ABA: Proposed HMDA Changes Warrant Further Discussion

In a comment letter today, the American Bankers Association provided feedback on the Consumer Financial Protection Bureau’s proposed technical changes to the data lenders are required to collect and report under the final Home Mortgage Disclosure Act Rule (Regulation C). Most provisions of the rule take effect Jan. 1, 2018.

ABA pointed out that while the CFPB characterized the proposed revisions as “technical corrections, clarifying amendments or minor changes,” many of the changes are substantive in nature. Despite this, the proposed changes would have the same compliance date as the original rule, adding confusion and additional compliance burden for banks, the association said. ABA added that offering the industry only 30 days to comment on the proposed changes was insufficient for gathering comprehensive feedback, and called on the bureau to undertake a more formal process for identifying problems with the rule.

In its revisions, the CFPB attempted to address how lenders should report loans in process when the HMDA rule takes effect, since those transactions may lack certain data that it was either not required or illegal to collect at the time of application. However, ABA noted that the proposed process would add unnecessary complications and recommended a simpler solution. The association also raised concerns about the new disaggregated race and ethnicity data and its alignment with Community Reinvestment Act requirements and fair lending analysis, among other things.

ABA has long sought changes to the final HMDA rule since it was issued in October 2015, and has previously expressed concerns particularly about privacy protection and data security, which the 150-page revision proposal does not address. In a recent white paper to the U.S. Treasury Department, ABA reiterated these concerns, calling for a pause to the implementation of the new requirements until security and privacy issues are adequately addressed. For more information, contact ABA’s Rob Rowe.