So as to not overly restrict consumer access to mortgage credit, the Consumer Financial Protection Bureau (CFPB) is easing its reporting requirements for lenders under the Home Mortgage Disclosure Act (HMDA).
Specifically, the CFPB is proposing to exempt lenders that originate fewer than 25 mortgages a year from the HMDA reporting rules. In addition, financial institutions with a large number of reported transactions would be required to submit HMDA data on a quarterly basis rather than an annual basis.
Perhaps more importantly, the CFPB is proposing ways to align HMDA data requirements with well-established industry data standards and improve the quality of the information reported. It is also looking for ways to make it simpler and easier for lenders to provide the required data – and for consumers to access that data.
In looking to improve the electronic reporting process, the bureau is considering what new technological tools would make the data submission process more efficient, ease the data formatting requirements and help financial institutions prevent errors.
The HMDA, which was originally enacted in 1975, requires most lenders to report information about the home loans for which they receive applications or that they originate or purchase. The data furnished by the lenders is used by regulators to determine whether lenders are serving the housing needs of their communities and to identify possible discriminatory lending patterns.
The CFPB became the designated administrator of the HMDA database when Congress passed the Dodd-Frank Act in 2010. What's more, the Dodd-Frank Act directed the CFPB to expand the HMDA dataset to include additional information about loans that would be helpful to better understand certain aspects of the mortgage market.
One of the major challenges in developing automated updating of the HMDA database is creating standard integrations with proprietary loan origination systems that don't jeopardize the integrity of those systems or inadvertently expose proprietary processes.
The challenge in making HMDA data available to the public is developing proper filtering so that certain sensitive customer data that is privy only to lenders and regulators is not inadvertently shared with the public.
In essence, the more mortgage data that is collected, the more measures need to be put in place to ensure that it remains secure.
The proposed rule will be open for public comment through Oct. 22.