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Joint Comment Letter re Home Mortgage Disclosure Data Points and Coverage
Bureau of Consumer Financial Protection
1700 G Street NW
Washington, DC 20552
Re: Docket No. CFPB-2019-0020; Home Mortgage Disclosure (Regulation C) Data Points and Coverage
Ladies and Gentlemen:
The American Bankers Association, Bank Policy Institute, Consumer Bankers Association, Housing Policy Council, and Mortgage Bankers Association (the “Associations”), on behalf of our respective members, appreciate the opportunity to respond to the Consumer Financial Protection Bureau’s (the “Bureau”) Advance Notice of Proposed Rulemaking on the Home Mortgage Disclosure Act (“HMDA”) (Regulation C) Data Points and Coverage (the “ANPR”). The initiation of this rulemaking process, to evaluate these key aspects of Regulation C, is a welcome step to ensure that the goals of HMDA are fulfilled with a properly tailored regulation and data collection.
We appreciate the Bureau’s attention to the ongoing challenges experienced by financial institutions to comply with Regulation C, as amended by the Bureau’s 2015 final rule (“2015 HMDA Rule”). We also appreciate the Bureau’s willingness to reconsider the mandatory cost-benefit analysis by evaluating the balancing of the burdens of data collection and reporting under the 2015 HMDA Rule with the value of the data reported. While we support modifications to Regulation C that further HMDA’s purposes, this must be done with due consideration of the costs and burdens on institutions relative to the value of additional data reporting. With appropriate balancing, the Bureau can alleviate the regulatory burdens related to HMDA data collection and reporting while still fulfilling the objectives of HMDA.
This balancing, however, requires data on the cost of data collection and reporting, which the Bureau observes, few commenters provide. First, Section II of the letter provides data on the regulatory burden on mortgage lenders and servicers. To address the Bureau’s direct solicitation for cost data, the Associations partnered with STRATMOR Group to conduct a survey to identify the precise burden associated with HMDA compliance (the “Survey”). These results are intended to provide a clear and comprehensive picture of the unique cost and burdens borne by banks under the expanded HMDA reporting requirements. Section III of the letter provides an overview of the Survey and key results.
Section IV of the letter responds to the Bureau’s specific questions from the ANPR based on the Survey and additional input from our members.
- Regulatory Burden
In the nine years since enactment of the Dodd-Frank Act, the Bureau has issued at least 31 major rulemakings affecting mortgage origination and servicing—a staggering rate of regulatory change that has significantly increased the complexity, risk, and cost of mortgage lending and has inhibited banks’ and mortgage companies’ ability to serve their customers. The cost to originate a mortgage loan for mid-sized banks has nearly doubled from approximately $4,800 in 2008 to approximately $9,000 in 2018, according to data from the Mortgage Bankers Association and the STRATMOR Peer Group Roundtable Benchmarking Program.
Data from ABA’s annual Real Estate Lending Surveys corroborate this trend and demonstrate the adverse impact of this ever-increasing layering of regulatory requirements on banks:
- In 2017, 77% of responding banks reported a “moderate to extreme” negative impact stemming from mortgage regulation, with 22% reporting “extreme” impact. Last year, even after most rules had been implemented, 58% still reported a “moderate to extreme” negative impact stemming from regulation, with 9% reporting “extreme” impact.
- In 2017, 96% of responding banks reported higher mortgage-specific compliance costs as a result of Dodd-Frank Act regulations. In 2018, 63% of respondents report that the institution’s mortgage-specific compliance costs continued to increase in 2018; another 36% report that they have just “leveled out” in 2018.
- In 2017, 83% of respondents reported they had to hire additional staff as a direct result of new regulations; in 2018, this number remained high at 43%.
- In 2017, 97% of respondents reported increased legal/regulatory consulting costs; these costs continued to increase in 2018 for 69% of respondents.
As the Survey results demonstrate, compliance with the 2015 HMDA Rule has added to these regulatory burdens.