CFPB Takes Steps to Improve Information About Access to Credit in the Mortgage Market
The Consumer Financial Protection Bureau (CFPB) is taking steps to improve information reported about the residential mortgage market to help better understand borrowers' access to credit. As a first step in the rulemaking process, the CFPB is convening a panel of small businesses to provide feedback on potential changes to mortgage information reported under the Home Mortgage Disclosure Act (HMDA). The Bureau is also unveiling a new online tool that makes it easier to navigate the publicly available HMDA data.
"Today we are asking for small businesses to provide feedback on ideas to improve the Home Mortgage Disclosure Act, which monitors the largest consumer financial market in the world," said CFPB Director Richard Cordray. "We want there to be better information, better collection, and better access to this important information."
HMDA was enacted in 1975 to provide information that the public and financial regulators could use to monitor whether financial institutions were serving the housing needs of their communities and providing access to residential mortgage credit. The law requires lenders to disclose information about the home mortgage loans they sell to consumers. HMDA was later expanded to capture information useful for identifying possible discriminatory lending patterns.
In the wake of the recent mortgage market crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred HMDA rulemaking authority to the CFPB. The law directs the Bureau to expand the HMDA dataset to include additional loan information that would be helpful in spotting troublesome trends.
Each year HMDA data is reported for the vast majority of residential mortgage loans originated in the U.S. In 2012, this near-complete inventory of mortgages came from 7,400 financial institutions that reported data for approximately 18.7 million applications and loans. The information that institutions report includes: the name of the lender; the type and general location of the property; and the race, ethnicity, and sex of the applicant. Reported HMDA data also include information about the loan amount and whether the loan is for purchasing a home, refinancing an existing mortgage, or home improvement.
The financial regulators share a subset of the HMDA data with the public after revising it to consider privacy interests.
While the HMDA dataset is the leading source of information about the mortgage market, it has not kept pace with the market's evolution. Additional mortgage information could help federal regulators, state regulators, lenders, consumer groups, and researchers better monitor the market. For example, while home equity lending surged during the lead up to the financial crisis, lenders are not currently required to report home equity lines of credit in their HMDA data. Similarly, teaser interest rates proliferated before the crisis, but HMDA data currently contains only limited information about loan features and interest rates.
Additionally, the CFPB is considering changes to make it easier for mortgage lenders to provide better information. The Bureau is also making it easier for the public to use the already-available public information. Taken together, these efforts can improve the quality and accessibility of mortgage loan information.