The Consumer Financial Protection Bureau (CFPB) is considering changes to improve and expand data collection under the Home Mortgage Disclosure Act (HMDA). Currently, lenders are required to report the type and general location of the property; the race, ethnicity and sex of the applicant; the amount of the loan; and the purpose of the loan (purchase, refinance or home improvement).
The Dodd-Frank Act directed the CFPB to expand HMDA reporting to include total points, fees and rate spreads for all loans; riskier loan features, such as teaser rates, prepayment penalties and nonamortizing features; lender information, including a unique identifier for the loan officer and the loan; property value and improved property location information; and the applicant’s age and credit score.
The CFPB is considering additional reporting requirements, including:
- Mandatory reporting of denial reasons,
- Debt-to-income ratios,
- Qualified mortgage status (under the CFPB’s ability-to-repay rule),
- Combined loan-to-value ratios,
- Automatic underwriting system results,
- Additional details about points and fees (including total origination charges; total discount points; risk-adjusted, prediscounted interest rates; and interest rates), and
- Affordable housing restrictions and manufactured-housing data.
Collecting and submitting this information could be burdensome for lenders. So the CFPB is seeking feedback on ways it can streamline reporting, improve data entry and standardize the reporting threshold — for example, by requiring banks to report only if they make 25 or more loans per year and meet certain other conditions.
Banks place high among occupational fraud victims
In combating fraud, banks tend to focus on external threats. But occupational fraud — fraud involving abuse of trust by employees and other insiders — is an enormous problem. According to the Association of Certified Fraud Examiners’ 2012 Report to the Nations on Occupational Fraud and Abuse, the typical organization loses 5% of its revenues to fraud each year, and banking and financial services is the most commonly victimized industry.
The most common fraud schemes in the banking and financial services industry are corruption (bribery, conflicts of interest and other abuses of an employee’s influence over a business transaction) and misappropriation of cash on hand. The median loss is $232,000.
Bad actor? No bank for you!
The FDIC has adopted a final rule prohibiting certain “bad actors” from buying failed banks — or assets of any covered financial company — from the FDIC. Under the rule, which implements a section of the Dodd-Frank Act, bad actors include individuals or entities that have, or may have, contributed to a covered financial company’s failure.