The Consumer Financial Protection Bureau launched an open comment period now through January 21 seeking input to assess the effectiveness of HMDA, focusing on:

  • Institutional coverage and transactional coverage;
  • Data points;
  • Benefits of the new data and disclosure requirements; and
  • Operational and compliance costs.

​This is your chance to help decrease the burden of HMDA rules on private lender transactions.

Home Mortgage Disclosure Act Rule Assessment | Submit Your Comments to the CFPB HERE

During our Day on the Hill, CFPB leaders were unaware of the burden HMDA rules had on private lenders or that many of the fields were not applicable to business-purpose transactions. It seems the 2018 HMDA updates that require private lenders to furnish Loan Activity Reports (LARs) for their non-consumer loans signaled to the CFPB that its purview had fundamentally expanded.

Previously, AAPL and industry leaders viewed HMDA’s 2018 implementation of a divergent definition of a mortgage loan as an oversight. HMDA uniquely defines a mortgage loan as “an extension of credit that is secured by a lien on a dwelling.” The precedent — and more widely used definition (such as found in the Truth in Lending Act) — characterizes a mortgage loan as “any loan primarily for personal, family or household use that is secured by a mortgage …” thereby exempting business-purpose, non-consumer loans.

According to CFPB leadership during our meeting, the HMDA definition change means the CFPB is now charged with monitoring investment into communities, even when that investment is not via a consumer financial transaction. However, the CFPB subsequently opened this comment period seeking public input on many of the items discussed during the meeting.

Read the full CFPB news release about the open comment period here.

AAPL hosted a webinar on December 20 to provide HMDA background information and guidance about submitting comments on the matter.

Presentation Slides

Informational Webinar Recording

Comment suggestions from AAPL

Because the CFPB is seeking information rather than general feedback, while AAPL will be submitting our own official comments to the Bureau, we will not be providing a form letter. Instead, we encourage you to submit your own experience and struggles with HMDA compliance. Consider:

  • Quantifying your costs of compliance (software, employee hours, etc.).
  • What specific data points in the LAR are outdated, not applicable to your loans, or that are unduly burdensome to your business.
  • Disparate impacts to your business: Your small business faces a higher cost-per-transaction to comply with HMDA than depository institutions, in addition to the CFPB’s unequal application of compliance exemptions and partial exemptions for depository institutions that are not availble to you.
  • Your risks and fears related to unintentional non-compliance due to opaque/complicated rules: You don’t have large teams of attorneys or employees who can guarantee full compliance with the complicated 132-page “Small Entity Compliance Guide“
  • Your asks: Exempt business-purpose loans like the precedent TILA and RESPA regulations. If the CFPB is unwilling to exempt business-purpose loans, increase the close-end loan reporting threshold and streamline/create specialized LARs for non-consumer loans.

Home Mortgage Disclosure Act Rule Assessment | Submit Your Comments to the CFPB HERE

Special thank you to Cort Chalfant, AAPL’s Government Relations Committee First Chair and managing member of Nexus Private Capital, for leading AAPL’s response to this effort.