The Consumer Financial Protection Bureau is proposing changes to Reg. C—Home Mortgage Disclosure (12 CFR Part 1003) that are intended to ease lenders’ compliance with its 2015 HMDA rule amendments. According to the bureau, it intends to establish transition rules that will excuse reporting of two data points for loans that were purchased before the 2015 rules took effect. The proposal would:
- clarify key terms, such as “temporary financing” and “automated underwriting system;
- create an exemption for some New York-based transactions; and
- provide a geocoding tool lenders could rely on to determine the census tract of property that secures a loan.
“The Home Mortgage Disclosure Act shines a much-needed spotlight on the mortgage market, which is the largest consumer financial market in the world,” said CFPB Director Richard Cordray. “Today’s proposal reflects the Bureau’s ongoing and substantive engagement with stakeholders in the marketplace, and will help industry meet its new reporting obligations.”
Monitoring mortgages. The HMDA requires many lenders to report information about the home loans in which they receive applications or that they originate or purchase. The regulators use the information to monitor whether financial institutions are serving the housing needs of their communities, assist in distributing public-sector investment, and to identify possible discriminatory lending patterns.
Following the passage of the Dodd-Frank Act, the CFPB updated the HMDA regulation to improve the quality and type of data reported by financial institutions. These amended requirements take effect in January 2018, although public outreach by the CFPB demonstrated that the financial industry would benefit from further clarification.
For more information about mortgage loan reporting, subscribe to the Banking and Finance Law Daily.