The proposed 500-loan threshold risks missing out on rural lending data
The proposed loan threshold for Home Mortgage Disclosure Act (HMDA) data submission requirements in Senate Bill S.2155 should be lowered given the risk of missing out on critical data, according to a white paper released by automated mortgage compliance software provider QuestSoft.
QuestSoft founder and President Leonard Ryan and VP of Compliance Loretta Kirkwood reviewed historic HMDA data in preparing the report.
Under the SB S.2155, the reporting threshold for expanded data submission is raised from 25 to 500 originations for banks and credit unions only. The new threshold is not proposed for non-depository lenders.
According to the white paper, while the proposed 500-loan threshold does not significantly affect expanded reporting aggregates in urban areas, it does pose the risk of not reporting critical data elements from depository institutions that cater to rural lending. The white paper recommended the reduction of the threshold to 250 to ensure sufficient data is available for peer comparisons and to identify housing-related risks in these markets.
Additionally, the white paper found that there is no evidence that the proposed thresholds will create a group of depository institutions that revert to pre-mortgage crisis lending practices, contrary to a primary argument of the bill’s opponents.
Sen. Elizabeth Warren (D-Mass.) previously spoke against the pending bank deregulation bill and predicted that another financial crisis will occur if the bill is passed.
S.2155, or the Economic Growth, Regulatory Relief, and Consumer Protection Act, was introduced in the Senate in September.