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HMDA rule changes could increase reporting burden
WASHINGTON (7/25/14)--The negative impact of the Consumer Financial Protection Bureau's proposed changes to Home Mortgage Disclosure Act (HMDA) reporting rules will far outweigh any benefit to credit unions--or their members, Credit Union National Association Associate General Counsel Jared Ihrig said Thursday.
 
In a release, the CFPB unveiled a proposal it said is intended to improve the information reported about the residential mortgage market under HMDA. It also is meant to simplify the reporting process for credit unions and other financial institutions. However, by the CFPB's own estimates, the changes would represent a compliance burden of 4.7 million hours annually for all regulated entities required to report under HMDA.
 
However, Ihrig noted that the proposal adds 37 data fields to the HMDA reporting requirements and also adds a requirement for reporting HMDA information on all Home Equity Lines of Credit (HELOCs).  Currently, reporting on HELOCs is optional.

"CUNA is disappointed to see that the CFPB's proposal contains requirements that are well beyond the statutory requirement carried in the Dodd-Frank Act. The bureau upped that to an unwieldy and unnecessarily burdensome 37 new data fields under the proposal," Ihrig said. According the CFPB's numbers, more than 2,000 credit unions were required to file HMDA reports in 2013.
 
The CFPB's Small Business Regulatory Enforcement Fairness Act advisory panel met earlier this year to discuss possible changes to HMDA rules. Six CUNA-member credit unions on the 21-member panel urged the bureau to consider the compliance burden on small institutions and to only require reporting of those data fields that are statutorily required under the Dodd-Frank Act.
 
Ihrig noted that credit unions also informed the CFPB that requiring HMDA reporting on HELOCs would create great operational complications and a significant compliance burden.

Many credit unions maintain their first-mortgage origination operations separate from their HELOC operations, which are more aligned with consumer lending. In these instances, data aggregation for HMDA reporting purposes may require significant changes in training, operations and technical requirements.
 
On the plus side of the CFPB proposed changes, the bureau is considering raising the reporting threshold to 25 or more closed-end loans or reverse mortgages in a year. In addition, the proposal would eliminate reporting of certain home-improvement loans. Currently, financial institutions must submit reports on their mortgage lending activities even if they write just one home-purchase loan or refinancing in a year.

Also in its announcement, the CFPB noted that it would be providing clarifications on its HMDA rules. CUNA's Ihrig said credit unions would welcome any guidance on such things as the definition of what constitutes a "dwelling," how to treat manufactured, modular and multiple properties under HMDA, and many other topics.
 
"Any clarification the bureau can provide is helpful," Ihrig said, but added that CUNA will be analyzing the proposal to see if any of the CFPB's proposed amendments would be adding to the regulatory burden.
 
The CFPB also said it is looking to improve the electronic reporting process and will be considering what new technological tools would make the data submission process more efficient, ease the data formatting requirements and help financial institutions prevent errors.
 
Ihrig noted that CUNA will be posting a Regulatory Call to Action for state credit union leagues and credit unions in the coming days and encourages all affected credit unions to weigh in with comments on the proposed rule. Comments are due to the CFPB Oct. 22.


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