CFPB's new rule will shine light on mortgage market practices

Today the Consumer Financial Protection Bureau is updating the Home Mortgage Disclosure Act (HMDA) requirements with a new rule that will shine more light on lending practices in America's largest consumer financial market, the mortgage market.

HMDA is a statute that provides the public and policymakers with information about the mortgage market and ensures market transparency.

HMDA requires many financial institutions to collect, report, and disclose information about their mortgage activity. The original law was enacted by Congress 40 years ago to respond to concerns that some banks may be failing to serve their communities.

Everyone in America deserves a fair shot at accessing the American Dream. The Home Mortgage Disclosure Act:

• Helps to show whether lenders are serving the housing needs of their communities,
• Gives public officials information that helps them make informed decisions and policies, and
• Reveals lending patterns that could be discriminatory.

What will be changing?

To address shortcomings in market transparency exposed by the financial crisis, the Dodd-Frank Act required the CFPB to expand the types of information collected through HMDA, both by mandating certain new data points, and by authorizing the CFPB to require additional ones that would further HMDA's purposes. The changes include:

• New information that lenders must report: This information could help identify potential discriminatory lending practices and other issues in the marketplace. Some examples of new information include:
• the property value
• the term of the loan
• the term of any prepayment penalty
• the duration of any teaser or introductory interest rates
• Monitoring access to credit: Financial institutions will be required to provide more information about underwriting and pricing, such as an applicant's debt-to-income ratio, the interest rate of the loan, and the discount points charged for the loan.

New HMDA data will begin to be collected by financial institutions on January 1, 2018, and this new information, modified to protect applicant and borrower privacy, will be publicly available in 2019.

What changes will I see with this new rule?

As the name implies, HMDA is a disclosure law, and it relies in part upon public participation for its effectiveness. When you submit a mortgage application to a financial institution, you are asked to share your race, ethnicity, sex, and income. This information is collected to help federal regulators, consumer groups, researchers, and others identify possible discriminatory lending patterns in mortgage markets by examining the lending activity occurring in local markets and lenders' practices when serving those markets. The information is only as powerful as what's collected; when you share your data, you help ensure a more equitable market for all.

While the information is not yet available, today, you can visit our website to learn more about specific mortgage trends in your community. Here you can filter search results to get just the data you need. Once you've selected the data you want, you can also create custom tables and download the data in formats that suit your purposes.

The Bureau wants to improve the quality of HMDA data for today's housing market, for the nation as a whole, and in your community. You can learn more at consumerfinance.gov/hmda.