The Consumer Financial Protection Bureau (CFPB) proposed changes last week to facilitate compliance with the 2015 updates to the Home Mortgage Disclosure Act (HMDA) rule.
The 2015 updates to the HMDA were mandated as part of the Dodd-Frank Act. The proposed changes would clarify the information that financial institutions are required to collect and report about their mortgage lending.
“The Home Mortgage Disclosure Act shines a much-needed spotlight on the mortgage market, which is the largest consumer financial market in the world,” CFPB Director Richard Cordray said. “Today’s proposal reflects the Bureau’s ongoing and substantive engagement with stakeholders in the marketplace, and will help industry meet its new reporting obligations.”
HMDA, which was originally enacted in 1975, requires lenders to report information about the home loans for which they receive applications or that they originate or purchase.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 to attract private investment to areas where it is needed, and to identify possible discriminatory lending patterns.
Per Dodd-Frank, the CFPB updated the HMDA regulation in 2015 to improve the quality and type of data reported by financial institutions. Most of the updated requirements take effect in January 2018, and the industry is working to bring operations into compliance.
The proposal contains a number of clarifications, technical corrections, and minor changes to the HMDA regulation. These include clarifying certain key terms, such as “temporary financing” and “automated underwriting system.” The proposal would also, for example, establish transition rules for reporting certain loans purchased by financial institutions. Another proposed change would facilitate reporting the census tract of a property, using a new geocoding tool the CFPB plans to provide online.
The CFPB is seeking input from stakeholders and invites the public to submit written comments on the proposal.