The Consumer Financial Protection Bureau (CFPB) announced new rules aimed at making federal home loan data more useful and transparent. The draft rules would update the federal Home Mortgage Disclosure Act (HMDA), which requires financial institutions to report their home loan activity by loan type, borrower census tract, and myriad other variables.
Data from HMDA are the leading source of information about the U.S. mortgage market. In 2012, financial institutions provided details of 18.7 million mortgage applications and loans. HMDA data have helped identify lending disparities and possible discrimination in the credit market. However, as Mortgage News Daily notes in its coverage of the new rule, HMDA data don’t provide adequate disclosure about loans like adjustable-rate mortgages or non-amortizing debt — products that helped contribute to the mortgage crisis.
The CPFB agrees, concluding HMDA data “must address the informational shortcomings exposed by the financial crisis, meet the needs of homeowners, potential homeowners, and neighborhoods throughout the nation, and reflect changes in business practices and the technological evolution of the mortgage market.”
The proposed changes improve the way home equity lines of credit and reverse mortgages are reported and expand disclosure to include data points like property value, loan term, total points and fees, information on teaser or introductory rates, and the applicant’s age and credit score. The proposed rule also would also require the largest banks to begin reporting HMDA data quarterly, rather than annually, in order to make the data more timely and actionable.
The update is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, passed by Congress in 2011 after the mortgage crisis. The CPFB is accepting comments on the proposed rule until October 22. The full text of the rule and information about submitting comments can be found on the CPFB website.