CFPB Proposes Updates to HMDA Reporting

• July 24, 2014
• Anna DeSimone

• Improving market information: In the Dodd-Frank Act, Congress directed the Bureau to update HMDA regulations by having lenders report specific new information that could help identify potential discriminatory lending practices and other issues in the marketplace. This new information includes, for example: the property value; term of the loan; total points and fees; the duration of any teaser or introductory interest rates; and the applicant’s or borrower’s age and credit score.

• Monitoring access to credit: The Bureau is proposing that financial institutions provide more information about underwriting and pricing, such as an applicant’s debt-to-income ratio, the interest rate of the loan, and the total discount points charged for the loan. This information would help regulators determine how the Ability-to-Repay rule is impacting the market, and would also help the Bureau monitor developments in specific markets such as multi-family housing, affordable housing, and manufactured housing. The proposed rule would also require that covered lenders report, with some exceptions, all loans related to dwellings, including reverse mortgages and open-end lines of credit.

• Standardize the reporting threshold: Depository institutions, such as banks, satisfying HMDA’s general reporting requirements must submit HMDA data, even if they make only a single home-purchase loan or refinancing in a given year. However, non-depository mortgage lenders may be required to report only if they make at least 100 loans. The proposal would generally require that institutions report HMDA data if they make 25 or more closed-end loans or reverse mortgages in a year. In addition, the proposal would eliminate reporting of certain home improvement loans.

• Ease reporting requirements for some small banks: With the proposed standardized reporting threshold, small depository institutions that have a low loan volume-fewer than 25 mortgages a year-would not have to report HMDA data. For small banks with few staff members, this change could make a significant impact in easing compliance costs. The new threshold would reduce the overall number of banks required to report HMDA data by 25 percent, but, because those lenders receive a low volume of applications and originate a low volume of mortgage loans, the change would not compromise the usefulness of the dataset.

• Align reporting requirements with industry data standards: In addition to collecting data under HMDA, many financial institutions are collecting the same or similar data for their own processing, underwriting, and pricing of loans, or to facilitate the sale of loans on the secondary market. The Bureau is proposing methods to align the HMDA data requirements with well-established industry data standards, including definitions that are already in use by a significant portion of the mortgage market. The Bureau anticipates that this alignment would mitigate the burden on many lenders, and could improve the quality and the value of the information reported.

• Improve the electronic reporting process: The CFPB is also looking to improve the electronic reporting process. The Bureau will be considering what new technological tools would make the data submission process more efficient, ease the data formatting requirements and help financial institutions prevent errors.

• Improve data access: The Bureau also is looking at ways to improve how the public can securely use HMDA data modified to protect applicant and borrower privacy. In February 2014, the Bureau released an online too that helps the public better use available mortgage loan data. The tool allows users to filter information, create summary tables, download the data, and save their results.

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