CFPB Prepares to Overhaul Home Mortgage Disclosure Act Rules

07 February 2014 Consumer Class Defense Counsel Blog

The Consumer Financial Protection Bureau (CFPB) is preparing to make significant revisions to the regulations promulgated under the Home Mortgage Disclosure Act of 1975 (HMDA)  (Regulation C) by requiring home mortgage lenders to disclose far more information to regulators. In its first step toward these revisions, the CFPB is convening a Small Business Review Panel (as required by the Small Business Regulatory Enforcement Fairness Act) to seek input from small lenders on the proposed changes before commencing rulemaking.

As mandated by Section 1094 of the Dodd-Frank Consumer Financial Protection Act of 2010 (Dodd-Frank), CFPB will revise the HMDA regulations to require lenders to report additional information that could alert regulators to issues in the home mortgage marketplace. This information would include the scheduled term of the loan, total points and fees, rate spreads, information on promotional interest rates, prepayment penalties and non-amortizing features, property value and location information, and the applicant’s or borrower’s age and credit score.

In addition to the revisions mandated by Dodd-Frank, the CFPB is considering asking lenders to include more underwriting and pricing information, such as the  APRs and rate spreads, the risk-adjusted, prediscounted interest rates, total origination charges, and total discount points, to enable regulators to better understand new developments in all segments of the housing finance market. The CFPB is also considering requiring lenders to provide regulators with explanations of rejected loan applications, whether the lenders considered particular loans to be “Qualified Mortgages” under the CFPB’s Ability-to-Repay rule, combined loan-to-value ratios, and borrowers’ debt-to-income ratios.

To alleviate the increased collection and reporting burden that lenders will face, the CFPB is also examining ways to streamline reporting and data entry processes, and to standardize the threshold for reporting requirements for depositary and non-depositary institutions.

Finally, the CFPB unveiled a new publicly-available HMDA tool to provide the general public with better access to certain mortgage data. (Not all information collected by regulators will be made available to the public.) The HMDA tool currently contains data from 2007 through 2012. Using the HMDA tool, information can be filtered by a number of criteria, including geography, loan characteristics, loan purpose, property type,  action taken, denial reason, and the applicant’s and co-applicant’s race, gender and ethnicity. Users can create customized summary tables, download the data in a variety of formats, and save and share results.

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