The Consumer Financial Protection Bureau just released its proposal intended to make the adoption of mortgage data reporting requirements – set to take effect in January, 2018 – less complicated. While it does add more data points to be reported, the CFPB’s new HMDA rule will make reporting data online easier.
“The Home Mortgage Disclosure Act (HMDA) shines a much-needed spotlight on the mortgage market, which is the largest consumer financial market in the world,” CFPB Director Richard Cordray said in a statement. “Today’s proposal reflects the bureau’s ongoing and substantive engagement with stakeholders in the marketplace, and will help [the] industry meet its new reporting obligations.”
Under the 1974 Home Mortgage Disclosure Act (HMDA), the CFPB introduced new data reporting requirements in the fall of 2015 In it, the CFPB updated existing rules which will force mortgage lenders to provide information on the subject property’s value, loan terms, prepayment penalty terms and the duration of teaser (or introductory) interest rates. The HMDA was intended to speak to problems minorities faced in gaining access to a mortgage. It requires lenders to collect data from the purchase, home improvements and refinancing as well as report that data to federal regulators.
However, the amplified amount of data which the CFPB has required lenders to report has led to significantly increased difficulties. Several lenders and trade groups have requested clarification on the definition and reporting requirements for new HMDA reporting categories, such as “loan purpose” the unique identifier for the originator of the loan.
In their recent statement, the CFPB informed mortgage lenders that they can avoid reporting on those topics if they do not have the information due to loans which were purchased from a third party. Importantly, the CFPB specified that erroneous information supplied while using a geocoding tool will not mean the lender will be held accountable under HMDA.