TheMReport — News and strategies for the evolving mortgage marketplace.
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62 | M R EP O RT O R I G I NAT I O N S E R V I C I N G DATA G O V E R N M E N T S E C O N DA R Y M A R K E T THE LATEST GOVERNMENT CFPB Issues New HMDA Analysis of 2019 Data The data is used to determine whether financial institutions are serving the housing needs of their local communities. T he Consumer Finan- cial Protection Bureau (CFPB) issued a new Home Mortgage Dis- closure Act (HMDA) analysis of the 2019 HMDA Data. This data article is the second in a series and follows the first article pub- lished in June. The (HMDA) is a data collec- tion, reporting, and disclosure statute enacted in 1975. According to a statement from the CFPB, "the HMDA data are the most comprehensive source of publicly available information on the U.S. mortgage market, and the only publicly-available and free source that provides nation- wide application-level data on the demand and supply of mortgage credit. The data are used to assist in determining whether financial institutions are serving the housing needs of their local communities; facilitate public entities' distribu- tion of funds to local communities to attract private investment; and help identify possible discrimina- tory lending patterns. Institutions covered by HMDA are required to annually collect and report specified information about each mortgage application acted upon and mortgage purchased during the prior calendar year." "In the Dodd-Frank Act, Congress amended HMDA to require reporting of new data points. Additionally, CFPB issued a HMDA Rule in 2015 revising cer- tain data points and requiring the reporting of new ones. This article presents findings based on these new and revised data points in the 2019 HMDA Data, the second year in which such data were required." Some important findings in this year's data points article include: The top 25 open-end lend- ers accounted for about 573,000 open-end originations, or 53.6% of all open-end originations reported under HMDA. Conventional jumbo loans have the highest mean and median credit scores among closed-end mortgages, with a mean score of 765 and a median of 773. FHA borrowers have the lowest mean and median scores among closed- end mortgages, with a mean score of 668 and a median of 663. Among Black and Hispanic white homebuyers seeking conven- tional conforming loans, the me- dian combined loan-to-value and debt-to-income ratios are higher than their Asian and non-Hispanic white counterparts. CFPB Details New 'Seasoned QM' Mortgage Proposal The proposed rule is designed to encourage innovation and help ensure access to responsible, affordable mortgage credit. T he Consumer Finan- cial Protection Bureau (CFPB) has proposed the implementation of a new type of seasoned qualified mortgages (Seasoned QMs). The purpose, the CFPB said, is to "encourage innovation and help ensure access to responsible, affordable [mortgage credit]." For a loan to be eligible to become a Seasoned QM, among other restrictions, the creditor would be compelled to consider and verify the consumer's debt- to-income ratio (DTI) or residual income at origination. Seasoned QMs would only be available for covered transactions that have no more than two 30- day delinquencies and no delin- quencies of 60 or more days at the end of the seasoning period. Also, should there be a disaster or pandemic-related national emer- gency, as long as certain conditions are met, the proposal would not disqualify a loan from becoming a Seasoned QM for the failure to make full contractual payments if the consumer receives a temporary payment accommodation. "Today's proposal continues the Bureau's work to encourage safe and responsible innovation in the mortgage origination market," Consumer Financial Protection Bureau Director Kathleen L. Kraninger said. "Our goal through our very deliberative rulemaking process is to protect, promote and preserve the financial well-being of American consumers while at the same time offering access to respon- sible, affordable mortgage credit." The proposal points to two previous new rules from June 2020 regarding QMs. Before issuing a final rule, the CFPB generally announces and ex- plains its proposals to address an issue and invites public comment. "Today's proposal continues the Bureau's work to encourage safe and responsible innovation in the mortgage origination market." — Kathleen L. Kraninger,. Director, Consumer Financial Protection Bureau