WASHINGTON–Sixty-five House Democrats have signed a letter to CFPB Director Kathy Kraninger calling on the Bureau to immediately withdraw actions that could lead to fewer institutions subject to Home Mortgage Disclosure Act (HMDA) reporting, less data being reported, and that potentially would replace the CFPB’s current HMDA research tool with a new one.
In the letter, House Financial Services Chairwoman Maxine Waters (D-CA) and 64 other House members said they have “strong concerns” over the Bureau’s HMDA plans “at a time when the public needs more transparency about harmful lending trends, not less.”
The letter was sent in response to a May announcement by the CFPB that among other things it would seek to permanently increase the HMDA coverage threshold from 25 closed-end mortgage loans to either 50 or 100 closed-end mortgage loans. The Bureau also published an advance notice of proposed rulemaking (ANPR) related to its “reconsideration” of the data points lenders must include as part of their yearly HMDA mortgage loan/application registers (the comment period on the ANPR ends in July).
Plans to Replace Tool
As part of its announcement, the Bureau also said it plans to replace its HMDA Explorer tool and the Public Data Platform Application Programming Interface, which facilitate access to loan-level datasets, in favor of another being developed by the Federal Financial Institutions Examination Council (FFIEC), of which Kraninger is currently the chair.
In the letter, the members of Congress argued that about 85% of depository institutions have already been “recklessly” exempted from reporting enhanced HMDA data on lending in underserved communities under last year’s Economic Growth, Regulatory Relief and Consumer Protection Act, and further suggested current proposals would “cut deeper, exempting 1,720 financial institutions from basic HMDA reporting requirements for closed-end mortgage loans.”
According to the letter, raising the HMDA coverage threshold to 100 closed-end mortgages from 25 would result in significantly less data being reported for rural communities and other areas served by small lenders. As a result, the change would make it “harder to identify predatory or discriminatory lending in these areas” and also harder for public officials to allocate resources and respond to market failures.
‘A Trojan Horse’
“What is worse is that the proposed 100 closed-end mortgage loan threshold could actually be a trojan horse for an even more extreme rollback of HMDA reporting given that the Consumer Bureau specifically asked for comments on alternative thresholds as well,” the letter continues.
The members of Congress said data shows “modern-day redlining” can still be seen in 61 U.S. markets, and the lawmakers called on the Bureau to ensure easy access to lending data in order to “promote fair lending, homeownership, and stronger communities.”
The members of Congress want Kraninger to provide a “timeline and detailed description” showing how the FFIEC query tool compares with the HMDA tools the CFPB is planning to retire, and want a response by June 29.