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41 California organizations urge CFPB to increase HMDA transparency

Better measurements needed for home loans, mortgage modifications, multi-family affordable housing, helocs for small business and “Asian” category

SAN FRANCISCO, CA (October 29, 2014) –– Today, 41 California organizations join with the California Reinvestment Coalition (CRC) in calling on the Consumer Financial Protection Bureau (CFPB) to strengthen the Home Mortgage Disclosure Act (HMDA) through greater transparency.

HMDA requires lenders to collect and publish data about mortgage lending, and many advocates credit the act with increasing access for communities that had previously been redlined.  Under financial reform, the CFPB was given authority over the law, and the CFPB is gathering public comments on several proposed changes.

Advocates suggested several changes to the current proposal, including:

  1.  Requiring loan modification data to be reported by banks and servicers;
  2.  Disaggregating the overly broad “Asian” race category to allow for more accurate reporting;
  3.  Capturing more information about languages spoken during a loan transaction;
  4.  Disclosing if a borrower is going to own a property with somebody who is not on the loan;
  5.  Determining if a borrower received pre-purchase counseling (associated with fewer foreclosures);
  6.  More transparency for whether lending for multi-family rental housing is for affordable housing units; and
  7.  Requiring reporting on whether commercial loans and home equity lines of credit loans are used to support small businesses

For a more extensive explanation of these recommendations, please see the detailed letter sent to the CFPB by the 41 organizations: LETTER.

Community leaders explain the opportunity to increase transparency and accuracy:

Loan modifications: Kevin Stein, associate director at CRC comments: “In updating HMDA rules, the CFPB can finally increase transparency into mortgage modifications so that it’s clearer if foreclosure relief is actually happening, and if so, in what communities. The City and County of San Francisco already asked for and received this type of modification data from Bank of America, so we know it’s possible.”

Widowed Homeowners: Maeve Elise Brown, executive director at Housing and Economic Rights Advocates, explains:“There are 10,000 baby boomers turning 65 every day, and we’re already seeing problems with widowed homeowners losing their homes if they’re listed on title but not on the mortgage. To address this problem, lenders should be required to note when they’re making a loan if there is another property owner who will not be listed on the loan, but who has a legal interest in the property.”

Asian Category: Jane Duong, director of programs & advocacy at the National Coalition for Asian Pacific American Community Development (CAPACD), comments on the importance of the Asian disaggregation: “Because there is only one ‘Asian’ category, we see that important socio-economic differences and experiences between the many Asian American Pacific Islander communities (like the level of homeownership), are lost. Increasing the categories would allow for a far more accurate analysis of our diverse communities.”

Small Business Loans: Hyepin Im, president and CEO of Korean Churches for Community Development comments: “Many of the families we helped with to avoid foreclosure had used Home Equity Lines of Credit (HELOC) as a source of capital for their small businesses. When the foreclosure crisis erupted, many of their businesses were impacted, which threatened their ability to pay their mortgages, pay their employees, and keep their businesses open. By asking if a customer is obtaining a HELOC to fund their small business, we can get a better sense of what’s driving defaults, and if access to small business loans is a problem.”

Full Disclosure: Charles Evans of Public Counsel notes:“Public release of lending data under the Homeowners Mortgage Disclosure Act is a critical safeguard against discrimination, and can also help local governments determine whether lenders are meeting local housing needs. We are concerned that the Consumer Financial Protection Bureau may delay the publication of data or fail to release all lending data to the public, and that could leave consumers vulnerable to fraud or abusive lending practices.”

Additional Context
More information about the San Francisco RFP and the loan modification data Bank of America provided in order to participate in the RFP for providing banking services to the City and County of San Francisco is available here.
The California Reinvestment Coalition advocates for fair and equal access to banking and other financial services for California’s low–income communities and communities of color. CRC has a membership of over 300 nonprofit organizations and public agencies across the state of California

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