WASHINGTON—NAFCU and CUNA have each filed comment letters with the CFPB offering suggestions for reducing HMDA compliance burden.
Highlighting that member credit unions' compliance costs related to Home Mortgage Disclosure Act (HMDA) data collection have risen 121% in less than a decade, NAFCU's Kaley Schafer offered suggestions to the CFPB to make compliance less burdensome – primarily by eliminating data points that do not ultimately support HMDA's goals.
Schafer, NAFCU's regulatory affairs counsel, sent a letter in response to the Bureau's advance notice of proposed rulemaking (ANPR) related to HMDA data collection and reporting requirements. The Bureau had extended the ANPR's comment deadline to provide stakeholders time to review HMDA data released in September.
While NAFCU said it is supportive of HMDA's intention to eliminate discriminatory lending practices, which credit unions do not participate in, Schafer argued that "the current regulation requires the collection and reporting of increased, hyper-granular data points that do not achieve the statutory HMDA purpose."
In addition to eliminating data points adopted pursuant to the Bureau's discretionary authority – including reasons for denial, lender credits, reverse mortgage flag, and more – Schafer offered other data points the Bureau should consider revising or eliminating as they are overly burdensome to collect and report, or do not assist in furthering HMDA's intent.
The Data Points
Those data points include:
- Rate spread
- Business or commercial purpose
- Loan purpose
- Ethnicity/race, due to the amount of sub-categories that are hyper-granular
- Mortgage licensing system and registry identifier
- Debt-to-income ratio
- Free-form text boxes
- Automatic lending denials
Additional Comment
Schafer also provided additional comments on the costs and resources needed to comply with HMDA's data collection and reporting, and raised privacy concerns about that could allow mortgagors to be identified.
"HMDA data collected and reported includes sensitive and non-public information, and the disclosure could leave members less secure and potentially more vulnerable to targeted scams," Schafer wrote.
CUNA's Comment
CUNA Tuesday filed two comment letters with the CFPB. The first letter was sent to offer improvements to the HMDA reporting threshold. CUNA reiterated that the HMDA rule has disproportionately burdened credit unions, despite no evidence of past wrongful conduct. CUNA urged the Bureau to make the following additional amendments to HMDA’s transactional coverage thresholds to further relieve unnecessary regulatory burden for credit unions:
- Increase the closed-end mortgage loan threshold for required HMDA reporting to 500 loans in each of the prior two years. Barring the adoption of a 500-closed end mortgage loan threshold, the CFPB should finalize the proposed 100 loan threshold at a minimum to exempt credit unions with small mortgage lending portfolios from HMDA reporting.
- Allow the reporting of open-end lines of credit to once again be voluntary. HMDA reporting for these loans was voluntary prior to the 2015 HMDA Rule, as these loans are separately treated and distinctive from dwelling-secured mortgages.
The second HMDA-related comment letter was filed with the CFPB in response to an ANPR seeking input on the HMDA data points required under the Bureau’s 2015 HMDA rule, CUNA said."While CUNA understands and supports the purpose of HMDA, we believe any benefits obtained from the data points added by the 2015 HMDA rule pursuant to the CFPB’s discretionary authority will not outweigh the cost and burden to credit unions. Our letter urges the CFPB to eliminate the data points added in Regulation C pursuant to the CFPB’s discretionary authority," CUNA said.