AFSA Comments on HMDA Proposed Rule

On Tuesday, October 15, the American Financial Services Association submitted a comment letter on the Consumer Financial Protection Bureau (CFPB)’s Advanced Notice of Proposed Rulemaking amending the October 2015 final rule on the Home Mortgage Disclosure Act (HMDA), noting that the Bureau should reduce the number of data points financial institutions must collect and report.

“AFSA members are committed to ensuring that all people have equal access to credit. As such, we support the spirit of HMDA and have invested heavily in compliance processes to ensure that the statute is fulfilled,” AFSA Vice President Celia Winslow wrote in the comment letter. “Enacted in 1975, HMDA sought to determine if potentially discriminatory practices in the area of mortgage lending were occurring. HMDA data is intended to provide information to address fair-lending concerns about loan pricing and to gain a better understanding of the mortgage market. That goal was met for over thirty years and can continue to be met with fewer data points.”

The letter outlines three key areas that will make HMDA data more focused and effective:

·         The Bureau should limit the number of required data points. The housing disclosure act’s data points were added or updated in 2015. The burden of additional data collection, particularly on small lenders, should be considered, because …   

·         Increased regulation may drive small lenders out of the market. Many AFSA members are small- or medium-sized business that operate in communities and serve niche loan needs that bigger institutions do not meet. Additional data collection requirements will add overhead that discourages smaller lenders from offering offer mortgage loans, because …  

·         Additional data collection is costly, provides uncertain benefits and raises privacy concerns – The data requirements already on the books benefit prospective homebuyers, but it’s unclear what additional data points would accomplish, beyond adding costs and creating pools of data that raise privacy concerns for consumers and lenders alike.