Consumer Financial Protection Bureau March 15, 2016 Draft, Sensitive and Pre-Decisional Not for External Distribution
Outline Home Mortgage Disclosure Act 1) Background 2) Rule Making 3) Changes Coming 4) Improvements to public access of HMDA Draft, Sensitive and Pre-Decisional Not for External Distribution 2
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HMDA provides sunlight to the marketplace Enacted in 1975, HMDA was passed to increase public scrutiny and access to credit Enacted in 1975, HMDA is a reporting and disclosure law. HMDA is used to evaluate compliance with other statutes (CRA, ECOA, FHA) HMDA is implemented through Regulation C and HMDA rulemaking authority transferred to the CFPB on July 21, 2011 Regulation C requires most lenders to collect, report and publicly disclose data about loan applications and home purchase, refinance and home improvement loans Variables and reporting have evolved over time Draft, Sensitive and Pre-Decisional Not for External Distribution 7
Statutory and Regulatory Purposes of HMDA Data HMDA Purposes Provide the citizens and public officials of the U.S. sufficient information: to enable them to determine whether covered institutions are filling their obligations to serve the housing needs of the communities and neighborhoods in which they are located; and to assist public officials in distributing public sector investments in a manner designed to improve the private environment. Regulation C Purposes Assist in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes. HMDA data enhances our understanding of the mortgage market. Draft, Sensitive and Pre-Decisional Not for External Distribution 8
What are some of the current strengths and limitations of HMDA data? Strengths: Only comprehensive mortgage dataset with race/ethnicity and income Covers a majority of housing-related loans Clean data overall Limitations: No performance data Difficult to match first and second loans No rural data Difficult to understand the channel - no mortgage broker flag Difficult to control for creditworthiness Difficult for the public to use the data that s made available Released to the public with a 9- to 21-month lag, in year increments Mortgage Data Panel October 6, 2011 9
Data variables in HMDA Current HMDA reporting Loan level: Application loan number and date Loan type, purpose and amount Action taken on the application and date HOEPA flag Lien status (first, subordinate, unsecured) Rate spread on higher-priced mortgages Property: Originator: Location by MSA, state and census tract Type Filed by lender Borrower/ Applicant: Other information: Race, ethnicity Gender Annual Income Owner occupancy, request for preapproval, reason for denial Certain fields redacted to preserve applicant s privacy (currently the application date, loan value is rounded) 10
An overview of the CFPB rulemaking process The Bureau will issue a proposed rule to modify Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The Bureau will consider and address public comments and issue a final rule. Once the rule is effective, data collection / reporting will commence. SBREFA Proposed Rule Public Comment Period Final Rule Implementation Period Data Collection The Regulatory Flexibility Act, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) and the Dodd-Frank Act, requires the Bureau to convene a Small Business Review Panel before proposing a rule that would have a significant economic impact on a substantial number of small entities. The CFPB makes the SBREFA documents public. Industry will build, buy or refine data collection systems to comply with the final rule. 11
Summary of Reportable HMDA Data Data Point (1) Legal Entity Identifier (LEI) (2) Universal Loan Identifier (ULI) (3) Application Date Status Modified Modified Existing (4) Loan Type Existing (5) Loan Purpose Modified (6) Preapproval Modified (7) Construction Method Modified Data Point (8) Occupancy Type Status Modified (9) Loan Amount Modified (10) Action Taken and (11) Action Taken Date (12) Property Address (13), (14), and (15) Property Location (16) Ethnicity, (17) Race, and (18) Sex Existing Existing Modified (19) Age Data Point Status (20) Income Existing (21) Type of Purchaser Modified (22) Rate Spread Modified (23) HOEPA Status Existing (24) Lien Status Modified (25) Credit Score (26) Reason for Denial (27) Total Loan Costs or Total Points and Fees Modified This chart summarizes requirements under HMDA and Regulation C, and does not itself establish any binding obligations. It is intended only to act as a quick reference and not as a substitute for the regulation or its official commentary. Always consult the regulation text and official commentary for a complete understanding of the law. SENSITIVE AND PRE-DECISIONAL
Summary of Reportable HMDA Data (continued) Data Point Status Data Point Status Data Point Status (28) Origination Charges (29) Discount Points (30) Lender Credits (31) Interest Rate (32) Prepayment Penalty Term (33) Debt-to- Income Ratio (34) Combined Loan-to-Value Ratio (35) Loan Term (36) Introductory Rate Period (37) Non- Amortizing Features (38) Property Value (39) Manufactured Home Secured Property Type (40) Manufactured Home Land Property Interest (41) Total Units (42) Multifamily Affordable Units (43) Application Channel (Submission of Application and Initially Payable to Your Institution) (44) Mortgage Loan Originator NMLSR Identifier (45) Automated Underwriting System (46) Reverse Mortgage (47) Open-End Line of Credit (48) Business or Commercial Purpose This chart summarizes requirements under HMDA and Regulation C, and does not itself establish any binding obligations. It is intended only to act as a quick reference and not as a substitute for the regulation or its official commentary. Always consult the regulation text and official commentary for a complete understanding of the law.
Data Submission Data Collection Effective Dates HMDA Rule Key Dates Timeline 2016 2017 2018 2019 2020 No new regulatory requirements go into effect Q1 Q4 Collect 2016 data as required under the current rule 1 (for reporting in 2017) 1/1 3/1 Submit 2015 data as required under the current rule, 1 and submit to the Federal Reserve Board 1/1 Effective date for excluding low volume depository institutions from coverage Q1 Q4 Collect 2017 data as required under the current rule 1 (for reporting in 2018) 1/1 3/1 Submit 2016 data as required under the current rule, 1 and submit to the Federal Reserve Board 1/1 Effective date for most provisions related to institutional and transactional coverage, and data collection, recording, reporting, and disclosure Q1 Q4 Collect 2018 data as required under the new rule 2 (for reporting in 2019) 1/1 3/1 Submit 2017 data as required under the current rule, 1 and submit to the CFPB 1 Data as required under the current rule on this timeline is defined as the data required to be collected and reported under Regulation C, prior to amendments to 1003.4 effective on January 1, 2018. 1/1 Effective date for changes to enforcement provisions and additional amendments to reporting provisions Q1 Q4 Collect 2019 data as required under the new rule 2 (for reporting in 2020) 1/1 3/1 Submit 2018 data as required under the new rule, 2 and submit to the CFPB 1/1 Effective date for quarterly reporting provisions Q1 Q4 Collect 2020 data as required under the new rule 2 (for reporting in 2021 and, if FI is quarterly reporter, 2020) 1/1 3/1 Submit 2019 data as required under the new rule, 2 and submit to the CFPB 4/1 5/30 Quarterly FI reporters report Q1, 2020 data as required under the new rule, 2 and submit to the CFPB 2 Data as required under the new rule on this timeline is defined as the data required to be collected and reported under Regulation C, as amended by the HMDA Rule issued on October 15, 2015.
Regulatory Implementation support available SENSITIVE AND PRE-DECISIONAL
Improving the information, collection and release of the data SENSITIVE AND PRE-DECISIONAL
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