CFPB Sends Request for Information on Planned Assessment of HMDA Rules | Weiner Brodsky Kider PC

The CFPB recently announced its intention to conduct a voluntary assessment of its final HMDA rule published in October 2015 and subsequent modifications (collectively, the HMDA rule) and demand public comments on this plan, as well as information and data that could be useful in conducting the assessment. Although this activity is not mandatory under the Dodd-Frank Act because the HMDA rule is not an “important” rule, the CFPB proposes to conduct such an assessment voluntarily because it considers the HMDA rule to be ” of sufficient importance ”to do so. When announcing the proposal, the CFPB called the request a solicitation for comments on “[d]detection [d]discrimination in [m]orgy [l]end ”and provided that the assessment strengthens its ability“ to maintain a fair, competitive and non-discriminatory mortgage market ”.

The completed assessment will include, among other things, the effectiveness of the HMDA rule in achieving the goals and objectives of the Dodd-Frank Act and the specific objectives of the HMDA rule. These objectives include, for example: (i) creating transparency in the mortgage market; (ii) provide information to both the public and public officials to help determine whether financial institutions are meeting the housing needs of the communities in which they are located and whether public sector investments have been distributed to improve the environment private investment; (iii) identify possible discriminatory loan schemes and apply anti-discrimination laws; and (iv) fill data gaps for certain market segments.

The CFPB foresees that the main areas of interest of the evaluation relate to: (i) institutional coverage and transactional coverage; (ii) data points; (iii) the benefits of the new data and disclosure requirements (excluding the evaluation of the balancing test used to determine whether and how HMDA data should be changed before it is released to the public in order to protect the privacy of the applicant and the borrower); and (iv) operating and compliance costs.

The CFPB “sees the assessment as an opportunity to assess whether past HMDA regulations have improved the data collected, reduced unnecessary burden on financial institutions, and streamlined and modernized the way financial institutions collect and report HMDA data.”

Among other declared interests, the CFPB is particularly interested in information on certain activities and results, and on how they relate to each other, including: (i) industry results affected by the rule HMDA; (ii) activities undertaken by financial institutions to comply with the criteria of the HMDA Rule; (iii) the general benefits and other outcomes that the HMDA rule sought to affect; (iv) the costs and benefits of new and revised data points and data reported under revised coverage thresholds; and (v) the effect of the HMDA rule on the operational and compliance costs of financial institutions. The CFPB has also indicated an interest in information and data on how certain stakeholders are using HMDA data to advance HMDA goals and objectives, citing expanding access to credit and l equitable application of loans.

In a press release announce issuing this request for information, the CFPB indicates that the plan for this voluntary assessment follows reports and analyzes from 2021 which found discriminatory models in mortgages and a report from 2021 examining the financing of loans to the prefabricated housing, which WBK has covered here.

Comments are expected by January 21, 2022. The CFPB expects that it will publish the assessment report by January 1, 2023.