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Mortgage Market Needs Improved Disclosure: CFPB Proposal

July 29th, 2014 · No Comments · Mortgages

by Kristy Welsh

(Last Updated On: February 26, 2018)

Mortgage Market Needs Improved Disclosure: CFPB ProposalWhen you’re in the market for a mortgage, you deserve a fair shot. That’s where the Home Mortgage Disclosure Act (HMDA) comes into play.

Since 1975, the HMDA has required lenders to report data on mortgage applications and loans. This gives regulators insight into who’s being approved, who’s not, and whether the decision one way or the other is discriminatory.

While HMDA has served an important role these near 40 years, it’s time for a makeover.

“It is critical that we shed more light on the mortgage market – the largest consumer financial market in the world,” says Richard Cordray, Director of the Consumer Financial Protection Agency.

To that end, the CFPB is proposing new rules regarding the reporting of mortgage data.

As outlined by the CFPB, the rule would:

  • Require reporting of new information, including property value, term of the loan, total points and fees, duration of any teaser or introductory interest rates, applicant’s or borrower’s age and credit score.
  • Require more reporting of information about underwriting and pricing, including applicant’s debt-to-income ratio, interest rate of the loan, and total discount points charged for the loan.
  • Require reporting on reverse mortgages and open-end lines of credit.
  • Require that non-depository mortgage lenders only report HMDA data if they make 25 or more closed-end loans or reverse mortgages in a year.
  • Eliminate reporting of certain home improvement loans.
  • Require small banks to report HDMA data only if they have more than 25 mortgages per year.
  • Align reporting requirements with industry data standards.
  • Improve the electronic reporting process.
  • Improve the system used by the public to access data.

Note, this is no arbitrary endeavor instigated by the CFPB, but one required of the agency by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. And the process is one that began in February of this year when the CFPB sought input on the subject from a panel of small businesses.

What do you think of the proposed rule? Do the new requirements go far enough? Why or why not?

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