The Consumer Financial Protection Bureau (CFPB) has announced the issuance of a Request for Information (RFI) [1] to seek input on rules implementing the Home Mortgage Disclosure Act (HMDA). The CFPB’s evaluation will strengthen its ability to maintain a fair, competitive, and non-discriminatory mortgage market.
The CFPB finalized changes to the HMDA regulations in 2015, expanding the types of data reported by lenders to monitor fair lending compliance. The 2015 rule also improved the HMDA reporting process by aligning requirements with industry data standards, enhancing tech interface, and easing requirements for some small banks and credit unions.
In issuing 12 CFR Part 1003, the CFPB seeks comment from the public to ensure it can use data collected under the HMDA Rule to meet the rule’s goals most effectively.
The CFPB is seeking comments on its plans to assess the effectiveness of the HMDA Rule, specifically, through:
- Institutional coverage and transactional coverage;
- Data points;
- Benefits of the new data and disclosure requirements; and
- Operational and compliance costs.
The RFI will remain open for 60 days after publication in the Federal Register, and follows an August 2021 HMDA report, which found that mortgage lenders more often deny credit and charge higher interest rates to Black and Hispanic applicants than they do to White applicants. A July 2021 CFPB analysis of lending patterns within the Asian American Pacific Islander (AAPI) communities found considerable discrepancies among AAPI communities, with some subgroups showing mortgage denial rates similar to those of Black and Hispanic borrowers. The CFPB has also made use of the enhanced data in a May 2021 report studying the financing of manufactured housing loans.
Originally drafted in 1975, HMDA requires lenders to report information about the home loans for which they receive applications or that they originate or purchase. The public and regulators can use the information 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 needed, and to identify possible discriminatory lending patterns. The CFPB maintains an online tool that provides access to the public loan data, allowing users to filter information, create summary tables, download the data, and save their results.