The CFPB proposed a rule Thursday that aims to simplify the HomeMortgage Disclosure Act reporting requirements for financialinstitutions. Institutions that produce fewer than 25 mortgages ayear would be exempted from reporting requirements.

“For small banks with few staff members, this change could makea significant impact in easing compliance costs,” said the CFPB in a press release.

The new threshold would reduce the overall number of banksrequired to report HMDA data by 25%, but, because those lendersreceive a low volume of applications and originate a low volume ofmortgage loans, the change would not compromise the usefulness ofthe dataset, the CFPB also said.

Under the proposal, financial institutions that make 25 or more closed-end loans orreverse mortgages in a year would be required to report HMDA data.However, the proposal eliminates reporting certain home improvementloans. Financial institutions with a large amount of reportedtransactions would be required to submit HMDA data on a quarterlybasis rather than an annual basis.

“It is critical that we shed more light on the mortgage market –the largest consumer financial market in the world,” CFPB DirectorRichard Cordray said. “The Home Mortgage Disclosure Act helpsfinancial regulators and public officials keep a watchful eye onemerging trends and problem areas in the mortgage market. Today'sproposal would help us understand better how to protect consumers'access to mortgage credit while simplifying the reportingrequirements for financial institutions.”

The CFPB is also proposing ways to align HMDA data requirementswith well-established industry data standards, which couldalleviate the burden on many lenders, and improve the quality ofthe information reported.

“While the proposal's efforts to amend institutional andtransactional coverage could provide some relief for credit unions,its expansion of the HMDA dataset will undoubtedly createadditional expenses and burden for credit unions, NAFCU Director ofRegulatory Affairs Mike Coleman said. “Any additions to the HMDAdataset will require credit unions to work with their staffs andvendors to update their processes and software. Because creditunions already grapple with overwhelming regulatory burden, NAFCUbelieves the Bureau should eliminate unnecessary burden to creditunions and restrict its changes to the HMDA dataset to thosemandated by Dodd-Frank.”

Under the Dodd-Frank Act, the CFPB is required to update HMDAregulations by having lenders report specific new information,including the applicant's age and credit score, property value,loan term, total points and fees and the duration of any teaser orintroductory interest rates. The CFPB said the new informationcould help identify possible discriminatory lending practices andother issues in the marketplace.

The CFPB is also evaluating new technological tools that wouldmake the electronic data submission process more efficient,simplify data formatting requirements andhelp financialinstitutions prevent reporting errors.