CSBS Issue Briefings - January 2020

CSBS ISSUE BRIEFING

undertaken by federal and state regulators. Given its importance, state regulators believe methods for analyzing HMDA compliance should be transparent and consistent across regulators. Working through the Federal Financial Institutions Examination Council Task Force on Consumer Compliance, state regulators pushed successfully for an interagency approach to supervision of HMDA reporting compliance. Prior to 2018, each agency followed its own exam procedures and data resubmission guidelines. • Even though most states do not directly examine for HMDA compliance, it is important for state regulators to understand how the data is assessed given the impact that compliance violations can have on CAMELS ratings and safety and soundness. • In comments regarding changes to Regulation C, state regulators have emphasized that the relationship lending model of community banks should not be subjected to the same scrutiny as large, global institutions that deploy standardized model-based lending programs. • Recently implemented increases to the reporting thresholds go beyond what CSBS asked for in comments on the 2015 HMDA rule. • With the release of the 2018 data, the FFIEC urged users of the data to be cautious when exploring whether new data points indicate discrimination. We believe this language is helpful and in line with a corrective, rather than punitive approach to fair lending analysis. From the FFIEC press release announcing availability of 2018 data on mortgage lending: “HMDA data alone cannot be used to determine whether a lender is complying with fair lending laws. The data do not include some legitimate credit risk considerations for loan approval and loan pricing decisions. Therefore, when regulators conduct fair lending examinations, they analyze additional information before reaching a determination about an institutions compliance with fair lending laws.” Talking Points

SME Contact: Daniel Schwartz, Director, Policy Development, (202) 728-5742, 36T

Dschwartz@csbs.org 36T

Date Updated: 01/13/2020

FOR STATE REGULATOR USE ONLY