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HMDA enforcement defanged by Trump-led regulators

Regulators rollback HMDA penalty assessments going into 2018

The Home Mortgage Disclosure Act has caused its fair share of grief among mortgage lenders who stress over the new risks it will bring to compliance in 2018. But there is some relief on the horizon as HMDA enforcement was just defanged by the now Trump-led regulators.

It's been a major issue for our industry. In fact, one of our feature stories for the December magazine, written by our Managing Editor Sarah Wheeler, details the new risks HMDA reporting represents for lenders.

And earlier this year HousingWire warned lenders that if they think compliance is hard now, just wait until the new HMDA regulations kick in.

Most of the 2015 updates to HMDA take effect in January 2018.

However, now, both the Office of the Comptroller of the Currency and the Consumer Financial Protection Bureau — both now led by Trump-administration leaders (more, below) — announced they will not be assessing penalties on HMDA data collected in 2018 and reported in 2019.

What’s more, the CFPB also intends to open a rulemaking to reconsider various aspects of the new 2015 updates to the rule, such as institutional and transactional coverage tests and the rule’s discretionary data points.

“The Bureau recognizes the significant systems and operational challenges needed to meet the impending requirements under the rule,” the CFPB stated. “Accordingly, for HMDA data collected in 2018 and reported in 2019, the Bureau does not intend to require financial institutions to resubmit data unless data errors are material, or to pay penalties with respect to data errors.”

And the OCC, which regulates national banks, made a similar announcement, saying it did not intend to require data resubmissions unless the error was material.

The CFPB said lenders should take this time to identify any cracks in their systems and make good faith efforts to fall in line with the new HMDA reporting requirements.

These changes come after former CFPB Director Richard Cordray stepped down from his position as director, and, after a short power struggle, was replaced by President Donald Trump’s pick for acting director, Mick Mulvaney. The new acting director has long been outspoken about his dislike for the CFPB.

And over at the OCC, Thomas Curry stepped down as comptroller of the currency on May 5 after sitting in the position for more than five years. The position was then filled by Keith Norieka, who resigned recently after serving in the position for approximately six months. Finally, Joseph Otting, who the Trump administration nominated back in June, was officially sworn in in late November as the next Comptroller of the Currency.

Upon taking over as comptroller, Otting issued a statement that laid out his vision for how the agency should regulate the banking industry. Namely, it appears that Otting will seek to reduce the regulatory “burden” that banks currently face.

And of course, the decision has garnished support from the housing industry, who otherwise may have had to face penalties or long resubmission processes.

“NAFCU supports the CFPB's decision not to require credit unions to resubmit HMDA data where submission errors are not material, with NCUA taking a similar approach,” said Brandy Bruyere, vice president of regulatory compliance. “We also appreciate that the bureau will reconsider the scope of HMDA in a future rulemaking.”

“The 2015 HMDA rule requires collecting a significantly greater number of data points than what was mandated by Dodd-Frank, and relief for smaller institutions was only temporary,” Bruyere said. “NAFCU is glad to see the CFPB, under acting Director Mulvaney's leadership, is willing to hear credit unions' concerns. In the new year, we will continue to advocate for more credit union exemptions from this burdensome rule.”

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