By Katalina M. Bianco, J.D.
The Consumer Financial Protection Bureau has finalized amendments to Reg. C—Home Mortgage Disclosure (12 CFR Part 1003) that will reduce the number of lenders that must file reports but require more data to be collected and reported. The rule is intended to "shed more light on consumers’ access to mortgage credit by updating the reporting requirements of" HMDA, according to the CFPB's notice. The CFPB said that the bureau is working with other agencies to streamline the reporting process for financial institutions.
“The Home Mortgage Disclosure Act helps financial regulators, the public, housing officials, and even the industry itself keep a watchful eye on emerging trends and problem areas in the nation’s mortgage market – the largest consumer financial market in the world,” said CFPB Director Richard Cordray. “With today’s final rule we are shedding more light to foster better understanding of the market, and also ensuring that lenders have sufficient time to come into compliance.”
The amendments will reduce the number of banks and credit unions that must file Home Mortgage Disclosure Act reports by about 22 percent but will require those that must report to collect up to 48 data points for each loan or application. The amendments also are intended to make it easier for institutions to file reports by making data collection consistent with established industry standards.
In an effort to explain the amendments, the bureau has provided a summary of the rule and an implementation timeline for the amendments that shows no changes for 2016. Compliance will be phased in beginning Jan. 1, 2017, and full compliance will be required with reports to be filed in 2020. The CFPB also has put into place an online HMDA tool that provides information about the rule and implementation.
Trade associations react to rule. In reaction to the CFPB's rule, leading trade associations have commended the bureau but continue to urge caution.
NCRC. According to National Community Reinvestment Coalition President and CEO John Taylor, had this expansion of rules been enacted earlier, it would have provided an early warning system that could have prevented the housing crisis. “This expansion of Home Mortgage Disclosure Act data is a very positive thing for consumers everywhere,” said Taylor. “This data will serve to increase the fairness of mortgage markets for all Americans.” However, said Taylor, the bureau’s work is not done. The CFPB now must ensure that “all of the data elements collected that pose no privacy concerns are released to the public. Detailed public disclosure gives increased transparency to the market, and allows members of the public to detect lending discrimination and abuse.”
ABA. Also commending the bureau for its action is the American Bankers Association. However, Frank Keating, ABA CEO and President, said that the trade association continues to be concerned “about the privacy of bank customers’ data and ensuring that their information is properly protected” and the “appropriate balancing of costs and benefits in order to maintain consumer access to the full variety of mortgage products.”
MBA. The Mortgage Bankers Association applauds the CFPB, but has reiterated its concerns about data security and consumer privacy in light of all the additional detailed information on consumers that the government will be collecting and disclosing under the new guidelines.
ICBA. Opposing the CFPB’s final rule is the Independent Community Bankers of America, which believes that the rule only add to the already excessive regulatory burdens placed on community banks. “While ICBA appreciates the CFPB’s provision of a two-year implementation period and its efforts to exempt some small-volume lenders, the overall costs of the expanded HMDA reporting requirements outweigh the benefits,” ICBA President and CEO Camden R. Fine said.
The trade association noted that the bureau’s final rule requires financial institutions to report 48 data fields for each borrower—greatly exceeding the statutory requirement laid out by Congress. This “extraneous data reporting will require additional costly system upgrades for community banks, but will not necessarily provide a better understanding of lending practices,” said the ICBA.
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