House votes to exempt more firms from HMDA rule

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WASHINGTON — The House has voted to exempt community banks, small credit unions and nonbank mortgage lenders from new Home Mortgage Disclosure Act reporting requirements that went into effect Jan. 1.

The bill, sponsored by Rep. Tom Emmer, R-Minn., is aimed at providing relief to smaller institutions from the Consumer Financial Protection Bureau’s 2015 rule that had expanded HMDA data points.

The CFPB rule only exempted mortgage lenders that originate fewer than 25 closed-end mortgages and fewer than 100 home equity loans over a two-year period. Under the Emmer bill, those reporting thresholds would be expanded to 500 closed-end mortgages and 500 home equity loans in a two-year period.

The House passed the HMDA relief bill by a 243-184 vote Thursday evening.

The CFPB rule had drawn criticism because it requires lenders to report 48 data elements, nearly double the previous total.

In terms of regulatory burden, "that is a lot, especially for a community bank," said Ron Haynie, senior vice president at the Independent Community Bankers of America.

The American Bankers Association had expressed concerned that the new HMDA requirements might force small banks out of the mortgage business.

"So great is the cost of compliance with these new regulations that many small banks may be forced to reconsider their ability to continue to make mortgage and other covered loans," wrote James Ballentine, executive vice president for the ABA, in a letter to lawmakers.

But consumer advocates said the bill undermines the intent of HMDA requirements.

HMDA “was enacted to protect Americans’ civil rights, determine whether financial institutions are serving the housing needs of their communities, and to assist public officials fairly allocate resources — goals shared by Americans of all political stripes,” said Scott Astrada, federal advocacy director at the Center for Responsible Lending. “The members of Congress who voted to pass HR 2954 voted to critically undermine these goals and to let a wide range of financial institutions hide their actions behind a veil of secrecy.”

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