As we begin to wrap up 2017, there’s already been a few interesting changes announced in leadership across several high-profile positions within our financial agencies.
In addition to Jerome Powell taking over for Janet Yellen as the next Federal Reserve chief, there’s now Mick Mulvaney filling in as the Consumer Financial Protection Bureau’s (CFPB) acting director after the recent resignation of Richard Cordray.
I know some of you are thinking, ‘Who are these people?’ and many of you are probably saying “Why do I care?’, but it’s time to start following along.
For example, on Oct. 15, 2015, the CFPB finalized a significant amendment to Regulation C, which went relatively unnoticed until now.
Regulation C implements what’s called the Home Mortgage Disclosure Act (HMDA) that requires certain institutions to collect, report and disclose information about their mortgage lending activity.
This information is intended to help show whether financial institutions are serving the housing needs of their communities.
It also is supposed to assist with the identification of potentially discriminatory lending patterns and enforcement of anti-discrimination laws.
Therefore, the Dodd-Frank Act of 2010 amended HMDA to add new data and authorized the CFPB to require additional information from certain institutions to make this practice allegedly even better.
One area that will change is the required government monitoring information.
For data collected on or after Jan. 1, 2018, the HMDA Rule amends the requirements for collection and reporting of your ethnicity, race and sex on this section of your home loan application.
It has been expanded to capture additional data on both your race and ethnicity with more than a dozen options you can now choose from.
The revised HMDA rule also adds new reportable data including age, credit score, automated underwriting system, property value, points and fees, borrower-paid origination charges, discount points, lender credits, loan term, prepayment penalty, non-amortizing loan features and interest rate.
These are all likely to be of great interest to regulators and potential litigants.
In effect, those who originate loans and those that review loans for quality and accuracy now, will have additional fields to complete or review, which could cause delays in your file.
In summary, the new HMDA rule requires your lender to report more data than is presently required. The new and modified data will enable regulators and private parties to analyze your lender’s business practices in much greater detail.
For instance, your age could potentially be analyzed in conjunction with pricing, ethnicity, or geographic data in order to identify potential instances of discrimination.
While Mick Mulvaney works to unwind the CFPB as much as possible, your lender is already gearing up for these rule changes.
Even though these new fields within your home loan application will require more time to complete than before, the data obtained could be invaluable if used the right way.
However, the increased public view into these previously less detailed lending practices could actually lead to unintended consequences such as higher fees to you.