HMDA Reporting Revisions Proposed

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Proposed changes to reporting requirements for the Home Mortgage Disclosure Act are intended to simplify the process while protecting consumer access to credit.

HMDA was enacted in 1975 and requires many lenders to report information about residential loans they take applications on, originate or purchase.

Information that is collected is used by regulators and the public to monitor whether financial institutions are serving the housing needs of their communities, It also helps identify potential discriminatory lending patterns.

While 7,400 financial institutions reported HMDA data on 18.7 million applications in 2012, the information hasn’t kept pace with the mortgage market’s evolution.

An example of this cited by the Consumer Financial Protection Bureau is the inadequate information about loan features that contributed to the crisis such as adjustable rates and interest-only payments.

As part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the CFPB was directed to expand the HMDA dataset.

On Thursday, the bureau announced that a rule has been proposed to update HMDA reporting requirements. The proposal is part of a HMDA rulemaking started in February when a panel of small businesses was convened to provide feedback on possible changes to the regulations.

The rule is intended to improve information reported about the residential mortgage market and shed more light on consumers’ access to mortgage credit.

In an effort to identify potential discriminatory lending practices, the rule proposes that lenders report property values, applicants’ ages and credit scores. In addition, lenders would have to report loan terms, points and fees, and teaser-rate durations.

As an attempt to determine access to credit, lenders would need to provide more information about underwriting and pricing like debt-to-income ratios, interest rates and total discount points. It would require lenders to report on reverse mortgages and home-equity lines of credit. Regulators will use this information to understand how the Ability-to-Repay rule is impacting the market, while the CFPB will use it to monitor developments in specific markets such as multi-family housing, affordable housing, and manufactured housing.

As part of the simplification strategy, the rule would raise the reporting threshold for depository institutions from one to 25 closed-end or reverse mortgages. It would also eliminate reporting on some home-improvement loans. The revised threshold is expected to reduce the number of reporting institutions by a quarter.

Another step in the simplification strategy would be to align HMDA data with industry standards used in processing, underwriting and pricing and also in secondary marketing. HMDA data would be aligned with well established industry standards, including widely used definitions. This alignment is expected to mitigate the burden of reporting and improve the quality and value of reported information.

The CFPB said it is considering how to improve the electronic reporting process using new technological tools to make the data submission process more efficient, ease data formatting requirements and help prevent errors.

One other objective that the bureau is trying to meet is to improve borrower and applicant privacy.

“It is critical that we shed more light on the mortgage market – the largest consumer financial market in the world,” CFPB Director Richard Cordray said in the news release. “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.”

Comments about the rule are being accepted until Oct. 23.

The full proposed rule is online at


Mortgage Daily Staff


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