The Dodd-Frank Wall Street Reform and Consumer Protection Act requires the Consumer Financial Protection Bureau (CFPB) to expand the Home Mortgage Disclosure Act (HMDA) to include more loan information that would help spot discriminatory or other negative mortgage lending trends.
HMDA requires lenders to collect and disclose information about the mortgages they provide to consumers. It was later expanded to obtain data that could be used to identify discriminatory lending patterns.
HMDA requires lenders to collect and report information including the name of the lender; property type and location; the applicant’s race, ethnicity, gender, and income; loan amount; whether the loan is for a purchase, refinancing, or for home improvement; whether the loan is subject to the Home Ownership and Equity Protection Act; and the lien status of the loan.
The amendments made by the Dodd-Frank Act expand the scope of the information relating to mortgage applications and loans that must be collected, compiled, maintained, and reported under HMDA.
In early February, CFPB took its first steps toward expanding HMDA’s requirements, and eventually issued a final rule.
During March the bureau held its “Small Business Review Panel” on changes to HMDA. CFPB plans to continue collecting information for several months before issuing a proposed rule and seeking formal comments on the proposed changes. Then it will begin working on the final rule.
A final rule is unlikely to be issued until sometime around mid- 2015 at the earliest with new data collection likely beginning in 2016.
New information requirements
The Dodd-Frank Act requires CFPB to include this additional information in HMDA:
- Total points, fees, and rate spreads for all loans;
- Riskier loan features including teaser rates, prepayment penalties, and nonamortizing features;
- Lender information, including a unique identifier for the loan officer and the loan, and information about whether the applicant works with a mortgage broker;
- Property value information and improved location information; and
- Applicant age and credit score.
The Dodd-Frank Act authorizes (but doesn’t require) CFPB to include additional loan information in HMDA.
The bureau may require the following information to be collected and reported under HMDA, and has asked the Small Business Review panel to provide feedback on:
- Mandatory reporting of denial reasons;
- The applicant’s debt-to-income ratio;
- The loan’s “Qualified Mortgage” status;
- The combined loan-to-value ratio;
- Automatic underwriting systems results;
- Additional points and fees;
- Affordable housing programs;
- Manufactured housing data; and
- HMDA data for all applications, originations, and purchases of dwelling-secured loans, including home equity lines of credit.
The bureau also may make changes to streamline reporting, improve data reporting, and standardize the reporting threshold. Financial institutions such as credit unions and banks, for example, have a different threshold than nonbank mortgage lenders. CFPB may require banks, credit unions, and nonbanks to report whether they make 25 or more mortgages a year if they meet other requirements. CUNA believes this number should be considerably higher than 25.
Considering the additional costs and operational and software changes necessary for credit unions to collect and report all of this new information, CUNA is particularly concerned about the collection and reporting of any new information not required by Dodd-Frank.
MICHAEL McLAIN is CUNA’s senior assistant general counsel for compliance.