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On February 12, the CFPB issued its semi-annual report to Congress covering the Bureau’s work from April 1, 2018, through September 30, 2018. The report, which is required by the Dodd-Frank Act, addresses issues including problems faced by consumers with regard to consumer financial products or services; significant rules and orders adopted by the Bureau; and various supervisory and enforcement actions taken by the Bureau when acting Director Mick Mulvaney was still in office. The report is the first to be released under Kathy Kraninger, who was confirmed as Director in December 2018. In her opening letter, Kraninger emphasized that during her tenure the Bureau will “vigorously and even-handedly enforce the law,” and will make sure the financial marketplace “is innovating in ways that enhance consumer choice.” Among other things, the report focuses on credit invisibility and mortgage shopping as two significant problems faced by consumers, noting that credit invisibility among adults tends to be concentrated in rural and highly urban areas and, based on recent studies, more than 75 percent of borrowers report applying for a mortgage with only one lender.
The report also includes an analysis of the efforts of the Bureau to fulfill its fair lending mission. The report highlights the most frequently cited violations of Regulation B (ECOA) and Regulation C (HMDA) in fair lending exams during the reporting period and emphasizes that during the reporting period the Bureau did not initiate or complete any fair lending public enforcement actions or refer any matters to the DOJ with regard to discrimination.
The Federal Reserve Board (Fed) issued a final rule on December 22 to repeal Regulation C, Home Mortgage Disclosure (HMDA), and a proposed rule to amend Regulation M, Consumer Leasing Act (CLA) to reflect the transfer of certain rulemaking authority to the CFPB. Regulation C is being repealed because the CFPB has issued its own final HMDA rules (previously covered by InfoBytes here) that supersede the Fed’s version. The proposed amendments to Regulation M implement the Dodd-Frank Act’s provisions on transferring CLA rulemaking authority to the CFPB, with the exception of retaining the Fed’s authority to issue rules for motor vehicle dealers that are predominantly engaged in the sale/leasing and servicing of motor vehicles and are not otherwise subject to the CFPB’s regulatory authority.
The repeal of Regulation C is effective 30 days after publication in the Federal Register. Comments on the proposed amendments to Regulation M are due by March 5, 2018.
On November 24, the Federal Reserve Board, FDIC, and OCC published a joint final rule in the Federal Register, amending their respective Community Reinvestment Act (CRA) regulations. The amended regulations conform with the CFPB’s amendments to Regulation C, which implements the Home Mortgage Disclosure Act (HMDA). The amendments are designed to reduce the burden associated with CRA performance evaluation reporting requirements. Specifically, the amended regulations (i) modify the definitions of “home mortgage loan” and “consumer loan”; (ii) revise the public file content requirements; and (iii) make technical corrections and remove obsolete references to the Neighborhood Stabilization Program (see previous InfoBytes coverage here).
As previously reported in InfoBytes, amendments to Regulation C generally take effect January 1, 2018, with the agencies’ specific amendments to the CRA regulations taking effect the same day.
On October 17, the CFPB published a new reference chart titled “Reportable HMDA Data: A Regulatory and Reporting Overview Reference” designed to be used as a reference tool for required data points to be collected, recorded, and reported under Regulation C. The chart takes into account HMDA rules issued on August 24, which generally take effect January 1, 2018. (See previous InfoBytes coverage here.) The CFPB noted that the reporting reference chart “does not itself establish any binding obligations” and is not intended to be viewed as a “substitute for the regulation or its official commentary.”
Separately that same day, in a measure to promote efficiency and consistency, the Board of Governors of the Federal Reserve, FDIC, and OCC identified 37 key data fields that examiners will typically use to test and validate the accuracy and reliability of data collected under the new HMDA requirements beginning in 2018. In certain circumstances, however, examiners may find it necessary to review additional HMDA data fields as appropriate. OCC Acting Comptroller of the Currency Keith Noreika noted in a statement that these actions should help ensure the accurate collection of HMDA data without creating “needless burden” on community banks surrounding the full resubmission of data “simply because of a few minor errors.”
CFPB Announces Final Rule Modifying ECOA Regulations, Seeks Public Comment on Proposed Disclosure of HMDA Data
On September 20, the CFPB announced its Final Rule amending Regulation B, which implements the Equal Credit Opportunity Act (ECOA), as well as a notice of proposed policy guidance requesting public comment on modifications to loan-level HMDA data that will be made publicly available beginning in 2019.
Amendments to Regulation B. The Final Rule, among other things, permits institutions not subject to HMDA reporting requirements to choose, on an “application-by-application basis,” between two approaches to collecting race and ethnicity data from applicants for certain dwelling-secured loans: either collect such data in the aggregate or use the disaggregated and more expansive categories required for HMDA-reporting institutions under revisions to Regulation C effective in 2018. According to the Final Rule, this means that creditors that are not HMDA reporters could transition to using the 2016 Uniform Residential Loan Application, which was updated to comply with the upcoming changes to Regulation C. As previously covered in InfoBytes, the justification for the change was to provide consistency and clarity with respect to other Bureau rules.
Proposed Policy Guidance Regarding Publicly Available Loan-Level HMDA Data. The CFPB has issued a notice of proposed policy guidance with a request for public comment concerning modifications that it intends to apply to publicly available loan-level HMDA data that financial institutions will be required to report in connection with the new HMDA data reporting requirements that become effective January 1, 2018. The CFPB is specifically seeking comment on whether certain data fields should be included or modified in the publicly available loan-level HMDA data; these fields include the universal loan identifier, application date, loan amount, action taken date, property address, age, credit score, debt-to-income ratio, and property value, among others. As previously covered in InfoBytes, the CFPB issued its final rule amending Regulation C in August. Comments on the proposed guidance are due 60 days after publication in the Federal Register.
On April 13, the CFPB announced the release of its proposal to amend Regulation C (12 CFR Part 1003), the regulation that implemented the Home Mortgage Disclosure Act (HMDA) and requires lenders to collect, report and disclose data on home loan applications, originations, and purchases of mortgage loans. On October 15, 2015, the Bureau updated the HMDA reporting requirements to expand the data collection scope, while simultaneously streamlining certain existing requirements (see Special Alert: CFPB Adopts Significant Expansion of HMDA Reporting Requirements). According to the Bureau’s press release, the 2017 proposed amendment is intended to “help financial institutions comply with the 2015 HMDA Final Rule by clarifying the information they are required to collect and report about their mortgage lending.” Specifically, the regulation, as amended, will establish “transition rules” for both “loan purpose” and the “unique identifier” for the loan originator. The transition rules will also allow financial institutions to report “not applicable” for these two data points. Furthermore, the proposal will make additional amendments to clarify certain key terms, such as “temporary financing” and “automated underwriting system,” and create a new reporting exception for certain transactions associated with New York State agreements. Comments on the proposal will be due within 30 days of its publication in the Federal Register.
Additional information and materials covering the new HMDA Rule (amending Regulation C) can also be found in Buckley Sandler’s HMDA Resource Center. And, as recently covered by InfoBytes, the CFPB has also made available two webinars and various "Quick Reference" guides that help explain the HMDA.
On February 14, the CFPB announced the availability of a second Webinar on the New Home Mortgage Disclosure Act (HMDA) Rule (amending Regulation C), a Rule that was itself finalized in late 2015 but that is predominantly not effective until January 1, 2018, or later. The new Webinar, with audio and closed-captioning over a slide-deck, focuses solely on identifiers and other “data points,” including the race and ethnicity of an applicant or borrower, which must be collected under the New HMDA Rule. In August 2016, the CFPB released an initial Webinar on the same Rule, covering a broader range of topics and without the focus on data points in the newer Webinar.
In addition, the Bureau has now made available a one-page chart to summarize the options a financial institution has for collecting and reporting ethnicity and race information under current Regulation C, Regulation C effective January 1, 2018, and the Bureau’s Official Approval Notice (issued on September 23, 2016). All of the above-mentioned resources and many more related materials (such as an unofficial transcript we prepared of the initial Webinar) can also be found in Buckley Sandler’s HMDA Resource Center.
On January 3, the CFPB announced the release of its annual report to the Senate and House Committees on Appropriations for 2016. The report—which covers October 1, 2015 through September 30, 2016—identifies the specific responsibilities that the Dodd-Frank Act tasked to the CFPB and explains how the Bureau has attempted to meet those responsibilities. Among other things, the report describes Bureau regulations and guidance related to the Dodd-Frank Act including, but not limited to: (i) a proposed rule on arbitration; (ii) a proposed rule related to payday loans, vehicle title loans, and other similar credit products; (iii) a final rule to amend various provisions of the mortgage servicing rules implementing the Real Estate Settlement Procedures Act and the Truth in Lending Act; and (iv) a final rule amending Regulation C, implementing the Home Mortgage Disclosure Act. The report also includes descriptions of the Bureau’s supervisory activities and enforcement actions undertaken by in the 2016 fiscal year.
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