HMDA Reporting and Multifamily Finance
The Home Mortgage Disclosure Act (HMDA) requires mortgage lenders to collect and report information on specific data points pertaining to their lending practices. The Dodd-Frank Act of 2010 transferred administration of HMDA to the Consumer Financial Protection Bureau (CFPB). It also authorized the CFPB to require collection of additional mortgage lending information. The CFPB implements HMDA under "Regulation C.
While historically the data collected under HMDA was primarily limited to single-family lending, the CFPB proposed in August 2014 to amend Regulation C to expand the range of data points collected to include additional data fields specified under new authority granted under Dodd-Frank. The CFPB finalized the new rule on October 15, 2015, and subsequently issued several rounds of technical corrections and clarifying amendments. MBA submitted comments on those amendments. Most new HMDA provisions took effect January 1, 2018.
HMDA FINAL RULE
The rule continues minimum asset-level and loan volume thresholds for covered institutions for 2017. Beginning in 2018, financial institutions that originate at least 25 covered commercial mortgage loans secured by a multifamily property in each of the two preceding calendar years, and meet other specifications for either depository or nondepository financial institutions, will be required to collect and report HMDA data.
The final HMDA rule mandates that financial institutions report data for all applications, originations (including assumptions), and purchased loans relating to commercial mortgage loans secured by multifamily properties and small business loans secured by a dwelling. Covered institutions must also collect and report data on loan applications that are approved but not accepted.
Addition and Modification of Data Points
The final rule requires covered institutions to report more data than were previously required. New and modified data include more detailed information on loan terms, interest rates, loan identification numbers, location and affordable housing units. The CFPB did exclude several borrower specific data points from multifamily reporting requirements, in line with MBA's view that the information is not applicable to commercial/multifamily lending given the fundamental nature of these transactions.
Reporting and Disclosure Process
Beginning with data reported in 2018, information must be submitted through a web based CFPB portal. The CFPB will be the single agency for collection and distribution of HMDA data. While institutions will be required to maintain public disclosure notices, they will not be required to provide their data directly to requesting parties. Data that the CFPB determines meets a balancing test for public disclosure will be made available on the HMDA website.
MBA continues to recommend that business-to-business loans secured by multifamily properties be exempted from HMDA reporting requirements. The regulatory burden of reporting such business-purpose transaction data under a statute and regulations designed for single-family consumer lending outweighs potential public policy benefits. MBA will continue to advocate such an exemption, by way of regulatory by the CFPB (under new leadership) or legislative action.
As an alternative source of relief, MBA also supports efforts to increase substantially the current 25-transaction threshold for HMDA reporting, either legislatively or by action by the CFPB under new leadership. Currently, two legislative proposals would provide some relief for some lenders. On the House side, H.R. 2954, the Home Mortgage Disclosure Adjustment Act, introduced by Congressman Tom Emmer (R-MN), would increase the threshold to 500 for bank and nonbank lenders - but would exempt lenders only from reporting new, additional data elements added under Dodd-Frank/new CFPB HMDA rules. On the Senate side, a provision of S. 2155, the Economic Growth, Regulatory Relief, and Consumer Protection Act, introduced by Senator Mike Crapo (R-ID), would similarly increase the threshold to 500 and would include the same limited exemption from HMDA reporting - but it would provide relief only to insured banks and credit unions, not to nonbank lenders.
MBA is also concerned about protecting the confidentiality of HMDA information. In September 2017, the CFPB issued proposed policy guidance around the release of HMDA data for notice and comment. MBA responded that multifamily loans should be exempt from HMDA reporting. To the extent that they are not exempt, loan-level information for multifamily properties should not be released at all, or should be released only in a manner "appropriately tailored" to fully address the risk that multifamily borrowers could be re-identified. This it critical because the proposal, in its current form, all but guarantees that at least some multifamily borrowers will be re-identified and exposed to reputational risk, an outcome MBA seeks to prevent.
Commercial Servicing Resources
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