CFPB Issues Proposal to Clarify HMDA

The Consumer Financial Protection Bureau yesterday issued a proposal to modify the Home Mortgage Disclosure Act, clarifying which data financial institutions would be required to collect and report about their mortgage lending practices.

The proposed rule ( includes clarifications, technical corrections and minor changes to the HMDA regulation. These include clarifying certain key terms, such as “temporary financing” and “automated underwriting system.” The CFPB said the proposal would also, for example, establish transition rules for reporting certain loans purchased by financial institutions. Another proposed change would facilitate reporting the census tract of a property, using a new geocoding tool the CFPB plans to provide online.

“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.”

HMDA, originally enacted in 1975, requires many lenders to report information about home loans for which they receive applications or that they originate or purchase. The public and regulators use the information to monitor whether financial institutions are serving the housing needs of their communities, to assist in distributing public-sector investment so as to attract private investment to areas where it is needed and to identify possible discriminatory lending patterns.

The Mortgage Bankers Association and other industry trade groups have maintained that HMDA data are subject to subjective interpretation and might not accurately reflect criteria that mortgage lenders use to determine the suitability of a potential borrower.

Most of the updated requirements would effect in January 2018. The proposal will be open for public comment for 30 days after its publication in the Federal Register.