining its commitment to tailored oversight.

The Federal Register document outlines the Consumer Financial Protection Bureau's (CFPB) adjustment to the asset-size exemption threshold for banks, savings associations, and credit unions under the Home Mortgage Disclosure Act (HMDA) for the year 2025. This adjustment is derived from the annual percentage change in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).

Asset-Size Exemption Threshold Adjustment

The primary financial reference in this document is the adjustment of the asset-size exemption threshold. The threshold is increased from $56 million to $58 million. This adjustment is based on a 2.9 percent average increase in the CPI-W over the 12-month period ending in November 2024. Such adjustments are part of an ongoing process defined by Regulation C to ensure that thresholds keep up with inflation. The threshold is rounded to the nearest $1 million as dictated by the regulatory framework.

Implications for Financial Institutions

The change implies that financial institutions with assets of $58 million or less as of December 31, 2024, will be exempt from collecting and reporting data in 2025. This exemption could relieve smaller institutions from the resource-intensive process of data collection, which can be particularly beneficial for entities operating close to the threshold. However, the document does not elaborate on how this adjustment impacts smaller or rural institutions, leaving an area of interest for stakeholders to consider further.

Procedural and Regulatory Context

The document notes that the amendment is considered technical and non-discretionary, as it applies a pre-established formula for adjusting the threshold. This procedural clarity aligns with established practices under the Administrative Procedure Act (APA), which can exempt such amendments from the typical requirement for notice and opportunity for public comment. These procedural mechanics are vital for ensuring that financial regulations remain up-to-date without unnecessary delays.

While the document does not specify financial spending or allocative decisions directly impacting government budgets or expenses, understanding these adjustments helps clarify regulatory expectations for financial institutions. It emphasizes keeping regulations in alignment with economic realities reflected in changes to the CPI-W, ensuring fair exemptions are maintained across evolving financial landscapes. However, it could be enhanced by discussing the broader economic implications or lack thereof, providing a full-picture analysis for institutions hovering near the established threshold.

In summary, the CFPB's adjustment of the asset-size exemption threshold from $56 million to $58 million reflects a methodical response to inflationary trends. It prioritizes fairness in regulatory compliance burdens, especially benefiting smaller institutions. Enhanced transparency about the broader economic impact of such adjustments could further aid in understanding these regulatory changes.