CFPB Changes HMDA Data Collection

ThernConsumer Financial Protection Bureau (CFPB) has announced it will take therninitial step to improve data collected under the Home Mortgage Disclosure Actrn(HMDA) by convening a panel of small businesses to provide feedback on itsrnproposals.  The Bureau is also unveilingrna new online tool that makes it easier to navigate the publicly available HMDArndata.</p

HMDArnwas enacted in 1975 to gather information on whether financial institutionsrnwere serving the housing needs of their communities and providing access tornresidential mortgage credit. HMDA was later expanded to capture informationrnuseful for identifying possible discriminatory lending patterns.  Responsibility for HMDA rulemaking was transferredrnto the newly created CFPB under the Dodd-Frank Wall Street Reform and ConsumerrnProtection Act which also mandated CFPB to expand the HMDA to include informationrnthat would be helpful to regulators in spotting troublesome mortgage trends.</p

Atrnpresent HMDA data is reported by 7,400 financial institutions on about 18.7rnmillion loans and applications.  Lendersrnreport the type and general location of the property; and the race, ethnicity,rnand sex of the applicant, information about the loan amount and whether thernloan is for purchasing a home, refinancing an existing mortgage, or homernimprovement.  Once revised to protectrnprivacy, a subset of the HMDA data is made available to the public.</p

Whilerna lot of information is contained in HMDA data CFPB says additional mortgagerninformation could help federal regulators, state regulators, lenders, consumerrngroups, and researchers better monitor the market. For example, no data isrncurrently gathered on home equity lines of credit which surged prior to thernhousing crisis nor on teaser mortgage rates which had a hand in causingrnit.  HMDA data currently contains onlyrnlimited information about loan features and interest rates.</p

CPFBrnis considering changes to the rules that establish what data financialrninstitutions are required to provide under HMDA.  Preparatory to any rules changes and asrnrequired by the Small Business Regulatory Enforcement Fairness Act (SBREFA),rnCFPB will convene a Small Business Review Panel of small lenders which will bernasked for early feedback on how data can be updated to better reflect what isrnhappening in the market.  Potentialrnchanges under consideration by the Bureau include:</p<ul class="unIndentedList"<liImprovementsrnrequired by Dodd-Frank: The Act directs the Bureau to update HMDArnregulations so as to obtain information that could alert regulators tornpotential problems in the marketplace. This includes: the length of the loan;rntotal points and fees; the length of any teaser or introductory interest rates;rnand the applicant or borrower’s age and credit score.</li<liNewrndevelopments in the market: ThernBureau is considering additional information that would give regulators arnbetter view of developments in all segments of the housing market such as underwritingrnand pricing information. This will helprnregulators investigate the true trouble spots in the mortgage market. </li<liMonitoringrnaccess to credit: Other new requirements could include gatheringrninformation about access to credit in the mortgage market such as explanationsrnof rejected applications, whether the lender considered the loan to be arnQualified Mortgage, and information such as debt-to-income ratios to helprnregulators see whether lenders are making loans that are expensive orrnunsuitable for borrowers. </li</ul

Atrna press conference CFPB Director Richard Cordray said that his agency was alsornconsidering ways to make the HMDA data collection less burdensome forrnlenders.  One way would be to level the playingrnfield between bank and nonbank lenders.  “Today, banks that meet certainrnconditions must submit annual reports even if they make only a singlernloan.  However, nonbank mortgage lenders generally are required to reportrnonly if they make 100 loans and meet other conditions.”  CFPB is considering a proposal to create consistencyrnby requiring all banks and nonbanks that meet certain conditions to report ifrnthey make 25 or more loans in a year, but exempting those that fall beneathrnthat proposed threshold.</p

Cordrayrnsuggested other ways in which reporting could be streamlined such as aligning HMDA data requirements with existing standardsrnfor information on processing, underwriting, pricing, and selling loans that arernalready in widespread use in the market. rnCFPB will also consult with regulators and consider creating anrninterface that will allow lenders to connect their own data submission andrnediting software to a CFPB intake system. </p

In addition to the panel Cordray saidrnhis agency will be seeking feedback from industry and consumer groups that willrnbe affected by these changes to the HMDA process.  “Sometime later thisrnyear, we will put out a proposed rule seeking broader public feedback throughrnthe standard notice-and-comment rulemaking process.  So today is only thernbeginning of our journey, and we plan to be fully engaged with the public.”</p

He also announced that a new tool to assist with publicrnaccess to a subset of HMDA data is now available online. Cordray said that for years, peoplernhave commented that the size and complexity of the data can make it difficultrnto use so this new tool provides the public with easier access to informationrnfor 2007 through 2012.  Users can filter data, download it, create summaryrntables, and share the results.  The tool uses a format that is compatiblernwith most spreadsheet programs and most programming software. </p

Thernfollowing information and assistance is currently available on the CFPB websiternat www.consumerfinance.gov</p<ul class="unIndentedList"<liThe HMDA data tool</li<liA factsheet about changes CFPB isrnconsidering</li<liProposals and questions for whichrnCFPB will seek input from the Review Panel</li<liA factsheet summarizing the SmallrnBusiness Review Panel process</li

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