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Giving Compass' Take:
· The authors address the problems with gathering accurate data about the mortgage market and the state of credit posed by COVID-19 and why this information is important to have.
· How can policymakers support the gathering of this information? Why is this information important?
Quietly but steadily, the public and policymakers are losing access to important data about the mortgage market and the state of credit for low- and moderate-income borrowers and communities. Three current rulemakings from the Consumer Financial Protection Bureau (CFPB) and bank regulators—one final, one proposed, and one at an earlier stage—promise to exacerbate the situation.
With COVID-19 raising the potential for another credit crisis, this pullback in public data is especially troubling. How did we get here?
In 2015, the CFPB published a final rule implementing provisions of the Dodd-Frank Act that were designed to increase the amount, type, and quality of mortgage market data available to the public under the Home Mortgage Disclosure Act (HMDA). The goal was to establish a better early-warning system for the kinds of problems in the mortgage market that led to the bubble and bust of the century’s first decade.
As part of that rulemaking (PDF), the CFPB exempted lenders making fewer than 25 mortgage loans a year from reporting. The result: 1,400 depository institutions, or 22 percent of those that had been reporting, became exempt.
Then, in 2018, Congress passed the Economic Growth, Regulatory Relief, and Consumer Protection Act, which exempted depository institutions making fewer than 500 mortgage loans a year from reporting almost all of the new data that had been required under Dodd-Frank and the CFPB’s 2015 rule. The result: much less information from 3,250 insured banks and credit unions. That’s 67 percent of the 4,860 financial institutions currently required to report, with a disproportionate impact on rural and low-income areas and on information about small loans.
Read the full article about gathering accurate data about the housing market by Laurie Goodman and Ellen Seidman at Urban Institute.