CFPB recently issued a notice and request for information regarding potential changes to the Home Mortgage Disclosure Act (HMDA) resubmission requirements. The CFPB’s HMDA resubmission schedule and guidelines (Resubmission Guidelines) generally describe the loan-level HMDA reviews that the CFPB conducts to confirm the accuracy of a financial institution’s HMDA data as part of CFPB’s HMDA audits and other examinations. The Resubmission Guidelines also describe when a financial institution should be required to correct and resubmit its HMDA data. Written comments to the CFPB’s request are due on or before March 14, 2016.
In general, the CFPB’s current Resubmission Guidelines provide that financial institutions reporting fewer than 100,000 loans or applications on their HMDA Loan/Application Register (LAR) should be required to correct and resubmit HMDA data when errors are found in either: (1) 10% or more of the HMDA-LAR sample entries; or (2) 5% or more of sample entries within an individual data field. The CFPB has now requested information on potential modifications to the Resubmission Guidelines.
In particular, the CFPB is asking whether it should continue to use percentage thresholds to determine the need for data resubmission and, if yes, whether the thresholds should be calculated differently. For example, the CFPB is asking whether separate error thresholds for the entire sample and individual data fields should be retained. The CFPB is also asking whether it should identify certain data fields as “key fields” that are held to a more stringent resubmission standard than other fields. Under its current Resubmission Guidelines, the CFPB does not treat any specific data fields as “key fields.”
Also, the CFPB is asking whether it should treat “systemic errors” differently from “non-systemic errors” and, if so, how the CFPB should distinguish between systemic and non-systemic errors. For example, the CFPB is asking whether it should require resubmission for only certain types of errors, but not for others. Given the CFPB’s ongoing focus on HMDA data quality issues, these information requests are significant, particularly if they result in the recognition that certain errors that are not systemic in nature should be treated differently for supervisory and enforcement purposes. We encourage all mortgage lenders to review the request and submit comments.
The CFPB is also asking whether any changes are needed to how it currently selects samples for its HMDA audits. Under the current Resubmission Guidelines, for financial institutions reporting fewer than 100,000 loans, the sample size that the CFPB reviews may be as low as 79 loans. If the number of errors in the sample exceeds the applicable resubmission threshold, the review of the sample may result in the determination that the financial institution should be required to correct and resubmit its entire HMDA-LAR.
The CFPB’s notice and request for information is available here: https://www.gpo.gov/fdsys/pkg/FR-2016-01-12/pdf/2016-00442.pdf.
The CFPB current Resubmission Guidelines can be found here: http://files.consumerfinance.gov/f/201310_cfpb_hmda_resubmission-guidelines_fair-lending.pdf.