consistent numbering or identification system will be developed,
or that standard coding will be utilized by all HMDA reporters
to identify any specific application or loan.
■ ■ Value of the property securing (or to secure) the loan.
This seems straightforward but will need clarification in practice.
Does it refer to appraised value? The value relied upon by the
lender in making the credit decision? What should be reported
for a refinancing where no new appraisal was obtained—is the
original appraised value reported or is some sort of educated
guess? The final rules will need to be precise.
■ ■ Parcel number corresponding to the property pledged
(or to be pledged) as collateral. This creates some operational
difficulties, because often this information is unavailable or hard
to come by. Congress recognized this both by including the “as
the Bureau may determine to be appropriate” phrase and by
requiring consultation between the CFPB and other regulatory
agencies to “develop or assist in the improvement of methods of
matching addresses and census tracts to facilitate compliance …
in as economical a manner as possible.” 4 Again, we’ll have to see
what sort of process is cooked up.
■ ■ Age. This seems straightforward enough, but there is a twist.
Similar to credit score reporting, we’ll have to wait for final regulations to see how exactly we are to report this, though it likely will
be similar to how other demographic data (such as race, ethnicity,
and so forth) are reported today.
The difficulty involves the timing of when reporting of age will
start. All of the other new data requirements will kick in according
to the “first January 1st 9 months after final regulations” rule; age
does not due to a technicality regarding where age was added to
the HMDA statute. The CFPB could conceivably require age to be
collected and submitted well before the other new data elements
(even right away). Again, we’ll have to wait and see.
■ ■ “Such other information as the bureau may require.”
This is a wild card. The Dodd-Frank Act gives unprecedented
latitude to the CFPB to write and amend consumer protection
regulations as it sees fit. It would not be a surprise if loan-to-value
(LTV) ratios, debt-to-income (DTI) ratios, or other credit-related
data find their way into future HMDA reporting.
For all loans (but not applications), the following additional
items are to be collected and submitted:
■ ■ total points and fees payable at origination. The definition of “total points and fees” follows the Reg. Z definition used
in determining whether a loan qualifies under Section 32. Thus,
“points and fees” is more inclusive than finance charge.
The Dodd-Frank Act modifies the “points and fees” definition as well (under separate TILA amendments) to include “all
compensation paid directly or indirectly by a consumer or creditor
to a mortgage originator from any source.” 5 It will also include
all premiums and other charges payable before or at closing for
credit life, disability, debt suspension or cancellation, or similar
products, and “the maximum prepayment fees and penalties
which may be charged or collected under the terms of the credit
transaction” 6 and any prepayment fees incurred if the loan is a
refinance from the same lender or an affiliate.
Essentially this will impose a Section 32–style analysis of
points and fees for all HMDA-reportable loans, not just Section
32 loans under Reg. Z.
■ ■ the difference between the loan’s APr and a “benchmark
rate or rates for all loans.” Note that this expands the current
rate spread reporting rule (which covers only loans exceeding a
set threshold) to cover all loans. The requirement will be to report
the difference between a loan’s APR and a prevailing market rate.
All loans will be reported like rate spread loans. Will we continue
to use Freddie Mac’s Primary Mortgage Market Survey (PMMS)
rate? We’ll have to see.
■ ■ the term (in months) of any prepayment penalty or
similar charge. This will include not only fees to repay the
entire balance, but also a charge to repay in advance even a portion of the principal.
■ ■ once again, “such other information as the bureau may
Will the existing HMDA-LAR form be amended to include
the new data or will a new format be developed? At this point
we don’t know; as with everything else, it’s entirely up to the
CFPB. The statute gives the bureau specific rulemaking authority in this area.
Submission standards are also at the mercy of the CFPB, as are
“procedures for disclosing the information to the public,” 7 which
again will include methods of masking information to protect
privacy interests. It’s not changed in the statute, so we’ll have to see
whether the bureau chooses to keep the March 1 submission date.
A New “LAR”: Business Loan Data Collection and Submission
Even though this requirement deals with business loans, the
CFPB will again be the drafter of implementing regulations and
guidance under Reg. B.
Note that this requirement is completely separate from the data
collection and reporting requirements of both HMDA and CRA.
Some loans may be reported under more than one regulation.
Unlike the HMDA changes, there is no complicated effective
date in the statute. This sounds like good news, but there is an
unresolved question. The statutory changes to ECOA take effect
on the “transfer date,” July 21, 2011, but there is no mention in
the Dodd-Frank Act of regulatory effective dates. Does that mean
that information collection must commence as of July 21, 2011?
At this point we can’t be 100 percent sure that it won’t, but the
act does say that “the Bureau shall prescribe such rules and issue
such guidance as may be necessary to carry out, enforce, and
compile data pursuant to this section.” 9
It will be extremely difficult to put this into play without any
regulations or guidance from the CFPB, but it might be a good
idea to have your game plan in place to determine how the information will be collected when the time does come.