House Lawmakers Propose Bill to Reinstate Dodd-Frank Reporting Requirements
On February 5th, thirteen Democratic Senators introduced a bill to reinstate the Dodd-Frank reporting requirements that were rolled back by the Economic Growth, Regulatory Relief, and Consumer Protection Act—also known as S.2155. Most notably, this new bill would require banks or credit unions that make more than 25 mortgage loans a year or 100 home equity lines of credit to report detailed loan characteristics that they were previously exempt from reporting, such as interest rates, points, and fees, loan terms as well as borrower characteristics like credit score and ethnicity. The bill would also require banks and credit unions to report a unique loan identifier on all loans.
“Last year Congress voted to make it harder to find and hold banks and credit unions who discriminate accountable for their actions,” said Senator Catherine Cortez Masto (D-Nevada). “That’s why I’m proud to introduce legislation requiring banks and credit unions to report data on their borrowers and the quality of their loans to ensure that the public and federal regulators have access to the information they need to hold banks accountable.”
Currently, insured depository institutions and credit unions that originate fewer than 500 mortgages and 500 home equity lines of credit in each of the two preceding years are exempt from reporting 26 out of the 48 HMDA data points to the Consumer Financial Protection Bureau (CFPB). The CFPB then makes the HMDA data available to the public.
Last year, QuestSoft conducted an extensive study of S.2155 and the effects of the 500 mortgage loan threshold. Our analysis found under the current 500-loan threshold, 92.3% of mortgage loans are reported with all 42 HMDA datapoints. If a 250-loan threshold is used, 95.9% of loans would be reported, including those in rural geographies.
Our findings concluded that a 250-loan threshold achieves the approximate apex where depository institutions would benefit from regulatory relief most, while statistically representing all areas of the country, including rural geographies.
While this bill stands little chance of passing in the present political climate, it does reveal what regulatory changes may happen in the future (depending on the outcome of 2020 elections). Threshold changes are likely to be adjusted in the coming years, but it is unlikely that the threshold will be reduced to 25 mortgage loans. The more likely scenario is the HMDA partial exemption threshold will be set closer to 100 mortgage loans.
In the meantime, we continue to emphasize the importance for all institutions to collect all HMDA data points for use in fair lending analysis, whether your institution is required to submit these data points or not.