November 22, 2017

NAFCU asks CFPB to exclude more HMDA data from public disclosure

In response to the CFPB's proposed policy guidance for disclosure of loan-level Home Mortgage Disclosure Act (HMDA) data, NAFCU Regulatory Affairs Counsel Andrew Morris urged the bureau to consider withholding some data in order to protect consumer privacy and limit the negative impact the new reporting requirements could have on credit unions and their members.

The bureau's policy guidance, published in September, is the result of the CFPB's privacy balancing test and describes the extent to which HMDA data will be publicly disclosed.

In the letter sent to the CFPB Wednesday, Morris contends that the proposed level of disclosure does not adequately protect the privacy of sensitive consumer financial information, which could elevate the risk of fraud, identity theft or embarrassment for individual borrowers or applicants.

"HMDA's statutory purpose does not specify that the public should be able to dissect every aspect of a lender's underwriting process, and while NAFCU understands that transparency is valuable, there is a point at which the risks to privacy outweigh the benefits of expanded disclosure," Morris wrote. "NAFCU believes that the proposed policy guidance does not strike the correct balance."

Morris also expressed concern about the cybersecurity risks and the ability to re-identify borrowers with the disclosure of additional HMDA data. He recommended that the CFPB maintain publicly disclosed data similar to its current state.

In general, the CFPB's final HMDA rule changes are set to take effect Jan. 1, with most data submissions under the new provisions due in 2019. The rule changes affect home equity lines of credit, establish transactional thresholds for coverage and expand the number of HMDA data points to be collected from credit unions.

The CFPB recently released a beta version of its HMDA portal for financial institutions to begin testing the reporting process. The bureau also published a new chart that is intended to be used as a reference tool for those data points required to be collected, recorded and reported under HMDA, and updated its small-entity compliance guide, which details some clarifications, technical corrections and minor changes to the regulation.

NAFCU has a host of HMDA compliance resources available to association members, including charts and guides, articles, webcasts and blog posts.