1、Fair Lending at the CFPB and the Role of the Home Mortgage Disclosure Act (HMDA) in Protecting Americas Consumers Consumer Financial Protection Week| July 2020Disclaimers This presentation is being made by Consumer Financial Protection Bureau representatives on behalf of the Bureau. It does not cons

2、titute legal interpretation, guidance, or advice of the Bureau. Any opinions or views stated by the presenter are the presenters own and may not represent the Bureaus views. Note: This document was used in support of a live discussion. As such, it does not necessarily express the entirety of that di

3、scussion nor the relative emphasis of topics therein.2Opening Remarks from Director Kraninger3The Home Mortgage Disclosure Act (HMDA) plays an important role in protecting Americas consumers.The CFPB takes seriously its obligations to enforce HMDA and holds mortgage lenders accountable for failing t

4、o comply with the law.HMDA data are used for a variety of purposes including to assess housing needs, public investment, and possible discrimination under numerous federal and state laws, as well as general market and economic monitoring.Patrice FicklinFair Lending DirectorAbby HoganResearch Analyst

5、The Office of Fair Lending and Equal Opportunity:Todays Presenters4Tim LambertSenior CounselStructureOffice of the DirectorOffice of Equal Opportunity and FairnessOffice of Fair Lending and Equal OpportunityThe Dodd-Frank ActSec. 1013 (c) Office of Fair Lending and Equal Opportunity.-(1) Establishme

6、nt.-The Director shall establish within the Bureau the Office of Fair Lending and Equal Opportunity.(2) Functions.-The Office of Fair Lending and Equal Opportunity shall have such powers and duties as the Director may delegate to the Office, including-(A) providing oversight and enforcement of Feder

7、al laws intended to ensure the fair, equitable, and nondiscriminatory access to credit for both individuals and communities that are enforced by the Bureau, including the Equal Credit Opportunity Act and the Home Mortgage Disclosure Act;(B) coordinating fair lending efforts of the Bureau with other

8、Federal agencies and State regulators, as appropriate, to promote consistent, efficient, and effective enforcement of Federal fair lending laws;(C) working with private industry, fair lending, civil rights, consumer and community advocates on the promotion of fair lending compliance and education; a

9、nd(D) providing annual reports to Congress on the efforts of the Bureau to fulfill its fair lending mandate.About the Office of Fair Lending and Equal Opportunity5Office of Fair Lending: Mission & VisionMISSION: The Office of Fair Lendings mission is to advance the CFPBs role as a national leader in

10、 ensuring fair, equitable, and nondiscriminatory access to credit for individuals and communities.VISION: The Office of Fair Lending envisions driving the CFPBs fair lending priorities, and also facilitating national dialogue and collaboration on efforts that advance fair, equitable, and nondiscrimi

11、natory access to credit for individuals and communities.6The Home Mortgage Disclosure Act (HMDA)Some background.Brief History of HMDA Enacted by Congress in 1975, implemented by the Federal Reserve Board rulemaking in 1976 (called “Regulation C”) Both the statute and the regulation were amended seve

12、ral times over the following four decades HMDAs purposes: Helps show whether financial institutions are serving the housing needs of their communities Assists public officials in distributing public-sector investment to attract private investment to areas where it is needed Assists with the identifi

13、cation of possible discriminatory lending patterns and enforcement of antidiscrimination laws8What kinds of transactions are reported under HMDA? Mortgages (including single family and multi-family, refinancing, preapprovals, applications, originations, secondary market purchases) secured by a dwell

14、ing Home Equity Lines of Credit (HELOCs) and other open-end credit secured by a dwelling Includes reverse mortgages and manufactured housing loans9Applicants & Applications Ethnicity, race, and sex Age Income Debt-t0-income ratio Credit score Automated underwriting system Application channel Reason

15、for denial Application date Preapproval requestProperty Property location by state, county, and census tract Lien status Property value Combined loan-to-value ratio Construction method Manufactured home secured property type Manufactured home land property interest Total units Multifamily affordable

16、 units Occupancy type10Data Points (data that must be reported)Data Points: Transaction11Who uses HMDA data?Who uses HMDA data? Federal Government CFPB Department of Justice Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) Agencies (FDIC, OCC, NCUA, FHFB, FCA) Department

17、 of Housing and Urban Development (HUD) State banking regulators and Attorneys General Consumer groups Compliance vendors Financial institutions Private parties Academics / researchers (including Congressional researchers)13HMDA Data are used by nearly every office at the Bureau: Supervision Enforce

18、ment Fair Lending Markets Regulations Research Technology & Innovation Legal And more!14Who can access HMDA data?The data are available to the public.You can! This powerful dataset is available to the public There is something for everyone at https:/ffiec.cfpb.gov/ You can conduct basic searches, li

19、ke finding out how many mortgages were originated in your area or which lenders are based in your area HMDA data can also be used to conduct more sophisticated analyses and identify fair lending risk16See how many home purchase loans were originated in your area Go to https:/ffiec.cfpb.gov/ Select “

20、HMDA Data Browser” Then select “HMDA Dataset Filtering” Type in the geography, you can use: State Metropolitan Statistical Area (MSA) County Nationwide17Start by accessing the HMDA Data Browser18Filter the dataset19Filter the data Lets use Pittsburgh, Pennsylvania, which is in Allegheny County, Penn

21、sylvania20Filter the data Leave the “Select Financial Institution” field blank to include all financial institutions in your chosen geography Notice that the field automatically calculates how many lenders reported HMDA data in that county (541 here)21Filter the data Action Taken 1 = originated Loan

22、 Purpose 1 = home purchase22Filter the data View the data summary to see how many records you retrieved (14,922 here) You can also download the dataset if you want to learn more about those loans23Want to see if any HMDA reporting lenders are based in your town or state? Start at the same website, h

23、ttps:/ffiec.cfpb.gov/ Select “Data Publication” Then select “Snapshot National Loan-Level Dataset”24Want to see if any HMDA reporting lenders are based in your town or state? Select the year The select the Transmittal Sheet CSV file to get a list of all HMDA reporters for that year Download the file

24、25Want to see if any HMDA reporting lenders are based in your town or state? Im from New Hampshire, its not a very big state, but lets see if any lenders are based there. Once we open the downloaded transmittal sheet, we can sort by city or state You can also see how many HMDA records each lender re

25、ported Sort from largest to smallest to see the largest mortgage lenders based out of your area!26More advanced HMDA analyticsAlso available to the public.Loan Distribution Analysis Problem statement: Determine what percentage of loans are going to minority neighborhoods in the Birmingham, Alabama M

26、etropolitan Statistical Area (MSA); compare lenders to see which lenders are receiving more applications from minority neighborhoodsREMEMBER!HMDA data can signal fair lending risk, but may not include some legitimate credit risk considerations for loan approval and loan pricing decisions. Therefore,

27、 when regulators conduct fair lending examinations, they analyze additional information before reaching a determination about an institutions compliance with fair lending laws. (See FFIEC Press Release: “FFIEC Announces Availability of 2018 Data on Mortgage Lending,” August 30, 2019, available at ht

28、tps:/www.ffiec.gov/press/pr083019.htm.)28Fair Lending Use Case 2: Loan Distribution Analysis Step 1: Select Geography MSA/MD type “BIRMINGHAM-HOOVER - ALABAMA” Step 2: Select Financial Institution leave blank to pull all institutions (or filter if you are looking at one institution) Step 3: Select a

29、 Filter you can filter on 0-2 different variables -some filters you may find helpful for comparing institutions: Action Taken select action codes 1-5 (to capture all applications and exclude preapprovals and loans purchased by an institution) Loan Purpose can include all or narrow to only consider,

30、for example, home purchases (loan type code 1), or only home purchases and refinances (codes 1, 31, and 32) Step 4: Download the dataset this dataset is small enough to work with in Excel (24,202 records)29Select Geography30Select MSA/MD. Type “Birmingham” and select the matching resultSelect Financ

31、ial Institution31Leave blank to pull all institutionsSelect a Filter32Selection “Action Taken” and “Loan Purpose”Click “View Summary Table”Check boxes for the loans of interest.View the Data Summary and Download the Dataset33Download the datasetContinuing the analysis in Excel Census and economic da

32、ta (at the tract level) are appended in columns CO-CU (population, percent minority, median family income, income percentage, owner-occupied units, 1-4 family homes, median age of housing units) Click on the upper left hand corner of the excel table and select “Insert” and then “Pivot Table” Drag “L

33、EI” (legal entity identifier) into the “rows” Drag “tract_minority_population_percent” into the “columns” box Drag “LEI” into the “values” box (to count how many records there are for each institution) Group the percent minority values (0-49%, 50-79%, 80-100%) You now have a list of what percentage

34、of loans from every lender in the MSA are going to low-, moderate-, and high-minority neighborhoods You can look up the entity names and contact information using https:/ffiec.cfpb.gov/data-publication/disclosure-reports/2018 You can continue to filter if you only want to compare certain types of lo

35、ans Common filters include Total Units, Open-End Line of Credit, Occupancy Type, Construction Method (e.g., site-built or manufactured home), and Reverse Mortgage.34Pivot tables are a great way to understand your data35Getting comfortable with pivot tables36Analysis Results37How the CFPB uses HMDA D

36、ataPutting the pieces together.HMDA Data are one of the foundations of our fair lending work. Understanding the market size and landscape Prioritizing our work Identifying non-compliant financial institutions HMDA non-reporters Poor HMDA data quality as an indicator of overall poor compliance Redlin

37、ing Identifying risk Mapping application patterns Reporting Annual report to Congress PROTECTING CONSUMERS39Freedom Mortgage (June 2019) The Bureau announced a settlement with Freedom Mortgage Corporation (Freedom), one of the ten largest HMDA reporters nationwide. Freedom violated HMDA and Regulati

38、on C by submitting mortgage-loan data for 2014 to 2017 that contained errors. Freedom reported inaccurate race, ethnicity, and sex information Much of Freedoms loan officers recording of this incorrect information was intentional For example, certain loan officers were told by managers or other loan

39、 officers that, when applicants did not provide their race or ethnicity, they should select non-Hispanic white regardless of whether that was accurate. Under the terms of the consent order, Freedom must pay a civil money penalty of $1.75 million and take steps to improve its compliance management to

40、 prevent future violations.40HMDA Warning Letters (October 2016 & February 2019) Purpose Through these letters the Bureau seeks to increase compliance with HMDA through enhanced education efforts and direct outreach to potentially non-compliant mortgage lenders, and to increase HMDA data quality and

41、 completeness through accurate reporting. Since commencing the issuance of the HMDA warning letters more than 140,000 new mortgage loan application registers (LARs) that previously went unreported by the entities have now been reported. Commitment to follow through The Bureau will follow up on these

42、 letters to ensure compliance, as appropriate.Fair Lending Report of the Bureau of Consumer Financial Protection, April 2020.41United States of America and Consumer Financial Protection Bureau v. BancorpSouth Bank (June 2016)CFPB and Department of Justice (DOJ) joint action against BancorpSouth Bank

43、 for discriminatory mortgage lending practices that harmed African Americans and other minorities, including: Illegally redlining in Memphis Denying certain African Americans mortgage loans more often than similarly situated non-Hispanic white applicants Charging African-American customers for certa

44、in mortgage loans more than non-Hispanic white borrowers with similar loan qualifications Implementing an explicitly discriminatory loan denial policyConsent Order - BancorpSouth was required to pay: $4 million in direct loan subsidies in minority neighborhoods in Memphis At least $800,000 for commu

45、nity programs, advertising, outreach, and credit repair $2.78 million to African-American consumers who were unlawfully denied or overcharged for loans $3 million penaltyIn resolving this lawsuit, the Bureau required BancorpSouth to take a number of actions to increase access to credit for majority

46、African American communities in the Memphis area. These actions included a loan subsidy program that offered qualified applicants mortgage loans on a more affordable basis, and the opening of new branches in the formerly redlined areas.42ResourcesResources “Data Point” research papers FFIECs HMDA-re

47、lated resources organized by year Frequently Asked Questions How to file HMDA data, including the FFIECs Filing Instructions Guide (FIG) HMDA publications (e.g., Modified Loan/Application Registers (or LARs), Aggregate and Disclosure Reports, etc.) Snapshot and Dynamic National Loan Level Dataset HM

48、DA tools (e.g., Data Browser, Rate Spread, LAR formatting tool, etc.) HMDA implementation resources aimed at HMDA reporters, but useful for data users Institutional and transactional coverage charts Regulatory and reporting overview charts by year Bureaus user-friendly version of Regulation C Execut

49、ive summaries of the Bureaus Regulation C rulemaking activities 44Thank you for joining us today!If you have further questions, please do not hesitate to reach out to us. If you have questions about the Office of Fair Lending, please email us at cfpb_fairlendingcfpb.gov.If you have questions about the HMDA Data Browser, please email our HMDA Operations team at hmdahelpcfpb.gov.45