Just When You Thought It Was Safe To Take A Summer Vacation: CFPB Proposes Extensive New HMDA Rules

Yesterday, the Consumer Financial Protection Bureau (CFPB) published its long-awaited new proposed revisions to its Home Mortgage Disclosure Act (HMDA) rules. The 573-page proposed rules would make sweeping changes to Regulation C, which implements HMDA, dramatically expanding financial institutions' HMDA reporting and compliance obligations, as well as their fair lending work more broadly. The changes include required reporting of 37 new data fields (20 of which are not required by HMDA and represent additional information the CFPB would like to collect) and required quarterly (rather than annual) reporting for larger institutions. We summarize here the key proposals, how they compare to current HMDA requirements, and what this all might mean for HMDA reporters in the future. (Hint: not many smiling faces.) Comments on the proposed rule are due by October 22, 2014.

BACKDROP

HMDA was enacted in 1975, and has expanded over the years from a statute aimed at basic monitoring and redlining prevention, to one widely used by regulators and advocates as a fair lending tool. It requires many depository institutions and other lenders to report information about the home loans that they decision, originate, or purchase. According to the CFPB, as of 2012, about 7,400 financial institutions reported HMDA data relating to about 18.7 million loans. In 2010, the Dodd-Frank Act directed the CFPB to expand HMDA data reporting to include additional information about the applicants, lenders, and loans.

In February 2014, the CFPB announced that it was beginning the required rulemaking process and was considering adopting not only the Dodd-Frank requirements, but also requiring reporting of extensive additional data. The CFPB also announced that it was looking into ways to streamline HMDA reporting and reporting thresholds. As an initial step, the CFPB convened a Small Business Review Panel to seek early feedback. Since then, the CFPB has been largely mum about the rule, reporting in June only that it "has begun work in preparation" to implement the changes. Surprisingly, unlike other significant regulatory initiatives, the CFPB held no "field hearing" announcing with fanfare the new proposed rules, but merely a dry press release yesterday about the proposal.

THE PROPOSED RULES

Yesterday, the Bureau published its extensive proposed rules, along with the Small Business Review Panel's detailed report. The proposal is largely in line with the Bureau's February...