HMDA Rule Released, Many Small Depositories Will Be Exempt


The Consumer Financial Protection Bureau (CFPB) has issued its final
rule outlining information lenders must report under the Home Mortgage
Disclosure Act (HMDA)
.  CFPB said the
rules that have been in place regarding HMDA data have not kept pace with the
market’s evolution, For example, not providing adequate information about
certain loan features that helped contribute to the mortgage crisis, such as
adjustable-rate mortgages and non-amortizing loans.

originally enacted in 1975, requires many lenders to report information about
the home loans for which they receive applications or that they originate or
purchase. In 2014, 7,062 financial institutions reported information about
approximately 11.9 million mortgage applications, preapprovals, and loans. The information
is available to the public and regulators to monitor whether financial
institutions are serving the housing needs of their communities, to assist in distributing
public-sector investment to attract private investment to needed areas, and to
identify possible discriminatory lending patterns.

When Congress
passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 it
included a mandate for CFPB to expand the HMDA dataset to include additional
information about applications and loans that would be helpful to better
understand the mortgage market. The CFPB convened a panel of small businesses
to provide feedback on potential changes to the rule in February 2014, and
issued a proposed rule which updated HMDA reporting requirements in July 2014.

 “The Home Mortgage Disclosure Act helps
financial regulators, the public, housing officials, and even the industry
itself keep a watchful eye on emerging trends and problem areas in the nation’s
mortgage market – the largest consumer financial market in the world,” said
CFPB Director Richard Cordray. “With today’s final rule we are shedding more
light to foster better understanding of the market, and also ensuring that
lenders have sufficient time to come into compliance.”

final rule changes the data financial institutions are required to provide. The
changes include:

  • Improving market information: In order to improve public
    understanding of market conditions and identify emerging risks and
    potential discriminatory lending practices in the marketplace HMDA
    requires new information that includes the property value, term of the
    loan, and the duration of any teaser or introductory interest rates.
  • Monitoring fair lending compliance
    and access to credit:
    information will now be required on loan underwriting and pricing
    including debt-to-income ratios, interest rates and points. This
    information will enhance the ability to screen for possible fair lending
    problems and focus attention on the riskiest areas where those problems
    are most likely to exist. It will also enable the Bureau and other
    stakeholders to monitor developments in specific markets such as
    multifamily housing, affordable housing, and manufactured housing.

The Bureau said it is
working with other federal agencies to streamline the reporting process and
burden for lenders. In line with this goal the final rule will:

  • Ease reporting requirements for
    some small banks and credit unions:
      The new rule continues to exclude small
    depository institutions that are located outside a metropolitan
    statistical area from the requirements and small institutions with low
    loan volume will no longer have to report HMDA data. The new threshold
    will reduce the overall number of banks and credit unions required to
    report HMDA data by an estimated 22 percent.
  • Align reporting requirements with
    industry data standards:
    Many financial institutions are collecting the same or similar data as
    required by HMDA for their own processing, underwriting, and pricing of
    loans, or to facilitate the sale of loans on the secondary market. Many of
    the amended requirements align with well-established industry data
    standards, including definitions that are already in use by a significant
    portion of the mortgage market.

final rule adopts many of the provisions proposed in 2014 but also incorporates
a number of changes that evolved out of public comments. For example, the final
rule does not include several of the data points proposed by the Bureau (such
as the “risk-adjusted, pre-discounted interest rate”), and does not adopt the
proposal to require reporting of all dwelling-secured transactions made for
commercial purposes.

CFPB said
it is looking at ways to improve public access to HMDA data modified to protect
applicant and borrower privacy. It continues to update an online tool that
helps the public better use available mortgage loan data and which allows users
to filter information, create summary tables, download the data, and save their

Most of
the provisions of the final rule will take effect on January 1, 2018. Lenders
will collect the new information in 2018 and then report this information by March
1, 2019.

David H. Stevens, President
and CEO of the Mortgage Bankers Association (MBA) commended CFPB for what he
said is the final mortgage-related rule from Dodd-Frank, and said MBA members
appreciate the long lead-time to update their reporting systems.  “While there will be new reporting requirements
for some market segments, we appreciate that the Bureau is making MISMO
technology standards a core part of the new reporting. MBA wants to reiterate
its concerns about data security and consumer privacy in light of all the
additional detailed information on consumers that the government will be
collecting and disclosing under the new HMDA guidelines. In the months to come,
we look forward to working closely with the Bureau to ensure that consumers’
data is protected.” 

copy of the final rule is available at:

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