The Consumer Financial Protection Bureau (CFPB) amended the Home Mortgage Disclosure Act (HMDA) rule last week, temporarily changing reporting requirements and clarifying the information that financial institutions are required to collect and report about their mortgage lending.
Under rules that are scheduled to take effect in January 2018, financial institutions would have been required under HDMA to report home-equity lines of credit if they made 100 such loans in each of the last two years. The CFPB has now increased that threshold to 500 loans through calendar years 2018 and 2019 so that the bureau can consider whether to make a permanent adjustment.
This temporary increase in the threshold will provide time for the bureau to consider whether to initiate another rulemaking to address the appropriate level for the threshold for data collected beginning Jan. 1, 2020.
Also, certain key terms, such as “temporary financing” and “automated underwriting system,” have been clarified. In addition, the changes establish transition rules for reporting certain loans purchased by financial institutions.
“The Home Mortgage Disclosure Act is a vital source of information on the health and fairness of the mortgage market,” CFPB Director Richard Cordray said. “Today’s amendments show that the consumer bureau is committed to ensuring that financial institutions are able to comply with the rule, and to promoting transparency across the largest consumer financial market in the world.”
The Home Mortgage Disclosure Act—originally enacted in 1975—requires most lenders to report information about the home loans that they originate or purchase, as well as applications received. Banking regulators and the public can use this data 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.
As directed by the Dodd-Frank Act, 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.