Today, the Consumer Financial Protection Bureau (CFPB) finalized data reporting thresholds under the Home Mortgage Disclosure Act (HMDA) for the nation’s financial institutions. By raising the reporting threshold from 25 to 100 loans, the agency’s final rule would exempt an additional 1,700 banks and nonbanks from having to report basic information about their mortgage lending, including about mortgage loan applications and loan denials. This means these banks will no longer have to report basic information they had to report well before the Dodd-Frank Act passed in 2010 and well before the housing crisis a decade ago. The agency would also exempt more banks from reporting on open-ended lines of credit, such as home equity lines of credit (HELOCs), by moving the thresholds from 100 loans to 200 starting in 2022.
Jesse Van Tol, CEO of the National Community Reinvestment Coalition, released the following statement:
“Today’s rule change is the wrong move at precisely the wrong time. Whenever we come out of the crisis, the public will know less about discrimination in mortgage lending. The CFPB’s rule change is a fundamental setback to transparency in the mortgage marketplace and will make enforcement of the nation’s fair lending laws harder and recovery for low- and moderate-income (LMI) families more challenging.
“Without question, we are in an extraordinary time for the mortgage industry. Mortgage liquidity concerns are looming and lenders and other market participants are applying new overlays and stricter credit requirements for borrowers. But this market still has to function fairly and equitably for LMI, minority and rural consumers, and the CFPB should be looking out for their interests.
“While the CFPB and FHFA announcement yesterday of a Borrower Protection Program is helpful, the CFPB should be using its market-monitoring teams and other tools for what they were designed to do – to find out from industry what exactly is happening in this fast-moving environment, to continue to ensure that consumers are treated fairly and to make timely information about what is happening as well as best practices available to the public.
“Today’s final rule violates HMDA statutory purposes to help the public assess credit needs. NCRC found that a significant number of counties (172 or 5.3%) would experience a drop of 10% or more of applications if the reporting threshold is raised to 100 closed-end loans. About 59% of these counties would be rural. In future years, members of the public will not know whether fewer loans in these counties are due to actual decreases in lending or because the HMDA reporting rules changed. This thwarts the ability to monitor credit access in underserved communities.