CFPB Proposes Changes to HMDA Rules
The Consumer Financial Protection Bureau issued a Notice of Proposed Rulemaking, which proposes to raise coverage thresholds for collecting and reporting data about closed-end mortgage loans and open-end lines of credit under the Home Mortgage Disclosure Act rules.
The Bureau said the NPRM (https://files.consumerfinance.gov/f/documents/cfpb_nprm-hmda-regulation-c.pdf) would provide relief to smaller lenders from HMDA’s data reporting requirements and would clarify partial exemptions from certain HMDA requirements that Congress added in the Economic Growth, Regulatory Relief and Consumer Protection Act.
The Bureau also issued an Advance Notice of Proposed Rulemaking (https://files.consumerfinance.gov/f/documents/cfpb_anpr_home-mortgage-disclosure-regulation-c-data-points-and-coverage.pdf) seeking information on the costs and benefits of reporting certain data points under HMDA.
“Today’s proposed changes would provide much needed relief to smaller community banks and credit unions while still providing federal regulators and other stakeholders with the information we need under the Home Mortgage Disclosure Act,” said CFPB Director Kathleen L. Kraninger. “The public is encouraged to submit their comments on the proposals, which will be considered by the Bureau before the next step is taken.”
Under the Dodd-Frank Act, HMDA rulemaking authority transferred from the Federal Reserve Board to the Bureau. HMDA and its implementing rules require many financial institutions to maintain, report and publicly disclose loan-level information about mortgages. These data help show whether lenders are serving the housing needs of their communities; they give public officials information that helps them make decisions and policies; and they shed light on lending patterns that could be discriminatory (although the Mortgage Bankers Association has pointed out that HMDA data do not take into account all the factors that lenders take into account in making a final decision to extend credit).
For closed-end mortgage loans, the NPRM proposes two alternatives that would permanently increase the coverage threshold from 25 to either 50 or 100 closed-end mortgage loans. For open-end lines of credit, the NPRM would extend for another two years the current temporary coverage threshold of 500 open-end lines of credit. Once that temporary extension expires, the NPRM would set the open-end threshold permanently at 200 open-end lines of credit.
The ANPR solicits comments about the costs and benefits of collecting and reporting the data points the 2015 HMDA Rule added to Regulation C and certain preexisting data points that the 2015 HMDA Rule revised. The ANPR also seeks comments about the costs and benefits of requiring that institutions report certain commercial-purpose loans made to a non-natural person and secured by a multifamily dwelling.
MBA Senior Vice President of Commercial/Multifamily Thomas Kim said the ANPR is “an important step in the right direction.” MBA has advocated for regulatory changes that would limit the applicability of HMDA reporting for non-consumer-facing multifamily finance transactions.
In a March letter to Kraninger, MBA President and CEO Robert Broeksmit, CMB, urged the Bureau to exclude business-to-business multifamily loans as part of this ANPR.
“HMDA reporting of business-to-business multifamily loans imposes a substantial and unwarranted regulatory burden on our commercial/multifamily members,” Broeksmit wrote. “HMDA reporting on multifamily loans is particularly burdensome because it requires institutions to adapt complex, bespoke commercial lending into a reporting framework designed for consumer-facing single-family mortgage lending. As a result of the impact of that burden, we understand that some lenders may curtail their multifamily lending in order not to be subject to HMDA reporting requirements.”
Broeksmit added that HMDA reporting on business-to-business multifamily loans is unwarranted because collecting information on such transactions is not necessary to achieve the Bureau’s core consumer mission. “We believe it is appropriate to amend Regulation C to exclude business-to-business multifamily loans, and to do so as part of the upcoming notice of proposed rulemaking,” he said.
The Bureau said comment periods will open upon publication in the Federal Register.
Additional information is available at https://www.consumerfinance.gov/policy-compliance/guidance/hmda-implementation/.
