When the COVID-19 pandemic first struck, the Consumer Financial Protection Bureau issued a number of temporary flexibilities to financial institutions in consumer financial markets such as the mortgage industry. As of April 1, the CFPB effectively canceled a number of these flexibilities and, more specifically for the mortgage sector, revocation of its statement on monitoring and enforcement practices regarding quarterly reports under the Home Mortgage Disclosure Act.
On March 26, 2020, the Bureau issued a statement titled “ Statement of Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Residential Mortgage Disclosure Act ” (Statement), regarding the exercise by the Office has its supervisory and enforcement discretion with respect to the Residential Mortgage Disclosure Act.
Specifically, the Statement provided that, until further notice, the Bureau did not intend to cite in a review or initiate enforcement action against an institution for failing to report its HMDA data on a quarterly basis, such as required by rule C. Under Regulation C, 12 CFR 1003.5 (a) (1) (ii), financial institutions that report for the previous calendar year at least 60,000 covered loans and requests (excluding loans purchased) must report their HMDA data quarterly (except for the fourth quarter) in addition to annually. “
This declaration is now rescinded and the CFPB has provided guidance on how these obligations should be fulfilled in the future.
“The Bureau hereby cancels, as of April 1, 2021, the Declaration and instructs all financial institutions required to file each quarter to do so as of their data for the first quarter of 2021, due by May 31 at the latest. 2021, for all loans covered and applications with final action taken between January 1 and March 31, 2021, ”according to the CFPB.“ The Bureau does not intend to cite in a review or initiate action enforcement against an entity that has not filed quarterly data collected in 2020. “
“We are now more than a year into the disruptive and deadly COVID-19 crisis. The virus has affected industry as well as consumers, but individuals and families have been hit hardest by the health and economic impacts pandemic, ”CFPB Acting Director Dave Uejio said in a Press release. “Providing regulatory flexibility to businesses should not come at the expense of consumers. As many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The first priority of the CFPB, today and always, is to protect consumers from harm. “
The CFPB also published the 2020 HMDA Mortgage Data. in the hope of helping lenders correct or prevent discriminatory lending patterns.
“HMDA data can help determine whether financial institutions are meeting the housing needs of their communities and can better drive public sector investment, which can attract private investment in areas where it is needed,” Uejio said. “Data can help identify potential discriminatory loan models and address unwarranted disparities in loan outcomes and credit pricing that lead to racial and economic inequalities.
Click here for the cancellation statement and tips on how mortgage institutions should operate in the future.