The CFPB recently announced its intent to complete a voluntary assessment of its final HMDA rule issued in October 2015 and subsequent amendments (collectively, the HMDA Rule) and requested comment from the public about this plan, as well as information and data that might be useful in conducting the assessment. While this activity is not mandatory under the Dodd-Frank Act as the HMDA Rule is not a “significant” rule, the CFPB proposes to voluntarily conduct such assessment since it considers the HMDA Rule to be “of sufficient importance” to do so. When announcing the proposal, the CFPB characterized the request as seeking input on “[d]etecting [d]iscrimination in [m]ortgage [l]ending” and provided that the evaluation will strengthen its ability “to maintain a fair, competitive, and non-discriminatory mortgage market.”
The completed assessment will address, among other things, the effectiveness of the HMDA Rule in meeting the purposes and objectives of the Dodd-Frank Act and the specific goals of the HMDA Rule. Such goals include, for example: (i) creating transparency in the mortgage market; (ii) providing information to both the public and public officials to help determine whether financial institutions are serving the housing needs of the communities in which they are located and whether public sector investments have been distributed to improve the private investment environment; (iii) identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes; and (iv) addressing gaps in data regarding certain segments of the market.
The CFPB intends for the assessment’s primary topic areas of focus to address: (i) institutional coverage and transactional coverage; (ii) data points; (iii) benefits of the new data and disclosure requirements (not including evaluation of the balancing test used to determine whether and how HMDA data should be modified before it is disclosed to the public to protect applicant and borrower privacy); and (iv) operational and compliance costs.
The CFPB “views the assessment as an opportunity to evaluate whether prior HMDA rulemakings have improved upon the data collected, reduced unnecessary burden on financial institutions, and streamlined and modernized the manner in which financial institutions collect and report HMDA data.”
Among other stated interests, the CFPB is specifically interested in information about certain activities and outcomes, and how they relate to each other, including: (i) industry outcomes affected by the HMDA Rule; (ii) activities undertaken by financial institutions to comply with the HMDA Rule’s criteria; (iii) overall benefits and other outcomes the HMDA Rule sought to affect; (iv) the costs and benefits of the new and revised data points and data reported under the revised coverage thresholds; and (v) the HMDA Rule’s effect on financial institutions’ operational and compliance costs. The CFPB also indicated an interest in information and data on how certain stakeholders use HMDA data to further HMDA’s goals and purposes, citing extension of access to credit and fair lending enforcement.
In a press release announcing the issuance of this request for information, the CFPB states that the plan for this voluntary assessment follows reports and analyses from 2021 which found discriminatory patterns in mortgage lending and a 2021 report studying the financing of manufactured housing loans, which WBK covered here.
Comments are due by January 21, 2022. The CFPB anticipates that it will issue the assessment report by January 1, 2023.