On April 28, 19 Democratic senators sent a letter to the Bureau of Consumer Financial Protection (“Bureau”) protesting both its decision to temporarily suspend quarterly mortgage lending reporting requirements under the Home Mortgage Disclosure Act (“HMDA”) during the COVID-19 pandemic, and to permanently reduce the number of entities that must provide certain types of reporting under the HMDA’s implementing regulation (Regulation C). Under Regulation C, lenders must collect and report to the Bureau information about the ethnicity, race, and gender of mortgage applicants and borrowers, along with other information.
On March 26, the Bureau announced that it was suspending Regulation C’s quarterly reporting requirement for financial institutions that report at least 60,000 covered loans and applications in the preceding calendar year. This action was intended “to provide lenders with flexibility and reduce administrative burden” during the COVID-19 pandemic.
On April 16, the Bureau also adopted a final rule amending Regulation C. The rule increases the threshold for reporting data about closed-end mortgage loans from 25 to 100. As a result, starting in July of this year, institutions that originate fewer than 100 closed-end mortgage loans in either of the preceding calendars years will not have to report such data. The rule also increases the permanent threshold for collecting and reporting data about open-end lines of credit from 100 to 200, starting in January of 2022.
In their letter, the Senators underscored that HMDA data plays a key role in uncovering and addressing lending discrimination and ensuring equal opportunity for borrowers. They argued that increasing the reporting threshold will result in the loss of HMDA data at the local level and impede public officials’ ability to understand access to credit in their communities.
In contrast, the Bureau has asserted that easing reporting requirements will reduce regulatory burdens on smaller institutions and enable them to focus on responding to consumers in need. Some members of the financial industry have also expressed their support. For example, the Mortgage Bankers Association has made a statement that the amendments to Regulation C will provide significant relief to many residential and commercial/multifamily lenders.