The Consumer Financial Protection Bureau finalized a rule to improve information reported about the residential mortgage market, and a lot of people in the mortgage finance and housing industry are raising concerns.
A copy of all 800-plus pages of the rule, which is updating the reporting requirements of the Home Mortgage Disclosure Act, can be found here.
National Association of Federal Credit Unions Director of Regulatory Affairs Alicia Nealon said the new rule presents a significant burden.
“While NAFCU and our members support HMDA requirements that further the goal of ensuring fair lending and anti-discriminatory practices, we are concerned that some of the additional reporting requirements will not achieve these goals and may only serve to impose significant additional compliance and reporting burdens on responsible lenders like credit unions who work to meet their members’ needs with safe, sound and fair products,” Nealon says. “As the CFPB and Congress have repeatedly recognized, credit unions did not engage in the type of mortgage-related practices that the Bureau is seeking to identify through an expanded HMDA dataset.
“Moreover, mandating home equity lines of credit reporting will exacerbate compliance costs and burdens on credit unions since they will have to make costly modifications to their systems in order to collect data on these newly covered transactions,” she said.
David Stevens, President and CEO of the Mortgage Bankers Association, said while the effort by CFPB is appreciated, there are challenges for lenders.
“We commend the CFPB for releasing what is the final mortgage-related rule from Dodd-Frank, and appreciate that financial institutions will have until January 1, 2018 to adapt their reporting systems to capture the new information that the CFPB will be collecting,” Stevens said. “While there will be new reporting requirements for some market segments, we appreciate that the Bureau is making MISMO technology standards a core part of the new reporting.
“MBA wants to reiterate its concerns about data security and consumer privacy in light of all the additional detailed information on consumers that the government will be collecting and disclosing under the new HMDA guidelines. In the months to come, we look forward to working closely with the Bureau to ensure that consumers’ data is protected," Stevens said.
Likewise, Timothy Burniston, executive vice president, Finance, Risk & Compliance Consulting Practice, Wolters Kluwer Financial Services, underscored the concerns there will be for lenders when it comes to compliance.
“The new data collection rules represent the most significant modifications to the HMDA regulations in the past 35 years,” Burniston said. “We expect the new rules to offer new opportunities for mortgage data analysis, but also to present additional regulatory compliance challenges for lenders.”
However, affordable housing advocates welcomed the new rules.
“Taken together, this data will provide a better picture of the market and make it easier for regulators to enforce fair housing and fair lending laws; for homeowners and community groups to understand and monitor the performance of banks, lenders, brokers, and other industry players; and for all of us to work for a mortgage market that serves people fairly and helps families and communities build and preserve wealth,” said a statement from Americans for Financial Reform.
National Community Reinvestment Council President and CEO John Taylor likewise applauded the CFPB.
“This expansion of Home Mortgage Disclosure Act data is a very positive thing for consumers everywhere. Had we had this expanded data before, it would have provided an early warning system that would have helped to prevent the housing crisis. This data will serve to increase the fairness of mortgage markets for all Americans,” Taylor said.
“We are particularly pleased that the CFPB has followed NCRC’s recommendation to disaggregate the data on race and ethnicity. The CFPB also shown careful consideration of potential privacy issues in this process, which should assuage any concerns surrounding the collection of the data,” he said.
The rule is intended to shed more light on consumers’ access to mortgage credit. The bureau is working with other federal agencies to streamline the reporting process for financial institutions.
“The Home Mortgage Disclosure Act helps financial regulators, the public, housing officials, and even the industry itself keep a watchful eye on emerging trends and problem areas in the nation’s mortgage market – the largest consumer financial market in the world,” said CFPB Director Richard Cordray.
HMDA, which was originally enacted in 1975, requires many lenders to report information about the home loans for which they receive applications or that they originate or purchase. The public and regulators can 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.
In 2014, 7,062 financial institutions reported information about approximately 11.9 million mortgage applications, preapprovals, and loans.
The final rule is supposed to “improve the quality and type” of HMDA data. The CFPB also says it is working to reduce the reporting burden for lenders, by streamlining and modernizing the submission of the data. It's all in the 800-plus pages that lenders will have to comb through.