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Wednesday, May 3, 2017

To Protect Consumers, ABA Seeks Pause on HMDA Expansion

ABA has called on the CFPB to rescind requirements to collect any Home Mortgage Disclosure Act data not explicitly spelled out in law, and for Congress to revoke the new HMDA data elements added by the Dodd-Frank Act. ABA also said the CFPB should suspend the pending HMDA expansion until privacy and security concerns are addressed and exclude commercial loans from being covered.

ABA noted that the Dodd-Frank HMDA expansion does nothing to enhance fair lending enforcement and that the bureau has pursued an even greater expansion of data, “geometrically expand[ing the] actual number of data fields for collection.” Complying with the expanded HMDA collection will cost the banking industry up to $327 million even using the CFPB’s conservative estimates, but the increased collection burden appears intended for filling the bureau’s mortgage database, not meaningfully improving the HMDA purpose of fair lending, ABA said.

Moreover, ABA noted that the granularity of pre-existing HMDA data – down to individual loan amounts and census tracts – make it possible to identify individual borrowers 95% of the time. “The new data points would add to the information that is publicly reachable, including information about the borrower’s credit score, property address, and age. This will be a treasure trove for identity thieves or others who want to commit financial crimes,” ABA said, adding that the CFPB has provided no plans for how to protect consumer data.

The recommendations came in the seventh white paper submitted to the Treasury Department as part of the banking industry’s continuing response to President Trump’s executive order outlining “core principles” for financial regulation.

Read the white paper.

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