CFPB seeks public feedback on impact of HMDA rule

The Consumer Financial Protection Bureau is seeking comment on an agency rule implementing changes to the Home Mortgage Disclosure Act to evaluate whether it is meeting HMDA's stated goals of detecting discrimination in mortgage lending.

The CFPB on Tuesday issued a request for information as part of what it called “a voluntary assessment” of whether the 2015 final rule is meeting the objectives of the Dodd-Frank Act, which reformed the mortgage disclosure law. Congress enacted HMDA in 1975 to root out discrimination in mortgage lending.

The bureau said the request comes on the heels of an August report that found mortgage lenders charge higher interest rates and deny credit to Black and Hispanic applicants more than white applicants.

"This evaluation will strengthen the CFPB’s ability to maintain a fair, competitive, and non-discriminatory mortgage market," the bureau said in a press release.

The agency said it welcomes particular information and data that “would produce a more robust evaluation of the costs and benefits of the HMDA Rule.”

“The Bureau views the assessment as an opportunity to evaluate whether prior HMDA rulemakings have improved upon the data collected, reduced unnecessary burden on financial institutions, and streamlined and modernized the manner in which financial institutions collect and report HMDA data,” it said in the request for information.

Major changes have been made to HMDA reporting in recent years, turning the rule into a political football.

In 2018, a regulatory relief bill that former President Donald Trump signed gave 85% of all banks relief from expanded HMDA data fields mandated by Dodd-Frank.

In addition, former CFPB Director Kathy Kraninger issued a 2020 final HMDA rule that eased reporting requirements for some small lenders. That rule permanently raised the reporting threshold for closed-end mortgage loans to 100 loans, up from 25 in the previous two years.

Still, the CFPB said certain provisions of the 2020 rule, including the increase in the open-end coverage threshold, “are not being considered under this assessment.”

Financial institutions are required under Regulation C, HMDA's implementing regulation, to collect and report 22 data points with optional reporting of one data point: the reasons for the denial of a loan.

The 2015 HMDA rule revised certain pre-existing data points and added 13 new ones including the rate spread for all loans and the total points and fees on a loan. The 2015 rule also called for the use of a balancing test to determine whether and how HMDA data should be modified for public disclosure.

The current request for input will focus specifically on four areas: institutional coverage and loan-volume thresholds, transactional coverage, data points and disclosure and reporting requirements.

Several changes have been made to the HMDA reporting thresholds in recent years.

In 2017, the CFPB temporarily increased the open-end coverage threshold from 100 to 500 open-end lines of credit, and extended that temporary increase for two additional years. Starting on Jan. 1, 2022, financial institutions originating at least 200 open-end lines of credit in each of the two preceding calendar years must report HMDA data.