Study: more HMDA info could help with oversight

(May 21, 2021) Reporting exemptions on home mortgage lending data for smaller credit unions and banks had little impact on data availability, but more information from the lenders would help oversight, a report from the congressional Government Accountability Office (GAO) stated this week.

The report noted that banks and credit unions that don’t do a lot of mortgage lending (but, in any event, some lending) are exempt from reporting mortgage lending data such as debt-to-income ratios and credit scores under changes made to the Home Mortgage Disclosure Act (HMDA) in 2018. “Although these exemptions minimally affected data availability, regulators still need to verify whether lenders are eligible to use them,” GAO said.

According to the watchdog agency, 3% of the new HMDA data were not reported because of partial exemptions for the 2018 and 2019 HMDA data GAO reviewed. At the local level, the agency said, in most census tracts, at least 91% of data GAO reviewed were available in 2019.

Partial exemptions did not disproportionately affect the availability of HMDA data GAO reviewed for borrowers of any race, ethnicity, or income level,” the agency stated.

However, GAO stated, regulators could not verify some lenders’ eligibility for partial exemptions because not all HMDA reporting included data on whether each loan is an open-end line of credit. “This data point is one of the new data points required since 2018, and lenders with exemptions are not required to provide it. Without it, however, it is difficult for regulators to determine if the lender is below the loan volume level required for partial exemption eligibility,” the report sates.

GAO said the HMDA data that lenders with partial exemptions are required to submit are set in statute. However, it said, if Congress were to make reporting of open-end lines of credit mandatory for all HMDA reporters, including those with partial exemption, regulators could more readily confirm lenders’ eligibility for partial exemption.

In addition, GAO said, CFPB has other data that are useful in determining lenders’ eligibility, such as type of lender. “CFPB does not plan to analyze these data for the other regulators, stating that they have access to the data through other sources,” GAO stated. “However, it would be more efficient—and reduce duplication of effort among regulators—for CFPB to synthesize and share data with regulators to assist them in assessing lenders’ partial exemption compliance.”

HMDA: Reporting Exemptions Had a Minimal Impact on Data Availability, but Additional Information Would Enhance Oversight