Based on the President’s executive order 13772 on The Core Principles for Regulating the United States Financial System, the American Bankers Association (ABA) submitted a white paper to Treasury Secretary Mnuchin that criticizes the revised Home Mortgage Disclosure Act (HMDA) rule adopted by the CFPB.

The executive order requires the Treasury Secretary, based on the core principles laid out in the executive order,  to identify the federal laws that promote and inhibit the regulation of the United States financial system.  In the white paper, the ABA “offers these views” to the Treasury Secretary in relation to the executive order’s directive:

  • Expanded data collection adds nothing but volumes of irrelevant data, distracting from achievement of HMDA’s purposes.
  • Regulators have failed to protect expanded HMDA data from breaches of security and privacy.
  • Expanded data collection will feed banker regulatory worries about meeting customer needs outside of the norm.
  • Data expansion should be suspended until security and privacy concerns are fully addressed.
  • Bureau regulatory expansion of data beyond the statute should be rescinded.
  • Dodd-Frank expansion of HMDA data fields should be repealed.

The comment regarding security and privacy addresses industry concerns that (1) the greatly expanded nonpublic personal information on consumers presents data security risks and (2) the public release of various new HMDA data elements will result in nonpublic personal information on consumers becoming readily available to the public.  As we have reported previously, the CFPB has provided little insight into its decision making on what data will be released, and does not appear to be too concerned with data security or privacy issues.  The ABA notes that it is “concerned that the Bureau has not initiated a public rulemaking to address the significant consumer privacy dangers and data protection threats that the expanded HMDA data collection poses.”  The ABA concerns are based on the “probability that manipulation of the expanded data points will make it easier for unfriendly parties to unmask identities of borrowers and their personal financial profiles, and the wholesale risks common to an age where harmful data breaches of government-held information are real, frequent, and therefore must be anticipated.”

We share the ABA’s concerns that the expanded HMDA data categories presents, both with regard to the risk of unauthorized access to the data, and the public release of various data elements by the CFPB.

On May 4 H.R. 10, the Financial CHOICE Act (the Act) introduced by House Financial Services Committee Chairman Jeb Hensarling, R-Texas, obtained enough votes to move the bill on to the House of Representatives floor.  The Act seeks to rollback or modify many of the regulatory and supervisory requirements imposed by the Dodd-Frank Act.

On May 8, my colleague, Barbara Mishkin blogged about provisions of the bill that would overhaul the CFPB’s structure and authority, and a variety of other provisions.  I will blog about the provisions in the bill that relate to mortgage origination and servicing.  The passage of the bill in its current form would result in significant changes for that industry.  The most significant changes are addressed below.

S.A.F.E. Act Transitional Authority.  If certain conditions are met, the Act would create, under the S.A.F.E. Mortgage Licensing Act, temporary authority for a loan originator to continue to originate loans in cases in which (1) a registered loan originator moves from a depository institution to a non-depository institution mortgage lender and (2) a licensed loan originator moves from a non-depository institution in one state to another non-depository institution in a different state.  The temporary period would run from the date the loan originator submits an application for a license until the earlier of the date (1) the application is withdrawn, denied or granted, or (2) that is 120 days after submission of the application, if the application is listed in the Nationwide Mortgage Licensing System and Registry (NMLSR) as being incomplete.

Points and Fees.  The definition of points and fees for purposes of the Regulation Z ability to repay/qualified mortgage requirements and high-cost mortgage loan requirements would be revised to exclude charges for title examinations, title insurance or similar purposes, regardless of whether the title company is affiliated with the creditor.  Currently, for such charges to be excluded from points and fees, the title company must not be an affiliate of the creditor.  The Act also would make a conforming change to exclude escrowed amounts for insurance from points and fees.  Currently, escrowed amounts for taxes are excluded from points and fees.  Both changes were included in bills introduced in prior years that never were enacted.

Ability to Repay/Qualified Mortgage.  The Act would create a safe harbor against lawsuits for failure to comply with the Regulation Z ability to repay requirements for mortgage loans made by depository institutions that are held in portfolio from the time of origination and comply with a limitation on prepayment penalties.  Mortgage originators working for depository institutions would have a safe harbor from a related anti-steering provision if they informed the consumer that the institution intended to hold the loan in portfolio for the life of the loan.

Higher-Priced Mortgage Loan Escrow Requirements.  The Act would exempt certain small creditors from the escrow account requirements under Regulation Z for higher-priced mortgage loans if the small creditor held the loan in portfolio for at least three years after origination.  A creditor would qualify for the exemption if it has consolidated assets of $10 billion or less.

Small Servicer Exemption.  For purposes of the exemption for small servicers from various servicing requirements, the Act would require an increase in the limit on loans serviced to be considered a small servicer.  Currently the limit is 5,000 loans serviced by the servicer and its affiliates, and the servicer and its affiliates must be the creditor or assignee of all of the serviced loans.  The Act would require the adoption of a limit of 20,000 loans serviced annually.  The Act does not expressly refer to loans serviced by affiliates or whether the servicer and its affiliates must be the creditor or assignee of the loans.

HMDA Reporting Threshold.  The revised Home Mortgage Disclosure Act (HMDA) rule adopted by the CFPB establishes uniform volume thresholds to be a reporting institution at 25 closed-end mortgage loans in each of the prior two years or 100 open-end lines of credit in each of the prior two years.  The uniform thresholds will become effective January 1, 2018, although the 25 loan threshold for closed-end mortgage loans became effective January 1, 2017 for depository institutions.  The bill would increase the thresholds to 100 closed-end mortgage loans in each of the prior two years and 200 open-end lines of credit for each of the prior two years.

HMDA Information Privacy.  The revised HMDA rule adopted by the CFPB significantly expands the data on the consumer and loan that must be collected and reported, including the credit score and age of the consumer.  The mortgage industry has raised concerns about how much information the CFPB will make public under HMDA, as parties can use the publicly released data as well as other publicly available data to determine the identity of the consumer.  The CFPB is still assessing what elements of the reported data it will release to the public.  The Act would require the Comptroller General of the United States to study the issue and submit a report to Congress.  The Act also would provide that reporting institutions are not required to make available to the public any information that was not required to be made available under HMDA immediately prior to the adoption of the Dodd-Frank Act.  This aspect of the Act does not address that, under the revised HMDA rule, the CFPB, and not each reporting institution, would make reported information available to the public.

It is likely that the H.R. 10 as currently structured will not be adopted, but various provisions may find their way into law.  We will continue to monitor developments.

On March 24, the CFPB announced a proposal to amend Regulation B requirements related to the collection of consumer ethnicity and race information, in order to resolve the differences between Regulation B and revised Regulation C.  These proposed rule amendments are effective on January 1, 2018, the same effective date as the 2015 Home Mortgage Disclosure Act (HMDA) Final Rule.

First, the proposal would give persons who collect and retain race and ethnicity information in compliance with Regulation B the option of permitting applicants to self-identify using the disaggregated race and ethnicity categories required by the 2015 HMDA Final Rule.  Aligning these rules would allow HMDA-reporting entities to comply with Regulation B without further action, while entities that do not report under HMDA but record and retain race and ethnicity data under Regulation B could either use existing aggregated categories or the new disaggregated race and ethnicity categories.

Second, the proposed amendment would remove the outdated 2004 Uniform Residential Loan Application (URLA) as a model form, and provide a new, one-page data collection model form, which is substantially similar to section X of the 2004 URLA.  Eventually, non-HMDA reporting entities will be free to use the 2016 URLA prepared by Freddie Mac and Fannie Mae to collect race and ethnicity information, as previously discussed in the CFPB’s September 2016 Approval Notice.  Fannie Mae and Freddie Mac have not implemented the 2016 URLA yet, and have not indicated a precise start date, and so the CFPB proposes that the 2004 URLA be removed on the cutover date the enterprises designate for use of the 2016 URLA or on January 1, 2022, whichever comes first.  Note that a Demographic Information Addendum, which is identical in form to section 7 of the 2016 URLA, and which is as a replacement for section X (Information for Government Monitoring Purposes) in the current URLA, dated 7/05 (revised 6/09), has been available for use since January 1, 2017.

Third, the proposed rule would allow creditors to collect ethnicity, race and sex information from mortgage applicants in certain cases where the creditor is not required to report under HMDA and Regulation C, including creditors that submit HMDA data even though not required to do so, and creditors that submitted HMDA data in any of the preceding five calendar years.  This change would primarily benefit institutions that may be required to report under HMDA and Regulation C in some years and not others, or may be uncertain about their reporting status. The CFPB believes that “allowing voluntary collection will reduce the burden of compliance with Regulation C on some entities and provide certainty regarding Regulation B compliance over time.”

Note that the CFPB is not proposing a mandatory requirement for Regulation B-only creditors to permit applicants to self-identify using disaggregated race and ethnicity categories.  The CFPB believes that permitting (rather than requiring) the use of disaggregated ethnicity and race categories avoids placing costs and heightened compliance burdens on Regulation B-only creditors.  Nevertheless, the CFPB believes that “many that are not subject to revised Regulation C are nevertheless likely to adopt the 2016 URLA at some point because of business considerations unrelated to Regulations B and C.”

The CFPB is seeking comments on these proposed amendments for 30 days after its publication in the Federal Register.

On October 15, 2015, the CFPB released a final rule amending Regulation C, which implements the Home Mortgage Disclosure Act (HMDA), requiring certain data on mortgage applications and loans to be collected beginning in 2017 by “covered institutions.”

The CFPB has previously made various resources available for HMDA filers, including a recording of a webinar conducted by the CFPB staff that provides an overview of the 2015 HMDA final rule.  Last week, the CFPB posted a recording of a new webinar on the final rule that discusses identifiers and other data points, including those related to applicants and borrowers.

As we have previously discussed, on October 15, 2015, the Consumer Financial Protection Bureau (CFPB) released a final rule amending Regulation C, which implements the Home Mortgage Disclosure Act (HMDA), requiring certain data on mortgage applications and loans to be collected in 2017 by “Covered Institutions.” The 2017 HMDA institutional chart  provides guidance on how to determine whether an institution is covered by Regulation C in 2017.

We also reported on various resources available for HMDA filers. Recently, the “Resources for HMDA Filers” webpage has been updated and is accessible here. As you will see, the 2017 Loan/Application Register (LAR) Formatting Tool has been released. It appears that the focus is lenders with small loan volumes of covered loans and applications, as the Tool is based on Microsoft Excel. In addition, please note that the Filing Instructions Guide for data collected in 2017 is still the July 2016 guide, but the Filing Instructions Guide for 2018 is updated to a January 2017 guide.

The CFPB has announced annual adjustments to two asset-size exemption thresholds.  First, the CFPB has made no change to the asset-size exemption threshold under HMDA/Regulation C which is currently set at $44 million.  Banks, savings associations, and credit unions with assets at or below $44 million as of December 31, 2016 will continue to be exempt from collecting HMDA data in 2017.

Second, the CFPB has increased the asset-size threshold under TILA/Regulation Z for certain small creditors operating primarily in rural or underserved areas to qualify for an exemption to the requirement to establish an escrow account for higher-priced mortgage loans (HPML).  The threshold is currently set at $2.052 billion.  Loans made by creditors operating primarily in rural or underserved areas with assets of less than $2.069 billion as of December 31, 2016 (including assets of certain affiliates) that meet the other Regulation Z exemption requirements will be exempt in 2017 from the escrow account requirement for HPMLs.  (The adjustment will also increase the asset threshold for small creditor portfolio and balloon-payment qualified mortgages which references the HPML escrow account asset-size threshold.)

The CFPB announced that it is issuing warning letters to 44 mortgage lenders and mortgage brokers stating that it “has information that appears to show that your company may not be in compliance with certain provisions of the Home Mortgage Disclosure Act (HMDA) and its implementing regulation, Regulation C.”

According to the CFPB’s press release, the CFPB identified the 44 companies by reviewing available bank and nonbank mortgage data.  The press release includes a link to a sample warning letter.

The letters urge recipients to review their practices to ensure HMDA compliance and encourage them to advise the CFPB of the steps they have taken or will take to ensure compliance.  Alternatively, if a recipient believes it is not subject to HMDA, the CFPB encourages the recipient to provide an explanation for its position.

In October 2015, the CFPB issued a final rule amending Regulation C.  The changes, which, in part, implement the Dodd-Frank Act’s amendments to HMDA, expanded the scope of data required to be collected and reported, changed the scope of HMDA’s coverage of both institutions and transactions, and adopted new processes for disclosing data.  Most of the new and revised requirements take effect on either January 1, 2018 or January 1,  2019.




In a notice published in today’s Federal Register, the CFPB announced that it has given its “official approval” to a revised and redesigned Uniform Residential Loan Application (2016 URLA) and to the collection of expanded Home Mortgage Disclosure Act information on ethnicity and race in 2017.

2016 URLA.  The 2016 URLA approved by the CFPB was issued by the Federal Home Loan Mortgage Corporation and the Federal National Mortgage Association and is included as an attachment to the CFPB’s notice.  The notice indicates that the CFPB’s staff has determined that the relevant language in the 2016 URLA complies with the provisions in Regulation B (which implements the ECOA) that limit requests by creditors for certain information in applications, such as information about race and other protected characteristics, a spouse, marital status, or income from alimony and certain other sources.  The CFPB stated that while a creditor’s use of the 2016 URLA is not required under Regulation B, a creditor that uses the 2016 URLA without any modification that would violate these Regulation B provisions would be in compliance with such provisions.

The CFPB noted that a version of the URLA dated January 2004 is included in appendix B to Regulation B as a model form and describes the safe harbor provided in appendix B for creditors that use the model form.  The CFPB also noted that the Official Staff Commentary to Regulation B provides that creditors can use a previous version of the URLA dated October 1992 without violating Regulation B.  The CFPB stated that its official approval “is being issued separately from, and without amending” the Official Staff Commentary and that it will consider whether to address the treatment of outdated versions of the URLA in the Commentary at a later date.

Expanded HMDA Information Collection.  The amendments to Regulation C (which implements HMDA) finalized in 2015 will require financial institutions covered by HMDA to permit applicants to self-identify using disaggregated ethnic and racial categories beginning January 1, 2018.  In the notice, the CFPB stated that before such date, such inquiries would not be allowed under Regulation B Section 1002.5(a)(2) which limits inquiries by creditors about race or other protected characteristics.  Believing there will be significant benefits to permitting creditors to ask consumers to self-identify before January 1, 2018, the CFPB gave approval for a creditor “at any time from January 1, 2017, through December 31, 2017…at its option, [to] permit applicants to self-identify using disaggregated ethnic and racial categories as instructed in appendix B to Regulation C, as amended by the 2015 HMDA final rule.”  A creditor adopting that practice “shall not be deemed to violate” Section 1002.5(a)(2) and “shall also be deemed to be in compliance with  Regulation B § 1002.5(a)(2) even though applicants are asked to self-identify using categories other than those explicitly provided in that section.”

The notice also includes instructions for creditors to use to submit information concerning ethnicity and race collected under the approval  in connection with applications received from January 1, 2017 through December 31, 2017.  The instructions distinguish between applications on which final action is taken during the 2017 calendar year and those on which final action is taken on or after January 1, 2018.

For applications on which final action is taken during the 2017 calendar year, a financial institution is directed to submit the information on ethnicity and race using only the aggregate categories and codes provided in the filing instructions guide for HMDA data collected in 2017, even if the financial institution has permitted applicants to self-identify using disaggregated categories pursuant to the approval.  For applications on which final action is taken on or after January 1, 2018, a financial institution is given the option to submit the information on ethnicity and race using disaggregated categories if the applicant provided such information instead of using the transition rule adopted by the 2015 HMDA final rule or to submit the information using the transition rule.


As we have reported, the Consumer Financial Protection Bureau (CFPB) released a final rule amending Regulation C, which implements the Home Mortgage Disclosure Act (HMDA), requiring “Covered Institutions” to report certain information about mortgage applications and loans in efforts to create transparency in the mortgage lending process. In connection with the revisions, beginning with data collected in 2017, Covered Institutions will file HMDA data with the CFPB rather than the Federal Reserve Board.

On July 13, 2016, the FFIEC and HUD published the following resources: filing instructions for HMDA data collected in 2017; filing instructions for HMDA collected in 2018; technology preview of the HMDA Platform; and frequently asked questions. These resources can be found on the CFPB website and on the FFIEC website. The filing instructions are updated versions of file specifications for 2017 and 2018 HMDA data that were released earlier this year.

In addition, the CFPB has posted a webinar recently conducted by the CFPB staff that provides an overview of the HMDA final rule.




On January 11, Elena Babinecz, a CFPB attorney, spoke as part of a panel relating to the revised HMDA rule at the Winter Meeting of the Consumer Financial Services Committee of the Business Law Section of the American Bar Association.  Ms. Babinecz confirmed that the CFPB is engaged in a follow-up policymaking process to allow the public to provide input on privacy concerns relating to new data that those subject to HMDA’s reporting requirements are required to collect, record and report.

As we have previously reported, the new HMDA rule includes numerous new data points.  For example, Covered Institutions will be required to collect, record and report information about applicants and borrowers, including age, credit score, and debt-to-income ratios.  Moreover, for data collected in or after 2018, the new rule will require a Covered Institution to allow applicants to self-identify ethnicity or race using disaggregated ethnic and racial subcategories, which information will be reported accordingly.

Ms. Babinecz acknowledged that the CFPB received comments on the rule drawing attention to the fact that many of these new data points implicate important privacy rights.  We agree that privacy is a critical issue, and join those who have raised concerns about expansion of data points under the new rule.  For example, the new rule will require Covered Institutions to collect and record sensitive information about individuals, which will be accompanied by additional data security burdens.

The CFPB has not provided details on how it intends to ensure that the sensitive information about consumers that will be reported to, and maintained by, the CFPB will be protected from unauthorized access or disclosure.  Finally, while the public will be able to obtain HMDA data using the new Internet-based tool being built by the CFPB, what portion of the reported data will be made publicly available is still under consideration by the CFPB.

We look forward to learning more about the CFPB’s policymaking relating to data privacy under the new HMDA rule.