A group of 65 House Democrats on Wednesday urged consumer bureau Director Kathleen (“Kathy”) Kraninger to immediately rescind a number of actions that could result in fewer institutions subject to Home Mortgage Disclosure Act (HMDA) reporting, less data reporting, and cap off the bureau’s current HMDA research tool in favor of one developed by a regulatory umbrella group.
In a letter to Kraninger, head of the Consumer Financial Protection Bureau (CFPB), House Financial Services Chairwoman Maxine Waters (Calif.), Rep. Nydia Velázquez (N.Y.), and 63 other House members lodged “strong concerns” about the bureau’s HMDA plans “at a time when the public needs more transparency about harmful lending trends, not less.”
The CFPB in May announced a notice of proposed rulemaking (with comments due June 12) that would, among other things, permanently increase the HMDA coverage threshold from 25 closed-end mortgage loans to either 50 or 100 closed-end mortgage loans. An advance notice of proposed rulemaking (ANPR) was also issued in connection with the bureau’s “reconsideration” of which data points lenders must include in their yearly HMDA mortgage loan/application registers (with comments due in July). The bureau also said it plans to retire its HMDA Explorer tool and the Public Data Platform Application Programming Interface (“API”), which facilitate access to loan-level datasets, in favor of another being developed by the Federal Financial Institutions Examination Council (FFIEC).
The lawmakers noted that about 85% of depository institutions have already been “recklessly” exempted from reporting enhanced HMDA data on lending in underserved communities under last year’s Economic Growth, Regulatory Relief and Consumer Protection Act (EGRRCPA, S. 2155), and they said the bureau’s current proposals would “cut deeper, exempting 1,720 financial institutions from basic HMDA reporting requirements for closed-end mortgage loans.”
Raising the HMDA coverage threshold from 25 to 100 closed-end mortgages (in each of the past two preceding years), they said, would likely mean less data being reported for rural communities and other areas served by small lenders, “making it harder to identify predatory or discriminatory lending in these areas” and also harder for public officials to allocate resources and respond to market failures.
“What is worse is that the proposed 100 closed-end mortgage loan threshold could actually be a trojan horse for an even more extreme rollback of HMDA reporting given that the Consumer Bureau specifically asked for comments on alternative thresholds as well,” they wrote.
Citing data showing persistent, “modern-day redlining” in 61 areas across the country, the lawmakers said the bureau must ensure easy access to lending data in order to “promote fair lending, homeownership, and stronger communities.”
“By putting much of this information back in the shadows, the Consumer Bureau is abandoning its mission and giving a free pass to those that would discriminate against otherwise creditworthy borrowers.”
The signers of the letter have asked Kraninger to immediately rescind its proposals and to provide a “timeline and detailed description” showing how the FFIEC query tool compares with the HMDA tools the CFPB is planning to retire. They want a written response by June 29.
Reg lookup: Home Mortgage Disclosure (Regulation C) (Proposed rule)
Reg lookup: Home Mortgage Disclosure (Regulation C) Data Points and Coverage (ANPR)