CFPB Considers Expanding HMDA Reporting Requirements
The Consumer Financial Protection Bureau is weighing whether to vastly increase the data collected under the Home Mortgage Disclosure Act in an effort to better monitor trends and abuses in the market.
That includes potentially requiring lenders to explain why they rejected a loan and whether they thought it was a so-called qualifying mortgage.
“We are considering asking financial institutions to include more underwriting and pricing information, such as an applicant’s debt-to-income ratio, the interest rate, the total origination charges and the total discount points of the loan,” CFPB director Richard Cordray told reporters Thursday.
Cordray noted that the HMDA data collected before the financial crisis failed to tip off regulators about the proliferation of teaser rates on subprime loans that led to many defaults and foreclosures.
The CFPB will be forming a review panel to get feedback from industry and other interested parties about the expansion of the HMDA data reporting requirements. Bureau officials insist they are just starting the process to update HMDA reporting and they won’t issue an actual proposal for public comment until the later this year.
Under HMDA, lenders are required to record the number of loans approved and rejected, a loan’s purpose (such as a refinancing), the sex, race and ethnicity of applicants, and the interest rate spread, among other items.
But the Dodd-Frank Act required the bureau to begin adding new data collection points, including total points and fees, the term of the loan, the length of any teaser interest rates and the borrower’s age and credit score.
The CFPB is also weighing going beyond that, potentially asking lenders whether they considered a loan for QM status and to further explain if they rejected a loan.
“We are considering adding a data point on whether the lender considered the loan to be a qualified mortgage,” Cordray said. “This information would help regulators and the public determine how the bureau’s rules are affecting the mortgage market.”
CFPB officials said they are also mindful of the data collection burden this would impose on lenders. The agency said it is considering ways to ease the compliance burden by aligning HMDA data collection with the Uniform Loan Delivery Dataset that lenders use to deliver loans to Fannie Mae and Freddie Mac.