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Lending / The Ticker

CFPB proposes HMDA rule changes

Works to keep pace with market

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The Consumer Financial Protection Bureau proposed a new rule in order to improve information reported about the residential mortgage market and communication with consumers.

The new rule is aimed at helping shed more light on consumers’ access to mortgage credit by updating the reporting requirements of the Home Mortgage Disclosure Act regulations.

HMDA went into effect in 1975 and requires many lenders to report information about the home loans for which they receive applications or that they originate or purchase. 

However, as the market has evolved, the HMDA has failed to keep pace.

As a result, the bureau is working to improve the type of HMDA data required by the Dodd-Frank Act, in addition to looking at ways to make submission of data easier for lenders. 

The Bureau is working on two main changes:

Improving market information.

Dodd-Frank directed the bureau to update HMDA regulations by having lenders report specific new information that could help identify potential discriminatory lending practices.

Monitoring access to credit.

The Bureau is proposing that financial institutions provide more information about underwriting and pricing, which would help regulators determine how the Ability-to-Repay rule is impacting the market, and would also help the bureau monitor developments in specific markets. 

Back in May, HMDA data blew up the market as top housing officials battled over what information was correct.   

David Stevens, CEO at the Mortgage Bankers Association, and Josh Rosner, a well-known analyst at Graham, Fisher & Co., went at it via Twitter for a few days in a truly epic Twitter war for the ages.

In his remarks, Stevens claimed that "[t]he 2012 HMDA data shows a 56% denial rate on GSE purchase loan applications for African Americans," as part of his argument that minorities are already being crowded out of the U.S. housing market.

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