The FFIEC announced last week that 2016 Home Mortgage Disclosure Act (HMDA) data for reporting institutions is now publicly available for calendar year 2016. Enacted in 1975, the Home Mortgage Disclosure Act requires lenders to report mortgage applications received during the prior calendar year.
Since 1975, these data have essentially included information about the applicant, including race, gender, ethnicity and geographic location along with information about the loan such as loan type, amount, and purpose.
The most significant change to the regulation that has occurred up until this point has been the addition of the “rate spreads” that were required to be reported beginning with 2004 data. The spread allows a way for the pricing of loans to be evaluated although the specific contract note rate or APR is not now currently reported.
The release of 2016 data marks the end of HMDA reporting as it has been over the last 30 years. In 2011, Dodd-Frank transferred rulemaking authority of HMDA to the Consumer Financial Protection Bureau (CFPB). The new reporting rules under which HMDA data will be submitted in 2018 will require an unprecedented amount of information be reported for mortgage applications. This includes underwriting and pricing characteristics such as the borrower’s credit score and key ratios along with the actual pricing of the loan.
In addition to adding an additional data and reporting burden to lenders, this change will undoubtedly significantly alter the regulatory landscape with respect to fair lending. The addition of the rate spreads heightened scrutiny of lender pricing practices beginning in 2005, but the data that will be available under the new reporting requirements pale in comparison.
A complete list of the data required to be reported can be viewed here:
http://files.consumerfinance.gov/f/201510_cfpb_hmda-summary-of-reportable-data.pdf.
The fair lending risk that is being created for lenders is significant. We have commented on this in past articles and will continue to expand on this over the next few months.
The FFIEC maintains a comprehensive history of the Home Mortgage Disclosure Act and notes the changes that have taken place over the last 30 years and timelines.
This can be accessed on their website at:
https://www.ffiec.gov/hmda/history2.htm.