Nov 22 -- The Bureau of Consumer Financial Protection (Bureau) is conducting an assessment of the 2015 Home Mortgage Disclosure Act (HMDA) Rule and related amendments in accordance with section 1022(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The Bureau is requesting public comment by January 22, 2022 on its plans for the assessment as well as certain recommendations and information that may be useful in conducting the planned assessment.
For over 45 years, the Home Mortgage Disclosure Act (HMDA) has provided the public with information about how financial institutions are serving the housing needs of their communities. Public officials use the information available through HMDA to develop and allocate housing and community development investments, to respond to market failures when necessary, and to monitor whether financial institutions may be engaging in discriminatory lending practices. The data are used by the mortgage industry to inform business practices, and by local communities to ensure that lenders are serving the needs of individual neighborhoods. To maintain the data's usefulness in serving its goals, HMDA and its implementing Regulation C have been updated and expanded over time in response to the changing needs of homeowners and the evolution of the mortgage market.
The Bureau is conducting a voluntary assessment of the final rule on HMDA the Bureau issued in October 2015 (2015 HMDA Final Rule) and related amendments (collectively, the HMDA Rule) in order to evaluate the effectiveness of the HMDA Rule in meeting its stated goals and the purposes and objectives of the Dodd-Frank Act. Section 1022(d) of the Dodd-Frank Act requires the Bureau to conduct an assessment of each significant rule or order adopted by the Bureau under Federal consumer financial law. While the Bureau determined that the HMDA Rule is not a significant rule for purposes of section 1022(d), the Bureau considers the HMDA Rule to be of sufficient importance to support the Bureau conducting a voluntary assessment that complies with the requirements of a Dodd-Frank Act assessment. Pursuant to those requirements, the Bureau must publish a report of the assessment not later than five years after the effective date of such rule or order. The assessment must address, among other relevant factors, the rule or order's effectiveness in meeting the purposes and objectives of title X of the Dodd-Frank Act and the specific goals stated by the Bureau. The assessment also must reflect available evidence and any data that the Bureau reasonably may collect. Before publishing a report of its assessment, the Bureau must invite public comment on recommendations for modifying, expanding, or eliminating the significant rule or order.
To assess the effectiveness of the HMDA Rule, the Bureau intends to focus its evaluation on the following primary topic areas: (1) Institutional coverage and transactional coverage; (2) data points; (3) benefits of the new data and disclosure requirements; and (4) operational and compliance costs. The Bureau recognizes that it faces challenges in its assessment, as it may be difficult to quantify certain components such as the benefits of the HMDA Rule. The Bureau also recognizes that, across stakeholders, there is interest and disagreement over certain aspects of the HMDA Rule, including thresholds. The Bureau has revised the institutional and transactional coverage thresholds that determine whether financial institutions are required to collect, record, and report any HMDA data on closed-end mortgage loans or open-end lines of credit in recent years. The Bureau also recently published a study on thresholds that analyzed differences in lending patterns for lenders below and above the 100-loan closed-end threshold set by the 2020 HMDA Final Rule. The Bureau is inviting public comment on these and other relevant issues as part of its HMDA assessment. The Bureau views the assessment as an opportunity to evaluate whether prior HMDA rulemakings have improved upon the data collected, reduced unnecessary burden on financial institutions, and streamlined and modernized the manner in which financial institutions collect and report HMDA data. The Bureau welcomes comments from stakeholders, in particular information and data that would produce a more robust evaluation of the costs and benefits of the HMDA Rule.
To assess the HMDA Rule, the Bureau plans to analyze a variety of metrics and data to the extent feasible. Feasibility will depend on the data and information available to the Bureau as well as any information and data submitted in response to this request for comment. The Bureau plans to investigate the operational and compliance costs of the rule. The Bureau will work from the methods and findings it published with the cost-benefit analysis in the 2015 HMDA Final Rule. The Bureau will also use comments responding to this request for information to determine whether those methods and findings remain valid. The Bureau is interested in any information about activities and outcomes including the ones listed below and is interested in understanding how these activities and outcomes relate to each other:
(1) Industry outcomes that the HMDA Rule may have affected, including the number and types of reporters, the number of loans, and the dollar amounts for reported open-end lines of credit and closed-end mortgage loans;
(2) The activities undertaken by financial institutions to comply with the HMDA Rule's criteria, as well as the adoption of loan-volume coverage thresholds, adoption of new and revised data points, and revisions to transactional coverage, including mandatory reporting of open-end lines of credit and the adoption of a dwelling-secured standard;
(3) Overall benefits and other outcomes that the HMDA Rule sought to affect, including whether the HMDA Rule has brought greater transparency to the mortgage market, has helped determine whether financial institutions are serving the housing needs of their communities, has assisted public officials in distributing public-sector investment so as to attract private investment to areas where it is needed, assisted in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes, and addressed gaps in the HMDA data regarding certain segments of the market;
(4) An evaluation of the benefits and costs of the new and revised data points, and the benefits and costs of new data reported under the revised coverage thresholds; and
(5) The HMDA Rule's effect on the operational and compliance costs for financial institutions, including activities covered institutions conducted to collect and report new and revised data points.
The Bureau plans to conduct or has begun conducting several research analyses in connection with this assessment. Other research analyses may also be considered as appropriate. In conducting the assessment, the Bureau will evaluate the association between the requirements of the HMDA Rule and the HMDA Rule's stated purposes, goals, and objectives.
The Bureau will consider analysis related to loan originations, applications, prices, and the number of reporters using available data. The currently available data includes HMDA data, third-party servicing data, Fannie/Freddie public loan level data, and the National Mortgage Database (NMDB). In addition, the Bureau is planning on utilizing responses to this request for information as appropriate.
CFPB HMDA data: https://www.consumerfinance.gov/data-research/hmda/
Federal Financial Institutions Examination Council (FFIEC) HMDA page: https://www.ffiec.gov/hmda/default.htm
FR notice inviting public input on HMDA rule assessment: https://www.federalregister.gov/documents/2021/11/22/2021-25330/request-for-information-regarding-the-hmda-rule-assessment