CFPB plans to reconsider aspects of mortgage data rule as new HMDA reporting begins
Thursday, January 4, 2018
Ahead of the Christmas holiday, the Consumer Financial Protection Bureau (CFPB) issued a public statement 1 on Dec. 21 announcing that it intends to open a rulemaking to reconsider various aspects of the CFPB’s 2015 HMDA rule, such as the institutional and transactional coverage tests and the rule’s discretionary data points.
|CFPB Acting Director Mulvaney hosting reporters at the CFPB office on Dec. 4, 2017. Source: Twitter @CFPBDirector
More specifically, the rulemaking may: (1) re-examine lending-activity criteria that determine whether institutions are required to report mortgage data; (2) look at adjusting the new requirements to report certain types of transactions; and (3) re-assess the additional information that the rule requires beyond the new data points specified under the Dodd-Frank Act.
In response to this news, CUNA President/CEO Jim Nussle noted, “this is a significant win for credit unions, as CUNA has urged the Bureau for years for relief from HMDA requirements that place a heavy burden on credit unions.” 2
The Carolinas Credit Union League in support of CUNA’s Campaign for Common-Sense Regulation has continued to advocate for this kind of regulatory relief for its member credit unions, most recently, sharing its views on the CFPB's proposed temporary threshold increase for reporting open-end lines of credit. 3 The League has also been diligent over the past year to incorporate HMDA training at various events and conferences for credit unions in both states.
“Revisiting this rule is great news for our credit unions,” said Trichina Pierce, compliance manager/associate counsel for the Carolinas Credit Union League. “The initial rule imposed significant costs that go beyond infrastructure, but into training, systems and additional staffing. Furthermore, preparing for NCUA examinations under this new rule creates great anxiety as the purpose of reporting additional data under HMDA isn’t clear. This creates an unnecessary adversarial situation between credit unions and examiners that hopefully can be remedied during this second review of the rule.”
In its statement, the CFPB also announced it does not intend to require data resubmission unless data errors are material or assess penalties with respect to errors for data collected in 2018 and reported in 2019 under the Home Mortgage Disclosure Act (HMDA). The CFPB recognizes the significant systems and operational challenges needed to meet the impending requirements under the rule, and expects that any supervisory examinations of 2018 HMDA data will be diagnostic, to help institutions identify compliance weaknesses, and will credit good-faith compliance efforts.
As of January 1, 2018, financial institutions now have to submit HMDA data collected in 2017 in accordance with current Regulation C and using the Bureau’s new online platform. The online platform will be used to upload financial institutions’ loan and application registers, review edits, certify the data, and submit the data for the filing year.
HMDA, which was originally enacted in 1975, requires many lenders to report information with respect to applications they receive for certain types of mortgage loans and certain loans that they purchase. The Dodd-Frank Wall Street Reform and Consumer Protection Act directed the Bureau to expand the data collected and reported under HMDA to include additional information regarding, for example, mortgage loan underwriting and pricing, and authorized the Bureau to require other data. To that end, the Bureau issued a rule in 2015 that requires financial institutions to collect and report additional mortgage information beginning on January 1, 2018. In August 2017, the Bureau issued a final rule making technical corrections, clarifying certain reporting requirements, and increasing the threshold for collecting and reporting data on home equity lines of credit for two years.
1 CFPB, “Statement with respect to HMDA implementation,” December 21, 2017.
2 CUNA, “CUNA advocacy leads to HMDA reporting relief from CFPB,” December 21, 2017
3 CCUL Comment Letters, "CCUL on HMDA Temporary Threshold Increase," July, 31, 2017