The Credit Union National Association (CUNA) has expressed its displeasure with the Consumer Financial Protection Bureau (CFPB)’s expanded data point request under the Home Mortgage Disclosure Act (HMDA) in a letter to the White House Office of Management and Budget (OMB).
Responding to last week’s public request from the CFPB for comment on the resubmission of mortgage lending data reported under HMDA, CUNA was highly critical of the Bureau in the letter, saying that the CFPB “overstepped the boundaries” and was “ignoring what Congress chose to allow for expressly” by requiring covered financial institutions to report what CUNA called a “staggering 48 data fields” instead of the 17 established by Dodd-Frank. CUNA also stated that the Bureau “fell well short” of certain Dodd-Frank mandates with regards to collecting HMDA data.
The CFPB did not immediately respond to a request for comment on the letter.
HMDA was enacted in 1975 and require lenders to report information about their home loan applications or originations. The public and regulators take this information and use it to monitor whether financial institutions are serving the housing needs of their communities, to assist in distributing public-sector investment so as to attract private investment to areas where it is needed, and to identify possible discriminatory lending patterns.
The CFPB stated that the recent finalization of the rule in October 2015 was done “to improve information reported about the residential mortgage market” and added more data points for financial institutions.
CUNA contended in the letter to the OMB that HMDA data, both under the old regime and the new regime, cannot establish discrimination because it contains only “outcome data” and does not contain any information on how those outcomes were determined. For example, HMDA data does not contain an applicant’s credit or employment history or assets, nor does it contain other pricing elements such as market factors or supply and demand. CUNA did note in the letter that the HMDA data may indicate certain trends that warrant investigation by regulatory agencies.
The letter noted that on credit unions specifically, HMDA data does not contain the individual field of membership restrictions that can affect lending decisions.
“It is precisely these limitations on the data which illuminate why the data collection is thus overbroad and not reasonably tailored to allowing the CFPB to accomplish its oversight function,” the letter stated. “Since the data cannot establish discrimination, the CFPB has clearly overstepped the boundaries of what is necessary for it to accomplish its oversight function and protect the public.”
CUNA further states that the CFPB is authorized by the Dodd-Frank Act to collect only 17 data points as part of HMDA, but under the new rule is now collecting 48 data points.
“Since the data cannot establish discrimination, the CFPB has clearly overstepped the boundaries of what is necessary for it to accomplish its oversight function and protect the public.”
“While Congress did authorize the CFPB to collect ‘such other information as the Bureau may require,’ it is unlikely this grant is an unbridled delegation to the CFPB to more than double the amount of express data points that Congress had indicated for the Bureau to collect,” the letter stated. “To go beyond the list is essentially ignoring what Congress chose to allow for expressly. Although Congress did provide for the CFPB to collect other information, the CFPB went far beyond the Dodd-Frank specifically itemized data points and now requires a staggering 48 data fields to be collected by a covered financial institution.”
Dodd-Frank requires the CFPB to work with other banking regulatory agencies to determine which data points collected under HMDA will be made public. CUNA said in the letter the organization is concerned because the CFPB has not disclosed which HMDA data will be made public.
“In the HMDA rulemaking, the CFPB fell well short of this mandate and only adopted a ‘balancing test’ to balance the importance of releasing the data to accomplish HMDA’s public disclosure purposes against the potential harm to an applicant or borrower’s privacy interest that may result from the release of the data without modification,” the letter stated. “While the balancing test may be useful by the agency as a step in determining what should be made public, it does not inform the industry of what data points will actually be made public or in what format the data will be public.”