A coalition of housing groups came together to comment jointly to the Consumer Financial Protection Bureau (CFPB) regarding its plans to change regulations about data collection under the Home Mortgage Disclosure Act (HMDA), including on its impact to commercial and multifamily loans.
The Mortgage Bankers Association (MBA), National Multifamily Housing Council, the National Association of Home Builders, the Real Estate Roundtable, the National Apartment Association, and the CRE Finance Council (CREFC) together drafted and submitted a response to the CFPB on Tuesday, June 11.
Bruce Oliver, MBA VP of Commercial Real Estate Finance, talked with Mortgage Media about the coalition’s efforts, and discussed the MBA’s position on the 2015 HMDA rule on data collecting.
While most of these organizations have joined forces in prior comments on HMDA, this particular coalition began last month, when the CFPB proposed two pieces of rulemaking.
The first was a Notice of Proposed Rulemaking (NPRM), proposing to change HMDA rules by increasing the transactional threshold number for closed-end loans from 25 loans to either 50 or 100 loans, for both depository and non-depository institutions.
“The NPRM itself, is a positive, because it increases the threshold. And MBA would like that because it seems like good public policy,” Oliver said.
In the case of the NPRM, Oliver predicts the CFPB may want to get a final rule out as far ahead of the end of the year, if possible, to create certainty for smaller-volume lenders, so they wouldn’t need to scramble to put together a report that will not be required. He hopes – and the letter expresses – that the final rule will raise the threshold to at least 100.
“A smaller lender that makes only 25 loans in a year is making a loan about every other week. And a lender that is making 100 loans in a year is making not quite two loans every week,” Oliver said. “It seems appropriate to exempt those smaller-volume lenders with volumes within that range because the information value isn’t worth the burden.”
“What the CFPB is trying to do is improve the balance between benefits and burdens,” he said. “And we think a threshold of 100 improves it better than 50.”
The letter also highlights that increasing the threshold would provide HMDA relief for business-to-business multifamily loans, at least for some lenders, which would be consistent with the view that multifamily loans to business entity borrowers ought to be entirely exempt from HMDA. The joint letter communicates to the CFPB that these trades all share this view.
“These are commercial business transactions involving the financing of income-producing properties; they don’t involve the same kinds of considerations that underlie HMDA,” Oliver said. “If there was any ambiguity about whether HMDA covered these commercial transactions before Dodd-Frank, Dodd-Frank has pretty well resolved it in favor of excluding them.”
At almost the same time, the CFPB also put out an Advance Notice of Proposed Rulemaking (ANPR), in which the Bureau is gathering information to inform possible future revisions to HMDA regulations. In that ANPR, the CFPB is asking for input on discretionary data elements, which are data elements that Dodd-Frank permits but does not require the CFPB to collect, and on whether the CFPB should continue to require some or all those to be reported.
As part of the ANPR, the CFPB also is looking at multifamily loans where the borrower is a business entity rather than a consumer, and whether those should be covered by HMDA. According to Oliver, the MBA has long advocated exempting those from HMDA.
In contrast to the NPRM, the ANPR is a longer process, giving the opportunity for comment in advance of a possible future proposals to change HMDA regulations. Oliver says he would have preferred the faster pace of having an exclusion for business-to-business multifamily loans included in the NPRM, but he also was pleased that the ANPR represents real progress.
“I really appreciate that they seem to have heard us, as we have been expressing this view for a long, long time,” Oliver said
As for finding common ground among a group of different trades for this letter, it was easy for the coalition to form around this issue.
“Most of these trades have been working together with us for some time on exempting multi-family loans to non-consumer business entity borrowers. It’s surprisingly easy compared with some coalition efforts because it’s a relatively straight-forward and we already have a common position,” Oliver said, adding that he hoped that the CFPB might appreciate hearing about a position agreed to across an industry in advance, rather than being in the position of trying to harmonize a series of similar but not identical comments. “We hope they find value in us working together to synthesize a common industry position, so that they don’t have to guess.”