Mortgage lenders need more help implementing law’s abrupt changes
Mortgage lenders need more help implementing law’s abrupt changes
The Economic Growth, Regulatory Relief and Consumer Protection Act, signed into law in late May, addressed several important issues facing the mortgage industry. The legislation, however, may have created unexpected implementation challenges for mortgage lenders. Certain provisions of the legislation failed to provide implementation timelines, guidance and clear definitions, particularly regarding changes to Home Mortgage Disclosure Act (HMDA) reporting requirements and Ginnie Mae pooling criteria for refinanced loans guaranteed by the Department of Veterans Affairs (VA).
“Regulators are still working out some of the details of the legislation, leaving lenders waiting for further instruction,” said Tim Rood, Chairman of The Collingwood Group. “Our clients are particularly struggling with the abrupt rollout of the VA churning rule changes.”
The legislation outlined changes to HMDA reporting requirements. The Bureau of Consumer Financial Protection (BCFP) has already issued guidance on partial exemptions for depository institutions and credit unions. While the legislation dictated a reduction in the amount of HMDA data collected, it did not specify which fields should be eliminated.
Roughly 85% of lenders fall under the umbrella of the new HMDA exemptions created by the legislation. There has been some confusion, however, about certain technical requirements of lenders that are exempt from HMDA reporting. Lenders are unsure of their requirements to collect HMDA data, despite not being required to report it. The Federal Deposit Insurance Corporation weighed in on the issue. Jonathan Miller, deputy director of deposit and consumer protection at the FDIC, said at a recent public agency meeting, “From our point of view, we do not think the law requires you to collect the data if you don’t have to report it.”
The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in 2010, expanded HMDA reporting from nine data fields to 23 data fields. The BCFP further expanded reporting requirements, adding another 25 data fields under the leadership of former Director Richard Cordray. Acting Director Mick Mulvaney has suggested in previous remarks that he plans to eliminate the 25 fields added by Cordray, but the industry is still waiting for more formal guidance and/or rulemaking.
“We’ve seen a complete 180 on HMDA in the past year. There have been changes to everything from enforcement approach to exemptions and reporting requirements,” said Rood. “We are close to a final picture of what HMDA reporting will look like under the Trump administration, but additional regulatory guidance is needed to provide clarity to lenders and vendors.”
To read the complete commentary on implementation challenges, click here.
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