The Consumer Financial Protection Bureau has finalized a rule updating reporting requirements of the Home Mortgage Disclosure Act.
The rule increases the kinds of data collected while also streamlining and modernizing the means through which it is reported. It also raises a threshold for small lenders who originate a low volume of loans each year.
This new information includes the property value, term of the loan, and the duration of any teaser or introductory interest rates. In 2010, the Dodd-Frank Act directed the CFPB to expand the HMDA dataset to include additional information about applications and loans that would be helpful to better understand the mortgage market.
Financial institutions will be required to provide more information about mortgage loan underwriting and pricing, such as an applicant’s debt-to-income ratio, the interest rate of the loan, and the discount points charged for the loan. The rule also generally requires that covered lenders report information about applications and loans secured by dwellings. The information will help screen for possible fair lending problems and monitor developments in specific markets of interest, the CFPB said.
A new threshold in the rule will exclude small depository institutions which originate a low number of loans, reducing the number of reporting institutions by about 22 percent, the bureau said. Because they originate so few loans, however, this exclusion will not compromise the usefulness of the HMDA data collect.
Small depository institutions outside of metropolitan statistical areas remain excluded from reporting requirements.
Requirements are also being changed to align with industry data standards, including definitions that are already in use by a large part of the mortgage market. The move would make it easier for financial institutions which already collect data similar to, or the same as, HMDA data for processing, underwriting and pricing loans or to sell loans to the secondary market, the bureau said.
“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. “With today’s final rule we are shedding more light to foster better understanding of the market, and also ensuring that lenders have sufficient time to come into compliance.”