Benefits of home Equity line of Credit

The Consumer Financials Protection Bureau (CFPB or Bureau) published on 14 July a proposal for a regulation on HMDA disclosure obligations for home-equity credit line (HELOC) issuing banking and credit cooperatives. According to the regulations, which are due to come into force in January 2018, MFIs are obliged to notify a HELOC if they have granted 100 such credits in each of the last two years.

Under the new proposals, this limit would be raised to 500 credits until the 2018 and 2019 calendars, to allow the Bureau to examine whether a continuous adaptation should be made. In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), the CFPB reviewed the HMDA in 2015 to enhance the accuracy and nature of the information provided by banks.

CFPB adopted a definitive provision on the implementation of changes to modify Hong Kong's Financial Markets Markets Authority (HMDA) through the Dodd-Frank Act on 15 October 2015. In particular, the Bureau has added several new obligations to report and clarified several current ones. It also amended the scope of application of Regulation C ( "Implementing Ordinance of HMDA") in terms of institutions and transactions and changed current obligations regarding disclosures and reports.

The CFPB in April 2017 suggested certain changes and clarifications to the HMDA definitive rules. Most of the revised standards will enter into force in January 2018. A major change that will begin in 2018 will include a requirement for some creditors to gather, file and publish information about certain residential backed open credit facilities, as well as associated credit facilities, which include HOELOCs.

The CFPB states that, in accepting the rules, it'recognised that the notification of these exposures was a new and in some cases significant constraint for smaller entities. "5 "5 In order to prevent these charges from being imposed on low-volume creditors when the usefulness of the information does not warrant the cost, the Bureau declares that it has restricted this new provision to creditors who have completed at least 100 home collateralised open credit facilities in each of the previous two years.

Through its public relations work, however, the Bureau has increasingly listened to concern from joint and cooperative credit cooperatives that the challenge and cost of notifying open-end loans may be greater than the Bureau had anticipated when it adopted the 100 credit limit. In addition, the Bureau explains that its analyses of recent information suggest changes in open credit patterns that may lead to more entities than originally expected to report open credit facilities.

The CFPB accordingly asks for an opinion on whether the gathering of this information should be postponed for smaller institutes so that the Bureau can examine whether the thresholds should be adapted forever. Specifically, the Bureau proposed changes to Regulation C that would raise the thresholds for the compilation and notification of open credit line information for a 2-year horizon, so that FIs that had less than 500 open credit line information in the previous two years would not be obliged to start compiling this information by 1 January 2020.

According to Bureau estimate, the 500 loan thresholds would still cover about three fourths of the home loan sector, compared to about 88 per cent of the 100 loan thresholds. Presidium will present a special suggestion with a longer announcement and comments procedure in order to consider an adjustment of the standing rule at a later stage.