The CFPB has proposed a rule to amend the reporting requirements under the Home Mortgage Disclosure Act (“HMDA”), implemented by the CFPB’s Regulation C, with an emphasis on information about consumers’ access to mortgage credit. The July 24 proposed amendments to Regulation C are also intended to simplify reporting requirements for home mortgage lenders, including banks, according to the CFPB. The Dodd–Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) requires the CFPB to update HMDA reporting to include specific information that could help identify potential discriminatory lending practices and other issues in the home mortgage loan marketplace. That information includes, for example, property value, term of the loan, total points and fees, duration of any teaser or introductory interest rates and the applicant’s or borrower’s age and credit score. The proposed amendments would require lenders to report more information about 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 CFPB said that the additional information would help regulators determine how the Ability-to-Repay rule is affecting the market. The CFPB also believes that the additional information would help the CFPB monitor developments in certain markets, such as multi-family housing, affordable housing and manufactured housing. The proposed amendments would also require lenders to report most loans related to dwellings, including reverse mortgages and open-end lines of credit. Comments on the proposed amendments must be submitted to the CFPB by October 22, 2014.
Nutter Notes: Currently, a bank that satisfies HMDA’s general reporting requirements must report HMDA data even if the bank makes only a single home purchase or refinance loan in a given year, while non-bank mortgage lenders may be required to report only if they make at least 100 loans. Under the proposed amendments to Regulation C, all lenders, including banks, would generally be required to report HMDA data only if they make 25 or more closed-end loans or reverse mortgages in a year. The CFPB believes that the new reporting threshold would reduce the number of small banks required to report HMDA data by 25%. The proposal would also eliminate reporting requirements for certain home improvement loans. Under the proposed amendments, lenders that make a large number of reported transactions would be required to report HMDA data on a quarterly, rather than an annual, basis. The CFPB said that it hopes to better align HMDA data reporting requirements with industry standards for collecting and transmitting data on home mortgage loans and applications. For example, the proposed rule would incorporate certain Mortgage Industry Standards Maintenance Organization data standards into the HMDA reporting requirements. Finally, as part of the rulemaking process, the CFPB said that it will consider ways to improve public access to HMDA data and what new technological tools would make the reporting process more efficient, ease data formatting requirements and help lenders prevent reporting errors.