WASHINGTON — The Consumer Financial Protection Bureau on Thursday proposed a series of clarifications to its 2015 Home Mortgage Disclosure Act rule, which many in the mortgage industry have said is too onerous.
The HMDA "shines a much-needed spotlight on the mortgage market, which is the largest consumer financial market in the world,” CFPB Director Richard Cordray said in a press release. “Today’s proposal reflects the Bureau’s ongoing and substantive engagement with stakeholders in the marketplace, and will help industry meet its new reporting obligations.”
The proposal includes two “transition rules” for two new data points — loan purpose and the unique identifier for the loan originator — under certain circumstances.
Companies reporting HMDA data can enter “not applicable” for the unique originator identifier for loans originated before January 2014, as well as for certain commercial loans issued before January 2018. Banks may also not report the loan purpose in certain cases, such as short-term loans to finance a home construction meant-for-sale.
The proposal also makes some technical accommodations for "temporary financing” — that is, financing the construction of a home that will be financed through more traditional means at a later time.
The bureau said it will also make a geolocation tool available for HMDA reporting companies to use in reporting the census tract of mortgages and applications.
The HMDA, which was initially passed in 1975, requires mortgage issuers — including banks, credit unions, savings associations and nonbank mortgage originators — to track certain data about the mortgage originations, applications, applicants and the sale of mortgage loans.
Dodd-Frank modified the law by transferring authority for collecting that data from the Federal Reserve to the CFPB, and also stipulated that certain additional information must be collected, such as the age of applicants, points and fees associated with origination, interest rates, and value of real estate pledged as collateral, among other data.
The CFPB issued a final rule in October 2015 implementing those changes, but the industry quickly criticized it as too costly, despite concessions the bureau made after industry pushback against its initial proposal.