by Walead Esmail
On February 7, 2014, the Consumer Financial Protection Bureau (CFPB) announced that it will consider changes to improve data collection under the Home Mortgage Disclosure Act (HMDA), which was enacted in 1975 to gather information on whether financial institutions were serving the housing needs of their communities and providing access to residential mortgage credit.
In 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking responsibility for HMDA to the CFPB. The Dodd-Frank Act also directed the CFPB to expand HMDA to add additional loan information and to consider adding more data points that would help in spotting troublesome mortgage trends.
Currently, HMDA data is reported by 7,400 financial institutions on about 18.7 million loans and applications. The data points lenders currently report on include: the type and general location of property; the race, ethnicity and sex of applicants; loan amounts; and whether loans are for purchasing a home, refinance or home improvement.
The Dodd-Frank Act directs the CFPB to expand HMDA to include the following additional information: total points and fees, and rate spreads for all loans; riskier loan features including teaser rates, prepayment penalties, and non-amortizing features; lender information, including a unique identifier for the loan officer and the loan; property value and improved property location information; and age and credit scores.
In addition, the CFPB is considering requiring additional data points, including: mandatory reporting of denial reasons; debt-to-income (DTI) ratio; qualified mortgage status of loans; combined loan-to-value (CLTV) ratio; automatic underwriting systems results; additional points and fees information (including total origination charges; total discount points; risk-adjusted, pre-discounted interest rates; and interest rates); affordable housing programs; and manufactured housing data.
As required by the Small Business Regulatory Enforcement Fairness Act (SBREFA), before the CFPB implements the proposed changes, the CFPB will convene a Small Business Review Panel of small lenders to seek early feedback on how data can be updated to better reflect what is happening in the market. The SBREFA Panel will also provide input on how burdensome the new requirements would be for small lenders. The CFPB is expected to conduct several conference calls with the SBREFA Panel over the next few weeks, culminating with an in-person meeting in Washington, D.C. in early-to-mid-March 2014. The CFPB is expected to issue its proposed rule shortly thereafter.
CFPB director Richard Cordray also announced that, in an effort to make HMDA data collection less burdensome and more streamlined for lenders, the CFPB is considering a proposal to require all banks and nonbanks that meet certain conditions to report if they make 25 or more loans in a year, but exempting those that fall beneath that proposed threshold. In addition, the CFPB has unveiled a new online tool that makes it easier to navigate the publicly-available HMDA data.
Read more articles about the Consumer Financial Protection Bureau at Dykema’s CFPB Blog
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