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CFPB Finalizes HMDA Rule and Adds to Reg Burden on FIs
Friday, October 16, 2015 6:40 AM

Yesterday, the Consumer Financial Protection Bureau finalized a rule which purported to improve information reported about the residential mortgage market. Instead, the 797-page rule will add another layer of expense and regulatory burden.

Credit Union National Association President/CEO Jim Nussle called yesterday's announcement from the CFPB "extremely disappointing."

"At a time when the bureau should be working to increase the availability of credit to middle class Americans, they instead continue to impose staggering amounts of regulatory burden for credit unions and other small financial institutions. If the bureau’s intent is to stifle available credit to consumers, they’re succeeding. While Director (Richard) Cordray continues to publicly state that credit unions in no way contributed to the financial crisis, it’s clear the bureau ignores that very important point in its rulemaking.”

CUNA Chief Advocacy Officer Ryan Donovan added, “The CFPB needs to do a much better job articulating what it will do with this vast data grab, which goes way beyond the Dodd-Frank Act requirements."

By the CFPB’s own estimates, the changes represent an additional compliance burden of 4.7 million hours per year for all entities required to report under HMDA.

CUNA has written to the bureau a number of times over the past year, urging the bureau to use its authority to exempt credit unions from HMDA provisions.

Specifically, CUNA asked the agency to:

  • Refrain from adding home equity lines of credit (HELOCs) to HMDA reporting requirements. The reporting burden on credit unions to aggregate and report on this data could be problematic for many credit unions, as HELOCs are often treated as consumer loans, maintained and managed by a consumer loan origination system (LOS), while first mortgages are maintained by a mortgage LOS;
  • Stick to the 17 data points mandated by Dodd-Frank, instead of the 37 the CFPB sought. CUNA urged the bureau to not require these additional data points to be collected and reported for HMDA purposes, or to exempt credit unions from the additional regulatory requirements; and
  • Exempt credit unions that originate under 500 mortgage loans per year, up from the proposed 25 mortgages per year threshold.

Although CFPB included HELOCs as part of the required information, the bureau did pare back on some of the proposed data points, such as “risk-adjusted, pre-discounted interest rate."

Also the first reporting under the rule will be required later than proposed—in 2019, for 2018 data. The CFPB also backed away from the proposal to require reporting of all dwelling-secured transactions made for commercial purposes.

Donovan emphasized, "We are going to continue to express our concerns about this rule to the CFPB, and point out areas where this impacts credit unions' ability to serve consumers."

Read more information about this development from CFPB.

Read a copy of the final rule.