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Friday, February 7, 2014

CFPB to Propose HMDA Changes Including Points and Fees

The Consumer Financial Protection Bureau (CFPB) today announced it will seek input from small lenders on potential changes to reporting requirements under the Home Mortgage Disclosure Act (HMDA). It also unveiled a new online tool that allows the public to better sort, filter, download and share publicly available HMDA data.

Some of the changes the CFPB is contemplating are mandated by the Dodd-Frank Act. These include requiring data on the length of the loan; total points and fees; the length of any teaser or introductory interest rates; and the applicant or borrower’s age and credit score.

Points and Fees: from the CFPB fact sheet
"The CFPB will ask for small business feedback on these new requirements, including:
  • Total points and fees, and rate spreads for all loans: For most consumers, a home is the biggest purchase they will ever make. It is critical that regulators understand how much borrowers are paying for their loans in the form of the total points and fees and the rate spread. These data points will significantly enhance financial regulators’ understanding of pricing outcomes and risk factors for borrowers.
  • Additional points and fees information: The Dodd-Frank Act requires lenders to report total points and fees and rate spread. The CFPB is considering requiring more detailed pricing-related information which will help regulators compare similarly situated borrowers to identify potentially discriminatory lending practices for further investigation and reduce “false positives” when analyzing disparities.
    • Total origination charges: The Dodd-Frank Act expanded HMDA to require lenders to report total points and fees, which the CFPB is considering defining as the points and fees calculated for the Home Ownership and Equity Protection Act and Qualified Mortgages. Total points and fees, however, may not provide sufficient information to understand loan pricing. For example, total points and fees do not include certain bona fide discount points. Thus, to gain a clearer picture of the costs incurred by a consumer to access credit, the Bureau is considering proposing to require financial institutions to separately report total origination charges. The CFPB further believes that reporting this information could be minimally burdensome because most financial institutions will have calculated this amount for the Closing Disclosure."
Take Action-Join an ABIA Task Force
If you would like to learn more about ABIA's work with CFPB to educate them about the bank-insurance industry or join our CFPB Task Force, please contact us and visit our website.

If you would like to learn more about ABIA's effort to educate regulators like the CFPB and Congress about the Qualified Mortgage rule's impact on points and fees and discriminatory treatment of affiliated insurance companies, or join our Qualified Mortgage Task Force, please contact us and visit our website.

Additional Information about the Proposal
The bureau also is considering asking financial institutions to include more underwriting and pricing information, such as the interest rate; a borrower's debt-to-income ratio; the total origination charges and the total discount points of the loan; an explanation of rejected loan applications; and whether the loan is a “Qualified Mortgage.”

In addition, the CFPB is asking for feedback on ways it can streamline reporting, improve data entry and simplify the coverage tests that determine which institutions must file HMDA data. For example, the bureau is considering requiring all banks and nonbanks -- if they meet certain conditions -- to report if they make 25 or more loans in a year. Banks and nonbanks are currently subject to different thresholds.

Read a CFPB fact sheet about the potential changes.
Read an outline of proposals under consideration.
View the new HMDA tool.