CFPB Releases HMDA Policy Guidance
On December 21, 2018, the Bureau of Consumer Financial Protection Bureau (Bureau) released final policy guidance applicable to the public disclosure of data collected and reported pursuant to the Home Mortgage Disclosure Act (HMDA). The Bureau crafted this guidance after considering comments received following its release of proposed policy guidance in September of 2017.
The following applies to data collected by financial institutions in 2018, which will be reported and made publically available in 2019.
Public loan-level HMDA data will exclude:
(1) universal loan identifier or non-universal loan identifier
(2) date the application was received or the date shown on the application form
(3) date of action taken by the financial institution on a covered loan or application
(4) address of the property securing or proposed to secure the covered loan
(5) credit score or scores relied on in making the credit decision
(6) unique identifier assigned by the Nationwide Mortgage Licensing System and Registry for the mortgage loan originator, and
(7) result generated by the automated underwriting system used to evaluate the application
In addition, the publically available data will exclude free-form text fields used to report the following data: race, ethnicity, the name and version of the credit scoring model used, the principal reason or reasons the financial institution denied the application, and the automated underwriting system name.
The following public loan-level HMDA data will be modified to reduce the precision of most of the values reported for the following:
(1) loan amount or the amount applied for will be disclosed as the midpoint for the $10,000 interval into which the reported value falls, and there will be an indication as to whether the reported value exceeds the applicable dollar amount limitation on the original principal obligation in effect at the time of application or origination
(2) age of an applicant or borrower will be provided in bin values in ranges such as: 25 to 34; and will indicate whether the reported value is 62 or higher
(3) ratio of the applicant’s or borrower’s total monthly debt to the total monthly income relied on in making the credit decision under 36 percent and over 50 percent will be reported as bin values; however, values greater than or equal to 36 percent and less than 50 percent will be reported without modification
(4) value of the property securing the covered loan or, in the case of an application, proposed to secure the covered loan, will be disclosed as the midpoint for the $10,000 interval into which the reported value falls
(5) number of individual dwelling units related to the property securing or proposed to secure the covered loan, will be reported as bin values in ranges such as 5 to 24; 25 to 49; 50 to 99; 100 to 149; and 150 and over
(6) number of individual dwelling units related to the property securing or proposed to secure the covered loan, that are income-restricted will be disclosed as a percentage of the total number of individual dwelling units related to the property securing the covered loan
As reflected above, in this most recent policy guidance, the Bureau changed the treatment of the following data fields from its original proposed approach: total debt to income ratio, number of individual dwelling units securing or proposed to secure the loan, and the number of individual dwelling units that are income-restricted. Moreover, the Bureau intends to commence a rulemaking in the spring of 2019 that will enable it to identify more definitively modifications to the data that it determines to be appropriate under the balancing test applied, and incorporate these modifications into a legislative rule.
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