Comment Now to Protect HMDA!

The Consumer Financial Protection Bureau (CFPB) is at it again. They want to take another swipe at the Home Mortgage Disclosure Act (HMDA) data right on the heels of proposing to exempt thousands of lenders from reporting data. Send in a letter before the Tuesday, October 15th deadline! 

The CFPB has asked for comments now regarding the value of new HMDA data required by the Dodd Frank Act of 2010. This new data included more demographic information about borrowers (race/ethnicity, age, etc.), more information about loan terms and conditions, and more information about multifamily lending. The CFPB asks some skeptical and leading questions indicating they want to get rid of some or all of them entirely. Multifamily data is particularly at risk.

We need to make our voices heard and eliminate the agency’s skepticism. The enhanced HMDA data is necessary to spot and deter abusive lending and to make sure that housing and credit needs are being met in a responsible fashion for traditionally underserved populations.

Send in a letter before the Tuesday, October 15th deadline! 

Please use and adapt the sample letter immediately below or download it above. Members of the public wishing to comment on the CFPB’s ANPR, can use this link to comment. After clicking onto the link, you will notice a button on the upper right-hand side of the page that says “Comment Now.” Click onto the button and follow the directions for submitting a comment.

Please submit your Comment to the Consumer Financial Protection Bureau (CFPB) today on HMDA!

  1. Please use and adapt the sample letter immediately below or download it above.
  2. Members of the public wishing to comment on the CFPB’s ANPR, can use this link to comment.
  3. After clicking onto the link, you will notice a button on the upper right-hand side of the page that says “Comment Now.” Click onto the button and follow the directions for submitting a comment.

Sample Comments

[YOUR LETTERHEAD]

<DATE>

Re: Docket No. CFPB-2019-0020, Advanced Notice of Proposed Rulemaking on HMDA data

To Whom It May Concern:

[Name of organization] opposes any changes that diminish the new and enhanced Home Mortgage Disclosure Act (HMDA) variables added by the 2015 final rule issued by the Consumer Financial Protection Bureau (CFPB). Under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd Frank), the CFPB was required to enhance HMDA data by adding numerous variables regarding loan terms and conditions and borrower demographics. The CFPB was also given discretionary authority to add additional data points such as debt-to-income ratios, CLTV, and characteristics of multifamily and manufactured home lending.

[Description of organization and how you use HMDA – and/or why it matters, especially the new data on pricing, loan characteristics, disaggregated race/ethnicity, multifamily housing, etc.]

The CFPB went through a long, thoughtful process to determine which variables to include in the 2015 rule. The agency analyzed the housing market leading up to the financial crisis and they solicited input from all stakeholders, including bank and non-bank lenders, community organizations, civil rights groups, and government.  The CFPB determined that more transparency in the form of publicly available data was needed to identify and prevent the type of widespread predatory and abusive lending that was a driver of the 2008 financial crisis. By providing information on loan terms and conditions, and more details on the borrowers, the data would help regulatory agencies, community groups, and other stakeholders spot increases in abusive lending, identify who was targeted by such practices, and take steps to curb predatory and abusive lending before it caused another crisis.

The statutory purposes of HMDA are to assess whether lenders are meeting the housing needs of local communities, inform public sector investment decisions, and to assist in identifying possible discriminatory lending patterns and enforcing anti-discrimination statutes.  The new HMDA data is necessary to uphold those purposes. 

  • With the new HMDA data points, the public can assess whether lenders are responsibly meeting local credit needs, redlining neighborhoods of color, or making predatory or abusive loans. HMDA now includes a comprehensive set of data on pricing, interest rates, debt-to-income ratios, CLTV, credit scores, reason for denials, and loan characteristics that can make it harder for the borrower to maintain their homeownership, such as interest-only mortgages, balloon payments, and high interest rates, to name a few. 
  • One of HMDA’s main purposes is to identify discriminatory lending patterns: both redlining that denies access to credit for low-income people and people of color and predatory lending whereby these same communities are targeted with expensive and unsustainable loans.  We can see who is getting access to credit and who isn’t, as well as the types of loans they are getting.  And now, with the new disaggregated data, we can evaluate disparities within the Asian, Pacific Islanders, and Hispanic categories.  For example, in NYC, early data indicates that, as in prior years, black and Hispanic borrowers are grossly underrepresented in all categories of lending while Asians appear overrepresented.  But now we can drill deeper.  For example, Chinese American borrowers are getting access to credit at much higher rates than their share of the Asian population, whereas Filipinos, Koreans, and “other Asian” borrowers are under-represented; “other Asians” make up 17% of the Asian population.  Early data also indicates that Mexicans are very under-represented in loan originations as compared to their percentage of the Hispanic population.
  • We can assess if lenders are supporting affordable housing with responsible multifamily loans that will preserve affordable housing or if they are fueling displacement and distress by not lending or by lending speculatively in a manner that will lead to displacement.  Two thirds of New Yorkers rent their homes; 45% of all rental housing falls under rent-regulation, 43% are market-rate and 12% fall under government affordable housing programs. New York City has lost thousands of affordable rent-stabilized housing units over the past decade due to unscrupulous predatory equity landlords, often supported by bank and non-bank lenders, buying and financing buildings with loans predicated on moving out lower-rent paying tenants. Similar phenomena happen elsewhere in the country. Meanwhile, the need for deep affordable housing continues, especially in a high-cost city like New York City.  The new HMDA data enables us to monitor trends in multifamily housing: who is lending, where they are lending, and if that lending appears sustainable based on loan characteristics, such as interest rates and CLTV’s.  Data on the size of buildings financed and the percentage of units that were affordable to lower income tenants can help assess whether public sector investments were successfully stimulating private sector lending to meet housing needs.  The data is useful, but can be improved upon.  The number of units are represented in buckets making it impossible to know how many affordable units were created (eg: 10% of a 5 unit bldg. is much less than a 24 unit building, and at the upper scale, 10% of 149 is drastically different than 10% of a 500 unit building).  Now that NY CEMA loans are HMDA-reportable, we finally have a more complete dataset to analyze and it must be preserved. Removing multifamily lending from HMDA would be detrimental to understanding the housing market in New York City and would violate the statutory purpose of HMDA.

If the CFPB now reverses its prior work on updating HMDA data, it will ultimately impede the ability of HMDA to achieve its statutory purposes in this rapidly changing housing and lending market. Indeed, the CFPB will be abdicating its responsibility to protect consumers and will invite a new round of abuses by shrouding lending in a veil of secrecy to the detriment of not only consumers but the economy as a whole. Even worse, this proposed rulemaking comes on the heels of a Notice of Proposed Rulemaking that seeks to raise the threshold of who reports to HMDA, thus hiding all lending data entirely for thousands of lenders. We cannot afford to lose any data if HMDA is to achieve its intended purpose.

The CFPB asks about costs and benefits of the new data without providing the public with baseline research about costs and benefits. We see this as an invitation for some stakeholders to exaggerate costs and minimize benefits. Based on the information included in the CFPB’s recently concluded rulemaking on whether to exempt more lenders from HMDA reporting, we believe that the costs are modest while the benefits include an early warning system that can prevent another financial crisis.

We also believe that this ANPR is not being conducted in a manner consistent with the Administrative Procedures Act (APA) which requires meaningful opportunity for the public to comment on proposed rule changes. The CFPB is asking the public to comment on the utility and value of the Dodd Frank additions to HMDA data before the first year of the full Dodd Frank HMDA data is publicly available for review. The agency simply cannot receive fully informed comments from the public without the public being able to review the complete HMDA dataset.

Thank you for the opportunity to comment on this important matter. Please preserve the Dodd Frank updates to HMDA data since they are integral to HMDA’s statutory purposes.

Sincerely,

[Name/Org]

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