Trade groups say CFPB proposed HMDA rule will increase costs

by MPA05 Nov 2014
Six industry trade groups have submitted a letter to the Consumer Financial Protection Bureau (CFPB), criticizing its proposed rule to amend the Home Mortgage Disclosure Act (HMDA) and saying it “could go beyond the act’s intent and harm competition.”

The leading industry trade groups include the Consumer Bankers Association, Mortgage Bankers Association, American Bankers Association, Consumer Mortgage Coalition, Financial Services Roundtable and Housing Policy Council.

“While we support the purpose of HMDA--to provide information on the availability of credit in the home mortgage market--we are concerned that the proposal to markedly increase HMDA data reporting and coverage goes beyond the law’s purposes in some areas and will unduly harm competition and increase costs in others,” the trade groups wrote in the letter.

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. Under the financial reform, the CFPB was given authority over the law and is currently gathering public comments on several proposed changes.

The proposed change would amend Regulation C, which implements HMDA. The letter addresses single-family real estate finance issues such as, automated underwriting recommendations, borrower paid origination charges, total points and fees, total discount points, interest rate, prepayment penalty, QM status and HELOC first draw amount.

“Moreover, the HMDA data indicates that regulatory costs are taking a toll on smaller lenders,” the letter said. “This year’s HMDA data shows a continuing reduction in the number of reporting lenders from MBA's Quarterly Mortgage Bankers Performance Report, 8,900 HMDA filers in 2006 to 7,190 in 2012, a downward trend that shows no sign of abating. These factors combine to constrain the availability of credit to consumers.”

The trade group suggested these changes to the CFPB:

  • Weigh consequences and value before adding fields
  • Limit Regulation C’s coverage to only home mortgage loans
  • Protect consumers from invasions of privacy and address data security concerns through rulemaking before the contents of the HMDA fields added by the Proposal are released to the public
  • Establish a reasonable implementation schedule for these changes given that technology resources will be consumed by other demands, especially the TILA RESPA Integration through Aug. 1, 2015 and beyond
  • Establish workable data integrity standards for HMDA reporting considering the many new data points proposed to be collected and reported
  • Minimize unnecessary reporting requirements to preserve credit options and avoid unnecessary costs;
  • Conform Regulation C to other rules and to MISMO as proposed
  • Coordinate with other regulators on the Community Reinvestment Act implications of these changes.
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What changes would you suggest to the CFPB?