WASHINGTON (Legal Newsline) – A new rule imposed by the Consumer Financial Protection Bureau is being challenged in court by affordable-housing groups.
The lawsuit, filed July 30 in District of Columbia federal court, takes issue with the CFPB’s Home Mortgage Disclosure (Regulation C) that was published May 12. It raises the loan-volume thresholds at which financial institutions are required to report data about closed-end mortgage loans and open-end lines of credit.
It raises those thresholds from a rule published five years ago.
“As a result, thousands of lending institutions will become exempt from reporting (Home Mortgage Disclosure Act) data, undermining the effectiveness of HDMA in achieving its statutory purposes,” the lawsuit says.
The main purpose of HDMA is making that data available to make sure lenders are meeting the housing needs of their communities, the lawsuit says.
The plaintiffs are the National Community Reinvestment Coalition, Montana Fair Housing, Texas Low Income Housing Information Service, the City of Toledo, Ohio, Empire Justice Center and Association for Neighborhood and Housing Development.
They say the CFPB has failed to provide a viable reason for increasing the reporting thresholds for lenders, calling the rule arbitrary and capricious.
“The exemption of a large number of lending institutions in the 2020 HDMA Rule is inconsistent with the text of the statutory authority upon which the agency relies,” the lawsuit says.