Independent mortgage bankers have asked Mick Mulvaney, the acting director of the Consumer Financial Protection Bureau, to delay implementation of the Home Mortgage Disclosure Act rule that is slated to go into effect on Jan. 1.
With just three weeks to go before the expanded requirements go into effect, the likelihood of a change or delay remains slim, industry experts said. But the Community Home Lenders Association sent a letter to Mulvaney on Wednesday requesting a delay and a formal safe harbor from the rule for lenders that show good-faith compliance with HMDA.
The trade group said it wants assurances that failing to comply with the new requirements will not result in big fines or enforcement actions.
“The Trump Administration has pledged to address overly burdensome regulations which have a negative impact on the ability of private sector finance providers to make credit available to consumers,” the letter stated. “Excessive regulations and the threat of enforcement actions without the opportunity to cure problems that the CFPB identifies with a firm’s compliance efforts disproportionately affect smaller [independent mortgage banks] and promote undue industry concentration.”
The CFPB made sweeping changes in 2015 to Regulation C, which implements HMDA, as mandated by the Dodd-Frank Act. The CFPB’s final HMDA rule requires that financial institutions report 48 data fields on each mortgage applicant, including a borrower’s age, credit score, and total points and fees paid on a loan.
Currently, publicly released HMDA data is primarily broken down by geography, race, gender and whether an applicant was approved or denied for a loan. But denial rates have always been tough to interpret without more data on individual borrowers.
Mortgage lenders have been pushing for a delay to the rule out of concern that the data would be used as a basis to file fair lending and discrimination lawsuits.
“A delay would allow the CFPB to utilize this procedure in order to maximize public input from lenders and consumers,” the trade group said in its letter to Mulvaney.
In September, the CFPB said it would modify or exclude from public disclosure roughly one-third of HMDA data that loan originators will begin reporting in 2018 to protect consumers’ privacy. Mortgage lenders have sounded the alarm, claiming the CFPB’s rule amounted to a massive data grab, and that the rule should be halted because of privacy issues.