Do You Know The Latest HMDA Requirements?

HMDA purpose and coverage

The federal Home Mortgage Disclosure Act (HMDA) was passed in 1975 to address concerns that lenders were contributing to the decline of some urban areas by failing to offer adequate home financing to qualified applicants on reasonable terms and conditions, in violation of their bank charters. [12 United States Code §§2801 et seq.]

From 1988 to 1992, substantial changes were made to the HMDA under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 (FIRREA) and the Federal Deposit Insurance Corporation Involvement Act (FDICIA). FIRREA and FDICIA required independent mortgage lenders who met certain loan volume criteria to collect HMDA data. Thus, federal and state banks, credit unions, savings associations and independent mortgage lenders can be required by the HMDA to compile home loan application and closed loan data.

HMDA rules are promulgated under Regulation C (Reg C). [12 Code of Federal Regulations §§1003 et seq.]

In 2015, the Consumer Financial Protection Bureau (CFPB) made changes to the HMDA and Reg C according to the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Clarifying changes were made in 2017. Generally, these changes modified the types of institutions and transactions subject to HMDA and expanded the scope of the data required to be collected.

Modifications to reportable data

HMDA data added to reporting requirements in 2018 includes:

a) the property address;

b) the borrower or applicant’s age;

c) the borrower or applicant’s credit score;

d) total points and fees charged at the time of origination;

e) the total borrower-paid origination charges;

f) the total discount points paid to the lender;

g) the amount of lender credits;

h) the interest rate;

i) the term (in months) of any prepayment period;

j) the debt-to-income ratio (DTI);

k) the combined loan-to-value ratio (LTV);

l) the loan term (in months);

m) the introductory interest rate period (in months);

n) the presence of terms resulting in potential negative amortization;

o) the property value;

p) whether the property is manufactured housing;

q) the ownership of land when the property is manufactured housing;

r) the total number of units related to the property;

s) the total number of income-restricted units related to the property;

t) the lending channel, e.g., retail or broker;

u) the originator’s NMLS ID;

v) the automated underwriting system (AUS) used to evaluation the application, and the result generated by the AUS;

w) whether the loan is a reverse mortgage;

x) whether the loan is an open-end loan; and

y) whether the transaction is a business-purpose loan. [12 CFR §1003.4(a)]

Why more criteria? For example, the current HMDA data can tell regulators whether a loan exceeds high-cost loan thresholds, and by how much. Regulators can further break the data down to show how often APRs exceed the high-cost loan thresholds for different ethnicities and races, and pinpoint a potentially discriminatory pattern.


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