CFPB Soliciting Comment on Often-Criticized HMDA Rule

The Consumer Financial Protection Bureau announced Tuesday it is soliciting comments on the agency’s Home Mortgage Disclosure Act rule—a controversial regulation often criticized by credit union trade groups.

“This evaluation will strengthen the CFPB’s ability to maintain a fair, competitive, and non-discriminatory mortgage market,” the CFPB said, in announcing the effort.

Comments are due 60 days after the request for comment is published in the Federal Register. It has not yet been published.

The CFPB said that the request for information follows an August 2021 HMDA report that, among other things, found that mortgage lenders more often deny credit and charge higher interest rates to Black and Hispanic applicants than they do for white applicants.

The CFPB said it wants to evaluate several aspects of the rule, including whether it has brought more transparency to the mortgage market, whether it has helped determine whether financial institutions are serving their communities and whether it has assisted in identifying possible discriminatory lending practices.

The CFPB said it also wants to measure the regulatory burden the rule places on financial institutions.

Effective July 1, 2020, financial institutions originating at least 100 closed-end mortgage loans in each of the two preceding calendar years had to report data to the CFPB.

Effective January 1, 2022, the 2020 HMDA Final Rule sets the open-end coverage threshold at 200 open-end lines of credit, meaning that financial institutions originating at least 200 open-end lines of credit in each of the two preceding calendar years must report such data.

Credit union trade groups have criticized the bureau for including credit unions in the rule without any evidence that those institutions are discriminating against mortgage applicants.

“In 2015, the CFPB chose to adopt a HMDA Final Rule that disproportionately burdened credit unions with finite resources despite no evidence of past wrongful conduct,” Credit Union National Association President/CEO Jim Nussle wrote in a letter to President Biden earlier this year, outlining the trade group’s priorities.

Nussle added that credit unions’ fields of membership may have an impact on where and to whom they may lend.

The National Association of Federally-Insured Credit Unions also has criticized the rule. In a letter to the House Financial Services Committee last month, Brad Thaler, the trade group’s vice president of legislative affairs, wrote that the CFPB should acknowledge that not all financial institutions operate the same way and should better-tailor the HMDA rule.

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