The Consumer Financial Protection Bureau wants lenders to share more data with the agency and the public about the mortgages they originate, aiming to help regulators spot trends that could protect borrowers.
The Home Mortgage Disclosure Act already requires many lenders to report information regarding mortgage loans, including the type of loan, the census district where the home is located and race and ethnicity of the borrower. The law was enacted in 1975 to encourage equal access to mortgage lending.
What the feds want to know
But CFPB officials says there's a lot more information to be shared. They want to know information such as:
- How much lenders charge borrowers in origination fees on each loan.
- The borrower's DTI, or debt-to-income ratio, which shows how much the borrower earns compared with his or her monthly debt obligations.
- Reason for loan denials.
A hazy metaphor
"It's going to be a game-changer," says Maurice Jourdain-Earl , managing director for ComplianceTech. "Right now the HMDA data can only point to disparities, but you don't know whether or not the smoke that is there is the function of a real fire or if it's because someone is having a barbecue in the backyard. So it shows you where the smoke is, currently, but with these additional details there is a high likelihood that a casual observer of HMDA data could pinpoint specific instances of disparate treatment."
Won't happen quickly
Many of the changes that the CFPB will propose this year are required under the Dodd-Frank financial reform law, which was enacted more than three years ago. Still, the CFPB still has to go through the time-consuming rule-making process, including a proposal and comment period, before it issues the rule.
Government promise: No need for worry
Dodd-Frank requires lenders to report the terms of the loans they make, the length of teaser interest rates, and borrowers' ages and the credit scores. Don't worry about the whole world finding out how old you are and what your score is. Only the data on your loan would get reported, not your name.
Next: Even more information
Richard Cordray, director of the CFPB, says the agency wants to take this a step further.
"We are considering other types of information that would give regulators a better view of developments in all segments of the housing marketplace," Cordray says. "This will help regulators spot troublesome trends in mortgage markets around the country."
Lenders won't like it
The CFPB will probably face some opposition from lenders as it considers proposing these additional changes, Jourdain-Earl says.
"I think there's going to be a lot of pushback," he says. "As a rule of thumb, lenders are adverse to anything that is going to make their compliance with the law more difficult." One of the reasons for that, he says, is that it's costly.
What do you think? How much information should lenders share regarding mortgage loans?
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