Legal Blog

Compensation and Compliance: Pay Attention to the HMDA Proposals

The Consumer Financial Protection Bureau announced its proposal for 37 new data requirements in Home Mortgage Disclosure Act information. The agencies’ stated goals for this substantial increase include improved identification of risk factors for default and enhanced ability to effectively regulate these risks. To be sure, these are legitimate goals and one can envision how some of this data could legitimately be useful and beneficial for all concerned. However, the CFPB also requests significant data pertaining to pricing, compensation, property uses, and other factors that if used too zealously could cause a massive restriction in the market and a reduction in the type and amount of lenders. For instance, while it is certainly legitimate to be able to compare discount points to undiscounted rates to determine the bona fide nature of a “discount,” cross referencing compensation to spreads, interest rates, and credit risk factors compared amongst similar lenders in similar communities, would allow certain conclusions about a lenders profitability vis a vis its competitors. Click here to read the entire article.

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Ari Karen is an experienced litigator and speaker who has focused his practice in representing financial institutions in both government investigations and litigation before state and federal trial and appellate courts nationwide.

Mr. Karen’s practice is diverse, representing clients on matters concerning banking regulations, Dodd Frank financial reform laws, contractual disputes, employment and labor statutes, wage-hour class actions, employment discrimination and fair lending matters, whistleblower complaints and non-competition claims, among others.

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