In an effort it says will improve the information reporting process across the residential mortgage market, the Consumer Financial Protection Bureau today announced it is proposing changes to the Home Mortgage Disclosure Act—the rule that governs all mortgage disclosures that are mandated during home loan transactions.
While lenders have long been collecting consumer information and reporting it under HMDA, the proposed changes are targeted at simplifying the process for financial institutions and gaining more insight into consumers’ access to mortgage credit. And they are specifically seeking more information from reverse mortgage lenders on their transactions and borrowers.
“It is critical that we shed more light on the mortgage market – the largest consumer financial market in the world,” said CFPB Director Richard Cordray. “The Home Mortgage Disclosure Act helps financial regulators and public officials keep a watchful eye on emerging trends and problem areas in the mortgage market. Today’s proposal would help us understand better how to protect consumers’ access to mortgage credit while simplifying the reporting requirements for financial institutions.”
The goal of the proposal is largely twofold, the CFPB noted, including a collection of better information about the mortgage market, as well as simplified process behind that reporting. Specific changes would include the addition of new information to help identify discriminatory practices such as property value, loan term, points and fees and other information.
The CFPB is also proposing that lenders provide more information about underwriting and pricing, such as debt-to-income ratios, interest rates, and discount points.
Reverse mortgage specific updates include a requirement that “covered lenders report, with some exceptions, all loans related to dwellings, including reverse mortgages and open-end lines of credit.”
Separately, the proposal loosens requirements for non-depository institutions, except for those who originate reverse mortgages. While all depository institutions must submit HMDA data, non-depository mortgage lenders may be required to report only if they make at least 100 loans in a year, with an exception around reverse mortgages.
“The proposal would generally require that institutions report HMDA data if they make 25 or more closed-end loans or reverse mortgages in a year,” the CFPB says.
In the proposal, the CFPB specifies that it is seeking more information about reverse mortgages to better inform the public and government officials about their risks.
Written by Elizabeth Ecker