Understanding Regulation C and HMDA Reporting Rules
A practical guide to Regulation C, HMDA thresholds, exemptions, and compliance for mortgage lenders.
What Is Regulation C and Why It Matters
Regulation C is the federal rule that puts the Home Mortgage Disclosure Act (HMDA) into practical effect. Enacted in 1975, HMDA was created to shine a light on mortgage lending patterns and ensure that financial institutions are serving the housing needs of all communities, not just certain neighborhoods or income groups. Regulation C, issued and periodically updated by the Consumer Financial Protection Bureau (CFPB), defines exactly which institutions must report mortgage data, what data they must collect, and how that information is used and disclosed.
The core idea behind HMDA is transparency. By requiring lenders to report detailed information about home loans and applications, regulators, community groups, researchers, and the public can analyze whether lending is fair, whether credit is available where it is needed, and whether any groups or areas are being systematically underserved. Regulation C is the operational blueprint that turns this broad goal into a concrete set of rules that banks, credit unions, and other mortgage lenders must follow.
Who Must Comply with Regulation C?
Not every financial institution is subject to HMDA reporting. Regulation C sets clear institutional and transactional coverage rules that determine which lenders must collect and report mortgage data.
In general, a financial institution must report under HMDA if it meets all of the following conditions:
- It is a bank, savings association, credit union, or other depository institution that is federally insured.
- It has a home or branch office in a metropolitan statistical area (MSA).
- It meets certain activity thresholds for closed-end mortgage loans or open-end lines of credit.
These thresholds are adjusted over time and are designed to focus reporting on institutions that are meaningfully active in the mortgage market, while relieving very small lenders from the burden of full HMDA reporting.
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Closed-End Loan Reporting Threshold
For closed-end mortgage loans (such as traditional home purchase loans, refinances, and home equity loans that are not lines of credit), Regulation C sets a volume-based threshold. An institution must report data on closed-end loans if it originated 25 or more such loans in each of the two preceding calendar years.
This threshold is applied separately for each institution. For example, if a bank originated 30 closed-end loans in 2023 and 28 in 2024, it would be required to report HMDA data for 2025. If it had only 20 loans in one of those years, it would not meet the threshold and would not be required to report closed-end loan data.
The 25-loan threshold is intended to capture institutions that are active in the mortgage market while excluding those with only occasional or minimal mortgage activity. Institutions that fall below this threshold are not required to collect and report closed-end loan data, though they may still be subject to reporting for open-end lines of credit if they meet that separate threshold.
Open-End Line of Credit Reporting Threshold
For open-end lines of credit (such as home equity lines of credit, or HELOCs), Regulation C uses a different threshold based on the number of lines originated. An institution must report data on open-end lines of credit if it originated 200 or more such lines in either of the two preceding calendar years.
This threshold is applied on a per-year basis, not on an average or combined basis. That means if a lender originated 210 HELOCs in 2023 but only 150 in 2024, it would still be required to report open-end line data for 2025 because it exceeded 200 lines in at least one of the two prior years.
The 200-line threshold is higher than the closed-end loan threshold because HELOCs are often used in different ways and by different types of borrowers. The higher threshold reflects the fact that many institutions offer HELOCs but may not do so at a volume that justifies full HMDA reporting.
Asset-Size Exemption for Small Institutions
Regulation C also includes an asset-size exemption that can relieve very small institutions from HMDA reporting altogether. Under this exemption, banks, savings associations, and credit unions with total assets at or below a certain dollar amount are not required to collect or report HMDA data.
The asset threshold is adjusted annually based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). For example, in recent years the threshold has been in the range of about $45 million to $58 million, depending on the year. Institutions whose total assets are at or below this adjusted amount as of the end of the prior calendar year are exempt from HMDA data collection and reporting for the current year.
This exemption is particularly important for small community banks and credit unions that may have limited resources and staff. By exempting the smallest institutions, Regulation C aims to balance the goal of broad data collection with the need to avoid imposing disproportionate compliance costs on tiny lenders.
What Data Must Be Reported Under HMDA?
For institutions that are subject to HMDA reporting, Regulation C requires the collection and reporting of a wide range of data about each covered loan or application. This data is organized into several categories:
- Loan and application information: Loan type, purpose, amount, term, interest rate, and whether the loan was originated, purchased, denied, or withdrawn.
- Property and location details: Property type, location (census tract and MSA), and whether the property is owner-occupied.
- Applicant and borrower characteristics: Race, ethnicity, sex, and income of the applicant(s), as well as whether the applicant is a first-time homebuyer.
- Underwriting and pricing: Credit score, debt-to-income ratio, loan-to-value ratio, and whether the loan has special terms such as a prepayment penalty or balloon payment.
- Loan originator and institution: Unique identifiers for the institution and loan originator, and information about the type of lender and any affiliates involved.
This detailed dataset allows regulators and researchers to analyze lending patterns by geography, income level, race, and other factors. It also supports enforcement of fair lending laws and helps community development organizations target resources where they are most needed.
Partial Exemptions and Optional Reporting
Regulation C includes provisions that allow certain institutions to report a reduced set of data, known as partial exemptions. These apply primarily to insured depository institutions and insured credit unions that meet specific criteria, such as having a satisfactory or better Community Reinvestment Act (CRA) examination history.
Under a partial exemption, an institution is not required to report certain data fields that are considered more burdensome, such as detailed credit score information or certain underwriting ratios. However, if an institution chooses to report any data within an exempt data point, it must report all of the fields within that data point for consistency.
Partially exempt institutions also have the option to use a non-universal loan identifier instead of the standard universal loan identifier, which can simplify internal systems while still allowing regulators to track loans. These partial exemptions are designed to reduce the compliance burden for well-performing small and midsize lenders without sacrificing the overall usefulness of the HMDA dataset.
How HMDA Data Is Used and Disclosed
The data collected under Regulation C is not kept secret. The CFPB compiles the reported information and makes it available to the public in a standardized format, typically through the FFIEC HMDA Platform.
Public HMDA data is used in many ways:
- Regulators use it to monitor lending patterns and identify potential fair lending issues.
- Community organizations use it to assess whether credit is available in low- and moderate-income neighborhoods.
- Researchers and academics use it to study housing markets, mortgage pricing, and demographic disparities in lending.
- Journalists and advocates use it to highlight lending trends and hold institutions accountable.
Before releasing the data, the CFPB applies certain modifications to protect privacy and prevent misuse. For example, some very detailed fields may be suppressed or aggregated, and identifiers are masked to prevent tracing loans back to individual borrowers. These safeguards ensure that HMDA serves its public purpose without compromising consumer confidentiality.
Compliance and Supervisory Expectations
For institutions that are subject to HMDA reporting, compliance with Regulation C is a serious regulatory obligation. Federal and state supervisors, including the CFPB, FDIC, OCC, and Federal Reserve, expect lenders to:
- Accurately determine whether they meet the institutional and transactional coverage thresholds.
- Establish robust systems and processes to collect and maintain HMDA data for all covered loans and applications.
- Ensure the accuracy and completeness of reported data, including proper coding of race, ethnicity, sex, and other sensitive fields.
- Submit the Loan/Application Register (LAR) and other required reports by the applicable deadlines (typically by March 1 of the following year).
- Retain records and supporting documentation for the required retention period.
Supervisors may conduct examinations to verify compliance and may take enforcement action if significant errors or omissions are found. Common issues include misclassifying loans, failing to report all required data fields, and not properly applying exemptions or thresholds.
Key Changes and Recent Updates
Regulation C is not static; it is periodically updated to reflect changes in the law, market conditions, and regulatory priorities. Recent updates have focused on:
- Adjusting the closed-end loan threshold from a higher level down to 25 loans per year, which narrowed the pool of institutions required to report closed-end data.
- Setting the open-end line of credit threshold at 200 lines, replacing a temporary higher threshold that had been in place for a limited period.
- Clarifying how partial exemptions apply, including which data points are covered and how institutions can choose to report exempt fields.
- Updating the asset-size exemption threshold annually based on CPI-W, ensuring that the exemption keeps pace with inflation.
- Providing detailed guidance on data collection, coding, and reporting to help institutions “get it right” and avoid common errors.
These changes reflect an ongoing effort to balance the need for comprehensive, useful mortgage data with the goal of minimizing unnecessary regulatory burden, especially for smaller lenders.
Practical Steps for Lenders
For financial institutions that may be subject to HMDA reporting, there are several practical steps to take:
- Assess coverage: Determine whether the institution meets the institutional criteria (e.g., insured depository institution in an MSA) and the transactional thresholds for closed-end loans and open-end lines.
- Review exemptions: Evaluate whether the asset-size exemption or a partial exemption applies, and document the basis for any exemption claimed.
- Implement systems: Ensure that loan origination, servicing, and reporting systems are configured to capture all required HMDA data fields accurately and consistently.
- Train staff: Provide training to loan officers, underwriters, and compliance staff on HMDA requirements, including how to collect and code applicant information.
- Conduct testing: Perform regular testing and quality control reviews of HMDA data before submission to catch and correct errors early.
- Stay updated: Monitor official guidance from the CFPB, FFIEC, and federal banking agencies for any changes to thresholds, exemptions, or reporting instructions.
Common Challenges and How to Avoid Them
Even experienced lenders can run into HMDA compliance issues. Some of the most common challenges include:
- Threshold miscalculation: Miscounting the number of closed-end loans or open-end lines in the prior years, leading to incorrect conclusions about reporting obligations.
- Incorrect loan classification: Failing to properly distinguish between covered and non-covered loans, such as loans secured by vacant land or loans that are not primarily for a dwelling.
- Data coding errors: Inconsistent or inaccurate coding of race, ethnicity, sex, and other demographic fields, which can distort the public data and raise fair lending concerns.
- Missing data fields: Omitting required fields or failing to report all fields within an exempt data point when some of that data is reported.
- Timing and deadlines: Missing the March 1 submission deadline or failing to retain records for the required period.
To avoid these issues, institutions should maintain clear policies and procedures, conduct regular internal audits, and seek guidance from regulators or legal counsel when in doubt.
FAQs About Regulation C and HMDA
Which institutions are covered by HMDA?
HMDA generally covers insured depository institutions (banks and credit unions) that have a home or branch office in a metropolitan statistical area and meet the activity thresholds for closed-end loans or open-end lines of credit.
What is the current closed-end loan threshold?
The current threshold is 25 closed-end mortgage loans in each of the two preceding calendar years. If an institution meets this threshold, it must report data on its closed-end loans.
What is the current open-end line of credit threshold?
The current threshold is 200 open-end lines of credit in either of the two preceding calendar years. If an institution meets this threshold in at least one of those years, it must report data on its open-end lines.
Is there an asset-size exemption?
Yes, banks, savings associations, and credit unions with total assets at or below the annually adjusted asset threshold (based on CPI-W) are exempt from HMDA data collection and reporting.
Can a partially exempt institution report some exempt data fields?
Yes, but if a partially exempt institution chooses to report any data within an exempt data point, it must report all of the fields within that data point for that loan.
When is HMDA data due?
For most institutions, the Loan/Application Register and related reports are due by March 1 of the year following the calendar year for which data is collected (e.g., 2025 data is due by March 1, 2026).
Where can I find official HMDA guidance?
Official guidance, including Regulation C, the FFIEC HMDA Filing Instructions Guide, and supervisory letters, is available from the CFPB, FFIEC, FDIC, OCC, and Federal Reserve websites.
References
- Home Mortgage Disclosure (Regulation C) — Consumer Financial Protection Bureau. 2020-04-16. https://www.consumerfinance.gov/rules-policy/final-rules/regulation-c-home-mortgage-disclosure-act/
- Home Mortgage Disclosure (Regulation C) Adjustment to Asset-Size Exemption Threshold — Consumer Financial Protection Bureau. 2024-12-27. https://www.consumerfinance.gov/rules-policy/final-rules/home-mortgage-disclosure-regulation-c-adjustment-asset-size-exemption-threshold/
- FDIC Supervisory Approach Regarding Changes to HMDA’s Closed-End Mortgage Loan Reporting Threshold — Federal Deposit Insurance Corporation. 2023-03-15. https://www.fdic.gov/news/financial-institution-letters/2023/fil23006.html
- Home Mortgage Disclosure Act (Reg C) — American Bankers Association. https://www.aba.com/banking-topics/compliance/acts/home-mortgage-disclosure-act
- 12 CFR Part 1003 – Home Mortgage Disclosure (Regulation C) — eCFR. https://www.ecfr.gov/current/title-12/chapter-X/part-1003
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