WASHINGTON—The CFPB is being urged by NAFCU to make changes to its assessment of the Home Mortgage Disclosure Act (HMDA) and related amendments.
The Bureau sought credit union feedback on the HMDA rule through a request for information issued in November of 2021 to evaluate the rule's effectiveness and to help “strengthen the Bureau's ability to maintain a fair, competitive, and non-discriminatory mortgage market.”
In a letter to the Bureau, NAFCU Regulatory Affairs Counsel Aminah Moore urged it to remove nonessential and unused data points and to allow lenders to submit the option “Not Provided” in the government monitored information (GMI) text boxes. “Additionally, the CFPB should permanently increase the reporting thresholds for both open-end and closed-end loans,” wrote Moore.
Moore said NAFCU recognizes the CFPB’s efforts to bring greater transparency to the mortgage market through HMDA, but also urged the Bureau to consider the “overly burdensome operational and compliance costs” of HDMA, which in some cases, she said, outweigh its benefits.
The letter notes that a survey conducted by NAFCU found 52% of respondents cited an increase in regulatory burden associated with HMDA over the last five years. “NAFCU members initially thought HMDA would mainly involve one-time costs, but instead they have found that compliance with HMDA requires significant ongoing costs," stated Moore.
‘Significant’ Challenges
Regarding HMDA’s discretionary data points, NAFCU called on the Bureau to eliminate data points that do not contribute to the purpose of HMDA, stating, “most of the data points pose significant system and operational challenges, and they do not transition well from application to software reporting.”
According to NAFCU, these data points include rate spread, which can be “especially difficult to calculate within the HMDA software and cause errors, subcategories for GMI,” as well as business or commercial, and loan purposes which many credit unions have reported as bearing a high degree of operational burden when collecting and reporting such data.
In addition, NAFCU urged the CFPB to adopt increased reporting thresholds for both open-end and closed-end loans, which expired on Jan. 1, 2022.
“Increased loan thresholds will provide more long-term meaningful relief for credit unions,” stated Moore.
The discussion paper can be found here.