The Consumer Financial Protection Bureau (CFPB) aims to simplify the reporting process for financial institutions by proposing a rule to improve information reported about the residential mortgage market. The goal of the proposed rule is to shed more light on consumers’ access to mortgage credit by updating the reporting requirements of the Home Mortgage Disclosure Act (HMDA) regulations.
“It is critical that we shed more light on the mortgage market – the largest consumer financial market in the world,” said CFPB Director Richard Cordray. “The Home Mortgage Disclosure Act helps financial regulators and public officials keep a watchful eye on emerging trends and problem areas in the mortgage market. Today’s proposal would help us understand better how to protect consumers’ access to mortgage credit while simplifying the reporting requirements for financial institutions.”
Enacted in 1975, HMDA requires many lenders to report information about the home loans for which they receive applications or that they originate or purchase. The public and regulators can use the information to monitor whether financial institutions are serving the housing needs of their communities and identify possible discriminatory lending patterns. In 2010, the Dodd-Frank Act directed the CFPB to expand the HMDA dataset to include additional information about loans.
In 2012, 7,400 financial institutions reported information about approximately 18.7 million mortgage applications and loans. However, the HMDA dataset has not kept pace with the market’s evolution, such as adjustable-rate mortgages and non-amortizing loans. To rectify this concern, the CFPB proposed rule would expand to include:
- Improving market information- This new information includes, for example: the property value; term of the loan; total points and fees; the duration of any teaser or introductory interest rates; and the applicant’s or borrower’s age and credit score.
- Monitoring access to credit
In addition the CFPB is looking to simplify HMDA reportingt requirements for financial institutions by:
- Standardizing the reporting threshold
- Easing reporting requirements for some small banks
- Aligning reporting requirements with industry data standards
- Improving the electronic reporting process
- Improving data access
The proposed rule will be open for public comment through October 22, 2014.
Copy of Proposed Rule