Recently there has been a push by the CFPB to require lenders to collect more data and report it as part of their yearly HMDA filing. A lot of this data is borrower specific data that is sensitive to their privacy, yet the federal government feels it is needed to better monitor lenders. Really?
HMDA data that we have collected and supplied to regulators for over thirty years is public. Anyone who wants it can request the entire database. Anyone who has ever gone through a HMDA data review which resulted in a full data scrub understands how complex and massive this is. Yet now they are asking for more. So what has been done with all this public data? From what I can see, not much.
Any by the way, how do we know it is accurate data, is it safe from hackers? While the majority of lenders spend lots of time and money compiling the data and checking its accuracy and validity, there are others who have created the data or backed into the information based on assumptions and calculations. Who would ever want to rely on this data? Do they really think it will be any better quality than what we have now?
Now they want us to provide even more sensitive data about individual borrowers such as credit scores, DTI, etc. OF course they say this data will not be made available to the public. But how hard will it be for someone who knows how, to get into this information and use it or sell it. We have seen the consequences to companies that have failed to protect their consumer data, yet they want us to put all of ours out in a public database. For an agency that was created to protect the consumer, this seems to go far beyond their mandate.
Of course the basic underlying question is “Do they really need all this data?” Well supposedly it will give the regulators better insight into the actions and activities of lenders; filling in gaps that they haven’t previously been unable to fill. But have they tried? Recently, Mortgage True View, a database company obtained HMDA data for years 2010 to 2012 and then set about attempting to gather the 2013 data. While not obtaining all the data submitted, there was a sufficient amount obtained to allow for the development of a very comprehensive database. This database is being used to conduct various types of analyses. Just by comparing individual company data against the larger industry database there was more than sufficient information obtained to isolate where problems exist and exactly what they were.
So why do we need more data if the issues surrounding the classes of borrowers protected by these laws can be analyzed and lender compliance determined by what is already collected? It is time for the CFPB to do some hard work using the data they have before putting borrowers at risk and causing more confusion and frustration for lenders.
About The Author
rjbWalzak Consulting, Inc. was founded and is led by Rebecca Walzak, a leader in operational risk management programs in all areas of the consumer lending industry. In addition to consulting experience in mortgage banking, student lending and other types of consumer lending, she has hands on practical experience in these organizations as well as having held numerous positions from top to bottom of the consumer lending industry over the past 25 years.