Bureau of Consumer Financial Protection.
Final policy guidance.
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.
The Bureau released this final policy guidance on its website on December 21, 2018.
Benjamin Cady and David Jacobs, Counsels; Laura Stack, Senior Counsel, Office of Regulations, at 202-435-7700 or
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.
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,
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.
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.
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.
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.
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
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.
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.
In 2010, the Dodd-Frank Act amended HMDA and transferred HMDA rulemaking authority and other functions from the Board to the Bureau.
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.
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
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.
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.
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,
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,
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.
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).
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
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.
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.
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.
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.
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,
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.
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.
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
The Bureau proposed to publicly disclose the following data fields as reported, without modification:
• 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.
• 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.
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.
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.
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.
Regulation C requires a financial institution, when submitting its loan/application register to the Bureau, to report the financial institution's LEI and name.
The Bureau proposed to disclose to the public without modification LEI and financial institution name as reported.
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.
Regulation C requires financial institutions to report the action taken by the financial institution in response to an application.
Regulation C also requires financial institutions to report the principal reason or reasons the financial institution denied the application, if applicable.
The Bureau proposed to disclose to the public without modification action taken and reasons for denial as reported.
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,
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.
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 § 1003.4(e).
The Bureau proposed to disclose to the public without modification State, county, and census tract as reported.
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
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.
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.
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).
The Bureau proposed to disclose without modification income as reported.
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.
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.
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.
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.
Insured depository institutions and insured credit unions are not required to report ULI for loans or applications that are partially exempt under the EGRRCPA.
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by excluding ULI.
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.
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.
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by continuing to exclude
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.
Regulation C requires financial institutions to report the amount of the covered loan or the amount applied for.
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.
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.
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
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.
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.
The Bureau proposed the GSE conforming loan limit indicator to facilitate the accuracy and transparency of the FHFA Housing Goals program.
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.
Regulation C requires financial institutions to report the date of action taken by the financial institution on a covered loan or application.
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by continuing to exclude action taken date.
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.
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.
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by excluding property address.
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.
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.
Regulation C requires financial institutions to report the age of the applicant or borrower.
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.
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.
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 (
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.
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
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.
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by excluding credit score.
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.
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.
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).
The Bureau proposed to disclose reported debt-to-income ratio of greater than or equal to 40 percent and less than 50 percent.
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.
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.
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).
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.”
The Bureau proposed to disclose these data fields to the public as reported.
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.
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.
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by excluding the NMLSR ID.
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.
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.
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.
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.”
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by excluding AUS result.
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.
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.
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.
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.
The Bureau proposed to modify the loan-level HMDA data disclosed to the public by excluding these free-form text fields.
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.
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 (
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.
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.
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
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.
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.
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,
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.
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.
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.
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.
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.
Pursuant to the Congressional Review Act (5 U.S.C. 801
The text of the final policy guidance is as follows:
The Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801
In 2010, Congress enacted the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
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.
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.
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.
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,
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.
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,
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).