User login

HCUA Comment Letter on HMDA (Regulation C)

Heartland Credit Union Association (HCUA) sent a comment letter to the Consumer Financial Protection Bureau (CFPB) on the Office of Management and Budget (OMB) review of the Agency Information Collection Activities concerning the Home Mortgage Disclosure Act (Regulation C) (HMDA).  Primarily, HCUA feels that the HMDA cannot establish discrimination. While it may provide trends that may warrant further investigation by the public or a regulator, HMDA data is only “outcome” data and does not contain pertinent and critical information on how those outcomes were determined. For example, with credit unions specifically, it does not contain individual field of membership restrictions that can affect a lending decision.

More specifically, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) outlined only 17 data points that Congress intended for the CFPB to collect as part of its HMDA collection. While Congress did authorize the CFPB to collect “such other information as the Bureau may require” it is unlikely this grant is an unbridled delegation to the CFPB to more than double the amount of express data points that Congress had indicated for the Bureau to collect.

HCUA believes the collection of information is not necessary for the CFPB to carry out the functions of the Bureau. It does not need the 48 data points for determining whether it needs to investigate an entity for potential violations of HMDA, ECOA, or FHA. Since the data it is collecting cannot establish discrimination on its own, the CFPB can really utilize far less data for purposes of identifying trends that might warrant further investigation. In order for it to bring an administrative action for a violation, it will need to conduct further investigation. In addition, the Bureau failed to consider potential litigation that might arise from the release of HMDA data to the public, to evaluate the privacy ramifications of the release of individual consumer mortgage data and to identify the data that will be made available to the public.

A specific burden for credit unions, the bureau chose to include HELOCs as part of the mandatory reporting. Previously, this reporting was voluntary for credit unions. Many credit unions process HELOCs on separate systems from regular mortgages and the financial impact for having to modify systems, reporting, and other checks and balances was not considered in the financial impact. This will disproportionately impact small credit unions at a much greater level than large credit unions. Therefore, the CFPB’s estimate of the impact has been greatly understated.

The burden could be greatly minimized by returning to the Dodd-Frank required data points. These are the only points necessary for the CFPB to perform its oversight function. The CFPB should provide a safe-harbor for the implementation of the HMDA rule. Particularly for credit unions where HELOCs are often processed on different systems than mortgages, it will require substantial effort and costs to revise operating systems to track the increased data collections required by the rule. To that end, an extended compliance period to January 1, 2018, with reporting commencing January 1, 2019 is certainly warranted

Credit unions have not been engaged in the practices to which the HMDA law seeks to remedy. They have never been subject to CRA and the CFPB acknowledges credit unions’ stellar underwriting history. As such, HCUA believes an exemption for credit unions (which is clearly within the statutory authority of the CFPB as provided by Dodd-Frank), is worthy of serious consideration.