On April 25, 2017-the CFPB issued a proposed clean-up rule to correct and clarify the 2015 rule (that expanded the data to be collected and reported by lenders regarding borrowers) to become effective January 1, 2018.
Brief overview:
Lenders are to collect the new data (see complete A Regulatory and Reporting Overview Reference Chart of requested information) required by the rule for loan actions on or after January 1, 2018, and they will need to report this data by March 1, 2019. The new HMDA rule requires reporting on 48 data fields-adding 25 new data fields to the current 23-but also modifying 20 of the existing fields. The new data fields include those mandated by the Dodd-Frank Act, as well as fields required by the CFPB under its discretionary authority. Some of the new HMDA fields include:
- Age of borrower and credit score;
- Borrower’s debt-to-income (DTI) ratio;
- Borrower-paid origination charges;
- Interest rate; and
- Lender credits;
Applicable financial institutions will be required to collect, record and report information for approved-but-not-accepted preapproval requests for home purchase loans (the collection, recording and reporting of this information is currently optional).
Also-beginning in 2020-institutions that reported a combined total of at least 60,000 applications and covered loans in the preceding calendar year will be required to report data quarterly. The first quarterly submission will be due by May 30, 2020.
As of the time of this log post, I understand private consumer identification information (name, ss#, address, etc) will remain private and not be released to the public.
Potential impact:
- Expensive implementation costs for systems and business process changes immediately on the heels of the implementation of the TILA-RESPA Integrated Disclosure (TRID) rule;
- Confidential information-such as credit scores, if improperly released, could cause significant harm to borrowers’ claims against lenders, and even undermine homeownership;
- Increased litigation risk. HMDA has been a major source of fair lending claims in the past, and the new data will allow greater analysis of application and loan data to evaluate impacts on protected classes. While HMDA’s purpose is to shine light on lending practices, data can be misused to present unfair claims-forcing costly litigation defense, and/or settlements and causing significant reputational harm.
Home Mortgage Disclosure Act (HMDA)/Reg C – Frequently Asked Questions such as:
- Are “fix and flip loans” reportable for HMDA purposes?
- Can you be more specific regarding reporting ethnicity and race for loans purchased?
- Does “Preapproval”, when the final loan disposition is “Approved but Not Accepted”, also mean “Preapproval Mailings”?
Source: The New Home Mortgage Disclosure Act (HMDA) Rule.
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