California Presses CFPB for More Mortgage Disclosure Transparency

More than 40 organizations in California are calling on the Consumer Financial Protection Bureau (CFPB) to bring greater transparency to the Home Mortgage Disclosure Act (HMDA) to address a variety of proposals, including those related to non-borrowing reverse mortgage spouses.

Better measurements are needed for home loans, mortgage modifications, multi-family affordable housing, home equity lines of credit for small business, as well as a more accurate definition of the “Asian” race in the HMDA, urge the 41 organizations that join the California Reinvestment Coalition (CRC) in the push for increased transparency.

The HMDA requires lenders to collect and publish data about mortgage lending. And while advocates credit the act with increasing access for communities that had previously been “redlined,” the CRC, along with its 41 supporters are submitting comments to CFPB on several proposed changes.

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In a letter addressed to Monica Jackson at the CFPB’s Office of the Executive Secretary, the organizations suggest several changes, including requiring loan modification data to be reported by banks and supervisors; as well as disclosing if a borrower is going to own a property with somebody who is not on the loan, which is especially important as it applies in the case of reverse mortgages.

“The problem of successors in interest and non-borrower spouses will only grow as the population ages,” states the letter. “These data are especially important and relevant as the CFPB here proposes to require the reporting of reverse mortgages, where the successors in interest dilemma is all too real.”

To address this, the organizations propose a data field be crafted to capture whether there is a co-owner of the property who is not only the loan, or where that person co-owns the property with someone who signs the deed of trust as a “guarantor.”

Because this person is usually a spouse, the organizations suggest this phenomenon—especially among limited English-speaking families and families of color—can cause significant problems upon divorce or the death of one spouse.

With 10,000 baby boomers reaching age 65 every day, instances of widowed homeowners losing their homes if they’re listed on the title but not on the mortgage are already evident, said Maeve Elise Brown, executive director at Housing and Economic Rights Advocates, one of the organizations calling for greater HMDA transparency.

“To address this problem, lenders should be required to note when they’re making a loan if there is a property owner who will not be listed on the loan, but who has a legal interest in the property,” Brown said in a written statement.

Determining if a borrower received pre-purchase counseling is another area where the HMDA needs more transparency.

“Pre-purchase housing counseling can have a significant impact on a borrower’s ability to attain, and maintain homeownership, while avoiding predators who would seek to siphon off fees and equity,” the organizations stated in the letter.

To this end, the organizations agree with the National Housing Resource Center that HMDA data should include data fields relating to counseling type (counseling or education), counseling mode (in-person, phone, online) and counseling agency HUD ID.

Changes to the HMDA, specifically data reporting requirements beyond those set by Dodd-Frank, will “greatly” assist in monitoring trends in access, affordability and sustainability of home loans, the organizations state.

“In updating HMDA rules, the CFPB can finally increase transparency into mortgage modifications so that it’s clearer if foreclosure relief is actually happening, and if so, in what communities,” said CRC Associate Director Kevin Stein in a written statement. “The City and County of San Francisco already asked for and received this type of modification data from Bank of America, so we know it’s possible.”

Written by Jason Oliva

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