MBA, Trade Groups Urge CFPB to Relieve Multifamily Lenders From Some HMDA Reporting

The Mortgage Bankers Association led two industry comment letters to the Consumer Financial Protection Bureau asking to relieve multifamily lenders from mandatory reporting under the Home Mortgage Disclosure Act.

MBA, the National Multifamily Housing Council, the American Bankers Association, the National Association of Real Estate Investment Trusts, The Real Estate Roundtable and other trade associations sent comments to CFPB Director Kathy Kraninger.

“These rulemakings, particularly the request for input on the application of HMDA to business-to-business multifamily loans, reflect several years of MBA HMDA advocacy,” said MBA Associate Vice President of Commercial/Multifamily Policy Bruce Oliver.

The first letter commented on HMDA’s treatment of business- or commercial-purpose loans made to a non-natural person and secured by a multifamily dwelling. The affiliated organizations recommended fully exempting business-to-business multifamily loans and multifamily loans generally from HMDA, “because the minimal HMDA value of information on multifamily loans is outweighed by the substantial regulatory burden of collecting that information, and because of the language of HMDA and the Dodd-Frank Act supports excluding multifamily loans,” it said.

The letter suggested CFPB could make a “sensible adjustment” to Regulation C, which implements the Home Mortgage Disclosure Act. “[This] adjustment would be in harmony with congressional intent,” it said. “We urge the Bureau to move expeditiously to exempt multifamily loan transactions from HMDA reporting requirements under Regulation C. While the Bureau is explicitly considering the application of HMDA to ‘business- and commercial-purpose loans made to a non-natural person and secured by multifamily properties,’ the most practical [approach] is to also exempt the rare examples of multifamily loans to natural person borrowers.”

The second letter replied to CFPB’s proposal to increase the HMDA transaction reporting threshold for closed-end loans from the current 25 up to 50 or 100 loans. MBA and the other organizations noted the proposal would provide relief to many member firms.

In June, MBA submitted a letter in response to the proposed rule supporting increasing the threshold to at least 100 loans. Yesterday’s comment letter supplemented those June comments and urged that any final rule to increase the threshold should permit any affected institution to cease HMDA reporting activity immediately.