Since his inauguration, President Trump has shown policy changes to the mortgage industry is one of his top priorities. From indefinitely suspending a cut to mortgage insurance rates [1] within an hour of being sworn in to recent speculation on what his tax reform means for home buyers, everyone seems to be discussing the impending effects of regulation and policy changes, including Lenders One Mortgage Barometer, who conducted a recent survey of 200 mortgage professionals. Of those polled, 73 percent share President Trump’s sentiment that policy changes would be beneficial to the lending market. One specific regulation that adds a burden to institutions is federal requirements on collecting and reporting mortgage data as outlined by the Home Mortgage Disclosure Act (HMDA).
The HMDA was enacted in 1975 in light of concerns that some financial institutions were not providing adequate home financing to qualified buyers in urban neighborhoods. Designed to promote transparency, it required lenders to disclose the details of loan applications, such as the applicant’s race, gender, ethnicity, gender, loan amount, type of dwelling, and whether or not the loan was awarded.
Data collection, however, costs money, and while 42 percent of those surveyed said that their primary investment was in operational changes, such as hiring new staff, and maintaining compliance and software support, 32 percent of those said they were having a difficult time securing resources to collect, analyze, and report the data. This could be one reason for the rising cost of loans, and 65 percent of those surveyed said they believed loan costs would continue to climb.
One way to lower the cost for collecting, maintaining, and reporting the data required by the HMDA is the automation that comes when institutions close mortgages electronically through e-closings. However, 39 percent of surveyed lenders are not currently using e-closings, and only one-third of those expect to implement it within the next one or two years. Of the 61 percent that said they were using e-closing, two-thirds have been in business over 10 years, suggesting that smaller lenders with fewer resources were the primary group struggling to keep up with data collection requirements.
While it remains unclear which, if any, of President Trump’s future policy changes will effect HMDA or data reporting requirements, it is clear from the survey that a large majority (65 percent) of mortgage professionals are “very prepared” for some sort of change, however that may look.
Methodology
The Lenders One Mortgage Barometer was conducted online among a random sample of 200 mortgage lenders. Fieldwork was conducted by independent research firm Ebiquity between January 4 and 14, 2017. The margin of error associated with the sample of n=200 is +/- 6.9 percent at a 95 percent confidence level.