Removing Barriers Blog

CUNA Sends Letter to CFPB Outlining Necessary HMDA Changes
Posted May 24, 2017 by CUNA Advocacy

CUNA’s Senior Director of Advocacy and Counsel, Andy Price, sent a letter to the Consumer Financial Protection Bureau in regards to the Proposed Rule on Technical Corrections and Clarifying Amendments to the Home Mortgage Disclosure (Regulation C) October 2015 Final Rule. 

The proposed rule is intended to provide clarifications, technical corrections, or minor changes and while CUNA supports several the corrections, but believes the CFPB should go much further noting that there are issues that should also be addressed before the proposed rule is finalized: 

  • Delaying Compliance of the Rule 
    We note that the comment deadline for this rule is approximately 6 months prior to the January 1, 2018 mandatory compliance date to begin collecting data under the rule. Any final rule is likely to occur after the January 1, 2018 effective date which presents a whole host of compliance/implementation/programming issues for a credit union. Although the proposed rule provides the later effective dates of January 1, 2019 or January 1, 2020 to correspond to related effective dates for amendments included in the 2015 HMDA Final Rule, the better approach would be to delay compliance with the entire 2015 HMDA Final Rule until the CFPB completes the appropriate clarifications, or for at least one year, to avoid confusion as to the interpretation of the rule.  

  • Compliance Costs 
    We note the CFPB’s statement that it believes this proposal will not add additional costs to financial institutions. Any change to the data collection means credit unions will spend time updating policies and procedures, audits, and adjusting programming in their systems. Although these proposed changes are favorable and ultimately will make compliance easier, they do not happen in a vacuum. Any change to the regulations will create a cost to the institution.  

  • Privacy Concerns 
    The CFPB indicated it will allow a process for the public to provide input regarding the application of the “balancing test,” yet six months before the January 1, 2018 effective date, no process has been provided. 

  1. Delay the effective date of the 2015 HMDA Final Rule for at least one year or until the CFPB has articulated which data points will be made public and in what format (with input from the public under notice and comment procedures);  
  2. Conduct a study regarding the impact on consumer privacy resulting from information made publicly available under HMDA and the potential for identity theft; and 
  3. Limit the number of required data points to only those expressly mandated under the Dodd-Frank Act. Therefore, required data points would not include the additional, extensive CFPB-created data points that add little in the way of useable data to enforce the purpose of HMDA yet create an enormous compliance burden on credit unions.  
  • Reporting for HELOCs 
    At a minimum, the CFPB should allow for the separate reporting of HELOC HMDA data versus closed-end reporting so institutions with separate systems are not required to bear the enormous cost of combining data generated from separate systems into one report for purposes of filing.  The thresholds for compliance with HMDA should be increased to 500 for closed-end loans and to 1000 for open-end loans if the CFPB continues to require HELOC reporting. 

CUNA will continue to urge the CFPB to consider the unnecessary regulatory burdens they are inflicting on credit unions in the mortgage lending space.