CUNA pushes for CFPB HMDA changes in advance of final rule

June 12, 2015

WASHINGTON (6/12/15)--CUNA has taken another proactive measure on behalf of credit unions by urging the exemption of credit unions from certain new Home Mortgage Disclosure Act (HMDA) Regulation C data reporting requirements in a letter to Consumer Financial Protection Bureau (CFPB) Director Richard Cordray.

In Thursday’s letter to Cordray, CUNA President/CEO Jim Nussle reiterated concerns about “particularly burdensome and prohibitive consequences on credit unions and their members” and urged that the CFPB require collection and reporting of only those data points required by the Dodd-Frank Wall Street Reform and Consumer Protection Act amendments to the HMDA.

The CFPB, as required by the Dodd-Frank Act, unveiled proposed HMDA changes in July. The proposed changes include revising the tests for determining which institutions are covered under HMDA and requiring more data points to be reported.

Although CUNA “understands the purpose behind HMDA reporting and recognizes the significance HMDA data has in showing how financial institutions are serving the housing needs of their communities,” wrote Nussle, “my concern is that the bureau has gone far beyond the purpose of the statute resulting in a proposed rule that would be detrimental to credit unions and their members.”

Covered entities, including credit unions that trigger Regulation C compliance, would be required to report HMDA data if they originate 25 covered loans in the previous calendar year. Unsecured home improvement loans would no longer have to be reported. All closed-end loans, open-end lines of credit and reverse mortgages secured by dwellings would be required to be reported.

Nussle’s letter also addressed that only 17 of the 37 new data fields that must be reported under the proposed rule are prescribed by Congress in the Dodd-Frank Act. He requested that only those required by statute be applied to credit unions.

“The burden for reporting literally dozens of new data fields would be particularly great for small credit union mortgage lenders, with the potential to even force these smaller institutions out of the marketplace,” said CUNA’s letter, which also discussed the operational impact it will have on all mortgage-lending credit unions. The projected costs of complying “are simply unmanageable.”

“The CFPB should be promoting a diverse mortgage marketplace with many different and competing options for consumers. Placing more regulatory burden on credit unions contradicts this objective because the potential reduction of the market will result in fewer choices and less competitive prices for consumers seeking mortgage loans.”

CUNA also stated that the exemption threshold of only 25 or more closed-end mortgage loans “does not accurately reflect the current mortgage market, or go nearly far enough.” Instead, data collected “illustrates that the threshold would be more appropriate if it were increased to 500 loans per year.” CUNA suggested that “very few lenders” in the past several years have originated less than 25 mortgage loans per year.

CUNA also urged CFPB to reconsider the proposal requiring mandatory reporting of home equity lines of credit, noting that “many credit unions, particularly small and medium-sized credit unions, will have extreme difficulties and overly burdensome expenses in compiling and aggregating the required HMDA data.”

The proposed rule “does not fully recognize the differences between credit unions and other types of depository institutions, who not only are more closely linked to past lending problems but also have more extensive compliance resources.”

The CFPB is expected to release its final rule later this summer. CUNA’s latest letter supplements earlier feedback it presented when the proposal was under its comment period (News Now Oct. 29).