CFPB Clarifies HMDA Rule, Seeks Feedback

Posted by Patrick Barnard on April 14, 2017 No Comments

The Consumer Financial Protection Bureau (CFPB) has issued a set of clarifications to its 2015 Home Mortgage Disclosure Act (HMDA) rule and is requesting feedback on the proposed changes.

The changes reflect “the bureau’s ongoing and substantive engagement with stakeholders in the marketplace, and will help industry meet its new reporting obligations,” says Richard Cordray, director of the CFPB, in a release.

The 150-page set of changes will be open for public comment for 30 days after its publication in the Federal Register.

The bulk of the new reporting requirements, as per the 2015 Final rule, are to take effect Jan. 1, 2018.

The bulk of the proposed changes simply clarify language as opposed to adjusting the rules themselves. Among the numerous technical corrections and minor changes are clarification of certain key terms, such as “temporary financing” and “automated underwriting system.”

The proposal would also establish transition rules for two data points, loan purpose and the unique identifier for the loan originator. The transition rules would permit financial institutions to report not applicable for these data points when reporting certain loans that they purchased that were originated before certain regulatory requirements took effect.

Dan Berger, president and CEO of the National Association of Federally-Insured Credit Unions (NAFCU), says while the association “appreciates the clarifications … the rule still represents a huge regulatory burden for credit unions.”

“NAFCU strongly encourages the bureau to reconsider its enormous expansion of the HMDA data collection set, raise the exemption thresholds and delay implementation of this rule to give credit unions more time to prepare,” Berger further adds in a statement.

The CFPB dialed back the reporting requirements for the rule after it was first introduced in 2014 by exempting lenders that originate fewer than 25 mortgages a year and by allowing financial institutions with high volume to submit HMDA data on a quarterly basis rather than an annual basis. The bureau also sought to align HMDA data requirements with well-established industry data standards.

Regardless, most mortgage lenders feel over-burdened by the new rules: Not only do they make mortgage operations more complex and costly, they could potentially result in major enforcement action by the CFPB, as well as lawsuits,  due to minor errors resulting from technical glitches.

To view the full proposal, click here.

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