CA 23-1

In view of the recent threshold adjustment outlined in regulation C with respect to closed-end mortgage loans data reporting requirements of financial institutions, the Board of Governors of the Federal Reserve System (FED), has published a new Consumer Affairs Letter (CA 23-1) in this context. Therein, the FED briefly describes the „new“ requirement and outlines its supervisory approach for the previous three years during which the „old threshold“ as explained below applied.
In detail, supervised financial institutions must usually report data about their housing related lending activity, specifically with respect to closed-end mortgage loans, if more than a certain number of loans have been granted in the two previous years – the so-called threshold.
This threshold was reduced from 100 contracts in „either of the past two years“ to 25 contracts on December 21, 2022. This reduction followed a recent rulemaking of the United States District Court for the District of Columbia which rendered the in 2020 implemented threshold increase to 100 invalid which implies that the increase – so to speak – never took place.
In this context, the FED notes that it will not penalize any institution that has originated more than 25 but less than 100 loans between 2020 and 2022 and has not reported on those loans in accordance with regulation C. However, the FED will review the reports and notify affected institutions so that they can take adequate measures to adjust their reporting processes accordingly to ensure future compliance.