We have been fairly consistent in our mortgage lending with around 400 originated loans per year and we qualified for the partial exemption. Last year we started reporting loans we sold in the secondary market because we did the underwriting and with the refinance boom, we more than exceeded 500 originated loans. Now I have confused myself when trying to determine if we start reporting all HMDA fields this year or next if we exceed 500 originated loans again this year. I was thinking the bank had to meet the threshold of 500 originated loans two years in a row to start reporting all fields. But now that I have re-read the regulation, I’m thinking we would have to report all fields this year (2021) and next year (2022) because we exceeded 500 originated loans in 2020. I'm hoping that I'm misunderstanding what I read.

Unfortunately, you have it confused. You have to stay under the threshold for two years in order to use the exemption. If you exceed it at all, you lose the exemption. So yes, you will now have to report all fields for this year and next.

See CFPB HMDA FAQ 2 under the "Partial Exemptions" topic:

2. If my financial institution originated 500 or more closed-end mortgage loans in the previous calendar year, can it take advantage of the partial exemption found in 12 CFR 1003.3(d) and collect, record, and report the limited HMDA data set for closed-end mortgage loans?

No. Section 1003.3(d)(2) of Regulation C states that a financial institution that originated fewer than 500 closed-end mortgages that are not excluded by 12 CFR § 1003.3(c)(1) through (10) or (13) in each of the two preceding calendar years can claim the partial exemption for closed-end mortgage loans. Thus, the financial institution cannot take advantage of the partial exemption if it originated 500 or more such closed-end mortgage loans in the previous calendar year. Note that, in addition to originating fewer than 500 closed-end mortgage loan in each of the two preceding calendar years, the financial institution must meet additional requirements that are not discussed in this FAQ to be eligible for the partial exemption. See 12 CFR § 1003.3(d) for the additional requirements.

For general information on the partial exemptions, see section 4.3 of the HMDA Small Entity Compliance Guide , and Regulation C, 12 CFR § 1003.3(d).

Resurecting this old post.

Does closed-end mortgage mean a mortgage loan covered by Reg Z for the partial exemption? Or do we include our commercial loans?

Any advice on how others have sorted their previous LAR by the data fields to determine this is appreciated if it's complicated.

You count up the loans that you would have had to report. That includes both consumer and those made for business purposes.

Thanks Randy.

I have another question. This will determine if we can take advantage of the exemption for 2022 filing.

To identify the closed-end loans, we are sorting our previous 2 years data by Action Taken Code 1 and Open-End Line of Credit Code 2.

This seems to be the only way to sort the data to obtain the closed-end loans. Is this how everyone does it?

Here is a very good explanation how the thresholds work, of course the mandatory thresholds have been revised since this was published.

HMDA Exemption Thresholds
September 12, 2022

500 originations is the threshold for the partial exemption. If you cross that in one year, you lose the partial exemption immediately for the following January 1. Also, the partial exemption threshold for open-end is also 500.

Mandatory reporting thresholds are 100 in each of the 2 preceding calendar years for closed-end, and 200 in each of the 2 preceding calendar years for open-end. Don't confuse those with the partial exemption thresholds of 500.

The partial exemption thresholds operate in an opposite manner from the mandatory reporter thresholds, where an institution must hit the threshold 2 years running to become a mandatory reporter.) For partial exemption, you must be BELOW the threshold for 2 years running to qualify.

So, to use the partial exemption, using closed-end as the example, your institution would have to be below 500 in each of the two preceding calendar years. This means if you cross the threshold in one of those 2 preceding years the partial exemption is lost. Open-end operates in the same way.

Refer to 1003.3(d) for rules on the partial exemption.

The partial exemption states, for closed-end:

(2) Except as provided in paragraph (d)(6) of this section, an insured depository institution or insured credit union that, in each of the two preceding calendar years, originated fewer than 500 closed-end mortgage loans that are not excluded from this part pursuant to paragraphs (c)(1) through (10) or paragraph (c)(13) of this section is not required to collect, record, or report optional data as defined in paragraph (d)(1)(iii) of this section for applications for closed-end mortgage loans that it receives, closed-end mortgage loans that it originates, and closed-end mortgage loans that it purchases.

And for open-end:

(3) Except as provided in paragraph (d)(6) of this section, an insured depository institution or insured credit union that, in each of the two preceding calendar years, originated fewer than 500 open-end lines of credit that are not excluded from this part pursuant to paragraphs (c)(1) through (10) of this section is not required to collect, record, or report optional data as defined in paragraph (d)(1)(iii) of this section for applications for open-end lines of credit that it receives, open-end lines of credit that it originates, and open-end lines of credit that it purchases.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Hi Kathleen,

I'm comfortable with how the lookback is to be performed for both open and closed-end as well as for mandatory reporting.

My latest question is actually more technical about the method used to determine the number of closed-end reportable loans for the previous two years using the LAR.

We sorted our LARS for the previous two years by Action Taken (1), Loan Purpose (1, 2, 31, 32,) and Open-End LOC (2).

Do we include/exclude purchased loans?

Kathleen created the above document but I'm the one that posted it.

When counting loans you count covered loans your FI originated.

Thanks Dan. We will be documenting our yearly totals in a chart going forward. We hover around the 500 mark for originated loans. Unfortunately, we haven't been lucky enough to be under two years in a row yet.

Reviving this thread...we are looking at under 500 originated loans on the LAR for 2022 and 2023. I believe that would put us under the threshold for partial exemption for 2024. If in 2024 we go back to over 500 HMDA reportable originations, am I correct in thinking we report all required fields in 2025 and 2026? This would be the first time we have been eligible and I want to make sure I am accurate in my understanding.

If you cross the 500 threshold in 2024 you will report in 2025 based on your partial exemption for 2024. On January 1 2025 you would have to start collecting all data points for reporting in 2026.