HMDA changes proposed
AML AND COMPLIANCE NEWS |
The Consumer Financial Protection Bureau (CFPB) has proposed to amend the Home Mortgage Disclosure Act (HMDA), also known as Regulation C. The act requires financial institutions to collect and publicly disclose information relating to mortgage loans and applications for mortgage loans. The information reported assists the public in understanding how financial institutions are serving the housing needs of their communities.
The proposal issued by the CFPB will add new reporting requirements for lenders as part of the Dodd Frank Act amendments to the HMDA. The new rule will require lenders to report:
- Data on the applicant or borrower such age, credit score, debt-to-income ratio, interest rate, total points charged, reason for denial (if applicable), application channels and the results of the underwriting process
- Data on the collateral such as property value, construction method, lien priority, the number of dwelling units, and information about manufactured or multifamily dwelling
- Data on the features of the loan such as the loan term, type of loan, the duration of teaser rates and additional pricing information
- Unique identifiers such as loan identifier, property address, loan originator identifier and a legal entity identifier.
The proposal will make several changes in determining which financial institutions will be required to report mortgage related transactions. Currently, regulatory guidance requires financial institutions and nonfinancial institutions to report data relating to mortgage transactions, if certain criterion is met. The CFPB is proposing that all financial institutions be required to follow the HMDA reporting rules, if a threshold is met. If institutions meet the proposed criterion of originating 25 mortgages annually, they will be required to report under the HMDA.
The proposed rule will also change requirements for the type of mortgage transactions to be reported. Currently, the financial institutions are required by the act to report home purchases, home improvements and refinancing loans. However, the reporting of home equity lines of credit under the HMDA is optional for institutions. The new proposal will require all dwelling-secured loans with a few exemptions to be reported by institutions. The purpose of this specific amendment is to eliminate the requirement of lenders to determine the applicant"s or borrowers intended purpose of the loan.
Comments on the proposal are to be received by Oct. 22, 2014.