Disclosure of Loan-Level HMDA Data
| Published date | 31 January 2019 |
| Citation | 84 FR 649 |
| Record Number | 2018-28404 |
| Section | Notices |
| Court | Consumer Financial Protection Bureau |
Federal Register, Volume 84 Issue 21 (Thursday, January 31, 2019)
[Federal Register Volume 84, Number 21 (Thursday, January 31, 2019)]
[Notices]
[Pages 649-673]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28404]
-----------------------------------------------------------------------
BUREAU OF CONSUMER FINANCIAL PROTECTION
[Docket No. CFPB-2017-0025]
Disclosure of Loan-Level HMDA Data
AGENCY: Bureau of Consumer Financial Protection.
ACTION: Final policy guidance.
-----------------------------------------------------------------------
SUMMARY: The Bureau of Consumer Financial Protection (Bureau) is
issuing final policy guidance describing modifications that the Bureau
intends to apply to the loan-level data that financial institutions
report under the Home Mortgage Disclosure Act (HMDA) and Regulation C
before the data is disclosed to the public. This final policy guidance
applies to HMDA data compiled by financial institutions in or after
2018 and made available to the public by the Bureau beginning in 2019.
DATES: The Bureau released this final policy guidance on its website on
December 21, 2018.
FOR FURTHER INFORMATION CONTACT: Benjamin Cady and David Jacobs,
Counsels; Laura Stack, Senior Counsel, Office of Regulations, at 202-
435-7700 or https://reginquiries.consumerfinance.gov/. If you require
this document in an alternative electronic format, please contact
CFPB_Accessibility@cfpb.gov.
SUPPLEMENTARY INFORMATION:
I. Summary
HMDA requires certain financial institutions to collect, report,
and disclose data about their mortgage lending activity. HMDA is
implemented by Regulation C, 12 CFR part 1003. In 2010, the Dodd-Frank
Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended
HMDA and transferred HMDA rulemaking authority and other functions from
the Board of Governors of the Federal Reserve System (Board) to the
Bureau. Among other changes, the Dodd-Frank Act expanded the scope of
information relating to mortgage applications and loans that must be
collected, reported, and disclosed under HMDA and authorized the Bureau
to require by rule financial institutions to collect, report, and
disclose additional information. In 2015, the Bureau published a final
rule amending Regulation C (2015 HMDA Final Rule) to implement the
Dodd-Frank Act amendments to HMDA and make other changes, including
adding a number of new data points. Most provisions of the 2015 HMDA
Final Rule took effect on January 1, 2018, and apply to data financial
institutions collect beginning in 2018 and report beginning in 2019.
With respect to the public disclosure of HMDA data, the Bureau
interpreted HMDA, as amended by the Dodd-Frank Act, to require that the
Bureau use a balancing test to determine whether and how HMDA data
should be modified prior to its disclosure to protect applicant and
borrower privacy while also fulfilling HMDA's public disclosure
purposes. On September 25, 2017, the Bureau published proposed policy
guidance that described the Bureau's balancing test and how the Bureau
proposed to apply it to the loan-level HMDA data made available to the
public.\1\
---------------------------------------------------------------------------
\1\ Disclosure of Loan-Level HMDA Data, 82 FR 44586 (Sept. 25,
2017) (hereinafter Proposed Policy Guidance).
---------------------------------------------------------------------------
After considering the comments the Bureau received on the proposal,
the Bureau is publishing this final policy guidance describing the
loan-level HMDA data it intends to make available to the public,
including modifications to be applied to the data. The Bureau intends
to make these modifications to data financial institutions collected in
2018 when the Bureau discloses that data in 2019. The Bureau is making
these determinations based upon the information currently available to
it, including the comments received on the proposal, with respect to
the risks and benefits associated with the disclosure of loan-level
HMDA data. The Bureau intends to commence a rulemaking in the spring of
2019 that will enable it to identify more definitively modifications to
the data that the Bureau determines to be appropriate under the
balancing test and incorporate these modifications into a legislative
rule. The rulemaking will reconsider the determinations reflected in
this final policy guidance based upon the Bureau's experience
administering the final policy guidance in 2019 and on a new rulemaking
record, including data concerning the privacy risks posed by the
disclosure of the HMDA data and the benefits of such disclosure in
light of HMDA's purposes.
In developing this final policy guidance, the Bureau consulted with
the prudential regulators (the Board, the Federal Deposit Insurance
Corporation (FDIC), the National Credit Union Administration (NCUA),
and the Office of the Comptroller of the Currency (OCC)); the
Department of Housing and Urban Development (HUD); and the Federal
Housing Finance Agency (FHFA).
For the reasons described below and in the proposed policy
guidance,\2\ the Bureau is modifying its proposed policy guidance to
change the proposed
[[Page 650]]
treatment of the following data fields: (1) The ratio of the
applicant's or borrower's total monthly debt to the total monthly
income relied on in making the credit decision; (2) the number of
individual dwelling units related to the property securing the covered
loan or, in the case of an application, proposed to secure the covered
loan; and (3) the number of individual dwelling units related to the
property securing the covered loan or, in the case of an application,
proposed to secure the covered loan, that are income-restricted
pursuant to Federal, State, or local affordable housing programs.
---------------------------------------------------------------------------
\2\ See id. at 44596-44610.
---------------------------------------------------------------------------
Pursuant to this final policy guidance, the Bureau intends to
disclose loan-level HMDA data reported under Regulation C with the
following modifications to the data: First, the Bureau intends to
modify the public loan-level HMDA data to exclude: (1) The universal
loan identifier or non-universal loan identifier; (2) the date the
application was received or the date shown on the application form; (3)
the date of action taken by the financial institution on a covered loan
or application; (4) the address of the property securing the covered
loan or, in the case of an application, proposed to secure the covered
loan; (5) the credit score or scores relied on in making the credit
decision; (6) the unique identifier assigned by the Nationwide Mortgage
Licensing System and Registry for the mortgage loan originator; and (7)
the result generated by the automated underwriting system used by the
financial institution to evaluate the application. The Bureau also
intends to exclude free-form text fields used to report the following
data: (1) Applicant or borrower race; (2) applicant or borrower
ethnicity; (3) the name and version of the credit scoring model used;
(4) the principal reason or reasons the financial institution denied
the application, if applicable; and (5) the automated underwriting
system name.
Second, the Bureau intends to modify the public loan-level HMDA
data to reduce the precision of most of the values reported for the
following data fields. With respect to the amount of the loan or the
amount applied for, the Bureau intends to disclose the midpoint for the
$10,000 interval into which the reported value falls. The Bureau also
intends to indicate whether the reported value exceeds the applicable
dollar amount limitation on the original principal obligation in effect
at the time of application or origination, as provided under 12 U.S.C.
1717(b)(2) and 12 U.S.C. 1454(a)(2). With respect to the age of an
applicant or borrower, the Bureau intends to bin reported values into
the following ranges: 25 to 34; 35 to 44; 45 to 54; 55 to 64; and 65 to
74; bottom-code reported values under 25; top-code reported values over
74; and indicate whether the reported value is 62 or higher.\3\ With
respect to the ratio of the applicant's or borrower's total monthly
debt to the total monthly income relied on in making the credit
decision, the Bureau intends to disclose without modification reported
values greater than or equal to 36 percent and less than 50 percent.
The Bureau also intends to bin reported values into the following
ranges: 20 percent to less than 30 percent; 30 percent to less than 36
percent; and 50 percent to less than 60 percent; bottom-code reported
values under 20 percent; and top-code reported values of 60 percent or
higher. With respect to the value of the property securing the covered
loan or, in the case of an application, proposed to secure the covered
loan, the Bureau intends to disclose the midpoint for the $10,000
interval into which the reported value falls. With respect to the
number of individual dwelling units related to the property securing
the covered loan or, in the case of an application, proposed to secure
the covered loan, the Bureau intends to bin reported values into the
following ranges: 5 to 24; 25 to 49; 50 to 99; 100 to 149; and 150 and
over. And with respect to the number of individual dwelling units
related to the property securing the covered loan or, in the case of an
application, proposed to secure the covered loan, that are income-
restricted pursuant to Federal, State, or local affordable housing
programs, the Bureau intends to disclose reported values as a
percentage, rounded to the nearest whole number, of the value reported
for the total number of individual dwelling units related to the
property securing the covered loan.
---------------------------------------------------------------------------
\3\ Binning, sometimes known as recoding or interval recoding,
allows data to be shown clustered into ranges rather than as precise
values. Top- and bottom-coding mask any value that is above or below
a certain threshold.
---------------------------------------------------------------------------
This final policy guidance is exempt from notice and comment
rulemaking requirements under the Administrative Procedure Act (APA), 5
U.S.C. 553(b), and is non-binding. As previously noted, the Bureau
believes that it is beneficial to commence a separate notice and
comment legislative rulemaking under the APA to consider and adopt a
more definitive approach to disclosing HMDA data to the public in
future years. The Bureau will commence such a rulemaking in May 2019.
II. Background
A. HMDA's Purposes and the Public Disclosure of HMDA Data
HMDA requires certain financial institutions to collect, report,
and disclose data about their mortgage lending activity. The home
mortgage market is the country's largest market for consumer financial
products and services, with $10 trillion in mortgage debt
outstanding.\4\ Homeownership is a critical source of wealth-building
for families and communities. As of 2016, 48 million consumers had a
mortgage, representing 64 percent of all owner-occupied homes.\5\
---------------------------------------------------------------------------
\4\ FRED Economic Data, ``Mortgage Debt Outstanding by Type of
Property: One- to Four-Family Residences (MDOTP1T4FR),'' Fed. Res.
Bank of St. Louis, Bd. of Govs. of the Fed. Res. Sys., https://fred.stlouisfed.org/series/MDOTP1T4FR (last updated Sept. 24, 2018).
\5\ U.S. Census Bureau, ``Selected Housing Characteristics:
2012-2016 American Community Survey 5-Year Estimates,'' https://factfinder.census.gov/bkmk/table/1.0/en/ACS/16_5YR/DP04/0100000US
(last visited Dec. 3, 2018).
---------------------------------------------------------------------------
HMDA is implemented by Regulation C, 12 CFR part 1003. HMDA
identifies its purposes as providing the public and public officials
with sufficient information to enable them to determine whether
financial institutions are serving the housing needs of the communities
in which they are located, and to assist public officials in their
determination of the distribution of public sector investments in a
manner designed to improve the private investment environment.\6\ In
1989, following amendments to HMDA, the Board recognized a third HMDA
purpose of identifying possible discriminatory lending patterns and
enforcing antidiscrimination statutes, which now appears with HMDA's
other purposes in Regulation C.\7\ Today, HMDA data are the preeminent
data source that regulators, researchers, economists, industry, and
advocates use to achieve HMDA's purposes and to analyze the mortgage
market.
---------------------------------------------------------------------------
\6\ 12 U.S.C. 2801(b).
\7\ See Home Mortgage Disclosure, 54 FR 51356, 51357 (Dec. 15,
1989) (recognizing the purpose of identifying possible
discriminatory lending patterns and enforcing antidiscrimination
statutes in light of the 1989 amendments to HMDA, which mandated the
reporting of the race, sex, and income of loan applicants).
---------------------------------------------------------------------------
Public disclosure of HMDA data is central to the achievement of
HMDA's purposes. Since HMDA's enactment in 1975, the data that
financial institutions are required to disclose under HMDA and
Regulation C have been expanded; public access to HMDA data has
increased; and the formats in which HMDA data have been disclosed have
evolved. As enacted and implemented
[[Page 651]]
in Regulation C, HMDA required covered financial institutions to make
available to the public at their home and branch offices a ``disclosure
statement'' reflecting aggregates of certain mortgage loan data.\8\ In
1980, Congress amended HMDA section 304 to require that the Federal
Financial Institutions Examination Council (FFIEC) implement a system
to increase public access to the data required to be disclosed under
the statute, including a ``central depository of data'' in each
metropolitan statistical area (MSA). The 1980 HMDA amendments also
required the FFIEC to compile annually, for each MSA, aggregate data by
census tract for all financial institutions required to disclose data
under HMDA. The 1980 amendments further required the FFIEC to produce
tables indicating, for each MSA, aggregate lending patterns for various
categories of census tracts grouped according to location, age of
housing stock, income level, and racial characteristics.\9\
---------------------------------------------------------------------------
\8\ Home Mortgage Disclosure Act of 1975, Public Law 94-200,
section 304, 89 Stat. 1124, 1125-28 (Dec. 31, 1975); 12 CFR
203.5(a)(1) (effective June 28, 1976).
\9\ Housing and Community Development Act of 1980, Public Law
96-399, section 340, 94 Stat. 1614, 1657-59 (1980).
---------------------------------------------------------------------------
In 1989, Congress amended HMDA to require that financial
institutions collect, report, and disclose data concerning the race,
sex, and income of applicants and borrowers, as well as data on loan
applications, in addition to originations and purchases.\10\ In
implementing these amendments in Regulation C, the Board required
financial institutions to report HMDA data to Federal regulators on a
loan-by-loan and application-by-application basis using the ``loan/
application register'' format.\11\ In 1990, the FFIEC issued a notice
announcing that it would make all reported HMDA data available to the
public in a loan-level format, after deleting three fields to protect
applicant and borrower privacy: application or loan number, application
date, and action taken date.\12\ The FFIEC stated that it believed
public disclosure of the reported loan-level HMDA data to be
``consistent with the congressional intent to maximize the utilization
of lending data.'' \13\ The FFIEC first disclosed the reported loan-
level HMDA data to the public in October 1991.
---------------------------------------------------------------------------
\10\ Financial Institutions Reform, Recovery and Enforcement Act
(FIRREA), Public Law 101-73, section 1211, 103 Stat. 183, 524-26
(1989).
\11\ 54 FR 51356, 51361 (Dec. 15, 1989).
\12\ Home Mortgage Disclosure Act; Disclosure Statements and
Aggregate MSA Reports; Availability of Data, 55 FR 27886, 27888
(July 6, 1990).
\13\ Id.
---------------------------------------------------------------------------
In 1992, Congress amended HMDA to add section 304(j), which
required that each financial institution make available to the public
its ``loan application register information'' for each year as early as
March 31 of the succeeding year, as required under regulations
prescribed by the Board.\14\ The Board implemented this amendment by
requiring that financial institutions make their ``modified'' loan/
application registers available to the public after deleting the same
three fields deleted from the loan-level HMDA data disclosed by the
FFIEC.\15\
---------------------------------------------------------------------------
\14\ Housing and Community Development Act, Public Law 102-550,
section 932, 106 Stat. 3672, 3889-91 (1992).
\15\ 12 CFR 203.5(a)-(e) (effective Mar. 1, 1993).
---------------------------------------------------------------------------
B. The Dodd-Frank Act and Amendments to HMDA and Regulation C
In 2010, the Dodd-Frank Act amended HMDA and transferred HMDA
rulemaking authority and other functions from the Board to the
Bureau.\16\ Among other changes, the Dodd-Frank Act expanded the scope
of information relating to mortgage applications and loans that must be
collected, reported, and disclosed under HMDA and authorized the Bureau
to require by rule financial institutions to collect, report, and
disclose additional information. The Dodd-Frank Act amendments to HMDA
also added new section 304(h)(1)(E), which directs the Bureau to
develop regulations, in consultation with the agencies identified in
section 304(h)(2),\17\ that ``modify or require modification of
itemized information, for the purpose of protecting the privacy
interests of the mortgage applicants or mortgagors, that is or will be
available to the public.'' Section 304(h)(3)(B), also added by the
Dodd-Frank Act, directs the Bureau to ``prescribe standards for any
modification under paragraph (1)(E) to effectuate the purposes of
[HMDA], in light of the privacy interests of mortgage applicants or
mortgagors. Where necessary to protect the privacy interests of
mortgage applicants or mortgagors, the Bureau shall provide for the
disclosure of information . . . in aggregate or other reasonably
modified form, in order to effectuate the purposes of [HMDA].'' \18\
---------------------------------------------------------------------------
\16\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 124 Stat. 1376, 1980, 2035-38, 2097-2101 (2010).
\17\ These agencies are the prudential regulators--the Board,
the FDIC, the NCUA, and the OCC--and HUD. Together with the Bureau,
these agencies are referred to herein as ``the agencies.''
\18\ Section 304(h)(3)(A) provides that a modification under
section 304(h)(1)(E) shall apply to information concerning ``(i)
credit score data . . . in a manner that is consistent with the
purpose described in paragraph (1)(E); and (ii) age or any other
category of data described in paragraph (5) or (6) of subsection
(b), as the Bureau determines to be necessary to satisfy the purpose
described in paragraph (1)(E), and in a manner consistent with that
purpose.'' 12 U.S.C. 2803(h)(3)(A).
---------------------------------------------------------------------------
On October 28, 2015, the Bureau published the 2015 HMDA Final Rule
to implement the Dodd-Frank Act amendments and make other changes,
including adding a number of new data points.\19\ Most provisions of
the 2015 HMDA Final Rule took effect on January 1, 2018, and apply to
data financial institutions collect beginning in 2018 and report
beginning in 2019. The 2015 HMDA Final Rule addressed the public
disclosure of HMDA data in two ways.
---------------------------------------------------------------------------
\19\ Home Mortgage Disclosure (Regulation C), 80 FR 66128 (Oct.
28, 2015); see also Home Mortgage Disclosure (Regulation C), 80 FR
69567 (Nov. 10, 2015) (making technical corrections).
---------------------------------------------------------------------------
First, the 2015 HMDA Final Rule shifted public disclosure of HMDA
data entirely to the agencies. Beginning with HMDA data compiled in
2017, financial institutions were no longer required to provide their
modified loan/application registers and disclosure statements directly
to the public. Instead, they were required only to provide a notice
advising members of the public seeking their data that the data may be
obtained on the Bureau's website. In addition to reducing burden on
financial institutions, this shift of responsibility to the agencies
eliminated risks to financial institutions associated with errors in
preparing their modified loan/application registers that could result
in the unintended disclosure of data. This shift of responsibility also
permitted the Bureau to consider modifications to protect applicant and
borrower privacy that preserve data utility but that may be burdensome
for financial institutions to implement. Finally, this shift of
responsibility allowed for easier adjustment of modifications as
privacy risks and potential uses of HMDA data evolve.
Second, the Bureau interpreted HMDA, as amended by the Dodd-Frank
Act, to require that the Bureau use a balancing test to determine
whether and how HMDA data should be modified prior to its disclosure to
the public to protect applicant and borrower privacy while also
fulfilling HMDA's public disclosure purposes. The Bureau interpreted
HMDA to require that public HMDA data be modified when the release of
the unmodified data creates risks to applicant and borrower privacy
[[Page 652]]
interests that are not justified by the benefits of such release to the
public in light of HMDA's statutory purposes.\20\ The 2015 HMDA Final
Rule's interpretation of HMDA section 304(h)(1)(E) and 304(h)(3)(B) to
require a balancing test imposed binding obligations on the Bureau to
evaluate the HMDA data, individually and in combination, to assess
whether and how HMDA data should be modified prior to its disclosure to
the public to protect applicant and borrower privacy while also
fulfilling HMDA's public disclosure purposes.
---------------------------------------------------------------------------
\20\ 80 FR 66128, 66134 (Oct. 28, 2015).
---------------------------------------------------------------------------
On September 25, 2017, the Bureau published proposed policy
guidance that described the Bureau's balancing test and how the Bureau
proposed to apply it to the loan-level HMDA data made available to the
public beginning in 2019, with respect to data compiled by lenders in
or after 2018.\21\
---------------------------------------------------------------------------
\21\ See 82 FR 44586 (Sept. 25, 2017).
---------------------------------------------------------------------------
On May 24, 2018, the President signed into law the Economic Growth,
Regulatory Relief, and Consumer Protection Act (EGRRCPA), which amended
HMDA by adding partial exemptions from HMDA's data collection and
reporting requirements for certain insured depository institutions and
insured credit unions.\22\ On September 7, 2018, the Bureau published
an interpretive and procedural rule to implement and clarify the
EGRRCPA's requirements (2018 HMDA Final Rule).\23\ Among other things,
the Bureau clarified that institutions covered by a partial exemption
have the option of reporting exempt data points as long as they report
all data fields that the specific data point comprises. The Bureau also
clarified which of the data points in Regulation C are covered by the
partial exemptions.\24\ The partial exemptions apply beginning with the
2018 HMDA data, which institutions must report to the Bureau by March
1, 2019.
---------------------------------------------------------------------------
\22\ Economic Growth, Regulatory Relief, and Consumer Protection
Act, Public Law 115-174, section 104(a), 132 Stat. 1296 (2018). The
EGRRCPA provided, among other things, that the requirements of HMDA
section 304(b)(5) and (6) (which requires collection and reporting
of certain data points and provides the Bureau discretion to require
additional data points) shall not apply to closed-end mortgage loans
of an insured depository institution or insured credit union if the
institution originated fewer than 500 closed-end mortgage loans in
each of the two preceding calendar years. The EGRRCPA also included
a similar exemption with respect to open-end lines of credit.
\23\ Partial Exemptions from the Requirements of the Home
Mortgage Disclosure Act Under the Economic Growth, Regulatory
Relief, and Consumer Protection Act (Regulation C), 83 FR 45325
(Sept. 7, 2018).
\24\ The Bureau interpreted the partial exemption to cover 26 of
the 48 HMDA data points, including 12 data points that the Bureau
added to Regulation C in the 2015 HMDA Final Rule to implement data
points specifically identified in HMDA section 304(b)(5)(A) through
(C) or (b)(6)(A) through (I), and 14 data points that were not found
in Regulation C prior to the Dodd-Frank Act and that the Bureau
required in the 2015 HMDA Final Rule pursuant to its discretionary
authority under HMDA sections 304(b)(5)(D) and (b)(6)(J).
---------------------------------------------------------------------------
III. The Balancing Test
As noted above, in the 2015 HMDA Final Rule, the Bureau interpreted
HMDA to require that public HMDA data be modified when the disclosure
of the unmodified data creates risks to applicant and borrower privacy
interests that are not justified by the benefits of such disclosure to
the public in light of HMDA's purposes. The Bureau included in the
proposed policy guidance a detailed description of the balancing test
and its proposed application, including the benefits of public
disclosure, the risks to applicant and borrower privacy that may be
created by public disclosure, and the Bureau's approach to balancing
these benefits and risks, including through modifying some of the data
to be disclosed.
As described in more detail in the proposal,\25\ under the
balancing test, the disclosure of the loan-level HMDA dataset creates
risks to applicant and borrower privacy interests only where: (1) At
least one data field or a combination of data fields substantially
facilitates the identification of an applicant or borrower, and (2) at
least one data field or combination of data fields discloses
information about the applicant or borrower that is not otherwise
public and may be harmful or sensitive. At the individual data field
level, a field may create ``re-identification risk'' by substantially
facilitating the identification of an applicant or borrower in the HMDA
data (for example, because it may be used to match a HMDA record to an
identified record), or may create ``risk of harm or sensitivity'' by
disclosing information about the applicant or borrower that is not
otherwise public and may be harmful or sensitive.\26\
---------------------------------------------------------------------------
\25\ See 82 FR 44586, 44590 (Sept. 25, 2017).
\26\ See id. at 44592-95.
---------------------------------------------------------------------------
Where the public disclosure of the unmodified loan-level HMDA
dataset would create risks to applicant and borrower privacy, the
balancing test requires that the Bureau consider the benefits of
disclosure to HMDA's purposes and, where these benefits do not justify
the privacy risks the disclosure would create, modify the dataset to
appropriately balance the privacy risks and disclosure benefits. An
individual data field is a candidate for potential modification under
the balancing test if its disclosure in unmodified form would create a
risk of re-identification or a risk of harm or sensitivity.
The Bureau explained in the proposal that, with respect to the HMDA
data that financial institutions will report to the agencies under the
2015 HMDA Final Rule, it initially determined public disclosure of the
unmodified loan-level dataset, as a whole, would create risks to
applicant and borrower privacy interests. The Bureau stated that this
was due to the presence in the dataset of individual data fields that
the Bureau believed would create re-identification risk and the
presence of individual data fields that the Bureau believed are not
currently public and would create a risk of harm or sensitivity. The
Bureau thus applied the balancing test to determine whether and how it
should modify the HMDA data financial institutions must collect and
report under the 2015 HMDA Final Rule before it is disclosed to the
public. Based on its analysis, the Bureau initially determined it would
have to modify the loan-level HMDA data before it disclosed that data
to the public. The Bureau also stated it initially determined the
modifications to the loan-level HMDA dataset proposed in the proposed
policy guidance would reduce risks to applicant and borrower privacy
and appropriately balance them with the benefits of disclosure for
HMDA's purposes.
For the reasons described below and in the proposed policy
guidance,\27\ the Bureau is modifying its proposed policy guidance to
change the proposed treatment of the following data fields: (1) The
ratio of the applicant's or borrower's total monthly debt to the total
monthly income relied on in making the credit decision (debt-to-income
ratio); (2) the number of individual dwelling units related to the
property securing the covered loan or, in the case of an application,
proposed to secure the covered loan (total units); and (3) the number
of individual dwelling units related to the property securing the
covered loan or, in the case of an application, proposed to secure the
covered loan, that are income-restricted pursuant to Federal, State, or
local affordable housing programs (affordable units). The Bureau
determines that public disclosure of the unmodified loan-level dataset,
as a whole, would create risks to applicant and borrower privacy
interests and that the loan-level HMDA data must be modified before the
data is disclosed to
[[Page 653]]
the public. The Bureau further determines, based on the information
currently available to it, that the modifications described in this
final policy guidance will reduce risks to applicant and borrower
privacy and appropriately balance them with the benefits of disclosure
in light of HMDA's purposes. This final policy guidance describes the
data the Bureau intends to disclose on each financial institution's
modified loan/application register as well as in the combined loan-
level data the agencies make available to the public each year.\28\
---------------------------------------------------------------------------
\27\ See id. at 44596-44610.
\28\ As described below in part IV.B and C, the Bureau will not
include on the modified loan/application registers (1) an indication
of whether the reported loan amount exceeds the applicable dollar
amount limitation on the original principal obligation in effect at
the time of application or origination as provided under 12 U.S.C.
1717(b)(2) and 12 U.S.C. 1454(a)(2) or (2) information about the MSA
or Metropolitan Division in which the property securing or proposed
to secure the loan is located. This information will be included in
the annual loan-level disclosure of all reported HMDA data combined.
---------------------------------------------------------------------------
IV. Comments Received and the Bureau's Responses
The Bureau received 26 comments on the proposed policy guidance.
These included general comments on the Bureau's proposal; views on the
proposed treatment of particular data fields; and comments on other
topics. The majority of the comments received did not address how the
Bureau should treat specific data fields, and many comments opposing or
expressing concern with the Bureau's proposal did not provide any
evidence or analysis in support of their positions.
A. General Comments Concerning the Application of the Balancing Test to
Loan-Level HMDA Data
Comments Received
Several industry commenters generally stated that the Bureau's
proposal did not sufficiently address the privacy risks posed by the
disclosure of HMDA data, but many of these commenters offered little
evidence or analysis to support their views or specific suggestions to
address their concerns. A few industry commenters stated that the HMDA
data the Bureau proposed to disclose would be highly re-identifiable.
They also stated that the new data fields required under the 2015 HMDA
Final Rule increased this re-identification risk compared to the data
publicly disclosed under the disclosure regime adopted by the Board in
implementing the 1992 amendments to HMDA (the Board's disclosure
regime).\29\ A group of industry commenters stated that over 80 percent
of loans publicly disclosed under the Board's disclosure regime could
be re-identified and that the addition of the new data fields increases
the possibility of re-identification to ``virtually 100%.'' \30\ These
commenters also suggested that the amount of HMDA data the Bureau
proposed to disclose would create incentives to re-identify the data.
Several industry commenters stated that technological advances increase
the ease with which public HMDA data can be re-identified. One industry
commenter stated that the Bureau had underestimated adversaries' \31\
motives to re-identify the HMDA data and that the Bureau's proposal
downplayed the risk that an adversary with personal knowledge of an
applicant or borrower would re-identify the applicant or borrower in
the HMDA data.
---------------------------------------------------------------------------
\29\ 12 CFR 203.5(c) (effective Mar. 1, 1993) (identifying the
data a financial institution must delete from its modified loan/
application register prior to making it available to the public).
\30\ These commenters cited a 2017 research paper in support of
their statement that attaching a borrower's name and address to a
HMDA record can be achieved in over 80 percent of cases. See Anthony
Yezer, ``Personal Privacy of HMDA in a World of Big Data,'' at 4
(Geo. Wash. U., Inst. for Int'l Econ. Policy, Working Paper No.
IIEP-WP-2017-21, 2017). In this paper, the author states that, in a
particular census tract that he identified as presenting low re-
identification risk compared to others in the same county, he was
able to re-identify 72 percent of borrowers with loans by the same
lender by matching the 2014 public HMDA data to public records. Id.
at 14-16. He also describes several projects in which academic and
government researchers matched HMDA data to other data sources--some
to private datasets, others to public records--and achieved up to a
75 percent match rate. Id. at 11-14. It is unclear which research
supports the author's claim that re-identification of HMDA data
disclosed under the Board's disclosure regime ``can be achieved in
over 80% of cases.'' Id. at 3.
\31\ The Bureau used the term ``adversary'' in the proposed
policy guidance to refer to persons that may attempt to re-identify
the HMDA data. See, e.g., Nat'l Inst. of Standards & Tech., ``De-
Identification of Personal Information (2015),'' available at http://nvlpubs.nist.gov/nistpubs/ir/2015/NIST.IR.8053.pdf (using
``adversary'' to refer to an entity attempting to re-identify data).
---------------------------------------------------------------------------
A few industry commenters also expressed general concern that, if
the HMDA data were re-identified, the data could be used to target what
one described as ``predatory'' marketing to applicants and borrowers
and to commit financial fraud and identity theft. Two industry
commenters suggested that these risks were posed by the data disclosed
under the Board's disclosure regime but that the Bureau's proposed
disclosure of the new data fields required by the 2015 HMDA Final Rule
increased these risks. One industry commenter stated that data the
Bureau proposed to disclose could be used for social engineering
attacks, such as an adversary posing as a borrower's lender. The
commenter also stated that disclosure could undermine lenders' use of
fraud detection measures such as authentication questions that rely on
a customer's personal knowledge of her financial information. The
commenter also stated that data the Bureau proposed to disclose could
be used to identify a vacation home for purposes of theft or adverse
possession. A group of industry commenters stated that data the Bureau
proposed to disclose could be used by an adversary to target older
borrowers in particular, and also would allow the public to form a very
accurate estimate of consumers' creditworthiness. A few industry
commenters expressed general concern that the Bureau proposed to
disclose data consumers would consider sensitive or would like or
expect to remain private. One industry commenter suggested that lenders
would be subject to ``increased litigation'' if HMDA data disclosed by
the Bureau were used for criminal purposes.
With respect to disclosure benefits, a few industry commenters
stated that public disclosure of the HMDA data, and in particular the
new data required to be reported under the 2015 HMDA Final Rule, would
not further HMDA's purposes. One industry commenter suggested that
regulator access to HMDA data alone would be sufficient to accomplish
HMDA's goals. This commenter and another industry commenter also stated
that the data disclosed to the public under the Board's disclosure
regime are sufficient to allow the public to achieve HMDA's goals.
Another industry commenter suggested that the Bureau should publicly
disclose limited data at first, and then later determine whether the
information disclosed is sufficient to allow the public to achieve
HMDA's purposes. None of these commenters specifically addressed the
benefits of the data's public disclosure to HMDA's purposes identified
in the proposal.
Two industry commenters addressed the balancing of privacy risks
and disclosure benefits. One industry commenter stated that if there is
``any chance'' that HMDA data could be used for criminal purposes, the
benefits of disclosure could not outweigh the privacy risks created by
disclosure. Another industry commenter suggested that the balancing
test requires the Bureau to modify the data to the point that re-
identification risk is ``remote,'' although the commenter did not
elaborate on what that term means or
[[Page 654]]
what would need to be shown to meet it.
A few industry commenters recommended that the Bureau disclose the
new data required under the 2015 HMDA Final Rule only in aggregate
form, and one industry commenter stated that the Bureau should not
disclose the new data to the public at all. Another industry commenter
suggested that the Bureau disclose all HMDA data, including data
publicly disclosed under the Board's disclosure regime, in aggregate
form only.
Several commenters generally supported the Bureau's proposal. These
commenters generally agreed with the Bureau's assessment and proposed
balancing of privacy risks and disclosure benefits, although almost all
of these commenters disagreed with the proposal's treatment of a few
specific fields and advocated for greater disclosure, as discussed
below in part IV.B. A group of consumer advocate commenters emphasized
that loan-level HMDA data have long been publicly disclosed without any
evidence the data has been used to harm applicants and borrowers. These
commenters asserted that industry commenters' claims about re-
identification risk failed to account for the Bureau's proposed
modifications and stated that the HMDA data the Bureau proposed to
disclose would be unlikely to be used to engage in identity theft.
These commenters also provided detailed descriptions of the benefits of
public disclosure of HMDA data to HMDA's purposes. An industry
commenter described HMDA data as a critical source of information for
the public to understand the mortgage market and to analyze the impact
of public policies on communities and borrowers. This industry
commenter supported the expansion of the data under the 2015 HMDA Final
Rule and the Bureau's proposal to disclose much of the new data.
Another industry commenter similarly stated that much of the new data
required to be reported under the 2015 HMDA Final Rule is vital to
accurate and complete fair lending analyses and to understanding the
housing needs of communities. An individual commenter also expressed
support for the public availability of HMDA data, noting in particular
the usefulness of the data to identify what the commenter described as
``predatory'' lending.
Bureau Response
For the reasons described below, the Bureau determines that none of
the general comments it received provide a sufficient basis to make
changes to the proposed policy guidance. On the other hand, as
explained below in part IV.B, the Bureau determines that some specific
comments it received about particular data fields provide an adequate
basis to make changes to the proposed treatment of these fields.
HMDA is a disclosure statute; public disclosure of HMDA data is
central to the achievement of HMDA's goals.\32\ The Bureau
acknowledges, as it did in the proposal, that the modifications it
intends to apply to the loan-level HMDA data disclosed to the public
will not completely eliminate privacy risks. Nevertheless, the Bureau
determines that, to the extent disclosure creates risks to applicant
and borrower privacy, such risks are justified by the benefits of such
release to the public in light of HMDA's purposes.
---------------------------------------------------------------------------
\32\ See 12 U.S.C. 2801(b) (``The purpose of this chapter is to
provide the citizens and public officials of the United States with
sufficient information'' to enable them to determine whether
depository institutions are filling their obligations to serve the
housing needs of the communities and neighborhoods in which they are
located and to assist public officials in their determination of the
distribution of public sector investments in a manner designed to
improve the private investment environment) (emphasis added); 12 CFR
1003.1 (``This part implements the Home Mortgage Disclosure Act,
which is intended to provide the public with loan data that can be
used:'' to help determine whether financial institutions are serving
the housing needs of their communities; to assist public officials
in distributing public-sector investment so as to attract private
investment to areas where it is needed; and to assist in identifying
possible discriminatory lending patterns and enforcing
antidiscrimination statutes) (emphasis added).
---------------------------------------------------------------------------
The public loan-level HMDA data have always displayed a high level
of record uniqueness and included fields that are also found in
identified public records.\33\ The Bureau believes that some degree of
re-identification risk in connection with the public disclosure of the
data is acceptable because HMDA requires the Bureau to consider not
only the risk posed by disclosure, but also the benefits of disclosure
to HMDA's purposes. The Bureau does not believe that HMDA permits it to
modify data based solely on the existence of a ``chance'' that HMDA
data could be used for harmful purposes, as suggested by one industry
commenter, without considering such risk in light of the benefits of
disclosure to HMDA's purposes. Similarly, the Bureau believes it would
be inconsistent with HMDA to modify the public data to the point that
re-identification risk is ``remote,'' as suggested by another industry
commenter, instead of to the point that any privacy risk created by the
disclosure is justified by the benefits of the data to HMDA's purposes.
---------------------------------------------------------------------------
\33\ In 2005, researchers at the Board found that ``[m]ore than
90 percent of the loan records in a given year's HMDA data are
unique--that is, an individual lender reported only one loan in a
given census tract for a specific loan amount.'' Robert B. Avery et
al., ``New Information Reported under HMDA and Its Application in
Fair Lending Enforcement,'' at 367, Fed. Res. Bull. (Summer 2005),
available at http://www.federalreserve.gov/pubs/bulletin/2005/3-05hmda.pdf. In the 2017 paper cited by a group of industry
commenters, the author described the high record uniqueness observed
in the 2014 public HMDA data for a particular county and stated
that, in a census tract that he identified as presenting low re-
identification risk compared to others in the county, he was able to
re-identify 72 percent of borrowers with loans by the same lender by
matching the public HMDA data to public records. See Yezer, supra
note 30, at 14-16.
---------------------------------------------------------------------------
Under the final policy guidance, the Bureau intends to modify every
new field required under the 2015 HMDA Final Rule that it has
identified as likely to substantially facilitate the re-identification
of an applicant or borrower. The Bureau is also making changes to the
proposal concerning specific data fields where commenters pointed out
that the proposal would have left unmodified data that would
substantially facilitate re-identification. Further, the Bureau intends
to significantly reduce the precision of loan amount in the public
data.\34\ Loan amount is a field that was required to be reported prior
to the 2015 HMDA Final Rule and that the Bureau believes to be a
significant contributor to re-identification risk in the HMDA data.
---------------------------------------------------------------------------
\34\ Prior to the 2015 HMDA Final Rule, loan amount was reported
rounded to the nearest thousand. Under the Board's disclosure
regime, this field was disclosed to the public without modification.
Consistent with its proposal and as discussed in part IV.B below,
under the final policy guidance the Bureau intends to disclose loan
amount binned in $10,000 intervals.
---------------------------------------------------------------------------
The Bureau has carefully considered the risk that a potential
adversary, such as an applicant's or borrower's neighbor or
acquaintance, may be able to re-identify the HMDA data by relying on
personal knowledge about the applicant or borrower. As discussed in
more detail in the proposal,\35\ although the Bureau believes that
location and demographic information may be more likely to be known
than other information in the HMDA data, it is impossible to determine
the exact content of any pre-existing personal knowledge such a
potential adversary may possess. None of the comments provided any
basis for the Bureau to make reliable predictions as to what this
knowledge would be.
[[Page 655]]
This uncertainty creates challenges for evaluating the degree to which
individual data fields contribute to the risk of re-identification by
such a potential adversary. The Bureau initially determined that,
because the pre-existing personal knowledge possessed by such a
potential adversary is typically limited to information about a single
individual, or a small number of individuals, any re-identification
attempt by such a potential adversary would likely target or affect a
limited number of individuals.\36\ No commenter disputed this
statement, much less rebutted it with data or analysis.
---------------------------------------------------------------------------
\35\ See 82 FR 44586, 44594 (Sept. 25, 2017). The Bureau noted
that, to the extent that disclosure of census tract and demographic
information such as ethnicity and race would create risk to
applicant and borrower privacy, it believed the risks would be
justified by the benefits of disclosure. Id. at 44598. As discussed
in part IV.B, two industry commenters opposed the proposal to
disclose without modification census tract. No commenter opposed the
proposal to disclose without modification race and ethnicity.
\36\ Id. at 44594.
---------------------------------------------------------------------------
The Bureau concludes, based on the information currently available
to it, that the HMDA data it intends to disclose under this final
policy guidance will be of minimal value to an adversary seeking to
perpetrate identity theft or financial fraud against applicants and
borrowers or to engage in other unlawful conduct.\37\ Specifically, as
noted in the proposal, the HMDA data do not include information
typically required to open new accounts in a consumer's name, such as
Social Security number, date of birth, place of birth, passport number,
or driver's license number, nor do they include information useful to
perpetrate existing account fraud, such as account numbers or
passwords. Although an adversary might try to use almost any
information relating to an individual to steal her identity or commit
fraud against her, the Bureau concludes that disclosure of HMDA data
would be unlikely to increase the information already publicly
available that an adversary could exploit for these purposes. For
example, the public HMDA data will include the name of the financial
institution and other details about the loan terms that could be used
in a social engineering attack against a borrower by a perpetrator
pretending to be the financial institution or against a financial
institution by a perpetrator pretending to be the borrower. However,
these and other data that could be used for this purpose are often
already publicly available--in identified form--in real estate
transaction records.
---------------------------------------------------------------------------
\37\ Indeed, as noted in the proposal, the Bureau believes that
the data would be of minimal use for such purposes even without
modification. Id. at 44595.
---------------------------------------------------------------------------
The Bureau determines that an individual seeking to rob or
adversely possess a property would be unlikely to undertake the effort
required to re-identify public HMDA data to determine whether such a
property is a vacation home, as suggested by an industry commenter.
With respect to the industry commenter that expressed concern that
lenders would be subject to increased litigation in the event public
HMDA data was used for criminal purposes, as noted above, the Bureau
concludes that it is unlikely the public HMDA data would be used for
criminal purposes. Even if the data were used for such purposes, the
Bureau is unable to identify a basis for lender liability under such a
circumstance, and the commenter did not describe how such increased
litigation would arise.
The Bureau acknowledges that, if the public HMDA data were re-
identified, that is, if an adversary were to link an identified
individual to his or her HMDA data, certain fields would reveal
information about an applicant's or borrower's creditworthiness.
However, information about applicant and borrower creditworthiness is
important to HMDA's purposes. For example, this information assists in
identifying possible discriminatory lending patterns by helping ensure
that users are comparing applicants and borrowers with similar
profiles, thereby controlling for factors that might provide non-
discriminatory explanations for disparities in credit and pricing
decisions. As explained below, despite the opposition of many
commenters, the Bureau is issuing final policy guidance that excludes
from the public HMDA data credit score, which is the field that would
reveal the most about an applicant's or borrower's creditworthiness.
The Bureau described and analyzed potential adversaries' incentives
to re-identify public HMDA data in the proposed policy guidance.\38\
Even though some adversaries may have such incentives and loan-level
HMDA data has been made available to the public since 1991, the Bureau
is unaware of any instances of re-identification of the data for
harmful purposes. Commenters provided no evidence of such re-
identification. In the 2017 paper cited by a group of industry
commenters, the author states that, using the 2014 public HMDA data, he
re-identified 72 percent of borrowers with loans by the same lender in
a particular census tract by matching the data to public records, but
it appears that this exercise was undertaken solely to demonstrate that
such matching can be done.\39\ Also in this paper, the author points to
several projects in which academic and government researchers matched
HMDA data to other data sources--some to private datasets, others to
public records--for purposes of research related to mortgage
lending.\40\ It is not clear from several of the resulting papers
whether the researchers used public HMDA data to perform the matching
(at least one appears to have relied on nonpublic HMDA data), but, in
any event, it appears that in none of these instances were the HMDA
data matched to other data sources for purposes of re-identifying
borrowers, let alone for purposes of harming consumers. The Bureau
concludes the modifications it intends to apply to the public HMDA data
under the final policy guidance will minimize the attractiveness of the
HMDA data for harmful purposes, and so will reduce any incentives for
adversaries to re-identify the data.\41\
---------------------------------------------------------------------------
\38\ See id. at 44593-95.
\39\ Yezer, supra note 30, at 14-16.
\40\ Id. at 11-14.
\41\ For example, the Bureau believes that low credit scores and
high debt-to-income ratios may provide information about a
borrower's financial condition that may suggest vulnerability to
scams relating to debt relief or credit repair. The final policy
guidance will exclude credit score from the public HMDA data and
will top-code debt-to-income ratio to protect very high ratios.
---------------------------------------------------------------------------
In 2015, the Bureau determined that public disclosure of the new
HMDA data required under the 2015 HMDA Final Rule would further the
purposes of HMDA. As noted above, the statute and Regulation C are
clear that HMDA's purpose is the provision of data to the public and
public officials in furtherance of HMDA's goals. Congress itself
determined that many of the new data should be collected and reported
to further HMDA's purposes, and the Bureau determined in the rulemaking
resulting in the 2015 HMDA Final Rule that each of the new HMDA data
fields it added using its discretionary authority furthers HMDA's
goals. Several commenters described how the new HMDA data furthers
HMDA's purposes, and no commenters provided analysis or data to support
the general statement made by a few commenters that the public
disclosure of HMDA data does not further the statute's purposes. For
purposes of this final policy guidance, the Bureau takes as given the
determinations made in the 2015 HMDA Final Rule, but the Bureau has
stated that it may reconsider these determinations with respect to some
or all of the discretionary fields through a new legislative
rulemaking.
Finally, the Bureau declines to exclude from the public data or
disclose only in aggregate form all HMDA data or all new data required
to be reported under the 2015 HMDA Final Rule, as suggested by several
commenters. As noted, HMDA is a disclosure statute. It requires that
HMDA data is made
[[Page 656]]
available to the public except as the Bureau determines necessary to
protect applicant and borrower privacy interests. The Bureau interprets
its obligation under the statute to permit modification of the data
made available to the public only where the privacy risk such
disclosure would pose would not be justified by the benefits of such
disclosure in light of HMDA's purposes. Under the balancing test,
excluding from public disclosure or disclosing only in aggregate form
all HMDA data or all new HMDA data would require the Bureau to
determine that the loan-level disclosure of each individual data field
creates privacy risks that are not justified by the benefits of
disclosure to HMDA's purposes and that the only modification available
to appropriately balance the risks and benefits is exclusion from the
public data. However, for the reasons discussed in the proposal,\42\
the Bureau determines that most of the HMDA data create low, if any,
privacy risk--they neither substantially facilitate re-identification
nor do they create a risk of harm or sensitivity--and that any risks
are justified by the benefits in light of HMDA's purposes. Except with
respect to total units and affordable units, discussed below in part
IV.B, none of the comments provided any information that casts doubt on
this conclusion. Therefore, the Bureau concludes that excluding all
HMDA data or all new HMDA data would be inconsistent with the statute
and the balancing test, which the Bureau has by law bound itself to use
to make disclosure determinations.
---------------------------------------------------------------------------
\42\ See 82 FR 44586, 44597-98 (Sept. 25, 2017).
---------------------------------------------------------------------------
B. Comments Concerning the Proposed Treatment of Specific Data Fields
Under the Balancing Test
Data To Be Disclosed Without Modification
The Bureau proposed to publicly disclose the following data fields
as reported, without modification: \43\
---------------------------------------------------------------------------
\43\ Id. at 44597-99.
---------------------------------------------------------------------------
The following information about applicants, borrowers, and
the underwriting process: Income, sex, race, ethnicity, name and
version of the credit scoring model, reasons for denial, and automated
underwriting system (AUS) name.\44\
---------------------------------------------------------------------------
\44\ Note that, as discussed below, the Bureau proposed to
exclude free-form text fields used to report certain data for the
following data fields: ethnicity, race, name and version of the
credit scoring model, reasons for denial, and AUS name. Id. at
44609-10.
---------------------------------------------------------------------------
The following information about the property securing the
loan: State, county, census tract, occupancy type, construction method,
manufactured housing secured property type, manufactured housing land
property interest, total units, and affordable units.
The following information about the application or loan:
Loan term, loan type, loan purpose, whether the application was
submitted directly to the financial institution, whether the loan was
initially payable to the financial institution, whether a preapproval
was requested, action taken, type of purchaser, lien status, prepayment
penalty term, introductory rate period, interest rate, rate spread,
total loan costs or total points and fees, origination charges, total
discount points, lender credits, whether the loan was a high-cost
mortgage under the Home Ownership and Equity Protection Act (HOEPA),
balloon payment, interest-only payment, negative amortization, other
non-amortizing features, combined loan-to-value ratio, open-end line of
credit flag, business or commercial purpose flag, and reverse mortgage
flag.
The following information about the lender: Legal Entity
Identifier (LEI) and financial institution name.\45\
---------------------------------------------------------------------------
\45\ See 12 CFR 1003.4(a)(2)-(7), (a)(8)(i), (a)(9)(ii),
(a)(10)(i), (a)(10)(iii), (a)(11)-(14), (a)(15)(i) (name and version
of credit scoring model), (a)(16)-(22), (a)(24)-(27), (a)(29)-(33),
(a)(35)(i) (AUS name), (a)(36)-(38).
The data fields above that were required to be reported under
Regulation C prior to the 2015 HMDA Final Rule were disclosed to the
public without modification under the Board's disclosure regime. The
Bureau's continued disclosure of these data fields thus is consistent
with the government's longstanding approach.
With the exception of LEI, financial institution name, action
taken, reasons for denial, census tract, and income, each of which is
discussed further below, the Bureau initially determined that
disclosing the data listed above in the loan-level HMDA data released
to the public would likely present low risk to applicant and borrower
privacy. The Bureau also stated that, to the extent that disclosure of
these fields would create risk to applicant or borrower privacy, the
Bureau believed the risks would be justified by the benefits of
disclosure in light of HMDA's purposes.\46\
---------------------------------------------------------------------------
\46\ 82 FR 44586, 44598 (Sept. 25, 2017) (describing the utility
of these data fields in light of HMDA's purposes: helping the public
and public officials to determine whether financial institutions are
serving the housing needs of their communities, to distribute
public-sector investment so as to attract private investment to
areas where it is needed, and to identify possible discriminatory
lending patterns and enforce antidiscrimination statutes).
---------------------------------------------------------------------------
An industry commenter and a group of consumer advocate commenters
supported the Bureau's proposal to disclose without modification the
fields the Bureau identified as likely to create low privacy risk. The
industry commenter stated these data fields would provide valuable
information about the mortgage market that is not available from any
other source. The consumer advocate commenters stated that data fields
relating to pricing--including the fields for interest rate, rate
spread, total loan costs or total points and fees, origination charges,
and discount points--would help data users identify potentially
discriminatory price disparities within the prime and subprime mortgage
markets. These commenters also stated that the data fields related to
loan terms and conditions--such as the term of any prepayment penalty,
the length of any introductory rate period, and whether the contractual
terms include non-amortizing features such as a balloon payment--would
serve as an early-warning system, enabling community organizations and
government agencies to assess the prevalence of unfair, deceptive, and
unaffordable lending. These commenters additionally supported the
Bureau's proposal to disclose new race and ethnicity subcategories for
Asian and Hispanic loan applicants. In their view, disclosure of these
subcategories would help data users identify ``discrimination and
targeting'' with greater precision and would promote responsible
lending in all communities. These commenters also stated that
disclosure of new data fields on manufactured housing would provide
important information about the manufactured home market, including any
issues of concern related to affordability, sustainability, or fair
lending. Another consumer advocate commenter supported the Bureau's
proposal to disclose whether the property is or will be used by the
applicant or borrower as a principal residence, a second residence, or
an investment property.
Except for total units and affordable units, the Bureau intends to
disclose without modification the data fields the Bureau identified in
the proposal as likely presenting low risk to applicant and borrower
privacy, as proposed. For the reasons discussed above and in the
proposal, the Bureau determines, based on the information currently
available to it, that disclosing these data fields as reported
appropriately balances the privacy risks that may be created by such
disclosure and the benefits of such disclosure in light of HMDA's
purposes.
[[Page 657]]
With respect to LEI, financial institution name, and census tract,
the Bureau acknowledged in the proposal that disclosure would likely
substantially facilitate the re-identification of applicants or
borrowers. However, the Bureau initially determined that these risks to
applicant and borrower privacy would be justified by the benefits of
disclosure in light of HMDA's purposes.\47\ With respect to income,
action taken, and reasons for denial, the Bureau recognized in the
proposal that, if the HMDA data were re-identified, disclosure would
likely create a risk of harm or sensitivity, but the Bureau initially
determined these risks would be justified by the benefits of disclosure
in light of HMDA's purposes.\48\ The Bureau responds to the specific
comments it received on its proposed treatment of these data and
describes its final determinations below.
---------------------------------------------------------------------------
\47\ Id. at 44597-99.
\48\ Id.
---------------------------------------------------------------------------
Legal Entity Identifier and Financial Institution Name
Regulation C requires a financial institution, when submitting its
loan/application register to the Bureau, to report the financial
institution's LEI and name.\49\ This requirement is effective January
1, 2019, and will apply to the submission of 2018 HMDA data.\50\ The
LEI is an identifier issued to the financial institution by either a
utility endorsed by the LEI Regulatory Oversight Committee or a utility
endorsed or otherwise governed by the Global LEI Foundation (GLEIF) (or
any successor of the GLEIF) after the GLEIF assumes operational
governance of the global LEI system.\51\ Prior to the 2015 HMDA Final
Rule, a financial institution was required to report its name and HMDA
Reporter's Identification Number (HMDA RID), a ten-digit number that
consisted of an entity identifier specified by the financial
institution's appropriate Federal agency combined with a code that
designates the agency. Both the financial institution's name and HMDA
RID were disclosed to the public without modification under the Board's
disclosure regime.
---------------------------------------------------------------------------
\49\ 12 CFR 1003.4(a)(1)(i)(A); 12 CFR 1003.5(a)(3) (effective
Jan. 1, 2019).
\50\ 80 FR 66128, 66312 (Oct. 28, 2015).
\51\ 12 CFR 1003.4(a)(1)(i)(A).
---------------------------------------------------------------------------
The Bureau proposed to disclose to the public without modification
LEI and financial institution name as reported.\52\ The Bureau
initially determined that disclosure of these data fields in the loan-
level HMDA data released to the public would likely substantially
facilitate the re-identification of applicants or borrowers, but that
this risk to applicant and borrower privacy would be justified by the
benefits of disclosure in light of HMDA's purposes.\53\ An industry
commenter stated that, due to the risk of frivolous class action
litigation against financial institutions, the public HMDA data should
not reveal financial institutions' identities.
---------------------------------------------------------------------------
\52\ 82 FR 44586, 44597-99 (Sept. 25, 2017).
\53\ Id. at 44598 (stating that the ability to identify the
financial institution by name is critical for users to evaluate the
lending practices of a financial institution).
---------------------------------------------------------------------------
The Bureau declines to exclude LEI and financial institution name
from the public HMDA data based on the risk of frivolous class action
litigation against financial institutions. As described above, HMDA
requires each financial institution to make its modified loan/
application register available to the public, which necessarily entails
identification of the lender. Though the 2015 HMDA Final Rule shifted
responsibility for disclosing the modified loan/application register
from institutions to the Bureau, the Bureau concludes that it must
maintain the public's ability to obtain loan-level data for an
individual lender. Further, the Bureau concludes that excluding these
data fields, and thereby concealing the identities of lenders, would
greatly undermine the utility of the public data for HMDA's purposes,
because HMDA's purposes in large part concern evaluating the practices
of individual lenders. Although the Bureau appreciates the industry
commenter's concern about frivolous litigation against financial
institutions and agrees such litigation should not be encouraged, it
declines to exclude LEI and financial institution name from the public
data on this basis.
The Bureau intends to disclose without modification LEI and
financial institution name, as proposed. For the reasons discussed
above and in the proposal, the Bureau determines, based on the
information currently available to it, that disclosing without
modification LEI and financial institution name appropriately balances
the privacy risks that may be created by disclosure of these fields and
the benefits of such disclosure in light of HMDA's purposes.
Action Taken and Reasons for Denial
Regulation C requires financial institutions to report the action
taken by the financial institution in response to an application.\54\
Financial institutions must report a code from a specified list set
forth in the HMDA Filing Instructions Guide to indicate the action
taken.\55\ Financial institutions were required to report this data
field prior to the 2015 HMDA Final Rule, and this data field was
disclosed to the public without modification under the Board's
disclosure regime.
---------------------------------------------------------------------------
\54\ 12 CFR 1003.4(a)(8)(i).
\55\ Bureau of Consumer Fin. Prot., ``Filing instructions guide
for HMDA data collected in 2018--OMB Control No. 3170-0008,'' at 81
(Sept. 2018) (hereinafter FIG), available at https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2018-hmda-fig-2018-hmda-rule.pdf. Action taken is reported using the following codes: Code
1--Loan originated; Code 2--Application approved but not accepted;
Code 3--Application denied; Code 4--Application withdrawn by
applicant; Code 5--File closed for incompleteness; Code 6--Purchased
loan; Code 7--Preapproval request denied; Code 8--Preapproval
request approved but not accepted.
---------------------------------------------------------------------------
Regulation C also requires financial institutions to report the
principal reason or reasons the financial institution denied the
application, if applicable.\56\ If the financial institution denied the
application, it must report one or more codes from a specified list to
indicate the reason or reasons for denial.\57\ Prior to the 2015 HMDA
Final Rule, reporting of reasons for denial was optional, except as
required by the OCC and FDIC for certain supervised financial
institutions.\58\ When reported, reasons for denial was disclosed to
the public without modification under the Board's disclosure regime.
---------------------------------------------------------------------------
\56\ 12 CFR 1003.4(a)(16). Insured depository institutions and
insured credit unions are not required to report reasons for denial
for loans or applications that are partially exempt under the
EGRRCPA, although reporting may be required by another law or
regulation. See 83 FR 45325, 45329 (Sept. 7, 2018).
\57\ FIG, supra note 55, at 96-98. Reasons for denial is
reported using the following codes: Code 1--Debt-to-income ratio;
Code 2--Employment history; Code 3--Credit history; Code 4--
Collateral; Code 5--Insufficient cash (down payment, closing costs);
Code 6--Unverifiable information; Code 7--Credit application
incomplete; Code 8--Mortgage insurance denied; Code 9--Other; Code
10--Not applicable; Code 1111--Exempt.
\58\ 12 CFR 1003.4(c) (effective Jan. 1, 1990). Financial
institutions regulated by the OCC are required to report reasons for
denial on their HMDA loan/application registers pursuant to 12 CFR
27.3(a)(1)(i), 128.6. Similarly, pursuant to regulations transferred
from the Office of Thrift Supervision, certain financial
institutions supervised by the FDIC are required to report reasons
for denial on their HMDA loan/application registers. 12 CFR 390.147.
---------------------------------------------------------------------------
The Bureau proposed to disclose to the public without modification
action taken and reasons for denial as reported.\59\ The Bureau
initially determined that disclosing action taken (if an application
was denied) and reasons for denial in the loan-level HMDA data released
to the public would likely disclose information about the applicant or
borrower that is not otherwise public and may be harmful or sensitive.
Nevertheless, the Bureau
[[Page 658]]
initially determined that this risk to applicant and borrower privacy
would be justified by the benefits of disclosure in light of HMDA's
purposes.\60\
---------------------------------------------------------------------------
\59\ 82 FR 44586, 44597-99 (Sept. 25, 2017).
\60\ Id. at 44598 (describing the utility of action taken and
reasons for denial in light of HMDA's purposes, including helping
the public and public officials to identify possible discriminatory
lending patterns and enforce antidiscrimination statutes).
---------------------------------------------------------------------------
A group of consumer advocate commenters supported the Bureau's
proposal to disclose action taken, stating that it is essential for
determining whether lenders are responsibly meeting credit needs in a
non-discriminatory manner. These commenters also stated that disclosure
of reasons for denial--in conjunction with disclosure of the name and
version of the credit scoring model and automated underwriting system
used by the financial institution, as the Bureau proposed--would
increase transparency in the marketplace and support fair lending
enforcement by enabling data users to determine if there are
differences in reasons for denial based on the credit scoring model or
automated underwriting system used.
An industry commenter recommended that the Bureau exclude action
taken and reasons for denial from the public HMDA data for commercial-
purpose multifamily loans only. The commenter stated that disclosure of
these fields would create re-identification risk and pose a unique risk
of harm for commercial-purpose multifamily applicants. In the
commenter's view, if the HMDA data were re-identified, commercial-
purpose multifamily applicants could suffer negative reputational harm
from certain information reported for action taken--specifically,
``Denied,'' ``Withdrawn by applicant,'' or ``Closed as incomplete''--
and from any information relating to the reason for a denial. According
to the commenter, the disclosure of this information could adversely
affect these applicants' business relationships and these applicants
may not be able to mitigate such harm effectively.
The Bureau does not believe that the concerns expressed by the
industry commenter justify excluding from the public HMDA data action
taken and reasons for denial for commercial-purpose multifamily
applications and loans. The risk of harm identified by the commenter
could arise only with respect to an application that did not result in
an origination. As discussed in more detail in the proposal,\61\ the
Bureau concludes that re-identification risk is significantly reduced
for applications that did not result in originations. The Bureau is not
aware of any public or private dataset containing information about
applications that do not result in originated mortgage loans. The
Bureau believes that the lack of public information about applications
would significantly reduce the likelihood that an adversary could match
the record of a HMDA loan application that was not originated to an
identified record in another dataset. Even if an applicant were to be
re-identified, however, the Bureau concludes the harms the commenter
envisions are unlikely to occur. Loan-level data for multifamily
applications have been disclosed publicly since 1991, and the Bureau is
not aware of any evidence that adversaries have re-identified these
applications in the public HMDA data or that this type of harm has
occurred. Further, even if this type of reputational harm were likely
to occur, this harm would not be unique to commercial-purpose
multifamily borrowers. Finally, if action taken were excluded, users
would be unable to determine whether an application was originated,
critically impairing the utility of the public data for HMDA's
purposes.
---------------------------------------------------------------------------
\61\ See id. at 44593 n.55.
---------------------------------------------------------------------------
The Bureau intends to disclose without modification action taken
and reasons for denial, as proposed. For the reasons discussed above
and in the proposal, the Bureau determines, based on the information
currently available to it, that disclosing without modification action
taken and reasons for denial appropriately balances the privacy risks
that may be created by disclosure of these fields and the benefits of
such disclosure in light of HMDA's purposes.
State, County, and Census Tract
Regulation C requires financial institutions to report the State,
county, and census tract of the property securing or proposed to secure
the covered loan if the property is located in an MSA or Metropolitan
Division (MD) in which the institution has a home or branch office, or
if the institution is subject to Sec. 1003.4(e).\62\ Institutions must
report the State using the two-letter State code of the property; the
county using the five-digit Federal Information Processing Standards
code for the county; and the census tract using the 11-digit census
tract number defined by the U.S. Census Bureau.\63\ As originally
enacted and implemented in Regulation C, HMDA required financial
institutions to disclose information about the financial institution's
mortgage lending activity by census tract.\64\ The 1992 amendments to
HMDA requiring institutions to make publicly available their modified
loan/application registers included language stating ``[i]t is the
sense of the Congress that a depository institution should provide loan
register information under this section in a format based on the census
tract in which the property is located.'' \65\ State, county, and
census tract were disclosed to the public without modification under
the Board's disclosure regime.
---------------------------------------------------------------------------
\62\ 12 CFR 1003.4(a)(9)(ii). 12 CFR 1003.4(e) requires banks
and savings associations that are required to report data on small
business, small farm, and community development lending under
regulations that implement the Community Reinvestment Act (CRA) to
collect the information required by 12 CFR 1003.4(a)(9) for property
located outside MSAs and MDs in which the institution has a home or
branch office, or outside any MSA.
\63\ FIG, supra note 55, at 83-84.
\64\ Home Mortgage Disclosure Act of 1975, Public Law 94-200,
section 304(a)(2)(A), 89 Stat. 1126 (Dec. 31, 1975); 12 CFR
203.4(a)(1) (effective June 28, 1976).
\65\ 12 U.S.C. 2803(j)(2)(C).
---------------------------------------------------------------------------
The Bureau proposed to disclose to the public without modification
State, county, and census tract as reported.\66\ The Bureau initially
determined that disclosure of State and county would likely present low
risk to applicant and borrower privacy, and that, to the extent that
disclosure of these fields would create risk to applicant and borrower
privacy, the risks would be justified by the benefits of disclosure in
light of HMDA's purposes. The Bureau initially determined that
disclosure of census tract would likely substantially facilitate the
re-identification of applicants or borrowers, but that this risk to
applicant and borrower privacy would be justified by the benefits of
disclosure in light of HMDA's purposes.\67\
---------------------------------------------------------------------------
\66\ 82 FR 44586, 44597-99 (Sept. 25, 2017).
\67\ Id. at 44598 (describing the utility of census tract in
light of HMDA's purposes, including helping the public and public
officials to determine whether financial institutions are serving
the housing needs of their communities and to identify possible
discriminatory lending patterns and enforce antidiscrimination
statutes).
---------------------------------------------------------------------------
One industry commenter opposed the Bureau's proposal to disclose
census tract without modification, and another industry commenter
opposed the disclosure of this field for commercial-purpose multifamily
loans. The first industry commenter stated that, to reduce re-
identification risk, the Bureau should exclude census tract from the
public loan-level HMDA data and instead disclose ``generalized census
tract classifications'' for each application or loan. The commenter
suggested that, for example, the Bureau could indicate whether the
property is located in a low- or moderate-income census tract or a
census tract with a high percentage of minority residents. The second
industry commenter stated that, for commercial-purpose multifamily
loans only, the Bureau should exclude
[[Page 659]]
census tract and county, and should disclose State only where there are
enough multifamily originations in the State to make re-identification
risk ``remote,'' although the commenter did not identify the number of
originations that would satisfy that standard. According to the
commenter, the disclosure of these data fields would pose elevated re-
identification risk for multifamily borrowers, as significantly fewer
commercial-purpose multifamily loans are originated each year than
single-family loans.
The Bureau recognizes that disclosing generalized census tract
classifications instead of the census tract would reduce re-
identification risk. Nevertheless, the Bureau concludes that doing so
would critically undermine the utility of the data for HMDA's purposes.
If census tract were excluded from the HMDA data, the public and public
officials would be unable to analyze the data at a geographic level
smaller than county. Consequently, excluding census tract would make it
virtually impossible for data users to identify possible discriminatory
lending patterns within counties. For example, for a data user to
analyze whether a lender was engaged in redlining, the user would need
census tract to compare lending behavior among lenders in a particular
community or an individual lender's behavior in different communities.
Without census tract, users would also be unable to determine whether
lenders were serving the housing needs of communities within counties
or identify communities within counties where public-sector investment
is needed to attract private investment. Additionally, excluding census
tract from disclosure would also prevent financial institutions from
using HMDA to assess their own fair lending risk by comparing their
data with other institutions.\68\
---------------------------------------------------------------------------
\68\ See, e.g., Melanie Brody & Anjali Garg, ``2013 HMDA Data Is
Now Available; Mortgage Lenders Should Consider Evaluating Redlining
Risk,'' K&L Gates, Consumer Fin. Servs. Watch (Sept. 25, 2014),
available at https://www.consumerfinancialserviceswatch.com/2014/09/2013-hmda-data-is-now-available-mortgage-lenders-should-consider-evaluating-redlining-risk/ (``With the release of the 2013 HMDA
data, lenders can now evaluate their own 2013 redlining risk by
comparing their applications and originations in high-minority
census tracts to those of their peers.'').
---------------------------------------------------------------------------
The Bureau also declines to exclude State, county, and census tract
for commercial-purpose multifamily loans. The Bureau determines that
the privacy risk created by the disclosure of census tract, even if
heightened with respect to multifamily loans, is justified by the
critical benefits of this field to HMDA's purposes, as described in the
above paragraph. The Bureau notes that, if census tract is disclosed,
disclosure of county and State do not create additional privacy risk,
because knowing the census tract allows a user to discern the county
and state, as counties are geographic units within states and census
tracts are geographic units within counties.
The Bureau intends to disclose without modification State, county,
and census tract, as proposed. For the reasons discussed above and in
the proposal, the Bureau determines, based on the information currently
available to it, that disclosing without modification State, county,
and census tract appropriately balances the privacy risks that may be
created by disclosure of these fields and the benefits of such
disclosure in light of HMDA's purposes.
Income
Regulation C requires financial institutions to report the gross
annual income they relied on in making the credit decision or, if a
credit decision was not made, the gross annual income they relied on in
processing the application. Financial institutions do not have to
report income for covered loans for which the credit decision did not
consider income (or for applications for which the credit decision
would not have considered income).\69\ Financial institutions must
report income rounded to the nearest thousand.\70\ The Board amended
Regulation C in 1989 to require reporting of income as part of its
implementation of FIRREA.\71\ Prior to the 2015 HMDA Final Rule,
financial institutions were required to report this data field rounded
to the nearest thousand. Under the Board's disclosure regime, this data
field was disclosed to the public without modification.
---------------------------------------------------------------------------
\69\ 12 CFR 1003.4(a)(10)(iii).
\70\ Comment 4(a)(10)(iii)-10.
\71\ 54 FR 51356, 51363 (Dec. 15, 1989).
---------------------------------------------------------------------------
The Bureau proposed to disclose without modification income as
reported.\72\ The Bureau initially determined that disclosing income in
the loan-level HMDA data released to the public would likely disclose
information about the applicant or borrower that is not otherwise
public and may be harmful or sensitive. Nevertheless, the Bureau
initially determined that this risk to applicant and borrower privacy
would be justified by the benefits of disclosure in light of HMDA's
purposes.\73\
---------------------------------------------------------------------------
\72\ 82 FR 44586, 44597-99 (Sept. 25, 2017).
\73\ Id. at 44598 (describing the utility of income in light of
HMDA's purposes, including helping the public and public officials
to determine whether financial institutions are serving the housing
needs of their communities and to identify possible discriminatory
lending patterns and enforce antidiscrimination statutes).
---------------------------------------------------------------------------
An industry commenter opposed the Bureau's proposal to disclose
income without modification and recommended that the Bureau exclude
income from the public HMDA data. The commenter stated that the new
data required under the 2015 HMDA Final Rule would increase the risk
that the HMDA data could be re-identified, and that information about a
consumer's income is generally not available to the public and is
considered sensitive by many consumers. The commenter also stated that
income data would be ``inconsequential'' because the 2015 HMDA Final
Rule modified Regulation C to require financial institutions to report
debt-to-income ratio.
The Bureau does not believe that the concerns expressed by the
commenter justify excluding income from the public HMDA data. The
Bureau recognizes, as it stated in the proposal, that, if the HMDA data
were re-identified, disclosure of income would likely create a risk of
harm or sensitivity.\74\ However, the Bureau believes that this risk is
justified by the benefits of disclosure to HMDA's purposes. For
example, income data plays a crucial role in: (1) Helping to identify
whether the credit needs of people with low and moderate incomes in
particular communities are being met; (2) the extent to which borrowers
with low and moderate incomes are using certain products, such as home
equity lines of credit; and (3) the extent to which lower-income
borrowers are receiving credit under different terms than higher-income
borrowers. The Bureau also believes that income data will continue to
be valuable for achieving HMDA's fair lending purposes, notwithstanding
the disclosure of debt-to-income ratio data pursuant to HMDA. Although
lenders may rely more on debt-to-income ratio than on income in
underwriting a loan, income will continue to be valuable as a proxy for
debt-to-income ratio if debt-to-income ratio is not reported as a
result of the EGRRCPA \75\ or if the precision of debt-to-income ratio
is reduced in the public data as a result of binning or top- or bottom-
coding. To the extent the commenter's concern is that the HMDA data the
Bureau proposed to disclose presents increased re-identification risk
compared to the data disclosed under the Board's disclosure
[[Page 660]]
regime, the Bureau notes that it intends to modify every new field
required under the 2015 HMDA Final Rule that it has identified as
likely to substantially facilitate the re-identification of an
applicant or borrower. Further, the Bureau intends to modify loan
amount, a field that was disclosed without modification under the
Board's disclosure regime and that the Bureau determines to be a
significant contributor to re-identification risk in the HMDA data.
---------------------------------------------------------------------------
\74\ Id.
\75\ As described in greater detail in part II.B, above, the
EGRRCPA amended HMDA by adding partial exemptions from HMDA's data
collection and reporting requirements for certain insured depository
institutions and insured credit unions.
---------------------------------------------------------------------------
The Bureau intends to disclose without modification income. For the
reasons discussed above and in the proposal, the Bureau determines,
based on the information currently available to it, that disclosing
without modification income appropriately balances the privacy risks
that may be created by disclosure of this field and the benefits of
such disclosure in light of HMDA's purposes.
Data To Be Excluded or Otherwise Modified in the Loan-Level HMDA Data
The Bureau proposed to exclude or otherwise modify several data
fields in the public HMDA data: The universal loan identifier;
application date; loan amount; action taken date; property address;
age; credit score; property value; debt-to-income ratio; the unique
identifier assigned by the Nationwide Mortgage Licensing System and
Registry for the mortgage loan originator; and AUS result. The Bureau
also proposed to exclude free-form text fields used in certain
instances to report the following data: Ethnicity; race; the name and
version of the credit scoring model; reasons for denial; and AUS name.
Below the Bureau addresses the comments it received and describes its
final action on each of these data fields and on two additional data
fields it did not propose to modify but intends to modify under the
final policy guidance: Total units and affordable units.
Universal Loan Identifier or Non-Universal Loan Identifier
Regulation C requires financial institutions to report a universal
loan identifier (ULI) for each covered loan or application that can be
used to identify and retrieve the application file.\76\ Regulation C
sets forth detailed requirements concerning the ULI to be assigned and
reported.\77\ A ULI must begin with the financial institution's LEI,
followed by up to 23 additional characters to identify the covered loan
or application, and then end with a two-character check digit
calculated according to the methodology prescribed in appendix C of
Regulation C.\78\ In addition, a ULI must be unique within the
institution and must not contain any information that could be used to
directly identify the applicant or borrower.\79\ Institutions reporting
a loan for which a ULI was previously assigned and reported must report
the ULI that was previously assigned and reported for the loan. The ULI
must be reported as an alphanumeric field.\80\ The requirement in the
2015 HMDA Final Rule to report a ULI replaced the requirement under
prior Regulation C that a financial institution report an identifying
number for the loan or loan application. Under the Board's disclosure
regime, this loan or loan application identifying number was excluded
from the public HMDA data. The Bureau added the requirement to report a
ULI to implement the Dodd-Frank Act's amendment to HMDA providing for
the collection and reporting of, ``as the Bureau may determine to be
appropriate, a universal loan identifier.'' \81\
---------------------------------------------------------------------------
\76\ 12 CFR 1003.4(a)(1)(i).
\77\ Id.
\78\ 12 CFR 1003.4(a)(1)(i)(A) through (C).
\79\ 12 CFR 1003.4(a)(1)(i)(B)(3).
\80\ FIG, supra note 55, at 77-79.
\81\ 12 U.S.C. 2803(b)(6)(G).
---------------------------------------------------------------------------
Insured depository institutions and insured credit unions are not
required to report ULI for loans or applications that are partially
exempt under the EGRRCPA.\82\ The 2018 HMDA Final Rule provides,
however, that--because loans and applications must be identifiable in
the HMDA data to ensure proper HMDA submission, processing, and
compliance--institutions that choose not to report ULI pursuant to the
EGRRCPA must report a non-universal loan identifier (NULI) for each
loan and application.\83\ The NULI may be composed of up to 22
characters and, among other requirements, must be unique within the
insured depository institution or insured credit union, though it need
not be unique within the industry.\84\
---------------------------------------------------------------------------
\82\ 83 FR 45325, 45329 (Sept. 7, 2018).
\83\ Id. at 45330.
\84\ Id.; see also FIG, supra note 55, at 78-79.
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by excluding ULI.\85\ The Bureau initially determined that
disclosing ULI in the loan-level HMDA data released to the public would
likely substantially facilitate the re-identification of an applicant
or borrower and that this risk would not be justified by the benefits
of the disclosure in light of HMDA's purposes.\86\
---------------------------------------------------------------------------
\85\ 82 FR 44586, 44599-44600 (Sept. 25, 2017).
\86\ Id. at 44599 (describing the utility of ULI in light of
HMDA's purposes, including helping the public and public officials
to determine whether financial institutions are serving the housing
needs of their communities).
---------------------------------------------------------------------------
A few industry commenters supported the Bureau's proposal to
exclude ULI from the public HMDA data. A group of consumer advocate
commenters did not oppose the Bureau's proposal to exclude ULI but
recommended that, separate from the HMDA data, the Bureau publish an
additional data product that, according to these commenters, would
serve some of the same purposes as ULI. Specifically, these commenters
recommended that the Bureau publish data on each financial
institution's loan purchases by income level and by year originated.
According to these commenters, this data would help data users assess
whether financial institutions are purchasing loans made to low- and
moderate-income borrowers from one another to improve their CRA
ratings.
The Bureau intends to exclude ULI from the public HMDA data, as
proposed, and to exclude NULI if it is reported instead of ULI. For the
reasons discussed above and in the proposal, the Bureau determines,
based on the information currently available to it, that excluding ULI
and NULI from the public HMDA data appropriately balances the privacy
risks that may be created by the disclosure of these fields and the
benefits of such disclosure in light of HMDA's purposes.\87\
---------------------------------------------------------------------------
\87\ Regarding the consumer advocate commenters' request for
additional data, the Bureau will consider, as it does in the
ordinary course of its business, whether to make additional
information related to mortgage lending available to the public.
---------------------------------------------------------------------------
Application Date
Regulation C requires financial institutions to report, except for
purchased covered loans, the date the application was received or the
date shown on the application form.\88\ This date must be reported by
financial institutions as the exact year, month, and day, in the format
of YYYYMMDD.\89\ Financial institutions were required to report this
data field prior to the 2015 HMDA Final Rule. The Board amended
Regulation C in 1989 to require reporting of the date the application
was received as part of its implementation of FIRREA.\90\ Under the
Board's disclosure regime, application date was excluded from the
public HMDA data.
---------------------------------------------------------------------------
\88\ 12 CFR 1003.4(a)(1)(ii).
\89\ FIG, supra note 55, at 79.
\90\ 54 FR 51356, 51363 (Dec. 15, 1989).
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by continuing to exclude
[[Page 661]]
application date.\91\ The Bureau initially determined that disclosing
application date in the loan-level HMDA data released to the public
would likely substantially facilitate the re-identification of an
applicant or borrower and that this risk would not be justified by the
benefits of disclosure in light of HMDA's purposes.\92\
---------------------------------------------------------------------------
\91\ 82 FR 44586, 44600-01 (Sept. 25, 2017).
\92\ Id. at 44600 (describing the utility of application date in
light of HMDA's purposes, including helping the public and public
officials to identify possible discriminatory lending patterns and
enforce antidiscrimination statutes).
---------------------------------------------------------------------------
A few industry commenters supported the Bureau's proposal to
continue to exclude application date from the public HMDA data. Two of
these commenters stated that excluding application date, along with the
other data points the Bureau proposed to exclude, would reduce re-
identification risk. Another of these commenters stated that excluding
this data field, along with the other data points the Bureau proposed
to exclude, would reduce the likelihood that community bank customers
would become victims of identity theft or fraud.
The Bureau intends to exclude application date from the public HMDA
data, as proposed. For the reasons discussed above and in the proposal,
the Bureau determines, based on the information currently available to
it, that excluding application date from the public HMDA data
appropriately balances the privacy risks that may be created by the
disclosure of this field and the benefits of such disclosure in light
of HMDA's purposes.
Loan Amount and Property Value
Regulation C requires financial institutions to report the amount
of the covered loan or the amount applied for.\93\ For closed-end
mortgage loans, open-end lines of credit, and reverse mortgages, this
amount is the amount to be repaid as disclosed on the legal obligation,
the amount of credit available to the borrower, and the initial
principal limit, respectively. Loan amount must be submitted by
financial institutions in numeric form reflecting the exact dollar
amount of the loan.\94\ Prior to the 2015 HMDA Final Rule, this data
field was reported rounded to the nearest thousand; it was publicly
disclosed without modification under the Board's disclosure regime.
Although HMDA has always required financial institutions to report
information about the dollar amount of a financial institution's
mortgage lending activity,\95\ the Board amended Regulation C in 1989
to require reporting of loan amount on a loan-level basis as part of
its implementation of FIRREA.\96\
---------------------------------------------------------------------------
\93\ 12 CFR 1003.4(a)(7).
\94\ FIG, supra note 55, at 81.
\95\ Home Mortgage Disclosure Act, Public Law 94-200, sections
301-310, 89 Stat. 1124, 1125-28 (1975).
\96\ See 54 FR 51356 (Dec. 15, 1989).
---------------------------------------------------------------------------
Regulation C also requires financial institutions to report the
value of the property securing the covered loan or, in the case of an
application, proposed to secure the covered loan.\97\ Financial
institutions must report the value they relied on in making the credit
decision, such as an appraisal value or the purchase price of the
property.\98\ Property value must be reported in numeric form
reflecting the exact dollar amount of the value the financial
institution relied on.\99\ The Bureau added the requirement to report
property value the financial institution relied on in the 2015 HMDA
Final Rule to implement the Dodd-Frank Act's amendment to HMDA
providing for the collection and reporting of the value of the real
property pledged or proposed to be pledged as collateral.\100\
---------------------------------------------------------------------------
\97\ 12 CFR 1003.4(a)(28). Insured depository institutions and
insured credit unions are not required to report property value for
loans or applications that are partially exempt under the EGRRCPA.
See 83 FR 45325, 45329 (Sept. 7, 2018).
\98\ Comment 4(a)(28)-1.
\99\ FIG, supra note 55, at 104.
\100\ Dodd-Frank Act section 1094(3)(A)(iv), 12 U.S.C.
2803(b)(6)(A).
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA dataset disclosed
to the public by disclosing the midpoint for the $10,000 interval into
which the reported loan amount or property value falls instead of the
exact value reported.\101\ For example, for a reported loan amount or
property value of $117,834, the Bureau would disclose $115,000 as the
midpoint between values equal to $110,000 and less than $120,000. The
Bureau initially determined that disclosing reported loan amount and
property value in the loan-level HMDA data released to the public would
likely substantially facilitate the re-identification of an applicant
or borrower and that this risk would not be justified by the benefits
of the disclosure in light of HMDA's purposes.\102\ The Bureau also
proposed to include an indicator of whether the reported loan amount
exceeds the applicable dollar amount limitation on the original
principal obligation in effect at the time of application or
origination as provided under 12 U.S.C. 1717(b)(2) and 12 U.S.C.
1454(a)(2) (GSE conforming loan limit).\103\ The Bureau sought comment
on whether to add a similar indicator for the applicable limit for
loans eligible for insurance by the Federal Housing Administration (FHA
conforming loan limit).\104\
---------------------------------------------------------------------------
\101\ 82 FR 44586, 44601-02; 44607-08 (Sept. 25, 2017).
\102\ See id. at 44601, 44607 (describing the utility of loan
amount and property value in light of HMDA's purposes, including
helping the public and public officials to determine whether
financial institutions are serving the housing needs of their
communities, and to identify possible discriminatory lending
patterns and enforce antidiscrimination statutes).
\103\ The dollar amount limitation on the original principal
obligation as provided under 12 U.S.C. 1717(b)(2) and 12 U.S.C.
1454(a)(2) refers to the annual maximum principal loan balance for a
mortgage acquired by Fannie Mae and Freddie Mac (the ``GSEs''). The
FHFA is responsible for determining the maximum conforming loan
limits for mortgages acquired by the GSEs. See Press Release, Fed.
Hous. Fin. Agency, FHFA Announces Increase in Maximum Conforming
Loan Limits for Fannie Mae and Freddie Mac in 2017 (Nov. 23, 2016),
available at https://www.fhfa.gov/Media/PublicAffairs/Pages/FHFA-Announces-Increase-in-Maximum-Conforming-Loan-Limits-for-Fannie-Mae-and-Freddie-Mac-in-2017.aspx.
\104\ See 24 CFR 203.18 (providing maximum amounts for eligible
mortgages).
---------------------------------------------------------------------------
A few commenters opposed the Bureau's proposal to disclose loan
amount in $10,000 bins and asked the Bureau to disclose more precise
loan amount values. A group of consumer advocate commenters and an
industry commenter each recommended disclosing loan amount rounded to
the nearest $1,000, like under the Board's disclosure regime. They
asserted that $10,000 bins would disproportionately affect the utility
of the data for smaller loans. Conversely, an industry commenter
opposed the Bureau's proposal and asked the Bureau to disclose less
precise loan amount values, stating that $10,000 bins would
insufficiently obscure the reported value for larger loans, such as
multifamily loans, and thus would yield insufficient protection against
re-identification relative to smaller loans. As with loan amount, a few
commenters urged the Bureau to disclose more precise property values,
such as by rounding to the nearest $1,000, while an industry commenter
supported disclosing less precise values. An industry commenter stated
that property value, or the property value derived from loan-to-value
ratio, could be matched to publicly-available property or appraisal
records.
One industry commenter supported the Bureau's proposal to disclose
loan amount and property value in $10,000 bins because it believed
these bins would help prevent re-identification of applicants and
borrowers while preserving much of the utility of these data fields. A
government agency commenter supported the proposed GSE
[[Page 662]]
conforming loan limit indicator because the indicator would allow it to
continue using public HMDA data to identify the market size for
conforming loans for the purpose of setting housing goals for its
regulated entities and to perform other analyses related to the
conforming loan limit. Similarly, a group of consumer advocate
commenters supported the proposed GSE conforming loan limit flag. These
commenters also recommended adding a similar indicator for the FHA
conforming loan limit, stating that analysis of loans below the FHA
conforming loan limit was important for fair lending purposes.
The Bureau determines that disclosing loan amount in $10,000
intervals will create a meaningful reduction in record uniqueness in
the HMDA data when evaluating three data fields that the Bureau
concludes contribute most to re-identification risk: Loan amount,
census tract, and lender name. Although the Bureau recognizes that
disclosing loan amount in $10,000 intervals will reduce the utility of
this field compared to disclosing more precise amounts, it believes it
will still allow users to rely on loan amount to further HMDA's
purposes to some degree. For example, $10,000 intervals will still
allow users to have some understanding of the amount of credit that
financial institutions have made available to consumers in certain
communities and the extent to which such institutions are providing
credit in varying amounts.
The Bureau acknowledges that, as commenters stated, $10,000
intervals create a larger reduction in uniqueness for small loan
amounts--providing more privacy protection and less data utility--and a
smaller reduction in uniqueness for large loan amounts--providing less
privacy protection and more data utility--relative to the baseline
reduction in uniqueness for all loans in the dataset. To address the
fact that the proposed uniform binning approach would not yield the
same balance of benefits and risks across all loan amounts, the Bureau
considered whether it could apply bin sizes that differed by reported
loan amount. For example, the Bureau could create bin sizes that were a
function of loan amount, such as a percentage of the reported value.
However, this approach may allow adversaries to determine the precise
loan amount by reversing the function applied to the reported loan
amount value. The Bureau also considered graduated bin sizes for
segments of loans. However, the larger bin sizes in a graduated binning
scheme would disproportionately reduce the utility of the data in more
expensive geographic regions. Graduated bin sizes also would more
significantly impair overall data utility compared to $10,000 bins, as
users who wish to work with a consistently binned dataset would have to
use the largest bin size for all loans. Finally, identifying a basis
upon which to segment loan amount values into different sized bins
presents challenges. In principle, the Bureau could analyze the
reported HMDA data annually and determine segments based on the
distribution of loan amounts in a given year to try to achieve more
consistent reduction in uniqueness across loans of all sizes. In
practice, however, resubmissions and late submissions may change the
distribution of loan amounts, creating a risk that the Bureau would
lack sufficient time to determine and apply the appropriate bins before
disclosing the modified loan/application registers.
Regarding an industry commenter's claim that property value could
be matched to public appraisal records and could be derived from the
loan-to-value ratio, the Bureau notes that appraisal records are not
public, and the HMDA data will not contain loan-to-value ratio.\105\
However, the Bureau believes that identified property tax records or
real estate transaction records may contain values close enough to the
reported property value that property value would substantially
facilitate the re-identification of a loan. Property value was not
required to be reported prior to the 2015 HMDA Final Rule. The Bureau
nevertheless expects its uniqueness to be similar to the uniqueness of
the values reported for loan amount and believes that disclosing
property value in $10,000 intervals would create a meaningful reduction
in uniqueness. The Bureau concludes that disclosing property value in
$10,000 intervals would still allow data users to determine the general
values of properties for which financial institutions are providing
financing. As with loan amount, the Bureau considered approaches that
would bin property value in different intervals depending on the
reported value, but for the reasons described above, the Bureau is not
adopting such approaches.
---------------------------------------------------------------------------
\105\ Unlike combined loan-to-value ratio, which includes the
total amount of all debt secured by the property securing the loan
reported, the loan-to-value ratio includes only the amount of the
reported loan itself.
---------------------------------------------------------------------------
Disclosing property value in $10,000 intervals also reduces
adversaries' potential ability to use combined loan-to-value ratio to
derive the reported loan amount. As mentioned above, the Bureau intends
to disclose without modification combined loan-to-value ratio. Although
both loan amount and property value would likely substantially
facilitate re-identification, the Bureau concludes that loan amount
will be easier to match to public records where available, because
public records that contain the loan amount will likely contain the
exact loan amount reported under HMDA. In contrast, the Bureau
concludes that financial institutions will likely report the appraisal
value as the property value, and the appraisal value is not publicly
available. However, even with property value disclosed in $10,000
intervals, if the reported combined loan-to-value ratio for a
particular transaction is actually the loan-to-value ratio, the loan
amount, property value, and combined loan-to-value ratio feasibly could
be used to narrow the possible values for loan amount, thus decreasing
the reduction in record uniqueness relative to $10,000 intervals.\106\
The extent to which this possible interaction could decrease the
benefits of binning loan amount is uncertain. As an initial matter,
under the 2018 HMDA Final Rule, certain small insured depository
institutions and insured credit unions will not be required to report
combined loan-to-value ratio or property value, so the interaction at
issue will not be possible for many loans. Moreover, the percentage of
transactions for which the reported combined loan-to-value ratio will
equal the loan-to-value ratio will vary based on market conditions, and
the Bureau believes that adversaries will not be able to determine
exactly when the combined loan-to-value and loan-to-value ratios are
equal for a given transaction. Finally, even if an adversary could
narrow for a particular transaction the range of possible loan amount
values, the narrowed range may not yield a record that is unique on the
data fields that most contribute to re-identification.
---------------------------------------------------------------------------
\106\ Similarly, an adversary could narrow the possible values
for property value.
---------------------------------------------------------------------------
The Bureau proposed the GSE conforming loan limit indicator to
facilitate the accuracy and transparency of the FHFA Housing Goals
program.\107\ FHFA has historically relied on public HMDA data to set
statutorily-required housing goals for the GSEs to ensure the GSEs and
the public are aware of and can provide feedback on FHFA's methodology.
Binning loan amount as proposed would significantly reduce the accuracy
of many calculations necessary to set these goals and measure
performance, which hinge on determining whether loans meet the
[[Page 663]]
GSE conforming loan limit. Although FHFA could use non-public HMDA data
for modeling purposes, this would result in FHFA, its regulated
entities, and the public working from different datasets to evaluate
the accuracy and transparency of the FHFA Housing Goals program.
---------------------------------------------------------------------------
\107\ 12 CFR 1281.11 (bank housing goals); 12 CFR 1282.12 (GSE
housing goals).
---------------------------------------------------------------------------
In contrast to the GSE conforming loan limit indicator, a FHA
conforming loan limit indicator would not serve a similarly compelling
purpose. Disclosing loan amount in $10,000 intervals will sometimes
reduce the ability of the public to determine whether a loan is at or
above the FHA conforming loan limit. However, no commenter stated that
the absence of this information would impact the FHA's ability to
perform statutorily-required functions. Additionally, no commenter
addressed the question of whether factors not reflected in the HMDA
data would affect the accuracy of a FHA conforming loan limit
indicator, and the Bureau remains concerned about its ability to
accurately produce such an indicator using the HMDA data.
The Bureau intends to modify the loan-level HMDA data disclosed to
the public by disclosing the midpoint for the $10,000 interval into
which the reported loan amount or property value falls, as proposed.
The Bureau also intends to indicate in the data disclosed whether the
reported loan amount exceeds the GSE conforming loan limit.\108\ For
the reasons discussed above and in the proposal, the Bureau determines,
based on the information currently available to it, that these
modifications appropriately balance the privacy risks that would likely
be created by the disclosure of these fields and the benefits of such
disclosure in light of HMDA's purposes.
---------------------------------------------------------------------------
\108\ The GSE conforming loan limit indicator will be included
in the annual loan-level disclosure of all reported HMDA data
combined, rather than in the modified loan/application register for
each financial institution.
---------------------------------------------------------------------------
Action Taken Date
Regulation C requires financial institutions to report the date of
action taken by the financial institution on a covered loan or
application.\109\ For originated loans, this date is generally the date
of closing or the date of account opening.\110\ Regulation C provides
some flexibility in reporting the date for other types of actions
taken, such as applications denied, withdrawn, or approved by the
institution but not accepted by the applicant. For example, for
applications approved but not accepted, a financial institution may
report ``any reasonable date, such as the approval date, the deadline
for accepting the offer, or the date the file was closed,'' provided it
adopts a generally consistent approach.\111\ This date is submitted by
financial institutions as the exact year, month, and day, in the format
of YYYYMMDD.\112\ Financial institutions were required to report this
data field prior to the 2015 HMDA Final Rule. As with the application
date, the Board added the requirement to report the action taken date
as part of the amendments to Regulation C that implemented FIRREA.\113\
Under the Board's disclosure regime, action taken date was excluded
from the public HMDA data.
---------------------------------------------------------------------------
\109\ 12 CFR 1003.4(a)(8)(ii).
\110\ Comment 4(a)(8)(ii)-5.
\111\ Comment 4(a)(8)(ii)-4.
\112\ FIG, supra note 55, at 81.
\113\ 54 FR 51356, 51363 (Dec. 15, 1989).
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by continuing to exclude action taken date.\114\ The Bureau
initially determined that disclosing action taken date in the loan-
level HMDA data released to the public would likely substantially
facilitate the re-identification of an applicant or borrower and that
this risk would not be justified by the benefits of the disclosure in
light of HMDA's purposes.\115\ A few industry commenters supported the
Bureau's proposal to continue to exclude action taken date from the
HMDA data disclosed to the public.
---------------------------------------------------------------------------
\114\ 82 FR 44586, 44602-03 (Sept. 25, 2017).
\115\ Id. at 44602 (describing the utility of action taken date
in light of HMDA's purposes, including helping the public and public
officials to identify possible discriminatory lending patterns and
enforce antidiscrimination statutes).
---------------------------------------------------------------------------
The Bureau intends to exclude action taken date from the public
HMDA data, as proposed. For the reasons discussed above and in the
proposal, the Bureau determines, based on the information currently
available to it, that excluding action taken date from the public HMDA
data appropriately balances the privacy risks that may be created by
the disclosure of this field and the benefits of such disclosure in
light of HMDA's purposes.
Property Address
Regulation C requires financial institutions to report the address
of the property securing the loan or, in the case of an application,
proposed to secure the loan.\116\ This address corresponds to the
property identified on the legal obligation related to the covered
loan.\117\ The property address reported by financial institutions
includes the street address, city name, State name, and zip code.\118\
The Bureau added the requirement to report property address in the 2015
HMDA Final Rule to implement the Dodd-Frank Act's amendment to HMDA
providing for the collection and reporting of, ``as the Bureau may
determine to be appropriate, the parcel number that corresponds to the
real property pledged or proposed to be pledged as collateral.'' \119\
---------------------------------------------------------------------------
\116\ 12 CFR 1003.4(a)(9)(i). Insured depository institutions
and insured credit unions are not required to report property
address for loans or applications that are partially exempt under
the EGRRCPA. See 83 FR 45325, 45329 (Sept. 7, 2018).
\117\ Comment 4(a)(9)(i)-1. For applications that did not result
in an origination, the address corresponds to the location of the
property proposed to secure the loan as identified by the applicant.
Id.
\118\ Comment 4(a)(9)(i)-2.
\119\ 12 U.S.C. 2803(b)(6)(H).
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by excluding property address.\120\ The Bureau initially
determined that disclosing property address in the loan-level HMDA data
released to the public would likely substantially facilitate the re-
identification of an applicant or borrower and that this risk would not
be justified by the benefits of the disclosure in light of HMDA's
purposes.\121\
---------------------------------------------------------------------------
\120\ 82 FR 44586, 44603-04 (Sept. 25, 2017).
\121\ Id. at 44603 (describing the utility of property address
in light of HMDA's purposes, including helping the public and public
officials to determine whether financial institutions are serving
the housing needs of their communities and to identify possible
discriminatory lending patterns and enforce antidiscrimination
statutes).
---------------------------------------------------------------------------
A few industry commenters supported the Bureau's proposal to
exclude property address from the public HMDA data. A group of consumer
advocate commenters recommended that the Bureau disclose a hashed value
for each property address in lieu of the property address.\122\
According to these commenters, disclosure of a hashed value in place of
property address would help data users track ``loan flipping,'' which
these commenters described as a predatory practice in which lenders
target borrowers for a series of refinancings that increase the
borrower's debt and strip equity. These commenters did not address
whether the recommended hashed value should be used in place of a
particular property address from year to year, i.e., every time that
the particular property address is included in reported HMDA data.
---------------------------------------------------------------------------
\122\ A hashed value is a value generated by a secure hash
algorithm. A hash algorithm is designed to be non-invertible,
meaning that the original value, in this case the reported property
address, could not be derived from the hashed value.
---------------------------------------------------------------------------
[[Page 664]]
The Bureau declines to disclose a hashed value in place of the
property address. The Bureau finds that a hashed value used only within
a particular year's HMDA data would have limited value for studying
loan flipping. However, if a hashed value were carried over from year
to year, the Bureau is concerned that, if one transaction related to
the property were re-identified, the hashed value could be used to re-
identify every loan secured by the property in any other year's HMDA
data. The Bureau also finds it would be difficult to develop a hashing
algorithm that recognizes, with certainty, if a reported property
address is unique, given slight differences in how property addresses
may be reported.
The Bureau intends to exclude property address from the public HMDA
data, as proposed. For the reasons discussed above and in the proposal,
the Bureau determines, based on the information currently available to
it, that excluding property address from the public HMDA data
appropriately balances the privacy risks that may be created by the
disclosure of this field and the benefits of such disclosure in light
of HMDA's purposes.
Age
Regulation C requires financial institutions to report the age of
the applicant or borrower.\123\ A financial institution complies with
this requirement by reporting age, as of the application date reported,
as the number of whole years derived from the date of birth as shown on
the application form.\124\ The Bureau added the requirement to report
age in the 2015 HMDA Final Rule to implement the Dodd-Frank Act's
amendment to HMDA providing for the collection and reporting of
age.\125\
---------------------------------------------------------------------------
\123\ 12 CFR 1003.4(a)(10)(ii).
\124\ Comment 4(a)(1)(ii)-1.
\125\ 12 U.S.C. 2803(b)(4).
---------------------------------------------------------------------------
The Bureau proposed to disclose age binned into the following
ranges: 25 to 34; 35 to 44; 45 to 54; 55 to 64; and 65 to 74. The
Bureau also proposed to bottom-code age under 25 and to top-code age
over 74.\126\ The Bureau initially determined that disclosing reported
age in the public HMDA data would likely disclose information about the
applicant or borrower that is not otherwise public and may be harmful
or sensitive and that this risk would not be justified by the benefits
of the disclosure in light of HMDA's purposes.\127\
---------------------------------------------------------------------------
\126\ 82 FR 44586, 44604 (Sept. 25, 2017).
\127\ Id. (describing the utility of age in light of HMDA's
purposes, including helping the public and public officials to
determine whether financial institutions are serving the housing
needs of their communities and to identify possible discriminatory
lending patterns and enforce antidiscrimination statutes).
---------------------------------------------------------------------------
The Bureau also proposed to indicate whether a reported age is 62
or higher to enhance the utility of the data for identifying the
particular fair lending risks that may be posed with regard to older
populations.\128\ The Bureau recognized that an effect of this
indicator would be to divide the 55 to 64 bin into two bins, 55 to 61
and 62 to 64. The Bureau sought comment on whether, instead of binning
age as proposed and indicating whether a reported age is 62 or higher,
the Bureau should disclose reported ages of 55 to 74 in ranges of 55 to
61 and 62 to 74.
---------------------------------------------------------------------------
\128\ Under Federal law, age 62 or higher is considered to be
older age for certain purposes. See, e.g., 24 CFR 206.33 (concerning
eligibility for a home equity conversion mortgage); 12 CFR 1002.2(o)
(defining ``elderly'' as 62 or older).
---------------------------------------------------------------------------
An industry commenter expressed support for the Bureau's proposal
to modify reported age. A group of consumer advocate commenters
expressed general support for the Bureau's proposal. These commenters
stated that applicant and borrower age is vital for fair lending
enforcement and to identify potential unfair and deceptive lending.
These commenters also stated that, in the years before the 2008
financial crisis, abusive lenders targeted older adults, especially
older adults of color, and that abuses also occurred in the reverse
mortgage market for adults over age 62. These commenters expressed
support for the Bureau's proposal to indicate whether a reported age is
62 or higher. These commenters also expressed a preference for the
proposed bins and indicator approach to the alternative the Bureau
considered (binning reported ages of 55 to 74 in ranges of 55 to 61 and
62 to 74), noting that the proposed bins would provide more precise
data with respect to borrowers newly eligible for reverse mortgages
(i.e., 62- to 64-year old borrowers). Finally, these commenters asked
the Bureau to top-code age at 84, instead of 74. They stated that
Americans are living longer, and top-coding age at 84 would help the
public identify reverse mortgage and other lending patterns affecting
the oldest seniors, including any fair lending or affordability
concerns.
An industry commenter expressed opposition to the Bureau's proposal
and recommended that the Bureau exclude age entirely from the public
HMDA data. The commenter expressed concern that disclosing age could
facilitate re-identification of applicants and borrowers and enable
adversaries to prey on vulnerable age groups.
The Bureau acknowledges the risks identified by the industry
commenter. However, as explained in the proposal, applicant or borrower
age would assist users in identifying possible discriminatory lending
patterns and enforcing antidiscrimination statutes by allowing users to
examine potential age discrimination in lending.\129\ Applicant or
borrower age would also assist in determining whether financial
institutions are serving the housing needs of their communities,
including the needs of various age cohorts.
---------------------------------------------------------------------------
\129\ See 82 FR 44586, 44604 (Sept. 25, 2017).
---------------------------------------------------------------------------
The Bureau determines that indicating whether the reported age is
62 or higher would provide the greater utility identified by the
commenters, as compared to the alternative bins about which the Bureau
sought comment. Additionally, this approach would result in more
consistent binning of the data and would allow analysis of the HMDA
data in combination with data found in other public data sources, such
as U.S. Census Bureau data, to further HMDA's purposes. The Bureau
determines that the difference in privacy protection provided by the
proposed approach compared to the alternative is minimal and is
justified by the benefits of the proposed approach.
Finally, the Bureau believes that top-coding age over 84 could
allow greater visibility into lending practices with respect to the
oldest consumers and could further HMDA's purposes: Specifically, such
disclosure could permit the public and public officials to better
understand whether lenders are serving the housing needs of the oldest
seniors of their communities and to observe lending patterns relating
to such consumers, a typically fixed-income population that is engaging
in increased dwelling-secured borrowing with respect to which there is
little public data currently available. However, the Bureau believes
this approach also could increase privacy risk. The Bureau believes the
reported HMDA data likely will not include significant numbers of
records for applicants and borrowers over age 84, which could pose re-
identification risk. Thus, the harm and sensitivity risks identified in
the proposal may be heightened to the extent that adversaries could re-
identify the oldest borrowers. Based on the information currently
available to it, in light of the potential risks and benefits of this
approach, the Bureau determines not to top-code age over 84.
The Bureau intends to modify the loan-level HMDA data disclosed to
the
[[Page 665]]
public by disclosing age binned into the following ranges: 25 to 34; 35
to 44; 45 to 54; 55 to 64; and 65 to 74, as proposed. The Bureau also
intends to bottom-code age under 25 and to top-code age over 74.
Finally, the Bureau intends to indicate whether reported age is 62 or
higher. For the reasons discussed above and in more detail in the
proposal, the Bureau determines, based on the information currently
available to it, that these modifications appropriately balance the
privacy risks that would likely be created by the disclosure of this
field and the benefits of such disclosure in light of HMDA's purposes.
Credit Score
Regulation C requires financial institutions to report, except for
purchased covered loans, the credit score or scores relied on in making
the credit decision and the name and version of the scoring model used
to generate each credit score.\130\ It also provides that, for purposes
of this requirement, ``credit score'' has the meaning set forth in
section 609(f)(2)(A) of the Fair Credit Reporting Act (FCRA).\131\
Financial institutions must report credit score as a numeric field,
e.g., 650.\132\ Financial institutions must also report a code from a
specified list to indicate the name and version of the scoring model
used to generate each credit score reported.\133\ The Bureau added the
requirement to report these data in the 2015 HMDA Final Rule to
implement the Dodd-Frank Act's amendment to HMDA providing for the
collection and reporting of ``the credit score of mortgage applicants
and mortgagors, in such form as the Bureau may prescribe.'' \134\
---------------------------------------------------------------------------
\130\ 12 CFR 1003.4(a)(15)(i). Insured depository institutions
and insured credit unions are not required to report credit score
for loans or applications that are partially exempt under the
EGRRCPA. See 83 FR 45325, 45329 (Sept. 7, 2018).
\131\ 12 CFR 1003.4(a)(15)(ii).
\132\ FIG, supra note 55, at 94-95.
\133\ Id. at 95-96.
\134\ 12 U.S.C. 2803(b)(6)(I).
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by excluding credit score.\135\ The Bureau initially
determined that disclosing credit score in the loan-level HMDA data
released to the public would likely disclose information about the
applicant or borrower that is not otherwise public and may be harmful
or sensitive and that this risk would not be justified by the benefits
of the disclosure in light of HMDA's purposes.\136\
---------------------------------------------------------------------------
\135\ 82 FR 44586, 44604-06 (Sept. 25, 2017).
\136\ Id. at 44605 (describing the utility of credit score in
light of HMDA's purposes, including helping the public and public
officials to determine whether financial institutions are serving
the housing needs of their communities and to identify possible
discriminatory lending patterns and enforce antidiscrimination
statutes).
---------------------------------------------------------------------------
A few industry commenters supported the Bureau's proposal to
exclude credit score from the public HMDA data. Another industry
commenter opposed the Bureau's proposal to exclude credit score. The
commenter stated that it would be extremely difficult to re-identify
applicants or borrowers using this data field because credit scores are
not publicly available, and that sensitivity alone should not be a
basis for withholding data from the public where re-identification risk
is low. The commenter stated further that credit scores are critically
important in identifying possible discriminatory lending patterns,
enforcing antidiscrimination statutes, and determining whether
financial institutions are serving the housing needs of their
communities, because they are an important factor in financial
institutions' underwriting decisions.
A group of consumer advocate commenters also opposed the Bureau's
proposal to exclude credit score. These commenters stated that credit
scores are essential in fair lending analysis because they help
determine whether similarly situated applicants are treated differently
solely due to their race or gender. The commenters recommended that, to
address the privacy concerns identified by the Bureau, the Bureau
``normalize'' reported credit scores before disclosure to the public.
The commenters suggested that the Bureau either disclose credit scores:
(1) As ``z-scores,'' which the commenters described as ``a measure of a
credit score's place in the overall distribution of credit scores for
loan applicants that year,'' or (2) in ``percentile ranges based on the
distribution of loan applicants' credit scores.'' The commenters also
recommended that, if the Bureau excludes credit score from the public
HMDA data, the Bureau disclose credit scores in aggregate form by
census tract, for all lenders and for each lender. According to the
commenters, this information would help the public assess whether the
industry as a whole or individual lenders are treating similarly
situated neighborhoods differently due to the racial, ethnic, income,
or age composition of the neighborhood.
The Bureau finds that the industry commenter underestimates the re-
identification risk associated with the HMDA data, even modified as
proposed, and that, where re-identification risk is present,
sensitivity alone is a basis for modification under the balancing test.
The Bureau declines to adopt the consumer advocate commenters'
recommendation that the Bureau normalize the credit score data and
disclose the normalized data. The Bureau finds that this alternative
would not reduce privacy risks to the point that they would be
justified by the disclosure benefits. Disclosure of a normalized credit
score would reflect the applicant's or borrower's reported credit score
in relation to all other applicants and borrowers in a particular
year's HMDA data. Thus, the Bureau believes that, if the HMDA data were
re-identified, disclosure of this information would likely create a
risk of harm or sensitivity similar to the risk created by disclosure
of reported credit score.\137\
---------------------------------------------------------------------------
\137\ Regarding the consumer advocate commenters' recommendation
that the Bureau disclose credit scores in aggregate form, the Bureau
will consider, as it does in the ordinary course of its business,
whether to make additional information related to mortgage lending
available to the public.
---------------------------------------------------------------------------
The Bureau intends to exclude credit score from the public HMDA
data, as proposed. For the reasons discussed above and in the proposal,
the Bureau determines, based on the information currently available to
it, that excluding credit score from the public HMDA data appropriately
balances the privacy risks that may be created by the disclosure of
this field and the benefits of such disclosure in light of HMDA's
purposes.
Debt-to-Income Ratio
Regulation C requires financial institutions to report, except for
purchased covered loans, the ratio of the applicant's or borrower's
total monthly debt to the total monthly income relied on in making the
credit decision (debt-to-income ratio).\138\ The debt-to-income ratio
must be reported as a percentage.\139\ The Bureau added the requirement
to report debt-to-income ratio in the 2015 HMDA Final Rule using its
discretionary authority provided by the Dodd-Frank Act's amendment to
HMDA to require the reporting of ``such other information as the Bureau
may require.'' \140\
---------------------------------------------------------------------------
\138\ 12 CFR 1003.4(a)(23). Insured depository institutions and
insured credit unions are not required to report debt-to-income
ratio for loans or applications that are partially exempt under the
EGRRCPA. See 83 FR 45325, 45329 (Sept. 7, 2018).
\139\ FIG, supra note 55, at 101.
\140\ 12 U.S.C. 2803(b)(6)(J).
---------------------------------------------------------------------------
The Bureau proposed to disclose reported debt-to-income ratio of
greater than or equal to 40 percent and less than 50 percent.\141\ The
Bureau also proposed to bin reported debt-to-income ratio
[[Page 666]]
values into the following ranges: 20 percent to less than 30 percent;
30 percent to less than 40 percent; and 50 percent to less than 60
percent. In addition, the Bureau proposed to bottom-code reported debt-
to-income ratio values under 20 percent and to top-code reported debt-
to-income ratios of 60 percent or higher. The Bureau initially
determined that disclosing reported debt-to-income ratio would likely
disclose information about the applicant or borrower that is not
otherwise public and may be harmful or sensitive and that, for certain
debt-to-income ratio values, this risk would not be justified by the
benefits of the disclosure in light of HMDA's purposes.\142\
---------------------------------------------------------------------------
\141\ 82 FR 44586, 44606-07 (Sept. 25, 2017).
\142\ See id. at 44606 (describing the utility of debt-to-income
ratio in light of HMDA's purposes, including helping the public and
public officials to determine whether financial institutions are
serving the housing needs of their communities and to identify
possible discriminatory lending patterns and enforce
antidiscrimination statutes).
---------------------------------------------------------------------------
The Bureau also initially determined that, for many financial
institutions, debt-to-income ratio of 36 percent serves as an internal
underwriting benchmark, so that the ability to identify whether an
applicant's debt-to-income ratio is above or below this value would
help users analyzing lending patterns to control for factors that might
provide a legitimate explanation for disparities in credit or pricing
decisions. The Bureau sought comment on whether the benefits of
disclosing more granular information concerning debt-to-income ratio
values at or around 36 percent would justify the risks to applicant and
borrower privacy such disclosure would likely create, and how such
information should be disclosed.
An industry commenter expressed support for the Bureau's proposed
treatment of debt-to-income ratio. A group of consumer advocate
commenters expressed general support for the Bureau's proposal and also
urged the Bureau to adopt more granular disclosure of debt-to-income
ratio values near 36 percent, agreeing with the Bureau that 36 percent
is a common underwriting benchmark. An industry commenter expressed
opposition to the Bureau's proposal to bin debt-to-income ratio values
into ranges, arguing that the Bureau should disclose debt-to-income
ratio without modification. According to the commenter, binning reduces
the utility of the data, thereby hampering understanding of lending
practices. The commenter added that misuse of the data would be
``almost impossible'' because, if property address were not disclosed,
as the Bureau proposed, re-identification of applicants and borrowers
would be extremely difficult.
The Bureau finds that the industry commenter underestimates the re-
identification risk associated with the HMDA data, even modified as
proposed. The Bureau determines that the existence of various
regulatory, guarantor, and investment program benchmarks justifies
disclosing exact debt-to-income ratio values between 40 and 50 percent,
for the reasons set forth in more detail in the proposal.\143\ Further,
based on the comment from a group of consumer advocates and further
analysis, the Bureau finds that a 36 percent debt-to-income ratio
serves as an internal underwriting benchmark for many lenders. The
ability to identify whether an applicant's debt-to-income ratio is at
or above this level therefore also would help data users control for
factors that might provide a legitimate explanation for disparities in
credit and pricing decisions. The Bureau determines that the best way
to allow users to determine whether a value is at or above this
benchmark is to extend the range of debt-to-income values disclosed
without modification from ``greater than or equal to 40 percent and
less than 50 percent'' to ``greater than or equal to 36 percent and
less than 50 percent.'' The Bureau believes that the modifications the
Bureau intends to apply will reduce the privacy risks created by the
public disclosure of debt-to-income ratio while preserving much of the
benefits of the data field.
---------------------------------------------------------------------------
\143\ See id. at 44606-07.
---------------------------------------------------------------------------
The Bureau intends to disclose debt-to-income ratio as proposed,
except that it intends to disclose without modification debt-to-income
ratio values greater than or equal to 36 percent and less than 50
percent instead of greater than or equal to 40 percent and less than 50
percent. The Bureau intends to bin reported debt-to-income ratio values
into the following ranges: 20 percent to less than 30 percent; 30
percent to less than 36 percent; and 50 percent to less than 60
percent. The Bureau also intends to bottom-code reported debt-to-income
ratio values under 20 percent and to top-code reported debt-to-income
ratios of 60 percent or higher. For the reasons discussed above and in
the proposal, the Bureau determines, based on the information currently
available to it, that the disclosure of reported debt-to-income ratio
values greater than or equal to 36 percent and less than 50 percent,
and the modifications it intends to apply to other reported debt-to-
income ratio values, appropriately balance the privacy risks that would
likely be created by the disclosure of this field and the benefits of
such disclosure in light of HMDA's purposes.
Total Units and Affordable Units
Regulation C requires financial institutions to report the total
number of individual dwelling units related to the property securing
the covered loan or, in the case of an application, proposed to secure
the covered loan (total units).\144\ Regulation C also requires
financial institutions to report, for properties that include
multifamily dwellings, the number of affordable units related to the
property. The rule defines affordable units as individual dwelling
units related to the property that are income-restricted pursuant to
Federal, State, or local affordable housing programs.\145\ The rule
defines ``multifamily dwelling'' as a dwelling, regardless of
construction method, that contains five or more individual dwelling
units.\146\
---------------------------------------------------------------------------
\144\ 12 CFR 1003.4(a)(31).
\145\ 12 CFR 1003.4(a)(32). Insured depository institutions and
insured credit unions are not required to report affordable units
for loans or applications that are partially exempt under the
EGRRCPA. See 83 FR 45325, 45329 (Sept. 7, 2018).
\146\ 12 CFR 1003.2(n). Under Regulation C, a covered loan is
secured by a multifamily dwelling if it is secured by the entire
multifamily dwelling; thus, a loan to purchase an entire apartment
building or condominium building would be a loan secured by a
multifamily dwelling, while a loan to purchase an individual
condominium in that building would not be. Comment 2(n)-3.
---------------------------------------------------------------------------
The total units and affordable units data fields were not reported
fields prior to the 2015 HMDA Final Rule; the Bureau added them to the
2015 HMDA Final Rule using its discretionary authority provided by the
Dodd-Frank Act's amendment to HMDA to require the reporting of ``such
other information as the Bureau may require.'' \147\ Prior to the 2015
HMDA Final Rule, however, data users could determine whether a property
was a multifamily property, because the ``property type'' data field--
which was eliminated under the 2015 HMDA Final Rule--included a code
for ``multifamily.'' Property type was disclosed to the public without
modification under the Board's disclosure regime.
---------------------------------------------------------------------------
\147\ 12 U.S.C. 2803(b)(6)(J).
---------------------------------------------------------------------------
The Bureau proposed to disclose these data fields to the public as
reported.\148\ The Bureau initially determined that disclosing these
data fields would likely present low risk to applicant and borrower
privacy, and, to the extent that disclosing these fields would create
risk to applicant and borrower privacy, that the risks would
[[Page 667]]
be justified by the benefits of disclosure in light of HMDA's
purposes.\149\
---------------------------------------------------------------------------
\148\ 82 FR 44586, 44597-99 (Sept. 25, 2017).
\149\ Id. at 44598 (describing in light of HMDA's purposes the
utility of total units and affordable units--along with the other
data fields that the Bureau proposed to disclose without
modification on the basis that they present low privacy risk--
including helping the public and public officials to determine
whether financial institutions are serving the housing needs of
their communities, to distribute public-sector investment so as to
attract private investment to areas where it is needed, and to
identify possible discriminatory lending patterns and enforce
antidiscrimination statutes).
---------------------------------------------------------------------------
Several consumer advocate commenters supported the Bureau's
proposal to disclose without modification these data fields. One
consumer advocate commenter stated that multifamily loan data, in
general, would help the public assess how lending practices affect low-
and moderate-income tenants. This commenter also stated that data on
total units would help data users determine how many households are
affected by a loan and that the data on affordable units would provide
valuable information about the financing of affordable housing.
An industry commenter opposed the proposal to disclose total units
and affordable units for multifamily loans. This commenter stated that
disclosure of this data for multifamily loans would create a heightened
risk of re-identification, because the number of units and number of
affordable units can vary widely across multifamily properties and
therefore may allow identification of specific properties. The
commenter requested that, for multifamily loans only, the Bureau
exclude these data fields from the publicly available HMDA data if the
relevant geographic area does not include enough multifamily loans to
protect against re-identification, although the commenter did not
specify the minimum number of loans necessary to do so. The commenter
further recommended that, if there is a sufficient number of
multifamily loans to protect against re-identification, the Bureau
should disclose total units binned into ranges--the commenter suggested
bins of 5 to 49 and 50 and above--and disclose the value reported for
the number of affordable units as a percentage of the number of total
units.
Based on these comments and the additional analysis described below
in this paragraph, the Bureau believes that disclosing without
modification reported values for total units of 5 and above in the
loan-level HMDA data would likely substantially facilitate the re-
identification of applicants or borrowers and that this risk would not
be justified by the benefits of disclosure. The Bureau determines that
multifamily loans are somewhat more unique than other loans in the data
and that, in many cases, an adversary could match the reported total
units for multifamily loans with publicly available information about
the number of units in a multifamily property, because this information
is widely available to the public from sources including public records
and real estate websites.
For these reasons, the Bureau intends to modify the loan-level HMDA
data disclosed to the public so that total units are binned into the
following ranges: 5 to 24; 25 to 49; 50 to 99; 100 to 149; and 150 and
over. The Bureau further determines that these modifications will
reduce re-identification risk while preserving much of the benefit from
disclosing this field, as data users will still be able to approximate
with some precision how many units a particular transaction affects.
Additionally, under the Bureau's approach, the bins for total units
will align with the bins used by HUD's Rental Housing Finance Survey--
the preeminent Federal data source on rental housing finance
characteristics--allowing users to analyze HMDA data in combination
with data from that survey to further HMDA's purposes. The Bureau
determines, based on the information currently available to it, that
these modifications appropriately balance the privacy risks that would
likely be created by the disclosure of this field and the benefits of
such disclosure in light of HMDA's purposes. The Bureau declines to
adopt the bins suggested by the commenter--5 to 49 and 50 and over--
because the Bureau concludes that these bins would provide insufficient
precision regarding the number of housing units a transaction affects.
The Bureau believes that the bins it is adopting better balance the
privacy risks and disclosure benefits associated with the disclosure of
this field.
The Bureau determines that disclosure in the loan-level HMDA data
of affordable units creates minimal risk, if any, of substantially
facilitating the re-identification of applicants and borrowers in the
HMDA data. However, it determines that, under certain circumstances,
disclosure without modification of affordable units would undermine the
privacy protection that binning total units achieves and that this risk
is not justified by the benefits of disclosure. To reduce this risk,
the Bureau intends to disclose affordable units as a percentage of the
value reported for total units, rounded to the nearest whole number.
The Bureau determines that this modification appropriately balances the
privacy risks that would likely be created by the disclosure of this
field and the benefits of such disclosure in light of HMDA's purposes.
Nationwide Mortgage Licensing System and Registry Identifier
Regulation C requires financial institutions to report the unique
identifier the Nationwide Mortgage Licensing System and Registry (NMLSR
ID) assigned to the mortgage loan originator, as defined in Regulation
G, 12 CFR 1007.102, or Regulation H, 12 CFR 1008.23, as
applicable.\150\ The NMLSR ID must be reported in numeric form, such as
123450.\151\ In the 2015 HMDA Final Rule, the Bureau added the
requirement to report the NMLSR ID to implement the Dodd-Frank Act's
requirement that financial institutions report, ``as the Bureau may
determine to be appropriate, a unique identifier that identifies the
loan originator as set forth in section 1503 of the [Secure and Fair
Enforcement for] Mortgage Licensing Act of 2008.'' \152\
---------------------------------------------------------------------------
\150\ 12 CFR 1003.4(a)(34). Insured depository institutions and
insured credit unions are not required to report NMLSR ID for loans
or applications that are partially exempt under the EGRRCPA. 83 FR
45325, 45329 (Sept. 7, 2018).
\151\ FIG, supra note 55, at 107-08.
\152\ 12 U.S.C. 2803(b)(6)(F).
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by excluding the NMLSR ID.\153\ The Bureau initially
determined that disclosing the NMLSR ID in the loan-level HMDA data
released to the public would likely substantially facilitate the re-
identification of an applicant or borrower and that this risk would not
be justified by the benefits of the disclosure in light of HMDA's
purposes.\154\
---------------------------------------------------------------------------
\153\ 82 FR 44586, 44608-09 (Sept. 25, 2017).
\154\ See id. (describing the utility of NMLSR ID in light of
HMDA's purposes, including helping the public and public officials
to identify possible discriminatory lending patterns and enforcing
antidiscrimination statutes).
---------------------------------------------------------------------------
Several industry commenters and a group of consumer advocate
commenters expressed support for the Bureau's proposal to exclude the
NMLSR ID. The consumer advocate commenters also recommended that, in
place of the NMLSR ID for the individual mortgage loan originator, the
Bureau disclose the applicable NMLSR ID for the loan originator's
company or branch. According to these commenters, disclosing the
company or branch identifier would eliminate re-identification risk
while helping data users assess the practices of mortgage brokers in
the mortgage lending market, which these commenters described as a
critical but hidden facet of the market.
[[Page 668]]
The Bureau does not intend to disclose the NMLSR ID for the loan
originator's company or branch as some commenters suggested. As
discussed in the proposal, the Bureau believes the NMLSR ID for a loan
originator would substantially facilitate re-identification of the HMDA
data because it is required to appear on various documents associated
with the loan, including the security instrument, and many
jurisdictions publicly disclose these real estate transaction records
in an identified form.\155\ For companies or branches with small
numbers of mortgage loan originators, disclosing the company or branch
identifier may allow adversaries to narrow the potential mortgage loan
originator NMLSR IDs for the loan, which would create similar re-
identification concerns. Further, the HMDA data reported to the Bureau
will not contain the NMLSR ID for the loan originator's company or
branch. Because mortgage loan originators may work out of multiple
branches, assigning the correct branch identifier may not be possible.
---------------------------------------------------------------------------
\155\ Id.
---------------------------------------------------------------------------
The Bureau intends to modify the loan-level HMDA data disclosed to
the public by excluding the NMLSR ID, as proposed. For the reasons
discussed above and in more detail in the proposal, the Bureau
determines, based on the information currently available to it, that
this modification appropriately balances the privacy risks that would
likely be created by the disclosure of this field and the benefits of
such disclosure in light of HMDA's purposes.
Automated Underwriting System Result
Regulation C requires that, except for purchased covered loans,
financial institutions report ``the name of the automated underwriting
system used by the financial institution to evaluate the application
and the result generated by that automated underwriting system.'' \156\
Regulation C defines ``automated underwriting system'' for the purposes
of this requirement as ``an electronic tool developed by a securitizer,
Federal government insurer, or Federal government guarantor . . . that
provides a result regarding the credit risk of the applicant and
whether the covered loan is eligible to be originated, purchased,
insured, or guaranteed by that securitizer, Federal government insurer,
or Federal government guarantor.'' \157\ Financial institutions report
a code from a specified list to indicate the result or results
generated by the AUS or AUSs used.\158\ Financial institutions may
report up to five AUS names and five AUS results.\159\ The Bureau added
these requirements in the 2015 HMDA Final Rule using its discretionary
authority provided by the Dodd-Frank Act's amendment to HMDA to require
the reporting of ``such other information as the Bureau may require.''
\160\
---------------------------------------------------------------------------
\156\ 12 CFR 1003.4(a)(35)(i). Insured depository institutions
and insured credit unions are not required to report these data
fields for loans or applications that are partially exempt under the
EGRRCPA. See 83 FR 45325, 45329 (Sept. 7, 2018).
\157\ 12 CFR 1003.4(a)(35)(ii).
\158\ FIG, supra note 55, at 109-10. AUS result is reported
using the following codes: Code 1--Approve/Eligible; Code 2--
Approve/Ineligible; Code 3--Refer/Eligible; Code 4--Refer/
Ineligible; Code 5--Refer with Caution; Code 6--Out of Scope; Code
7--Error; Code 8--Accept; Code 9--Caution; Code 10--Ineligible; Code
11--Incomplete; Code 12--Invalid; Code 13--Refer; Code 14--Eligible;
Code 15--Unable to Determine or Unknown; Code 16--Other; Code 17--
Not applicable; Code 1111--Exempt. Id.
\159\ Comment 4(a)(35)-3.iv.
\160\ 12 U.S.C. 2803(b)(6)(J).
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by excluding AUS result.\161\ The Bureau initially
determined that disclosing AUS result in the public HMDA data would
likely disclose information about the applicant or borrower that is not
otherwise public and may be harmful or sensitive and that this risk
would not be justified by the benefits of the disclosure in light of
HMDA's purposes.\162\
---------------------------------------------------------------------------
\161\ 82 FR 44586, 44609 (Sept. 25, 2017).
\162\ Id. (describing the utility of AUS result in light of
HMDA's purposes, including helping the public and public officials
to identify possible discriminatory lending patterns and enforce
antidiscrimination statutes).
---------------------------------------------------------------------------
A few industry commenters supported the Bureau's proposal to
exclude AUS result from the public HMDA data. Two AUS owner commenters
also supported the Bureau's proposal to exclude AUS result, agreeing
with the Bureau's assessment that AUS results are sensitive. These
commenters also incorporated by reference comments they submitted in
connection with the 2015 HMDA Final Rule in which they expressed
concern that AUS result could be used to reverse-engineer proprietary
information about how AUSs are designed.
A group of consumer advocate commenters opposed the Bureau's
proposal to exclude AUS result. The commenters disagreed with the
Bureau's assessment that the benefits of disclosing AUS result do not
justify the privacy risks that may be created by such disclosure. The
commenters stated that AUS result can aid significantly in fair lending
analysis by helping data users determine whether similarly situated
borrowers were treated differently due to race, gender, or age. The
commenters also stated that the codes for AUS result--such as
``Approve/Ineligible,'' ``Ineligible,'' or ``Incomplete''--would not
reflect any more negatively on applicants than the fact of a loan
application denial.\163\ An industry commenter also opposed the
Bureau's proposal. The commenter stated that it would be extremely
difficult to re-identify applicants or borrowers using AUS result
because it is not available in other public databases, and that
sensitivity alone should not be a basis for withholding data from the
public where re-identification risk is low. The commenter stated
further that AUS result is critically important in identifying possible
discriminatory lending patterns, enforcing antidiscrimination statutes,
understanding lenders' underwriting decisions, and determining whether
financial institutions are serving the housing needs of their
communities.
---------------------------------------------------------------------------
\163\ As noted above, the Bureau proposed to disclose data on
the action taken by the financial institution--which includes
information that a consumer's application was denied--without
modification. Id. at 44597-99.
---------------------------------------------------------------------------
The Bureau determines that disclosing AUS result in the public HMDA
data would likely disclose information about the applicant or borrower
that is not otherwise public and may be harmful or sensitive. The
Bureau finds that the industry commenter that opposed the Bureau's
proposal underestimated the re-identification risk associated with the
HMDA data, even modified as proposed, and that, where re-identification
risk is present, sensitivity alone is a basis for modification under
the balancing test. The Bureau further finds that the consumer advocate
commenters understated the sensitivity of AUS result data. As the
Bureau explained in the proposal, if a HMDA record were associated with
an identified applicant or borrower, disclosure of a ``negative'' AUS
result would reveal information that would likely be perceived as
reflecting negatively on the applicant's or borrower's willingness or
ability to pay.\164\ Most consumers would consider such information
sensitive and disclosure of this information could lead to dignity harm
or embarrassment. The Bureau also determines that scam artists and
other bad actors could use this field to target marketing to applicants
or borrowers to try to take advantage of vulnerable consumers. The
Bureau determines these privacy risks are not justified by the benefits
of disclosure.
---------------------------------------------------------------------------
\164\ Id. at 44609.
---------------------------------------------------------------------------
[[Page 669]]
The Bureau intends to exclude AUS result from the public HMDA data,
as proposed. For the reasons discussed above and in the proposal, the
Bureau determines, based on the information currently available to it,
that excluding AUS result from the public HMDA data appropriately
balances the privacy risks that may be created by the disclosure of
this field and the benefits of such disclosure in light of HMDA's
purposes.
Free-Form Text Fields
Regulation C requires financial institutions to use free-form text
fields to report certain data. Free-form text fields are unique in the
HMDA data reported to the Bureau because they allow the reporting of
any information, rather than certain specified types of numbers or
codes. Free-form text fields must be used to report the name and
version of the credit scoring model used, reasons for denial, AUS
system name, and AUS result where the financial institution reports a
code indicating that a non-listed value applies, and the fields may
also be used to report certain ethnicity and race information, if
provided by the applicant or borrower.\165\ Free-form text fields used
to report race and ethnicity must be completed by applicants; all other
free-form text fields must be completed by the financial
institution.\166\ The maximum number of characters for the AUS system
name, AUS result, and reasons for denial free-form text fields,
including spaces, is 255; the maximum number of characters including
spaces for all other free-form text fields is 100.\167\
---------------------------------------------------------------------------
\165\ See FIG, supra note 55, at 85-86 (ethnicity), 88-89
(race), 96 (name and version of credit scoring model used), 98
(reasons for denial), 108-09 (AUS system name), and 110 (AUS
result). Insured depository institutions and insured credit unions
are not required to report these data fields for loans or
applications that are partially exempt under the EGRRCPA. See 83 FR
45325, 45329 (Sept. 7, 2018).
\166\ Id.
\167\ Id.
---------------------------------------------------------------------------
The Bureau proposed to modify the loan-level HMDA data disclosed to
the public by excluding these free-form text fields.\168\ The Bureau
initially determined that free-form text fields would allow the
reporting of any information, including information that creates risks
to applicant and borrower privacy, and that, given the amount of HMDA
data reported each year, it would not be feasible for the Bureau to
review the contents of each free-form text field submitted before
disclosing the loan-level HMDA data to the public. The Bureau initially
determined that excluding free-form text fields is a modification to
the public loan-level HMDA data that appropriately balances the risks
to applicant and borrower privacy and the benefits of disclosure in
light of HMDA's purposes.\169\
---------------------------------------------------------------------------
\168\ 82 FR 44586, 44609-10 (Sept. 25, 2017).
\169\ Id.
---------------------------------------------------------------------------
Two industry commenters supported the Bureau's proposal to exclude
free-form text fields. A group of consumer advocate commenters
requested that the Bureau clarify that financial institutions cannot
use the free-form text field to report a reason for denial if the
reason for denial can be reported using an available code.
The Bureau intends to exclude free-form text fields from the public
HMDA data, as proposed. For the reasons discussed above and in the
proposal, the Bureau determines, based on the information currently
available to it, that excluding free-form text fields from the public
HMDA data appropriately balances the privacy risks that may be created
by the disclosure of this field and the benefits of such disclosure in
light of HMDA's purposes.\170\
---------------------------------------------------------------------------
\170\ The consumer advocate commenters' request seeks
clarification about a matter unrelated to the subject of this final
policy guidance, which is the disclosure of loan-level HMDA data.
For information about how reasons for denial should be reported, see
12 CFR 1003.4(a)(16), Comment 4(a)(16)-1 through -4, and the FIG,
supra note 55, at 96-98.
---------------------------------------------------------------------------
Inclusion of Multifamily Loan Data
One industry commenter recommended that the Bureau not disclose any
loan-level data concerning loans secured by multifamily dwellings. The
commenter stated that all data reported for these applications and
loans should be excluded from the loan-level data made available to the
public because HMDA's principal focus is single-family consumer-purpose
mortgage transactions; the data required to be reported are
inapplicable to multifamily loans; and multifamily lending differs from
consumer-purpose single-family lending (e.g., because different
criteria is considered in underwriting).
The Bureau declines to categorically exclude multifamily loan data
from the public HMDA data. As noted above, HMDA requires that HMDA data
be made available to the public except as the Bureau determines
necessary to protect applicant and borrower privacy interests.\171\
Because the Bureau determines that most of the HMDA data create low, if
any, privacy risk, and that any risks are justified by the benefits in
light of HMDA's purposes, excluding all multifamily loan data would be
inconsistent with the statute and the balancing test. In addition,
multifamily loans have always been included in the public HMDA data and
Regulation C exempts lenders, on a data field-by-data field basis, from
reporting data that is inapplicable to multifamily loans. Further, the
Bureau concludes that the differences between single-family and
multifamily loans do not reduce the value of public multifamily loan
data for advancing HMDA's purposes, especially considering that
multifamily housing is a vital component of the nation's housing stock.
---------------------------------------------------------------------------
\171\ See supra note 18 and accompanying text; part IV.A
(responding to comments suggesting that the Bureau exclude from the
public data or disclose only in aggregate form all HMDA data or all
new data required to be reported under the 2015 HMDA Final Rule).
---------------------------------------------------------------------------
C. Other Comments Received
Additional Data
Prior to the 2015 HMDA Final Rule, Regulation C required financial
institutions to report the location of the property to which the loan
or application relates, by MSA or by Metropolitan Division, by State,
by county, and by census tract, if the institution has a home or branch
office in that MSA or Metropolitan Division. To reduce burden on
financial institutions, the 2015 HMDA Final Rule eliminated from this
provision the requirement to report the MSA or Metropolitan Division in
which the property is located.\172\ The Bureau proposed to identify in
the public data, for each loan and application that would have been
subject to this provision prior to the 2015 HMDA Final Rule, the MSA or
Metropolitan Division in which the property securing or proposed to
secure the loan is located. The Bureau received no comments on this
proposal. For each loan and application with respect to which the
financial institution reports property location information, the Bureau
intends to identify in the public data the applicable MSA or
Metropolitan Division.\173\
---------------------------------------------------------------------------
\172\ 12 CFR 1003.4(a)(9)(ii) (effective Jan. 1, 2018); 80 FR
66128, 66187 (Oct. 28, 2015).
\173\ If applicable, the MSA or Metropolitan Division will be
included in the annual loan-level disclosure of all reported HMDA
data combined, rather than in the modified loan/application register
for each financial institution.
---------------------------------------------------------------------------
The FFIEC has historically included with its annual loan-level
disclosure of all reported HMDA data the following census and income
data: (1) Population (total population in tract); (2) Minority
Population Percent (percentage of minority population to total
population for tract, carried to two decimal places); (3) FFIEC Median
Family Income (FFIEC Median family income in dollars for the MSA/MD in
which the tract is
[[Page 670]]
located (adjusted annually by FFIEC)); (4) Tract to MSA/MD Median
Family Income Percentage (percentage of tract median family income
compared to MSA/MD median family income, carried to two decimal
places); (5) Number of Owner Occupied Units (number of dwellings,
including individual condominiums, that are lived in by the owner); and
(6) Number of 1- to 4-Family units (dwellings that are built to house
fewer than five families). These data are intended to provide
additional context to the reported HMDA data. The Bureau proposed to
continue to include these data in the combined loan-level HMDA data
disclosed to the public.
A group of consumer advocate commenters supported the proposal to
continue to include the census and income data the FFIEC historically
has included with its annual loan-level disclosure of all reported HMDA
data. These commenters stated that the Minority Population Percent data
can be incomplete as a demographic indicator and that disclosing the
percentages of African-American and Hispanic populations separately
would allow for a more accurate picture of the experience of geographic
areas and neighborhoods in lending markets. These commenters also
stated that, although neighborhoods with predominantly Asian residents
are currently not as widespread as predominantly Hispanic and African-
American neighborhoods, adding the percentage of Asians living in each
census tract would be valuable in some major markets.
The Bureau intends that the census and income data historically
included with the annual loan-level disclosure of all reported HMDA
continues to be included with this disclosure. The Bureau will consider
whether to recommend that the FFIEC add to these data the more granular
minority population percentage data the consumer advocate commenters
requested. Issuance of this final policy guidance does not require that
a determination be made concerning the addition of the more granular
data to the FFIEC's annual loan-level disclosure.
The FFIEC historically also has included with its annual loan-level
disclosure of all reported HMDA an application date indicator
reflecting whether the application date was before January 1, 2004, on
or after January 1, 2004, or not available. The Bureau stated in the
proposal that it believed the application date indicator for pre- and
post-January 2004 is no longer useful to the analysis of the HMDA data
and therefore proposed to no longer include the indicator in the
combined loan-level HMDA data disclosed to the public. The Bureau
received no comments concerning the application date indicator. The
Bureau intends that the application date indicator historically
included with the annual loan-level disclosure of all reported HMDA
data is no longer included with this disclosure.
Restricted Access Program
The Bureau stated in the proposal that, as it had previously
indicated in the supplementary information to the 2015 HMDA Final Rule,
it believed HMDA's public disclosure purposes may be furthered by
allowing industry and community researchers and academics to access the
unmodified HMDA data through a restricted access program, for research
purposes. The Bureau did not propose to establish a restricted access
program but rather stated in the proposal that it continued to evaluate
whether access to unmodified HMDA data should be permitted through such
a program, the options for such a program, and the risks and costs that
may be associated with such a program.
Two industry commenters expressed concerns that such a program
would create risk that the data would be misused or subject to a data
breach. A group of consumer advocate commenters supported such a
program and offered specific suggestions concerning how it should be
structured. The Bureau will take these comments into consideration as
it continues to evaluate access to unmodified HMDA data through a
restricted access program. Issuance of this final policy guidance does
not require that a determination be made concerning a restricted access
program.
Legislative Rulemaking
A group of industry commenters asserted that HMDA requires the
Bureau to use a legislative rulemaking under the APA, rather than
policy guidance, to identify the modifications to be applied to the
loan-level HMDA data before it is disclosed to the public and suggested
that the Bureau delay public disclosure of the data until such
rulemaking is complete. Another industry commenter expressed concern
that the Bureau did not use a rulemaking to determine the HMDA data to
be disclosed to the public and stated that the Bureau should not
disclose any new HMDA data until such a rulemaking is undertaken.
The Bureau determines that its adoption of the balancing test in
the 2015 HMDA Final Rule satisfies its obligations under HMDA; HMDA
does not require a legislative rulemaking to identify modifications to
the public HMDA data. As discussed in more detail in the proposal,\174\
in the 2015 HMDA Final Rule, the Bureau interpreted HMDA, as amended by
the Dodd-Frank Act, to require that the Bureau use a balancing test to
determine whether and how HMDA data should be modified prior to public
disclosure to protect applicant and borrower privacy while also
fulfilling HMDA's public disclosure purposes. The Bureau interpreted
HMDA to require that public HMDA data be modified when the disclosure
of the unmodified data creates risks to applicant and borrower privacy
interests that are not justified by the benefits of such disclosure in
light of the statutory purposes.\175\ This interpretation implemented
HMDA sections 304(h)(1)(E) and 304(h)(3)(B) because it prescribed
standards for requiring modification of itemized information, for the
purpose of protecting the privacy interests of mortgage applicants and
borrowers, that is or will be available to the public.\176\ The final
policy guidance applies the balancing test to determine whether and how
to modify the HMDA data reported under the 2015 HMDA Final Rule before
it is disclosed on the loan level to the public.
---------------------------------------------------------------------------
\174\ See 82 FR 44586, 44589 (Sept. 25, 2017).
\175\ 80 FR 66128, 66134 (Oct. 28, 2015).
\176\ Id.
---------------------------------------------------------------------------
Nonetheless, as noted above, even though it is not required to do
so as a matter of law, the Bureau has decided that it would be
beneficial to undergo a separate notice and comment legislative
rulemaking under the APA to determine what HMDA data will be disclosed
in future years. The Bureau will commence such a rulemaking in May
2019.
Data Collection and Reporting Under the 2015 HMDA Final Rule and
Related Data Security Concerns
Several industry commenters raised concerns with the data
collection and reporting requirements imposed on financial institutions
by the 2015 HMDA Final Rule, and one consumer advocate commenter
requested that the Bureau require the collection and reporting of
additional data. These comments are outside the scope of the proposed
policy guidance, which concerned only the public disclosure of data
collected and reported, not the collection and reporting itself.\177\
As
[[Page 671]]
mentioned above, the Bureau intends to reconsider aspects of the 2015
HMDA Final Rule. Concerns about the data required to be collected and
reported under Regulation C are more appropriately raised in comments
submitted in connection with that rulemaking.
---------------------------------------------------------------------------
\177\ The Bureau noted in the proposed policy guidance that the
proposal did not reopen any portion of the 2015 HMDA Final Rule, as
the Bureau did not intend, in the policy guidance, to revisit any
decisions made in that rulemaking. See 82 FR 44586, 44587 (Sept. 25,
2017).
---------------------------------------------------------------------------
Several industry commenters also raised data security concerns
related to the collection and reporting of HMDA data, including
concerns with the system lenders use to submit their HMDA data to the
Bureau and the Bureau's ability to protect the data during transmission
and storage. A few of these commenters urged the Bureau to publish the
details of its information security practices and procedures to address
these concerns. One industry commenter suggested that financial
institutions would be liable for a data breach at the Bureau that
exposed nonpublic HMDA data, and also that financial institutions would
be required to mitigate damages incurred by their customers as a result
of such a breach. Again, these comments are outside the scope of the
proposed policy guidance, which concerns the Bureau's intentional
disclosure of HMDA data to the public as required by the statute. No
comments received on the proposed policy guidance addressed data
security concerns raised by the Bureau's proposed disclosure of HMDA
data as required by HMDA.
Public Education
A group of industry commenters expressed concern that applicants do
not understand why financial institutions must ask for certain
sensitive information and report the information to the Bureau, and why
such information may be publicly disclosed. These commenters suggested
that explanatory information provided at the time of application would
be especially helpful, and asked that the Bureau consult with industry
and engage in educational efforts concerning the purposes and
requirements of HMDA. A group of consumer advocate commenters requested
that the Bureau produce materials to help data users understand the
HMDA data to be made public and in what form. These commenters
suggested that the Bureau update a chart it has previously made public,
describing the HMDA data to be collected and reported, to reflect if
and how the data will be made available to the public. The Bureau will
consider, as it does in the ordinary course of its business, whether to
address the concerns expressed in these comments.
V. Regulatory Requirements
The Bureau concludes that the final policy guidance on Disclosure
of Loan-Level HMDA Data is a non-binding general statement of policy
and/or a rule of agency organization, procedure, or practice exempt
from notice and comment rulemaking requirements under the APA pursuant
to 5 U.S.C. 553(b). Because no notice of proposed rulemaking was
required, the Regulatory Flexibility Act does not require an initial or
final regulatory flexibility analysis.\178\ The existing information
collections contained in Regulation C have been approved by the Office
of Management and Budget (OMB) and assigned OMB control number 3170-
0008. The Bureau determines that this final policy guidance does not
impose any new or revise any existing recordkeeping, reporting, or
disclosure requirements on covered entities or members of the public
that would be collections of information requiring OMB approval under
the Paperwork Reduction Act, 44 U.S.C. 3501, et seq. The Bureau has a
continuing interest in the public's opinions regarding this
determination. At any time, comments regarding this determination may
be sent to the Bureau of Consumer Financial Protection (Attention: PRA
Office), 1700 G Street NW, Washington DC 20552, or by email to
CFPB_Public_PRA@cfpb.gov. The Bureau stated these conclusions in the
proposed policy guidance and did not receive any comments on them.
---------------------------------------------------------------------------
\178\ 5 U.S.C. 603(a), 604(a).
---------------------------------------------------------------------------
VI. Congressional Review Act
Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Bureau plans to submit a report containing this policy guidance and
other required information to each House of the Congress and the
Comptroller General. The Bureau plans to make such a submission at
least 60 days prior to the date the Bureau will first publish loan-
level HMDA data consistent with this policy guidance. The Bureau
expects to publish such information on March 29, 2019. The Office of
Information and Regulatory Affairs has designated this policy guidance
as a ``major rule'' under 5 U.S.C. 804(2).
VII. Final Policy Guidance on Disclosure of Loan-Level HMDA Data
The text of the final policy guidance is as follows:
Policy Guidance on Disclosure of Loan-Level HMDA Data
A. Background
The Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq.,
requires certain financial institutions to collect, report, and
disclose data about their mortgage lending activity. HMDA is
implemented by Regulation C, 12 CFR part 1003. HMDA identifies its
purposes as providing the public and public officials with sufficient
information to enable them to determine whether financial institutions
are serving the housing needs of the communities in which they are
located, and to assist public officials in their determination of the
distribution of public sector investments in a manner designed to
improve the private investment environment.\179\ In 1989, the Board of
Governors of the Federal Reserve System (Board) recognized a third HMDA
purpose of identifying possible discriminatory lending patterns and
enforcing antidiscrimination statutes, which now appears with HMDA's
other purposes in Regulation C.\180\
---------------------------------------------------------------------------
\179\ 12 U.S.C. 2801(b).
\180\ See Home Mortgage Disclosure, 54 FR 51356, 51357 (Dec. 15,
1989) (recognizing the purpose of identifying possible
discriminatory lending patterns and enforcing antidiscrimination
statutes in light of the 1989 amendments to HMDA, which mandated the
reporting of the race, sex, and income of loan applicants).
---------------------------------------------------------------------------
In 2010, Congress enacted the Dodd-Frank Wall Street Reform and
Consumer Protection Act (Dodd-Frank Act).\181\ Among other changes, the
Dodd-Frank Act expanded the scope of information relating to mortgage
applications and loans that must be collected, reported, and disclosed
under HMDA and authorized the Bureau to require by rule financial
institutions to collect, report, and disclose additional information.
The Dodd-Frank Act amendments to HMDA also added new section
304(h)(1)(E), which directs the Bureau to develop regulations, in
consultation with the agencies identified in section 304(h)(2),\182\
that ``modify or require modification of itemized information, for the
purpose of protecting the privacy interests of the mortgage applicants
or mortgagors, that is or will be available to the public.'' Section
304(h)(3)(B), also added by the Dodd-Frank Act, directs
[[Page 672]]
the Bureau of Consumer Financial Protection (Bureau) to ``prescribe
standards for any modification under paragraph (1)(E) to effectuate the
purposes of [HMDA], in light of the privacy interests of mortgage
applicants or mortgagors. Where necessary to protect the privacy
interests of mortgage applicants or mortgagors, the Bureau shall
provide for the disclosure of information . . . in aggregate or other
reasonably modified form, in order to effectuate the purposes of
[HMDA].'' \183\
---------------------------------------------------------------------------
\181\ Dodd-Frank Wall Street Reform and Consumer Protection Act,
Public Law 111-203, 124 Stat. 1376, 1980, 2035-38, 2097-101 (2010).
\182\ These agencies are the prudential regulators--the Board of
Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the National Credit Union Administration, and
the Office of the Comptroller of the Currency--the Department of
Housing and Urban Development. Together with the Bureau, these
agencies are referred to herein as ``the agencies.''
\183\ Section 304(h)(3)(A) provides that a modification under
section 304(h)(1)(E) shall apply to information concerning ``(i)
credit score data . . . in a manner that is consistent with the
purpose described in paragraph (1)(E); and (ii) age or any other
category of data described in paragraph (5) or (6) of subsection
(b), as the Bureau determines to be necessary to satisfy the purpose
described in paragraph (1)(E), and in a manner consistent with that
purpose.'' 12 U.S.C. 2803(h)(3)(A).
---------------------------------------------------------------------------
On October 28, 2015, the Bureau published a final rule amending
Regulation C (2015 HMDA Final Rule) to implement the Dodd-Frank Act
amendments and make other changes, including adding a number of new
data points.\184\ Most provisions of the 2015 HMDA Final Rule took
effect on January 1, 2018,\185\ and apply to data financial
institutions collect beginning in 2018 and report beginning in 2019.
---------------------------------------------------------------------------
\184\ See generally Home Mortgage Disclosure (Regulation C), 80
FR 66128 (Oct. 28, 2015); see also Home Mortgage Disclosure
(Regulation C), 80 FR 69567 (Nov. 10, 2015) (making technical
corrections).
\185\ Certain amendments to the definition of financial
institution went into effect on January 1, 2017. See 12 CFR 1003.2
(effective Jan. 1, 2017); 80 FR 66128, 66308 (Oct. 28, 2015).
---------------------------------------------------------------------------
B. The Balancing Test
In the 2015 HMDA Final Rule, in consultation with the agencies and
after notice and comment, the Bureau interpreted HMDA, as amended by
the Dodd-Frank Act, to require that the Bureau use a balancing test to
determine whether and how HMDA data should be modified prior to its
disclosure to the public to protect applicant and borrower privacy
while also fulfilling HMDA's public disclosure purposes. The Bureau
interpreted HMDA to require that public HMDA data be modified when the
release of the unmodified data creates risks to applicant and borrower
privacy interests that are not justified by the benefits of such
release to the public in light of HMDA's purposes. In such
circumstances, the need to protect the privacy interests of mortgage
applicants or mortgagors requires that the itemized information be
modified. This binding interpretation implemented HMDA sections
304(h)(1)(E) and 304(h)(3)(B) because it prescribed standards for
requiring modification of itemized information, for the purpose of
protecting the privacy interests of mortgage applicants and borrowers,
that is or will be available to the public.\186\
---------------------------------------------------------------------------
\186\ 80 FR 66128, 66134 (Oct. 28, 2015).
---------------------------------------------------------------------------
The Bureau has applied the balancing test to determine whether and
how to modify the HMDA data reported under the 2015 HMDA Final Rule
before it is disclosed on the loan level to the public. This policy
guidance describes the loan-level HMDA data that the Bureau intends to
make available to the public beginning in 2019, with respect to data
compiled by financial institutions in or after 2018, including
modifications that the Bureau intends to apply to the data. This policy
guidance is exempt from notice and comment rulemaking requirements
under the Administrative Procedure Act pursuant to 5 U.S.C. 553(b) and
is non-binding.
C. Loan-Level HMDA Data To Be Disclosed to the Public
The Bureau intends to publicly disclose loan-level HMDA data
reported pursuant to the 2015 HMDA Final Rule as follows:
1. Except as provided in paragraphs 2 through 8 below, the Bureau
intends to disclose all data as reported, without modification.
2. The Bureau intends to exclude the following from the public
loan-level HMDA data:
a. Universal loan identifier, collected pursuant to 12 CFR
1003.4(a)(1)(i), or non-universal loan identifier, collected pursuant
to 83 FR 45325, 45330 (Sept. 7, 2018);
b. The date the application was received or the date shown on the
application form, collected pursuant to 12 CFR 1003.4(a)(1)(ii);
c. The date of action taken by the financial institution on a
covered loan or application, collected pursuant to 12 CFR
1003.4(a)(8)(ii);
d. The address of the property securing the loan or, in the case of
an application, proposed to secure the loan, collected pursuant to 12
CFR 1003.4(a)(9)(i);
e. The credit score or scores relied on in making the credit
decision, collected pursuant to 12 CFR 1003.4(a)(15)(i);
f. The unique identifier assigned by the Nationwide Mortgage
Licensing System and Registry for the mortgage loan originator, as
defined in Regulation G, 12 CFR 1007.102, or Regulation H, 12 CFR
1008.23, as applicable, collected pursuant to 12 CFR 1003.4(a)(34);
g. The result generated by the automated underwriting system used
by the financial institution to evaluate the application, collected
pursuant to 12 CFR 1003.4(a)(35)(i); and
h. Free-form text fields used to report the following data:
Applicant or borrower race, collected pursuant to 12 CFR
1003.4(a)(10)(i); applicant or borrower ethnicity, collected pursuant
to 12 CFR 1003.4(a)(10)(i); name and version of the credit scoring
model used to generate each credit score or credit scores relied on in
making the credit decision, collected pursuant to 12 CFR
1003.4(a)(15)(i); the principal reason or reasons the financial
institution denied the application, if applicable, collected pursuant
to 12 CFR 1003.4(a)(16); and automated underwriting system name,
collected pursuant to 12 CFR 1003.4(a)(35)(i).
3. With respect to the amount of the covered loan or the amount
applied for, collected pursuant to 12 CFR 1003.4(a)(7), the Bureau
intends to:
a. Disclose the midpoint for the $10,000 interval into which the
reported value falls, e.g., for a reported value of $117,834, disclose
$115,000 as the midpoint between values equal to $110,000 and less than
$120,000; and
b. Indicate where possible whether the reported value exceeds the
applicable dollar amount limitation on the original principal
obligation in effect at the time of application or origination as
provided under 12 U.S.C. 1717(b)(2) and 12 U.S.C. 1454(a)(2).
4. With respect to the age of an applicant or borrower, collected
pursuant to 12 CFR 1003.4(a)(10)(ii), the Bureau intends to:
a. Bin reported values into the following ranges, as applicable: 25
to 34; 35 to 44; 45 to 54; 55 to 64; and 65 to 74;
b. Bottom-code reported values under 25;
c. Top-code reported values over 74; and
d. Indicate whether the reported value is 62 or higher.
5. With respect to the ratio of the applicant's or borrower's total
monthly debt to the total monthly income relied on in making the credit
decision, collected pursuant to 12 CFR 1003.4(a)(23), the Bureau
intends to:
a. Bin reported values into the following ranges, as applicable: 20
percent to less than 30 percent; 30 percent to less than 36 percent;
and 50 percent to less than 60 percent;
b. Bottom-code reported values under 20 percent;
c. Top-code reported values of 60 percent or higher; and
d. Disclose, without modification, reported values greater than or
equal to 36 percent and less than 50 percent.
[[Page 673]]
6. With respect to the value of the property securing the covered
loan or, in the case of an application, proposed to secure the covered
loan, collected pursuant to 12 CFR 1003.4(a)(28), the Bureau intends to
disclose the midpoint for the $10,000 interval into which the reported
value falls, e.g., for a reported value of $117,834, disclose $115,000
as the midpoint between values equal to $110,000 and less than
$120,000.
7. With respect to the number of individual dwelling units related
to the property securing the covered loan or, in the case of an
application, proposed to secure the covered loan, collected pursuant to
12 CFR 1003.4(a)(31), the Bureau intends to:
a. Bin reported values into the following ranges, as applicable: 5
to 24; 25 to 49; 50 to 99; and 100 to 149;
b. Top-code reported values over 149; and
c. Disclose, without modification, reported values below 5.
8. With respect to the number of individual dwelling units related
to the property that are income-restricted pursuant to Federal, State,
or local affordable housing programs, collected pursuant to 12 CFR
1003.4(a)(32), the Bureau intends to disclose reported values as a
percentage, rounded to the nearest whole number, of the value collected
pursuant to 12 CFR 1003.4(a)(31).
Dated: December 20, 2018.
Kathleen Kraninger,
Director, Bureau of Consumer Financial Protection.
[FR Doc. 2018-28404 Filed 1-30-19; 8:45 am]
BILLING CODE 4810-AM-P
