In order to better monitor the mortgage market, the Consumer Financial Protection Bureau (CFPB) is planning to expand the information mortgage lenders are required to report under the Home Mortgage Disclosure Act (HMDA).
Currently, the HDMA database, a leading source of information about the mortgage market, includes basic information such the name of the lender; the type and general location of the property; and the race, ethnicity and sex of the applicant. It also includes information about the loan amount and whether the loan is for purchasing a home, refinancing or home improvement.
HMDA was enacted in 1975 to help regulators ensure that lenders were meeting the housing needs of their communities and providing access to credit. Later, it was expanded to capture information that could be used for uncovering discriminatory lending practices.
More recently, the Dodd-Frank Act, in effect, made the CFPB the steward of the HDMA database and reporting rules. As a result of the major changes to the mortgage market since the financial crisis, the CFPB now sees the need to expand the database, so that it can get a better read on market trends and measure the impact of its rulemaking.
As such, the CFPB is considering requiring lenders to report additional information including the length of the loan, total points and fees, the length of any teaser or introductory interest rates, and the applicant or borrower's credit score.
In addition, the CFPB is considering asking lenders to provide additional underwriting and pricing information, such as the interest rate, the total origination charges and the total discount points of the loan.
What's more, the bureau is considering asking lenders to include an explanation of why a particular loan application was rejected – or, if approved, whether the lender considered the loan a ‘qualified mortgage’ upon origination. It is also considering asking lenders to provide each borrower's debt-to-income ratio, to see whether lenders are adhering to the bureau's ability-to-repay rules.
Before the CFPB makes any changes, however, it will first convene a panel of small businesses, which will provide feedback. Once this review panel makes its recommendations, the CFPB will then gather input from other industry stakeholders and the public, before issuing a final proposed rule.
The CFPB is also looking to standardize the HMDA reporting process by requiring all lending institutions to furnish their data in the same format. This could be achieved through the development of an online interface that would allow lenders to connect their software to a CFPB intake system. By aligning the HMDA data with established and proven data standards, the bureau aims to not only reduce the burden of reporting for lenders, but also improve the overall quality of the data.
As part of this, the CFPB is considering adjusting the thresholds that determine which lenders are required to report data and which are exempt. Currently, all banks, savings associations and credit unions that meet certain conditions must submit annual reports even if they make only a single loan. However, non-bank mortgage lenders are often only required to report if they make 100 loans and meet other conditions. The bureau says it is considering requiring all banks and non-banks – if they meet certain conditions – to report HMDA data if they make 25 or more loans in a year.
In order to protect consumers' personal information and prevent fraud, some of the data collected (including the borrower's name and other identifiers) would not be available to the public, the CFPB notes.
The CFPB, however, will make most of the data available to the public through its new HMDA tool, which currently gives users access to mortgage data for 2007 through 2012. Using this tool, consumers and regulators alike can filter the data, so they only see the information they want. For example, they can filter by geography (state, metropolitan area, county and census tract), loan characteristics and property type.
Users can also compare refinances, home purchases and home improvement loans over the past few years, or see county-level trends in federally related mortgages. In addition, users can download the summary tables and the underlying HMDA data in the format of their choice.
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