As Trump Takes Aim at Consumer Protections, Lending Regulators Dig In

Mortgage lenders are bracing for the impact of the new Home Mortgage Disclosure Act (HMDA) Rule, which will require lenders to double the number of data fields reported to the Consumer Financial Protection Bureau (CFPB) starting Jan. 1, 2018. That’s just a few short months away.

Some of the new data fields lenders must report include the borrower’s age and credit score, the mortgage loan originator NMLS identification, the combined loan-to-value ratio, the borrower’s debt-to-income ratio, borrower-paid origination charges, discount points, lender credit, interest rate and more.

Impacts: Privacy Concerns and Litigation Risk

What’s the impact? They are broad, reports the Mortgage Bankers Association (MBA), and range from extensive implementation costs to increased litigation risk and privacy and data security concerns. “This new HMDA rule will bring major challenges to the residential mortgage industry,” the organization stated.

The goal of the new rule, CFPB officials said, is to strengthen the consumer finance market. “Home-equity lines of credit worsened the foreclosure crisis that swept the country in 2008 and 2009,” said CFPB Director Richard Cordray. “We need to keep track of the responsible use of these loans for consumers, but after hearing from community banks and credit unions we want to reconsider whether that goal can be achieved with a higher reporting threshold.”

CFPB has been updating the Home Mortgage Disclosure Act since late 2015 to improve the types of data and quality of data reported by financial institutions. The industry is fed up. “MBA believes the CFPB should consider delaying the rule’s implementation – or at minimum delaying enforcement pending completion of a testing and transition period,” stated the MBA.

Consumer Protection Rules Come Under Trump Administration Scrutiny

CFPB Director Richard Cordray, a Democrat, has been feeling the heat from the Trump Administration. But instead of backing off of consumer protections, the agency has ramped them up, the New York Times has reported: “While many federal agencies have begun to loosen the reins on the companies they regulate, the Consumer Financial Protection Bureau, born out of the Dodd-Frank financial law in 2010, has taken the opposite course.”

The administration appears to have concluded that the agency enjoys enough popular support that scrapping it would be a political albatross, but changes may still be coming. In fact, Cordray has reportedly considered stepping down to run for governor of Ohio.

Randy Neugebaur, a conservative former congressman from Texas seen as a candidate to head the CFPB, told the Independent that “I don’t think you want to do away with consumer protection but you want to change it. The government ought not to be telling you what kind of financial products are appropriate for you.”

How Lenders Can Prepare

Financial services attorney Chrys Lemon addresses these issues and others in an audio conference for Eli Financial, “January 1, 2018: Big Changes to Regulation C, the Home Mortgage Disclosure Act’s (HDMA) Disclosure Regulation.” Aimed at mortgage loan officers and compliance personnel/counsel who work with closed-end loans, open-end lines of credit and reverse mortgages, Lemon’s conference reviews the CFPB’s Institutional Coverage Chart for 2018, details which financial institutions are exempt, reviews reportable data for 2018, and provides an overview of techniques that may assist the industry with compliance.

To join the conference or see a replay, order a DVD or transcript, or read more

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