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From Banking and Finance Law Daily, October 16, 2015

Trade associations react to CFPB’s HMDA final rule requiring new disclosures

By Stephanie K. Mann, J.D.

In reaction to the Consumer Financial Protection Bureau’s release of a final rule regarding modifications to Regulation C, which will implement changes to the Home Mortgage Disclosure Act, leading trade associations have commended the bureau for its action, but continue to urge caution.

According to the bureau, the final rule amendments will reduce the number of banks and credit unions that must file Home Mortgage Disclosure Act reports by about 22 percent, but will require those that must report to collect up to 48 data points for each loan or application. The amendments also are intended to make it easier for institutions to file reports by making data collection consistent with established industry standards (see Oct. 15, 2015, issue of Banking and Finance Law Daily).

NCRC. According to National Community Reinvestment Coalition President and CEO John Taylor, had this expansion of rules been enacted earlier, it would have provided an early warning system that could have prevented the housing crisis. “This expansion of Home Mortgage Disclosure Act data is a very positive thing for consumers everywhere,” said Taylor. “This data will serve to increase the fairness of mortgage markets for all Americans.”

However, said Taylor, the bureau’s work is not done. The CFPB now must ensure that “all of the data elements collected that pose no privacy concerns are released to the public. Detailed public disclosure gives increased transparency to the market, and allows members of the public to detect lending discrimination and abuse.”

ABA. Also commending the bureau for its action is the American Bankers Association. However, Frank Keating, ABA CEO and President, said that the trade association continues to be concerned “about the privacy of bank customers’ data and ensuring that their information is properly protected” and the “appropriate balancing of costs and benefits in order to maintain consumer access to the full variety of mortgage products.”

MBA. The Mortgage Bankers Association applauds the CFPB, but has reiterated its concerns about data security and consumer privacy in light of all the additional detailed information on consumers that the government will be collecting and disclosing under the new guidelines.

ICBA. Opposing the CFPB’s final rule is the Independent Community Bankers of America, which believes that the rule only add to the already excessive regulatory burdens placed on community banks. “While ICBA appreciates the CFPB’s provision of a two-year implementation period and its efforts to exempt some small-volume lenders, the overall costs of the expanded HMDA reporting requirements outweigh the benefits,” ICBA President and CEO Camden R. Fine said.

The trade association noted that the bureau’s final rule requires financial institutions to report 48 data fields for each borrower—greatly exceeding the statutory requirement laid out by Congress. This “extraneous data reporting will require additional costly system upgrades for community banks, but will not necessarily provide a better understanding of lending practices,” said the ICBA.

Companies: American Bankers Association; Independent Community Bankers of America; Mortgage Bankers Association; National Community Reinvestment Council

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