October 19, 2015
Friday October 15, 2015, the Consumer Financial Protection Bureau (CFPB) announced it is updating mortgage loan regulations–specifically the Home Mortgage Disclosure Act (HDMA)–to make the home loan process more transparent and easier to understand. According to the to the CFPB official site, HMDA requires, “many financial institutions to collect, report, and disclose information about their mortgage activity. The original law was enacted by Congress 40 years ago to respond to concerns that some banks may be failing to serve their communities.”
HMDA, the press release states, is a statute that provides “the public and policymakers with information about the mortgage market and ensures market transparency.” What does the HDMA do? According to the Consumer Financial Protection Bureau, it:
–Helps to show whether lenders are serving the housing needs of their communities,
–Gives public officials information that helps them make informed decisions and policies, and
–Reveals lending patterns that could be discriminatory.
New changes are coming for HDMA which includes an expansion of the types of information collected in accordance with the act, “both by mandating certain new data points, and by authorizing the CFPB to require additional ones that would further HMDAs purposes”. The new changes include required reporting on property value, the term of the loan, plus the any prepayment penalty. Also required–the duration of any teaser or introductory interest rates.
There will also be a new requirement to monitor “access to credit”. According to CFPB, “Financial institutions will be required to provide more information about underwriting and pricing, such as an applicants debt-to-income ratio, the interest rate of the loan, and the discount points charged for the loan.”
These changes won’t implemented immediately–the new data collection starts January 1, 2018. “…(This) new information, modified to protect applicant and borrower privacy, will be publicly available in 2019” according to the CFPB press release. But how do these changes affect mortgage loan applicants?
“When you submit a mortgage application to a financial institution, you are asked to share your race, ethnicity, sex, and income. This information is collected to help federal regulators, consumer groups, researchers, and others identify possible discriminatory lending patterns in mortgage markets by examining the lending activity occurring in local markets and lenders practices when serving those markets. The information is only as powerful as whats collected; when you share your data, you help ensure a more equitable market for all.”
More information is available at the Consumer Financial Protection Bureau’s official site.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.
It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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