Forty-one California organizations joined the California Reinvestment Coalition (CRC) in calling on the Consumer Financial Protection Bureau (CFPB) to bringing greater transparency to the Home Mortgage Disclosure Act (HMDA). The group is urging the regulator to provide better measurements needed for home loans, mortgage modifications, multifamily affordable housing, HELOcs for small businesses as well as a more accurate definition of the Asian category in the HDMA.
HMDA requires lenders to collect and publish data about mortgage lending, and many advocates credit the act with increasing access for communities that had previously been redlined, according to the CRC. Under financial reform, the CFPB was given authority over the law, and the CFPB is gathering public comments on several proposed changes.
Advocates suggested several changes to the current proposal, including:
- Requiring loan modification data to be reported by banks and servicers
- Disaggregating the overly broad “Asian” race category to allow for more accurate reporting
- Capturing more information about languages spoken during a loan transaction
- Disclosing if a borrower is going to own a property with somebody who is not on the loan
- Determining if a borrower received pre-purchase counseling (associated with fewer foreclosures)
- More transparency for whether lending for multi-family rental housing is for affordable housing units and
- Requiring reporting on whether commercial loans and home equity lines of credit loans are used to support small businesses
Community leaders comment on the opportunity to increase transparency and accuracy:
Loan modifications: “In updating HMDA rules, the CFPB can finally increase transparency into mortgage modifications so that it’s clearer if foreclosure relief is actually happening, and if so, in what communities," said Kevin Stein, associate director at CRC. "The City and County of San Francisco already asked for and received this type of modification data from Bank of America, so we know it’s possible.”
Widowed homeowners: “There are 10,000 baby boomers turning 65 every day, and we’re already seeing problems with widowed homeowners losing their homes if they’re listed on title but not on the mortgage," said Maeve Brown, executive director at Housing and Economic Rights Advocates. "To address this problem, lenders should be required to note when they’re making a loan if there is another property owner who will not be listed on the loan, but who has a legal interest in the property.”
Asian category: Jane Duong, director of programs and advocacy at the National Coalition for Asian Pacific American Community Development, commented on the importance of the Asian disaggregation: “Because there is only one ‘Asian’ category, we see that important socio-economic differences and experiences between the many Asian American Pacific Islander communities [like the level of homeownership], are lost. Increasing the categories would allow for a far more accurate analysis of our diverse communities.
Small business loans: Hyepin Im, president and CEO of Korean Churches for Community Development said by asking clients if they are using HELOCs to fund small businesses, they can get a better sense of what's driving defaults. “Many of the families we helped with to avoid foreclosure had used Home Equity Lines of Credit (HELOC) as a source of capital for their small businesses," he added. "When the foreclosure crisis erupted, many of their businesses were impacted, which threatened their ability to pay their mortgages, pay their employees, and keep their businesses open. By asking if a customer is obtaining a HELOC to fund their small business, we can get a better sense of what’s driving defaults, and if access to small business loans is a problem.”
Full disclosure: “Public release of lending data under the Homeowners Mortgage Disclosure Act is a critical safeguard against discrimination, and can also help local governments determine whether lenders are meeting local housing needs.," Charles Evans of Public Counsel noted. "We are concerned that the Consumer Financial Protection Bureau may delay the publication of data or fail to release all lending data to the public, and that could leave consumers vulnerable to fraud or abusive lending practices.”
To read the detailed letter sent to the CFPB by the organizations, click here.