On January 18, the House moved forward legislation that would exempt many credit unions, community banks, and small lenders from specific Home Mortgage Disclosure Act (HMDA) reporting requirements.
The House passed H.R. 2954 by a 243 – 184 vote. The resolution increases the threshold of mortgage originations that must be reached to trigger HMDA reporting. Current law requires that lenders that originate more than 25 loans over the previous two years collect data and report it to the CFPB.
The Home Mortgage Disclosure Adjustment Act would increase the exemption so that lenders originating fewer than 500 closed-end mortgages or 500 open-ended lines of credit in each of the previous two years are exempt from the reporting requirements.
The legislation was supported by credit union trade groups and smaller mortgage lenders, as it will ease the burden of providing specific mortgage application data to the CFPB via the online HMDA reporting portal. Republican lawmakers hailed the legislation, saying it helps consumers by reducing the regulations on credit unions and community banks, allowing them to expand their product offerings.
“Community banks and credit unions are weighed down with the same compliance burdens as larger institutions, without the advantages of massive compliance departments,” said Rep. Scott Tipton (R-Colo.).
House Financial Services Chairman Jeb Hensarling (RTX), has long criticized the CFPB for imposing regulations under Dodd-Frank which are considered burdensome to financial institutions. Hensarling said that the Bureau overstepped its mandate with the HMDA reporting requirements and that the regulation is hurting consumers by restricting their access to capital.
In a statement, Hensarling said, “like many things the CFPB is involved in, the rule went far, far beyond what was originally intended by Congress, and effects have far-reaching and negative consequences on community financial institutions and home buyers.”
Not all lawmakers supported the move, however, with Democrat ranking member Maxine Waters (D-CA) stating that the data collection is crucial in ensuring equal opportunity guidelines are being followed.
“HMDA data provide information on mortgage lending patterns and trends that allow regulators, lenders, researchers, and the public to better understand and address redlining concerns by identifying possible discriminatory lending patterns, and monitoring compliance with and enforcement of statutes, like the Community Reinvestment Act; and Federal anti-discrimination laws, like the Equal Credit Opportunity Act and the Fair Housing Act,” she said.
Republicans have signaled that they want to reduce HMDA requirements further, and have already shown a reluctance to penalize companies violating aspects of the data collection and reporting rules.
The bill passed on a strictly partisan vote, with only nine Democrats crossing party lines to vote for the resolution, and 183 voting against it. Minnesota Republican Rep. Tom Emmer praised its passage, saying he consistently hears from banks and credit unions claiming they are having trouble with the cost of compliance related to the law. “Some have significantly reduced the amount of mortgages or loans they originate or even stopped offering mortgages altogether,” he said.
“Americans want the opportunity to achieve the American dream – to own a home, buy a car, or start a business,” Emmer added. “I am proud the House passed the Home Mortgage Disclosure Adjustment Act to provide relief for these institutions to help make that happen.”
Credit union trade groups were also quick to issue praise to lawmakers for getting the legislation thru the house. In a statement issued shortly after the bill’s passage, National Association of Federally-Insured Credit Unions President and CEO, Dan Berger thanked members of Congress. “NAFCU thanks Representative Emmer for introducing this bill, House Speaker Ryan for bringing it to a vote, and all members who voted today in support of reducing credit unions’ regulatory burden,” he said.
He went on to explain that HMDA’s expanded reporting requirements have inflated the cost of compliance and community credit unions are struggling with the additional expense. “With this much-needed regulatory relief, credit unions will be able to focus on what they do best – providing financial services to Americans who need them most,” he added.
Jim Nussle, President and CEO of the Credit Union National Association agreed, saying “This bill provides much-needed regulatory relief for credit unions, particularly smaller ones, and we’re pleased to see it pass the House.”
The bill now heads to the Senate for consideration. With Republicans holding a one-seat majority, the Trump administration may need to exert some pressure on lawmakers to ensure the resolution gets passed and reaches his desk for signing.