Regulation C of the Home Mortgage Disclosure Act (HMDA) requires lending institutions to 
report public loan data. How has this changed? The Consumer Finance Protection bureau (CFPB), an independent agency of the US government, founded in 2011, has finally released the final version of this regulation, pursuant to amendments made by the Dodd-Frank Act.
Some analysts, including the National Association of Federal Credit Unions (NAFCU)’s Director of Regulatory Affairs, Alicia Nealon, worry the additional reporting requirements will impose “significant additional compliance and reporting burdens” on lenders already doing their best to serve their clients fairly according to banking regulations. But the CFPB actually believes the modifications reduce the reporting burdens on financial institutions.
What reason does the CFPB give for this change to Regulation C? “To better achieve HMDA’s purposes in light of current market conditions and to reduce unnecessary burden on financial institutions.”
The regulation now standardizes loan-volume thresholds for reporting data across depository and nondepository institutions—now each must have “originated at least 25 closed-end mortgage loans or at least 100 open-end lines of credit in each of the two preceding calendar years.”
Also, it has changed the types of transactions subject to the HMDA disclosure rules of Regulation C: it now adopts a dwelling-secured standard for loans/lines of credit for personal/family/household purposes. This changes the focus of reporting requirements to be on consumer-purpose transactions vs commercial-purpose transactions, which we can all agree is the real purpose of the CFPB, as one of the reasons behind its founding was the predatory lending that precipitated the Great Recession.
As an additional point, the new Final Rule includes both the option for consumers to self-report race and ethnicity as well as allowing the lending institution to report it, however the rule requires that the lending institution also explain, if the consumer is not self-reporting, “whether ethnicity, race, or sex information was collected on the basis of visual observation or surname when an application is taken in person.” This is also vitally important as communities of color were some of the hardest-hit from the Great Recession, and it would behoove the mortgage industry to achieve some measure of transparency on that front
Here’s what that analyst was talking about: financial institutions handling large amounts of HMDA data per year are now required to submit it quarterly. This may seem to be an additional burden on lending institutions to submit data—and it certainly is, in a basic sense—but to have this data reported quarterly will mean it will also be available to the public much sooner, which can only be beneficial to institutions acting on good faith toward the public, since the public will be able to more readily take them at their word.
Finally, all this information is now centralized on the Bureau’s website rather than at individual locations, which might make it a bit less easy for members of the public to get at, but will ultimately give them a more accurate basis for comparison in their decision-making around mortgages.
Finally, fortunately the new rules don’t take effect until January 1, 2018, but that doesn’t mean you’ll have until then to understand them. Beat the deadline with helpful banking webinars, such as expert advice on compliance from Chrys Lemon, a specialist in financial services law. His webinar on the CFPB’s revisions to the HMDA will give you everything you need to know about the new final rule, from the new data points to new categorizations of what’s covered, all from the comfort of your home or office.