Alert February 18, 2014

CFPB Begins Process for Amending HMDA Reporting Requirements

As a first step in its process to amend the Home Mortgage Disclosure Act reporting requirements “to make it easier for mortgage lenders to provide better information,” and to “seek to assess whether there are opportunities to improve upon the data collected, reduce unnecessary burden on financial institutions, and, as appropriate, to modernize and streamline the manner in which [financial institution]s collect and report data,” the CFPB announced its plans to convene a Small Business Review Panel to seek early feedback from small lenders, including feedback on how data can be updated to better reflect what is happening in the market. HMDA and its implementing regulation, Regulation C, require mortgage lenders that meet certain threshold conditions to collect, report to Federal regulators, and disclose to the public certain data (e.g., loan amount and loan purpose) about applications for, and originations and purchases of, home purchase loans, home improvement loans, and refinancings for each calendar year.

Certain changes to the HMDA regulations are required by the Dodd-Frank Act (including that lenders report on the length of the loan, total points and fees, the length of any teaser or introductory interest rates, and the applicant or borrower’s age and credit score), but the CFPB plans to “use its discretionary authority to propose other new requirements that it believes will ensure that HMDA data continue to serve HMDA’s purposes.” To that end, the CFPB is considering proposals related to: which financial institutions are required to report HMDA data; the types of loans and applications that must be reported; the information required about each loan or application; and potential operational improvements in the HMDA compliance system. For instance, the CFPB would like financial institutions to include more underwriting and pricing information, such as the interest rate, the total origination charges, and the total discount points of the loan.

The CFPB is also considering proposals that would reduce the annual, ongoing operational costs that financial institutions currently incur in collecting and reporting HMDA data, including: restructuring the geocoding process and possibly shifting some of the burden to the government; creating an improved web-based HMDA data entry software; streamlining the submission and editing process to make it more efficient; and expanding and integrating HMDA help sources. The CFPB released the questions to be addressed by the Small Business Review panel and an outline of its proposals.

In conjunction with the announcement, the CFPB unveiled a new online tool that makes it easier to navigate the publicly available HMDA data.