Comment Letter on Notice of Proposed Rulemaking Concerning Which Lenders Report Data

October 15, 2019
Docket No. CFPB-2019-0021 or RIN 3170-AA76
Notice of Proposed Rulemaking, HMDA Reporting Thresholds

To Whom it May Concern:

The undersigned organizations (214 national and local organizations) oppose the proposal of the Consumer Financial Protection Bureau (CFPB) to exempt thousands of lending institutions from reporting the Home Mortgage Disclosure Act (HMDA) data. As the CFPB recognizes, HMDA is a sunshine statute that holds lending institutions publicly accountable for making loans responsibly to traditionally underserved populations. The statutory purposes of HMDA are to assess whether lenders are meeting the housing needs of local communities, inform public sector investment decisions, and to detect and prevent discrimination.

The CFPB’s unnecessary proposal to exempt a large segment of lenders from HMDA reporting requirements will undermine the effectiveness of HMDA in achieving its statutory purposes. The CFPB must withdraw its proposal to increase the threshold for reporting since the objective of that proposal, reducing lender costs, has already been largely achieved by the Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA) passed by Congress in 2018.

This comment letter maintains that:

  • The CFPB had initially issued this proposed rule before the public had been able to access the complete HMDA data for the first year of the new data enhanced by the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010. The agency then extended the comment period but because the data became available in late August, there was not sufficient time for the public to thoughtfully analyze the proposed changes. Therefore, this rulemaking has not provided the public with a meaningful opportunity to comment as required by the Administrative Procedure Act. The CFPB itself will not benefit from fully informed comments based on an analysis of the new HMDA data.
  • The public visibility of HMDA has motivated lending institutions to increase safe and sound lending to traditionally underserved borrowers and communities. The visibility of HMDA also makes it effective for CRA and fair lending enforcement. The CFPB’s proposal undermines HMDA’s effectiveness by replacing visibility with secrecy regarding the lending activity of thousands of lenders.
  • Raising reporting thresholds and dramatically reducing the number of institutions reporting HMDA data will lead to another round of abusive and discriminatory lending. A sizable segment of lenders are more likely to engage in unfair and deceptive practices when data is concealed on loan term and conditions and their overall lending patterns to borrowers of different races, genders, and income levels. Unscrupulous lenders will calculate that without publicly available data, members of the public and agencies will have a harder time detecting predatory lending.
  • The general public, researchers, and federal agencies will have an incomplete picture of lending trends in several counties and thousands of census tracts and neighborhoods if several institutions no longer report HMDA data. This violates one of the essential purposes of HMDA to determine if housing and credit needs are being met.
  • HMDA compliance costs are modest, not significant as the CFPB suggests. Therefore, the benefits of HMDA data outweigh the costs of reporting the data. Lenders of all sizes have been reporting HMDA data for decades without undue burden.
  • As well as hiding abusive practices in the closed-end lending marketplace, the proposed reduction in open-end reporting will re-introduce risky lending to neighborhoods that are recovering from the financial crisis and can least afford another round of defaults.

This Proposal is not Consistent with the Administrative Procedure Act

At the outset, the undersigned organizations maintain that this rulemaking undermines the objectives of the Administrative Procedure Act (APA) to fully inform federal agencies of the impacts of proposed rules by providing the public with meaningful opportunities to comment. The CFPB initially issued this proposed rule before the public had been able to access the complete HMDA data for the first year of the new data enhanced by the Dodd Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd Frank Act). The Dodd Frank Act enhanced HMDA data by adding several variables regarding loan terms and conditions. EGRRCPA exempted most of the smaller volume lenders from reporting the new Dodd Frank variables though they will still be reporting HMDA data.

In response to requests for re-issuing the proposed rule after the release of the first year of the new HMDA data, the CFPB extended the comment period to October 15. The full HMDA dataset for 2018, the first year of data with the new Dodd Frank variables, was released on August 30, right before the Labor Day weekend. The public therefore had approximately just 45 days to analyze a complex dataset in preparing comments. This truncated time period is not sufficient to assess the loss of data in local communities across the country due to the proposed rule. Community-based organizations and other stakeholders need time to identify lower volume lenders who are likely to be exempt from reporting HMDA data in future years due to the proposed rule. Some of these lenders could very well have problematic fair lending or Community Reinvestment Act (CRA) records. A thorough vetting of the fair lending and consumer compliance records of these lenders is needed in order to assess the full impacts of the proposed reporting exemptions. Moreover, it is likely that expert CFPB staff took considerably longer than 45 days to estimate impacts of threshold changes on the number of overall loans reported and loans in various census tracts using the previous 2017 data.

In fact, for most local stakeholders, the CFPB’s data dissemination makes it virtually impossible to identify lenders with 50 or 100 HMDA reportable loans that might be exempt. Firstly, the local stakeholder would need to download transmittal sheet records and convert the text file to excel. Second, the stakeholder would need to download the national level dataset and need to identify lenders with loan amounts below the proposed thresholds. The national level dataset cannot be opened in excel, the only analysis tool accessible to most stakeholders. More sophisticated software is needed to read the large national dataset. Third, the stakeholder would need to download data for his or her state and metropolitan statistical area (MSA) and match the lender entity identifiers (LEI) for those lenders below the proposed reporting thresholds to the LEIs for lenders in his or her area. This is tasking for a sophisticated user of the data, let alone a novice or intermediate user. Thus, the CFPB’s public dissemination of the data is guaranteed to produce relatively few informed comments about the impacts of tracking the fair lending, consumer compliance, and CRA records of lenders that could be exempt from reporting requirements.

A recent Congressional Research Service report on the APA states that the APA requires a “meaningful opportunity for public comment.” The report states, “although the APA sets the minimum degree of public participation the agency must permit, the legislative history of the APA suggests that matters of great importance, or those where the public submission of facts will be either useful to the agency or a protection to the public, should naturally be accorded more elaborate public procedures.”[1]

This rulemaking has not provided the public with a meaningful opportunity to comment as required by the APA. Therefore, the CFPB itself will not benefit from fully informed comments based on an analysis of the new HMDA data. The CFPB will lack critical information with which to make the fairest and most effective rule regarding thresholds.

The Public Nature of HMDA Data Increases Safe and Sound Lending and Roots out Abusive and Predatory Lenders

The public visibility of HMDA data motivates banks to increase their lending to people of color, low- and moderate-income borrowers, and women. In 1989, Congress amended the HMDA statute to require information on the demographics of the loan applicants in addition to the census tract location of the loan.[2] Shortly, thereafter bank lending to underserved borrowers and communities surged. In 1997, former Comptroller of the Currency Eugene Ludwig remarked, “Since 1993, home mortgage loans to low and moderate income census tracts have risen by 33 percent. Mortgage loans to minorities are up almost 38 percent, with African Americans and Hispanics accounting for most of that gain.”[3] Moreover, the Department of Treasury found that banks increased home lending to low- and moderate-income (LMI) borrowers and census tracts by 39 percent from 1993 to 1998, double the increase of 17 percent to middle- and upper-income borrowers and tracts.[4] The time period from the early through the mid-1990s was before the surge of high-cost and abusive loans. Thus, the increase in lending was not due to predatory lenders seeking to take advantage of vulnerable populations but instead reforms to HMDA and the Community Reinvestment Act during this time period boosted the public accountability of lenders to make loans to traditionally underserved populations.

For decades, the public has used HMDA data to uncover and address redlining and other fair lending and fair housing violations. An investigative journalist, Bill Dedman, was an early user of HMDA data in a major fair lending investigation. In 1988, a series of powerful articles called the “Color of Money” in the Atlanta Journal-Constitution documented striking lending disparities between white and African American middle-income neighborhoods in Atlanta.[5] After this series of articles, the Department of Justice (DOJ) under the administration of George H. Bush used HMDA data to pursue one of the first federal lending discrimination lawsuits against one of the largest lenders in Atlanta, Decatur Federal Savings and Loan.[6] Since then, public agencies at all levels have used HMDA data per its statutory purposes of anti-discrimination enforcement and to determine where public sector investment can further increase private sector lending. More recently, journalists Emmanuel Martinez and Aaron Glantz, authored “Kept Out,” an expose highlighting continued mortgage redlining in 61 U.S. cities, using HMDA data, that resulted in city, state, and federal actions to address pervasive racial disparities in bank branching and mortgage lending patterns.[7]

Raising the Threshold to 50 or 100 Loans Would Enable Hundreds, if Not Thousands, of Lenders to Hide Abuses behind a Veil of Secrecy

The CFPB’s Notice of Proposed Rulemaking (NPR) would increase the number of loans banks may make before reporting any data under HMDA. Currently, the threshold for reporting HMDA data is 25 closed-end loans, which reduced the number of HMDA reporters by 22 percent when it went into effect after the CFPB’s 2015 HMDA rulemaking. In 2015, the CFPB decided against a higher threshold exempting more lenders stating that, “The Bureau concluded that, if it were to set the closed-end coverage threshold higher than 25, the resulting loss of data at the local level would substantially impede the public’s and public officials’ ability to understand access to credit in their communities.”[8] Inexplicably, however, the CFPB is now reversing itself and is proposing to raise the threshold to 50 or 100 loans. The CFPB invited comments on even higher thresholds of 250 or 500 loans in its initial request for comments earlier this year. These possible thresholds would reduce the number of HMDA depository institution reporters by at least an additional 17 percent for a threshold of 50 loans to as much as an additional 81 percent for a threshold of 500 loans.[9]

Raising the threshold would likely eliminate HMDA reporting for thousands of institutions. If the threshold is raised to 50 loans, about 36 percent of depository institutions (banks and credit unions) will not be reporting HMDA loans (estimates based on 2013 HMDA data).[10] Based on 2017 data, the CFPB estimates that 760 institutions issuing 37,000 loans would be exempt from reporting if the threshold was raised to 50 loans.[11] If the threshold is raised to 100 loans, 53 percent of the depository institutions will not report HMDA data (based on 2013 data).[12] Overall, 1,720 institutions that made 147,000 loans in 2017 would be exempt from reporting HMDA data under a 100 loan threshold.[13] Using the new data, the CFPB recently estimated that 39 percent of institutions (2,194 institutions) would be exempt under a 100 loan threshold from reporting in 2018, an increase from 36 percent that would be exempt in 2017. The HMDA data would lose 107,000 loans in 2018.[14] The yearly fluctuations regarding the number of institutions exempted and loans lost from the data are due to differing economic conditions and interest rates. Regardless, the estimates suggest that a large number of lenders will no longer be reporting data, thwarting a statutory purpose of HMDA which is assessing whether lenders are meeting housing and credit needs.

Although the CFPB is not proposing to raise the threshold to 250 loans, it asks for comments on higher thresholds. The CFPB estimates that moving the threshold to 250 loans would exempt 67 percent of depository institutions or 2,850 institutions from HMDA reporting.[15]

Raising the thresholds to 50 or higher would make it more likely that lending institutions would engage in abusive behavior. They will calculate that without publicly available data on lending patterns and loans terms and conditions, members of the public as well as federal agencies will have a harder time detecting discriminatory or predatory practices.

Finally, the current regulatory procedure of requiring a depository institution to make at least one single family loan for home purchase or refinancing before it is even considered as a HMDA reporter must be changed. Even if a lender has not originated a single family home purchase or refinance loan, it could be a major lender in the geographical areas it serves. For example, if it made 25 or more multifamily loans, it could finance housing for thousands of tenants. Also, the two year look-back period could also potentially exclude lenders that rely on New York CEMA loans in cases in which a high volume of CEMA lending in 2017 would not count as loans since CEMAs are present in the 2018 HMDA data but not the 2017 data. In addition, if a lender made several home improvement loans, it is a significant lender in its community but would not be a HMDA reporter due to the threshold counting rules that only consider home purchase or refinance lending. These lenders must publicly report HMDA data so agencies and members of the public can see if they are serving housing needs responsibly and in a non-discriminatory manner. 

CRA and Fair Lending Enforcement Weakened by Exempting Lenders from HMDA Reporting

If the CFPB raises the threshold to 50 or 100 loans, the public will no longer be able to identify smaller volume lenders that are making few loans to underserved populations or have very high denial rates to people of color or modest income borrowers. This, in turn, reduces information available to federal agencies which undertake more extensive fair lending investigations, often based on the data analysis they receive from community-based organizations. Moreover, federal and state agency fair lending and CRA exams will become more difficult and burdensome for regulatory agencies and the HMDA-exempt lenders since the agencies will now have to ask for internal data from the lenders instead of using the HMDA data.

Eliminating HMDA data for several lenders will make fair lending enforcement more difficult and allow predatory lenders to continue their practices. A few years ago, legal aid societies filed a lawsuit against Emigrant Savings Bank. The bank and its affiliates are likely to be exempt from HMDA reporting. For example, Emigrant Funding, an affiliate of the bank reported just 86 applications in its HMDA data in 2017. In 2016, a federal jury found that Emigrant violated the Equal Credit Opportunity Act, the Fair Housing Act, and the New York City Human Rights Law by targeting African-Americans and Hispanics with predatory loans. The bank and its affiliate focused on vulnerable borrowers with credit scores under 600. The loans were “no doc” loans, meaning that the lender’s underwriters did not verify the borrowers’ ability to repay. If the borrower missed one loan payment, the bank would raise the loan’s interest rate to 18 percent, leading many borrowers to default and experience foreclosures.[16] This case would have been more difficult to pursue in the absence of HMDA data which documented a pattern and practice of targeting people and communities of color.

Raising the thresholds for reporting will also imperil enforcement against unfair and deceptive lending across loan purposes and types. In a report to Congress, the CFPB found that “the reverse mortgage market is increasingly dominated by small originators, most of which are not depository institutions. The changing economic and regulatory landscape faced by these small originators creates new risks for consumers.”[17] Many of these lenders could be exempt from reporting HMDA data in the wake of an increase in the reporting threshold. The CFPB and the general public would have considerably less data with which to monitor the practices of these lenders.

Like fair lending and consumer protection enforcement, CRA examination will become more difficult and less able to hold banks accountable if the CFPB increases the reporting thresholds. Frontier State Bank, based in Oklahoma City, Oklahoma, has assets of $607 million. The most recent CRA exam records 110 HMDA loans but most of these are purchased loans since the bank pursues a strategy of purchasing loans. The bank failed its CRA exam and its lending test, receiving a Needs-to-Improve for the overall rating and on the lending test. It did not make any loans to LMI borrowers or purchase any loans made to LMI borrowers during 2016, the year of data analyzed by the exam.[18] At more than half a billion dollars, the bank has the capacity to market to and make loans to LMI borrowers but chooses against doing so.

If banks like Frontier are exempt from reporting HMDA data in the future, community groups cannot hold them accountable for making good faith efforts to serve LMI borrowers. Examiners will also have a harder time conducting exams since they will now have to go onsite and retrieve data from the bank’s internal files. Now, they can do most of their analysis off-site, using the publicly available HMDA data. Exams will become more burdensome and intensive on-site for both the bank and the examiner. CRA will become less effective and more burdensome for small and mid-size banks which remain important sources of credit in large parts of the country.

NCRC appreciates that MidFirst Bank states in its comment letter that the proposed exemptions will result in more difficult CRA exams and fair lending reviews due to a number of peer banks not reporting HMDA data. CRA exams and fair lending reviews often involve reviews of a particular bank against its peers in order to assess whether the particular bank has acceptable fair lending and CRA performance. The lack of peers, just because of an exemption from data reporting, will make this peer analysis difficult, if not impossible, and may result in erroneous judgments about CRA and fair lending performance according to MidFirst.[19]

On a macro level, CRA and fair lending enforcement and monitoring will be less accurate and rigorous if the CFPB raises the HMDA reporting thresholds. Recently, NCRC conducted analysis showing that the typical bank issued more loans to LMI borrowers and census tracts than independent mortgage companies.[20] In other words, a higher percentage of banks issued a higher percentage of home loans than independent mortgage companies to LMI borrowers and census tracts. A significant amount of the difference could be due to lower volume lenders among both banks and mortgage companies. Raising the thresholds could obscure patterns such as this which would then reduce the ability of policymakers and federal agencies to adjust the application of CRA and the fair lending laws in a manner that would improve lender performance in serving traditionally underserved populations.

Reducing Reporting will make it Difficult to Determine if Lenders are Meeting Needs

Raising the thresholds would also imperil HMDA’s statutory purpose of accurately assessing whether housing and credit needs are being met. If, for example, the threshold is raised to 100 loans, the number of HMDA reported loans will fall by 20 percent or more in 2,200 LMI tracts and in a similar number of rural tracts.[21]Members of the public, journalists, academics, and public agencies will not be able to accurately assess whether credit and housing needs are being met in communities across the country in the wake of this significant loss of data.

NCRC also found that a significant number of counties would experience a drop of ten percent or more of applications if the threshold is raised to 100 loans for reporting. Applications are an important measure of impact because fair lending and CRA analysis seeks to uncover whether disparities in denials in addition to originations are present for various geographical areas or groups of borrowers. A significant number of counties (172 or 5.3 percent) would experience a drop of ten percent or more of applications.

A high number of counties would encounter a loss of six percent or more of applications; 334 or 10.4 percent would see a drop of 7 percent or more of applications and 425 or 13.2 percent would have a decrease of 6 percent or more. Overall, the ability to accurately assess whether credit needs are being met in about one out of ten counties would be substantially compromised by raising the threshold to 100 loans. On the low end, while 6 percent of applications may not seem like much, it can make a significant difference when analyzing trends in denials, originations, and other actions for underserved populations at a county level. Underserved populations receive relatively few loans so eliminating HMDA reporting for lenders accounting for 6 percent of applications could disproportionately impact the number of loans reported to be received by underserved populations, particularly if the exempted lenders specialized in lending to these populations. Thus, the accuracy of assessing whether credit needs are being met would be compromised.

Rural counties would be disproportionately impacted.[22] Considering counties that would experience a drop of 10 percent or more of applications, 59.3 percent of these counties would be rural. For the country as a whole, 40.5 percent of counties are rural. Rural areas generally have less access to banks and credit so disproportionately reducing the robustness of HMDA data in rural counties frustrates HMDA’s statutory purpose to ascertain if credit needs are being met. In some cases, raising the reporting thresholds would make it appear that rural areas were receiving fewer loans than they actually were.

Raising the threshold to 100 loans will also impact credit needs analyses in outlying counties. Outlying counties are in metropolitan statistical areas (MSAs) but are located beyond the center city or core of the MSAs. Whereas 17.5 percent of all counties are outlying counties, 27.9 percent of counties experiencing decreases of 10 percent or more of applications are outlying counties. Outlying counties are undergoing demographic change with notable increases in Hispanics and other people of color.[23] A proposed rule that diminishes the quality of HMDA data disproportionately in outlying counties will impair HMDA’s ability to evolve with the changing demographic compositions on a county level.

The proposed 100 loan threshold would diminish the ability of stakeholders to assess credit needs in counties located in central city areas of MSAs and that are in persistent poverty. Twenty one central city counties would experience a decrease of 10 percent or more in applications. Of these, eleven or 52.4 percent are in persistent poverty as defined by the Community Development Financial Institutions (CDFI) Fund.[24] Ten of these counties are located in Puerto Rico. The proposed threshold will therefore particularly impact a poor and vulnerable population located in an area served disproportionately by smaller lenders. These are precisely the populations that HMDA is designed to protect via disclosure and transparency.

Counties in the Midwest and Southwest would be disproportionately impacted by large losses in applications as demonstrated via data analysis or visually.[25] Four counties in Texas would experience a decrease of 25 percent or more applications if the reporting threshold is raised to 100 loans. Likewise, three counties in Nebraska and Kansas each would see a drop of 25 percent or more of applications as would two counties in Oklahoma. The interior parts of the country have suffered from either economic contraction or sluggish growth the last couple of decades. These are the regions that need more data on lending and economic conditions, not less.

The proposed threshold of 100 would sacrifice so much accuracy in depicting lending patterns across disadvantaged areas that it would violate HMDA’s statutory purposes. Even higher thresholds would magnify the damage to HMDA data. Raising the threshold to 250 loans, for example, would result in 118 counties or almost 4 percent losing 25 percent or more of their applications. One quarter of the counties in the United States or 817 would lose 10 percent or more of their applications.

The census tracts and counties experiencing an artificial drop in lending due to newly HMDA-exempt lenders are likely to include a disproportionate number of neighborhoods that are underserved in terms of low loan volumes per capita. The neighborhoods are likely to range from distressed urban neighborhoods, communities of color, neighborhoods with high numbers of immigrants, and rural and tribal areas. A large loss of HMDA reporting will create a distorted view of lending trends in these underserved areas and will make it more difficult for stakeholders to determine if revitalization efforts are succeeding. In some cases, lending will appear to be lower than it actually is. The overall impact of raising the threshold will be to frustrate HMDA’s purposes of determining whether credit needs are being met and whether public investment has succeeded in rejuvenating the housing and lending markets in struggling neighborhoods.

If the CFPB Diminishes Open End Lending Data, a New Round of Abuses and Defaults Will Occur

The CFPB is also proposing to increase the threshold for reporting open end lines of credit often called Home Equity Lines of Credit (HELOCs). In the years before the financial crisis, HELOC lending was riddled with abuses that resulted in distress and/or foreclosure for large numbers of homeowners. The CFPB states that investors would purchase homes and would take out open-end loans with high loan-to-value ratios that often ended up in default. In 2008 Congressional testimony, former Comptroller of the Currency John Dugan reports that national bank losses on home equity loans were three times higher in 2007 than 2006.[26] These loans were not visible in the HMDA database before the Dodd Frank enhancements.

Under the CFPB’s proposal to permanently increase the threshold to 200 open end lines of credit, 401 lenders making 69,000 open end lines of credit would be exempt from reporting HMDA data. Also, raising the threshold from 100 to 200 loans would reduce the number of reporting institutions by 40 percent.[27] This is too many lenders and loans escaping the scrutiny of public and agency review. A repeat of risky practices in vulnerable neighborhoods would thus be too likely to occur.

The CFPB’s recent review of the 2018 HMDA data illustrates that home equity lines of credit (HELOCs) continues to be a riskier form of lending than closed-end mortgage lending. It also appears that multiple risky features are layered on HELOC loans, further increasing the chances of abusive lending and defaults. The CFPB reports that in 2018, 77 percent of HELOC loans were adjustable rate, half feature interest-only payments, and prepayment penalties are present on 28 percent of the loans. In addition, 15 percent of HELOC loans with hefty balloon payments that borrowers need to pay all at once at the end of the loan term have prepayment penalties.[28] In other words, if a borrower wants to refinance out of a HELOC with a significant balloon payment, he or she could face a payment of several hundred if not thousands of dollars associated with the prepayment penalty. In addition, the median interest rate of 5 percent for HELOCs is higher than closed-end loans. The interest rate at the 95 percentile for HELOCs of 8.25 percent is significantly higher than the comparable interest rate for closed end loans.[29] It is likely that the borrowers receiving the highest interest rate HELOCs are the most vulnerable and also those with the most risky features layered on top of each other.

Given the high incidence of risky features present for HELOCs in the 2018 data, the CFPB must not permanently increase the threshold from 100 to 200 loans. Two hundred loans per lender is too many loans to shield from public scrutiny and review. This not only thwarts members of the public from tracking potentially risky or abusive lenders, but also local fair housing officials engaged in important enforcement activities.

Perversely, the CFPB justifies its proposal to raise the permanent threshold to 200 open-end loans by stating that open-end lending has increased by 36 percent from 2013 through 2017.[30] The CFPB is concerned that with the rise of open-end lending, more lenders would exceed the previous reporting threshold of 100 loans. However, an increase in open end lending would be a compelling reason to leave the threshold as is so that more lenders and lending would be subject to the visibility that HMDA provides.

HMDA Compliance Costs are Modest, Not Significant as CFPB Suggests

The CFPB has not accurately balanced the potential costs and benefits of its proposed changes. The CFPB cost estimates for HMDA reporting are modest while the loss of data associated with the higher reporting thresholds was deemed too damaging by the CFPB in its 2015 rulemaking.

Under EGRRCPA, the vast majority of lenders that make fewer than 500 closed-end loans or 500 open-end loans are already exempt from reporting the new HMDA data points added in the CFPB’s 2015 rulemaking in response to passage of Dodd Frank. For example, all but 50 of the 1,720 lenders exempted by a 100 loan threshold would have been exempted from reporting the new Dodd Frank data.[31] These lenders report essentially the same data they have collected and reported for decades (with a modest addition in 2004 of data points such as lien status, pre-approvals, and pricing information for high-cost loans). It is therefore hard to fathom how these lenders could be experiencing any meaningful HMDA reporting burden. Instead, the major impact of raising the threshold is imperiling the effectiveness of HMDA in achieving its statutory purposes. Some stakeholders are seizing an opportunistic time to argue for deleting their HMDA reporting responsibilities rather than responding to a significant impediment to their business operations.

We also believe that these modest savings are an over-estimate since even in the absence of HMDA reporting, almost all of the data would still need to be collected by the lenders in order to comply with other statutes like the Truth in Lending Act and/or to sell loans to Fannie Mae or Freddie Mac or acquire FHA insurance for loans. For example, Adam Levitin, professor of law at Georgetown University, states that loan costs and fees are required to be reported to borrowers under the Truth in Lending Act and Real Estate Settlements Procedures Act. Data points such as debt-to-income ratio are required for compliance with the Qualified Mortgage rule while other data points such as combined loan-to-value ratio are collected as part of securitization data.[32]

Even if they are over-estimates, the CFPB’s estimates for cost savings are modest for increasing the reporting threshold to 50 closed end loans. According to the CFPB, savings would equal “$2,200 for a representative low-complexity tier 3 institution, $32,800 for a representative moderate-complexity tier 2 institution, and $309,000 for a representative high-complexity tier 1 institution.”[33]  Tier 3 are the smaller institutions with fewer HMDA loans and fewer loan processing systems and Tier 1 are typically larger institutions with multiple loan processing systems.

Of the 760 institutions that would be exempt from reporting any HMDA data if the threshold is raised to 50 closed-end loans, 740 would have been exempted from reporting the new Dodd Frank data due to EGRRCPA. The vast majority (740 out of 760) would have already received most of the savings from less data reporting since Congress exempted them from reporting the new Dodd Frank data. In addition, 727 of these would have been a “low complexity tier 3 institution” that would have saved only $2,200 if they no longer had to report HMDA. The CFPB estimates that the total savings for these institutions would be about $2.2 million annually if the CFPB raises the threshold to 50 loans.[34] The per institution savings of around $2,000 and the total savings for this group of institutions of just over $2 million are not impressive and pale in comparison to the losses incurred to the general public in deleting their HMDA data reporting.

The CFPB calculates that raising the reporting threshold to 100 loans would exempt 1,720 lenders from HMDA reporting and result in annual savings of $8.1 million. Again, the savings is modest on a per institution level since the great majority of these lenders would save just over $2,000 as Tier 3 lenders.[35]

Likewise the cost estimates for raising the threshold for open-end reporting are modest and based on guesses more than rigorous analysis. The CFPB seems to accept what it calls as “anecdotes” from the industry that the costs of reporting open end loans are about three times higher than it originally estimated.[36] The CFPB notes that of the 401 institutions that would be exempt from reporting open-end loans if the permanent threshold was raised from 100 to 200 loans, 390 of them would encounter “Tier 3” or relatively low costs.[37] Aggregate savings would be just $2.1 million per year for these 401 exempt institutions.[38]  For each of the 401 institutions, the savings would average about $5,236. This modest amount of savings is not compelling considering the damage done by the abusive open-end lending in the years preceding the financial crisis and the resulting widespread foreclosures. It would seem that most fair minded members of the public would rather institutions incur an extra $5,000 in costs annually, even if this translated into modestly higher loan fees for consumers, than run the risk of these institutions hiding abusive and harmful lending practices because they no longer have to report HMDA data.

MidFirst Bank argues for a lower threshold of 100 loans for HELOC reporting in its comment letter on the NPRM. It states, “The value of the additional data obtained by an exception threshold of 100, especially in local lending markets, exceeds the burden that may occur to smaller lenders. The smaller loan reporting threshold…affords more certainty, clarity, and transparency in analytics, and therefore greater benefit to the consumer and general public.”[39] Fair lending expectations for banks are clearer when more robust comparisons can be made among peer performance and the general public benefits as well from a more transparent marketplace.

Affiliates and Subsidiaries of Banks Must be Data Reporters

The CFPB is correct in adding commentary clarifying that non-bank affiliates or subsidiaries of depository institutions or credit unions do not qualify for the partial exemption.[40] The partial exemption allows a depository institution or credit union to opt against reporting the new Dodd Frank variables including loan terms and conditions if they issued fewer than 500 loans. EGRRCPA applied the partial exemptions to only banks and credit unions, not non-banks. In the years leading up to the financial crisis, non-banks were more likely to engage in abusive and high-cost lending than banks.[41] Moreover, public and regulatory scrutiny of non-bank affiliates and subsidiaries of banks is usually less than for banks since banks have the option to include or exclude non-bank affiliates on their CRA exams. Thus, retaining the new Dodd Frank variables for non-banks, including affiliates and subsidiaries of banks and credit unions, is vital for monitoring against abusive practices.

The threshold calculations for determining whether an institution reports HMDA data should be applied at the holding company level. In other words, if a bank and non-bank are owned by the same parent, their data should be combined to determine if the holding company reports HMDA data. There is often a symbiotic relationship between the affiliates and/or subsidiaries that needs to be captured by data disclosure.

The undersigned organizations agree with the CFPB that data points the Federal Reserve Board added to HMDA before Congress passed Dodd Frank are not affected by the EGRRCPA partial exemption.[42] These include lien status and whether the loan is covered by the Home Ownership and Equity Protection Act. Applying the partial exemption would be contrary to the plain meaning of the EGRRCPA and would delete valuable data for fair lending enforcement and for assessing whether various credit needs are met.

Time Periods for Determining Thresholds

When the CFPB re-opened comments on the Notice of Proposed Rulemaking (NPR) this past summer, it asked whether the date for determining reporting thresholds should be May 2020 or January 2021. A mid-year time period does not make sense. HMDA institutes an annual reporting requirement for banks possibly affected by the NPR. Therefore, their reporting systems are geared for annual submissions. Interrupting a system that has been familiar to these banks for decades would introduce unnecessary regulatory burden. From a community perspective, a mid-year reporting regime would artificially boost the number of banks exempt from reporting since their loans counts would be calculated over a six month time period instead of an annual time period. Because banks would make fewer loans over six as opposed to twelve months, more banks would qualify for the reporting exemption. This would magnify the loss of data accuracy and transparency from any adjustments to the thresholds and would exacerbate damage done to the statutory purpose of HMDA for assessing whether lenders are meeting credit needs in a responsible manner.

HMDA is the Sunshine that Eliminates Unfair, Unsafe, and Destructive Lending

As former Supreme Court Justice Louis Brandeis stated in reference to data disclosure, “Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.”[43] Sunlight prevents abuses while darkness and the absence of publicly available data breeds predatory and wealth stripping behavior.

Congress passed HMDA in 1975. Lenders, including small volume lenders, have been reporting data for decades. Relief from reporting is thus only a minor gain for lenders while it would be a large loss for communities. Even smaller volume lenders can be significant lenders in smaller towns and rural areas. They need to be held accountable and their data is necessary for a complete and accurate picture of whether credit needs are being met.

Thank you for the opportunity to comment on this important matter. If you have any questions, please contact Josh Silver, Senior Advisor, NCRC on jsilver@ncrc.org.



Americans for Financial Reform Education Fund

Center for Responsible Lending

Consumer Action

Consumer Federation of America

Enterprise Community Partners

Local Initiatives Support Corporation


National Association of American Veterans, Inc.

National Community Reinvestment Coalition

National Consumer Law Center (on behalf of our low-income clients)

National Fair Housing Alliance

National NeighborWorks Association

Prosperity Now

Public Citizen

The Leadership Conference on Civil and Human Rights




Alabama Small Business Development Initiative

Birmingham Business Resource Center

Birmingham City Wide

Build UP

Building Alabama Reinvestment

Community Action Association of Alabama

Fair Housing Center of Northern Alabama

NAACP Economic Development



Alaska Public Interest Research Group (AKPIRG)



Chicanos Por La Causa

Local First Arizona



Asian Inc.

California Capital Financial Development Corporation

California Coalition for Rural Housing

California Reinvestment Coalition

CAARMA Consumer Advocates Against Reverse Mortgage Abuse

Cash Community Development Organization

CDC Small Business Finance

EAH Housing

Fair Housing Council of the San Fernando Valley

Fresno Minority Business Development Center

Housing Coalition Educators

The Central Valley Urban Institute

Reinvent South Stockton Coalition

Richmond Neighborhood Housing Services,Inc.

Self-Help Enterprises

The Greenlining Institute

Vermont Slauson EDC



Habitat for Humanity of Metro Denver

Urban Land Conservancy



Bridgeport Neighborhood Trust, Inc.

Hartford Community Loan Fund



Cornerstone West CDC

Delaware Community Reinvestment Action Council, Inc.

Edgemoor Revitalization Cooperative, Inc.

New Castle Prevention Coalition

The Ministry of Caring Inc.


District of Columbia

Coalition for Nonprofit Housing & Economic Development



Affordable Homeownership Foundation/Squirrels Nest

Community Enterprise Investments, Inc.

Community Reinvestment Alliance of South Florida

FL Alliance of Community Development Corps., Inc.

Florida Housing Coalition

Neighborhood Renaissance

St. Petersburg Neighborhood Housing Services, Inc. dba Neighborhood Home Solutions

Solita’s House

Veterans Center of Florida

We Help Communities To Develop Corporation



Atlanta Legal Aid Society, Inc.

Georgia Advancing Communities Together, Inc.

National Housing Counseling Agency

The Greater Piney Grove Community Development, Inc.



Hawai’i Alliance for Community-Based Economic Development



Chicago Rehab Network

Housing Action Illinois

Illinois People’s Action

Institute of Cultural Affairs

Neighborhood Housing Services of Chicago

The Resurrection Project

Universal Housing Solutions CDC

Woodstock Institute



Continuum of Care Network NWI, Inc..

Hope Initiative of NWI

Northwest Indiana Community Action

Northwest Indiana Reinvestment Alliance



River Cities Development Services




Louisville Affordable Housing Trust Fund

Metropolitan Housing Coalition


River City Housing

Urban Coalition of Appraisal Professionals



Foundation for Louisiana

Greater New Orleans Fair Housing Action Center

Greater New Orleans Housing Alliance (GNOHA)

Guste Homes

Home by Hand, Inc



Multi-Cultural Development Center

PosiGen Solar




Coastal Enterprises, Inc.



Community Service Network Inc.

Greater Boston Legal Services, on behalf of its low-income clients

Massachusetts Affordable Housing Alliance

Massachusetts Communities Action Network

Plymouth Redevelopment Authority



Colossus Enterprise Llc

Community Development Network of Maryland

Coppin Heights CDC

Greater Baltimore Community Housing Resource Board

Housing Options & Planning Enterprises, Inc.

Maryland Consumer Rights Coalition

NHS of Baltimore

Poppleton Now! Community Association

PFC Coalition

St. Ambrose Housing Aid Center



Fair Housing Center of Metropolitan Detroit

Southwest Economic Solutions



Bii Gii Wiin Community Development Loan Fund

Jewish Community Action

Metropolitan Consortium of Community Developers

Village Financial Cooperative



Covenant Faith Outreach Min. Inc. /dba/ Covenant Community Development

Housing Education and Economic Development, Inc.



Consumers Council of Missouri

Metropolitan St. Louis Equal Housing and Opportunity Council


New Jersey

Fair Housing Council of Northern New Jersey

New Jersey Citizen Action


New Mexico

Southwest Neighborhood Housing Services


New York

Action for a Better Community

Association for Neighborhood and Housing Development

Buffalo Urban League

Business Outreach Center Network, Inc.

Center for NYC Neighborhoods

Chhaya CDC

Cypress Hills L.D.C

DE Squared

Empire Justice Center

Fair Finance Watch

Genesee Co-op FCU

Greater Rochester Community Reinvestment Coalition


Long Island Housing Services, Inc.

Lower East Side Peoples Federal Credit Union

Neighborhood Housing Services of Brooklyn CDC, Inc.

Neighborhood Restore HDFC

New Economy Project

New York Housing Conference

PathStone Enterprise Center

Partnership for the Public Good

The Homeowners Association, Inc.

Wyandanch Community Development Corporation


North Carolina

Community Link

Henderson and Company

Reinvestment Partners



Bereavement Concierge

Camp Washington Community Board

City of Toledo

Evanston Community Council

Fair Housing Center for Rights & Research

Fair Housing Resource Center, Inc.

Friends Of the African Union Chamber of Commerce

Gladiators for Justice Trump Resistance

Greater Cincinnati Realtist Assocation

Hamilton County Community Reinvestment Group

Isaacs Inc


Mustard Seed Development Center

Nazareth Housing Dev Corp

Ohio Fair Lending

The Law Office of Rachel K. Robinson, LLC

The Pride Through Empowerment Foundation, Inc

Transition Concierges

Working In Neighborhoods



CASA of Oregon

Community Action Team, Inc.

Community Housing Fund

Housing Development Center

Housing Oregon

Portland Housing Center

Proud Ground

REACH Community Development



Bloomfield Development Corporation

Bloomfield-Garfield Corporation


Community Action Committee of the Lehigh Valley

Consulting & Support Services for CBO’s

Habitat for Humanity of Greater Pittsburgh

Housing Alliance of Pennsylvania

Larimer Consensus Group

Liberty Resources, Inc.


Mount Washington Community Development Corporation

NeighborWorks Western Pennsylvania


Philadelphia Association of Community Development Corporations

Pittsburgh Community Reinvestment Group

Southwest CDC


Rhode Island

HousingWorks RI

RI Housing Resources Commission



Chattanooga Organized for Action



Brazos Valley Affordable Housing Corporation

Frameworks Community Development Corporation

Harlingen CDC

Home Sweet Home Community Redevelopment


Neighborhood Recovery Community Development Corporation

Our Casas Resident Council Inc.

South Dallas Fair Park Innercity Community Corporation



West Virginia

Mountain State Justice



Disability Justice

Forward Community Investments

Havenwoods EDC

Metropolitan Milwaukee Fair Housing Council

Pastors United

Urban Economic Development Association of Wisconsin (UEDA)

Wisconsin Partnership for Housing Development


[1] Todd Garvey, A Brief Overview of Rulemaking and Judicial Review, Congressional Research Service, March 2017, p. 2, https://fas.org/sgp/crs/misc/R41546.pdf

[2] Federal Financial Institutions Examination Council, History of HMDA, https://www.ffiec.gov/hmda/history2.htm

[3] Remarks of Eugene A. Ludwig Comptroller of the Currency before the National Urban League, August 5, 1997, OCC, https://www.occ.treas.gov/news-issuances/news-releases/1997/nr-occ-1997-78.html

[4] Robert Litan, Nicolas Retsinas, Eric Belsky and Susan White Haag, “The Community Reinvestment Act After Financial Modernization: A Baseline Report,” produced for the United States Department of the Treasury, April 2000.

[5] The Color of Money: Text of the Pulitzer-winning articles, http://powerreporting.com/color/

[6] Excerpt in Color and Money, Politics and Prospects for Community Reinvestment in Urban America, Gregory D. Squires and Sally O’Connor, State University of New York Press, 2001, p. 7.

[7] Emmanuel Martinez and Aaron Glantz, Kept Out, For people of color, banks are shutting the door to homeownership, February 2018, https://www.revealnews.org/article/for-people-of-color-banks-are-shutting-the-door-to-homeownership/

[8] CFPB, Proposed Rule, Docket No. CFPB-2019-0021, pp. 17-18, original double-spaced version posted on agency website, https://files.consumerfinance.gov/f/documents/cfpb_nprm-hmda-regulation-c.pdf

[9]  CFPB Proposed Rule, p. 17, p. 20, and p. 24.

[10] CFPB, Final Rule, Docket No. CFPB-2014-0019, Federal Register / Vol. 80, No. 208 / Wednesday, October 28, 2015 / Rules and Regulations, p. 66279, https://www.govinfo.gov/content/pkg/FR-2015-10-28/pdf/2015-26607.pdf

[11] CFPB Proposed Rule, p. 118.

[12] CFPB Final Rule, 2015, p. 66279.

[13] CFPB Proposed Rule, p. 119.

[14] CFPB, Data Point: 2018 Mortgage Market Activity and Trends, August 2019, p. 60, https://files.consumerfinance.gov/f/documents/cfpb_2018-mortgage-market-activity-trends_report.pdf

[15] CFPB Proposed Rule, p. 24.

[16] Legal Services NYC, Jury Finds Emigrant Bank Liable for Discrimination in First Reverse Redlining Case to be Tried in Federal Court,  https://www.legalservicesnyc.org/news-and-events/press-room/1033-jury-finds-emigrant-bank-liable-for-discrimination-in-first-reverse-redlining-case-to-be-tried-in-federal-court

[17] CFPB, Reverse Mortgages: Report to Congress, June 28, 2012, p. 9, https://files.consumerfinance.gov/a/assets/documents/201206_cfpb_Reverse_Mortgage_Report.pdf

[18] FDIC, CRA Exam of Frontier Sate Bank, November 2017, https://www5.fdic.gov/CRAPES/2017/21978_171113.PDF

[19] MidFirst comment letter on NPRM.

[20] Jason Richardson and Josh Silver, NCRC, Home lending to LMI borrowers and communities by banks compared to non-banks, April, 2019, https://ncrc.org/home-lending-to-lmi-borrowers-and-communities-by-banks-compared-to-non-banks/

[21] CFPB Proposed Rule, p. 23.

[22] County designations are rural, central, or outlying and are obtained from the Census, see https://www.census.gov/geographies/reference-files/time-series/demo/metro-micro/delineation-files.html

[23] Laura Meckler and Kate Rabinowitz, The Changing Face of School Integration, Washington Post, September 12, 2019, https://www.washingtonpost.com/education/2019/09/12/more-students-are-going-school-with-children-different-races-schools-big-cities-remain-deeply-segregated/

[24] Persistent poverty is defined as counties in which 20 percent or more of the population lives in poverty. See CDFI resources: https://www.cdfifund.gov/Pages/default.aspx and https://www.cdfifund.gov/Pages/default.aspx

[25] See maps produced by Jason Richardson, NCRC, September 2019 at  https://public.tableau.com/profile/jason.richardson#!/vizhome/HMDALoanThresholdImpactMap/Dashboard1 for a map of the impact of various thresholds.

[26] Testimony of Comptroller of the Currency John Dugan before the United States Senate Committee on Banking, Housing and Urban Affairs, March 2008, p. 12, https://www.occ.gov/news-issuances/congressional-testimony/2008/pub-test-2008-28-written.pdf

[27] CFPB Proposed Rule, pp. 130-131.

[28] CFPB, Introducing New and Revised Data Points in HMDA: Initial Observations from New and Revised Data Points in 2018 HMDA, August 2019, pp. 33-37, https://files.consumerfinance.gov/f/documents/cfpb_new-revised-data-points-in-hmda_report.pdf

[29] CFPB, Ibid, p. 67.

[30] CFPB Proposed Rule, p. 32.

[31] CFPB Proposed Rule, p. 119.

[32] Adam Levitin, New HMDA Regs Require Banks to Collect Lots of Data…That They Already Have, in Credit Slips, June 23017, https://www.creditslips.org/creditslips/2017/06/new-hmda-regs-require-banks-to-collect-data-they-already-have.html

[33] CFPB Proposed Rule, p. 122.

[34] CFPB Proposed Rule, pp. 122-123.

[35] CFPB, Proposed Rule, pp. 123-124.

[36] CFPB, Proposed Rule, p. 33.

[37] CFPB, Proposed Rule, p. 37.

[38] CFPB, Proposed Rule, p. 135.

[39] MidFirst comment letter.

[40] CFPB, Proposed Rule, p. 58.

[41] Robert Avery, Kenneth Brevoort, and Glenn B. Canner, Higher Priced Home Lending and the 2005 HMDA Data, Federal Reserve Bulletin, September 2006, and Elizabeth Laderman and Carolina Reid, Federal Reserve Bank of San Francisco, CRA Lending during the Subprime Meltdown in Revisiting the CRA: Perspectives on the Future of the Community Reinvestment Act, a Joint Publication of the Federal Reserve Banks of Boston and San Francisco, February 2009, http://www.frbsf.org/publications/community/cra/cra_lending_during_subprime_meltdown.pdf

[42] CFPB Proposed Rule, pp. 62-63.

[43] Louis D. Brandeis Quotes, https://www.brandeis.edu/legacyfund/bio.html

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

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