Proposed HMDA rule would expand data collection

The Consumer Financial Protection Bureau has issue a proposed rule expanding the collection of information required under the Home Mortgage Disclosure Act.

The Consumer Financial Protection Bureau has issue a proposed rule expanding the collection of information required under the Home Mortgage Disclosure Act.

Following its Small Business Review Panel in February, the bureau has issued a proposed rule aimed at identifying potential discriminatory lending practices, among other issues, as well as monitoring the impact of the bureau’s ability-to-repay rule.

Currently, HMDA data provide inadequate information on certain loan features which helped contribute to the mortgage crisis, such as adjustable-rate mortgages and non-amortizing loans, the bureau said.

New information reported under the proposed rule would include the property value, term of the loan, total points and fees, the duration of any teaser or introductory interest rates, and the applicant’s or borrower’s age and credit score as well as more information on underwriting and pricing, such as an applicant’s debt-to-income ratio, the interest rate of the loan, and the total discount points charged for the loan.

The bureau also proposed a number of changes to ease reporting requirements through standardizing the reporting threshold, lifting requirements for certain small banks and aligning requirements with industry data standards, as well as streamlining the electronic data submission process.

The proposal would generally require that institutions report HMDA data if they make 25 or more closed-end loans or reverse mortgages in a year while small depository institutions which fewer than 25 mortgages per year would not have to report HMDA data. In addition, the proposal would eliminate reporting of certain home improvement loans.

“It is critical that we shed more light on the mortgage market – the largest consumer financial market in the world,” said CFPB Director Richard Cordray. “The Home Mortgage Disclosure Act helps financial regulators and public officials keep a watchful eye on emerging trends and problem areas in the mortgage market. Today’s proposal would help us understand better how to protect consumers’ access to mortgage credit while simplifying the reporting requirements for financial institutions.”

Fredrikson & Byron Law