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When the COVID-19 pandemic initially hit, the Consumer Financial Protection Bureau issued a number of temporary flexibilities to financial institutions in consumer financial markets such as the mortgage industry. Starting April 1, the CFPB effectively rescinded a number of those flexibilities and most notably for the mortgage industry, is the rescission of its statement on supervisory and enforcement practices regarding quarterly reporting under the Home Mortgage Disclosure Act.
On March 26, 2020, the Bureau issued a statement entitled, 'Statement on Supervisory and Enforcement Practices Regarding Quarterly Reporting Under the Home Mortgage Disclosure Act' (Statement), regarding the Bureau’s exercise of its supervisory and enforcement discretion in connection to the Home Mortgage Disclosure Act.
"Specifically, the Statement provided that until further notice, the Bureau does not intend to cite in an examination or initiate an enforcement action against any institution for failure to report its HMDA data quarterly, as required under Regulation C. Under Regulation C, 12 CFR 1003.5(a)(1)(ii), financial institutions that report for the preceding calendar year at least 60,000 covered loans and applications (excluding purchased loans) must report their HMDA data quarterly (except for the fourth quarter) in addition to annually."
That statement is now rescinded and the CFPB has provided guidance on how these obligations are to be met moving forward.
"The Bureau hereby rescinds, as of April 1, 2021, the Statement and instructs all financial institutions required to file quarterly to do so beginning with their 2021 first-quarter data, due on or before May 31, 2021, for all covered loans and applications with a final action taken date between January 1 and March 31, 2021," according to the CFPB. "The Bureau does not intend to cite in an examination or initiate an enforcement action against any entity that did not make the quarterly filing for data collected in 2020."
"We are now over a year into the disruptive and deadly COVID-19 crisis. The virus has affected the industry as well as consumers, but individuals and families have been hardest-hit by the pandemic’s health and economic impacts," said CFPB acting director Dave Uejio in a press release. "Providing regulatory flexibility to companies should not come at the expense of consumers. Because many financial institutions have developed more robust remote capabilities and demonstrated improved operations, it is no longer prudent to maintain these flexibilities. The CFPB’s first priority, today and always, is protecting consumers from harm."
The CFPB also published the 2020 HMDA data on mortgage lending. in hopes to help lenders correct or prevent discriminatory lending patterns.
"HMDA data can help determine whether financial institutions are serving the housing needs of their communities and can better drive public-sector investment, which can attract private investment to areas where it is needed," said Uejio. "The data can help pinpoint potential discriminatory lending patterns, and address unjustified disparities in lending outcomes and credit pricing that drive racial and economic inequality."
Click here to view the rescission statement and guidance on how mortgage institutions should operate moving forward.