The Consumer Financial Protection Bureau (CFPB) announced in October 2015, the finalization of a rule that will improve information about consumers’ access to residential mortgage credit by updating reporting requirements of the Home Mortgage Disclosure Act (HMDA).
The revamped rule appears to be weighing heavy on the minds of many in the mortgage industry as is brings about several new data point requirements that must be fulfilled by lenders.
According to the CFPB, lenders are required to report information about home loans for which they receive applications or that they originate or purchase under the HMDA, which was enacted in 1975. The information reported is used by both the public and regulators to monitor whether the housing needs of communities are being met by financial institutions, to assist in distributing public-sector investment in order to attract private investment where it is needed, and to identify possible discriminatory lending patterns.
The National Association Federal Credit Union (NAFCU) Regulatory Affairs Counsel Alexander Monterrubio wrote a letter to the CFPB urging the agency to lift some of the regulatory burden on credit unions by revising the HMDA resubmission guidelines.
Monterrbio pointed out that a considerable number of data points were added to the HMDA requirements at the CFPB’s discretion, and the data set grew to roughly 38 total data points, which is more than double the current reporting requirement.
“NAFCU remains concerned that the tidal wave of regulation related to mortgage lending has significantly altered the market in unintended ways," he wrote. "The HMDA final rule has undeniably required credit unions to revise their mortgage origination and servicing operations, setting off a chain of high-cost and time-intensive system upgrades.”
Monterrubio specifically recommended that the CFPB "mitigate the burden of HMDA data reporting by increasing the error percentage thresholds to reduce the likelihood of triggering the requirement to resubmit data in addition to creating a safe harbor for institutions reporting few entries on their loan/applicant register (LAR)," he wrote in the letter. In addition, he also suggested improving the submission process overall and developing stronger procedures to protect sensitive borrower information.
"As the CFPB has repeatedly acknowledged, credit unions have not engaged in the type of practices that the Bureau is seeking to prevent through a modified and expanded Regulation C," Monterrubio stated. "And yet, the rule’s compliance requirements will undoubtedly add to the regulatory burden felt by credit unions, which drains resources and limits their ability to serve their members. Therefore, NAFCU and our members urge the Bureau to address the overwhelming regulatory burden by increasing the error percentage thresholds to reduce the likelihood of triggering resubmission and creating a safe harbor for institutions reporting few entries on their LAR."
Click here to view the full letter.