Today, Congresswoman Maxine Waters (D-CA), Ranking Member of the Committee on Financial Services, gave the following floor statement in opposition to H.R. 2954, the Home Mortgage Disclosure Adjustment Act:

As Prepared for Delivery

Mr. Chairman, I rise today in opposition to H.R. 2954, the Home Mortgage Disclosure Adjustment Act, which would undermine efforts to monitor trends in mortgage lending, combat discriminatory and predatory lending, and ensure that consumers who reside in low- and moderate-income communities have fair access to mortgage credit.

In 1975, Congress enacted the Home Mortgage Disclosure Act, also known as HMDA in response to concerns that, despite their responsibility to provide adequate home financing to qualified applicants on reasonable terms and conditions, some lenders’ failure to do so had contributed to a decline in housing conditions in communities of color.

HMDA data provide the only comprehensive picture of the rates at which American consumers’ requests for mortgages are approved and denied and as a result, it has many important uses. HMDA data provide information on mortgage lending patterns and trends that allow regulators, lenders, researchers, and the public to better understand and address redlining concerns by identifying possible discriminatory lending patterns and monitoring compliance with, and enforcement of, statutes like the Community Reinvestment Act and federal anti-discrimination laws like the Equal Credit Opportunity Act and the Fair Housing Act.

Local governments also use HMDA data to determine which financial institutions are meeting the needs of their communities and should receive important benefits funded by the taxpayers of those communities. For example, in Antioch, California, the local government uses HMDA data when selecting banks for contracts and participation in local programs.

HMDA data are also used by government officials to determine areas of disinvestment that are in need of targeted assistance. Take Flint, Michigan for example. There, HMDA data has been used to target funds to remediate blight.

Communities also use HMDA data to identify discriminatory lending patterns and enforce antidiscrimination statutes. HMDA data, for example, were used in Chicago to identify discrimination in lending patterns in its neighborhoods, leading to a large discriminatory lending settlement.

And it was precisely because of HMDA data that Congress learned during the run up to the financial crisis, that African-Americans were routinely steered into predatory, subprime loans—even when they qualified for prime mortgages—and they received these loans at higher rates than White borrowers.

Following the financial crisis, Congress updated HMDA when it passed the Dodd-Frank Act, directing the Consumer Financial Protection Bureau to close information gaps about mortgage lending patterns and practices that contributed to the 2007-2008 financial crisis, as well as other data that could better identify discrimination.

Accordingly, in 2015, the Consumer Bureau finalized a rule that required sufficient information to shed light on predatory practices in the mortgage market and considered compliance costs and burdens imposed on institutions that collect, maintain, and report the data.

Through this rule, the Consumer Bureau added and implemented additional data fields that must be reported in order to further close information gaps about mortgage lending patterns and practices. The new data fields include basic loan facts such as the address of the property, interest rate of the mortgage, and borrower’s credit score.

The Consumer Bureau’s rule only excluded truly small lenders – banks that originate fewer than 25 closed-end loans, like mortgages, and 100 open-end lines of credit, like home equity lines—because providing broader relief would negatively affect low- and moderate-income communities.

Specifically, the Consumer Bureau wrote, “the loss of data in communities at closed-end mortgage loan-volume thresholds higher than 25 would substantially impede the public’s and public officials’ ability to understand access to credit in their communities.”

Despite the harm posed to low- and moderate-income communities around the country, HR 2954 would permanently raise the threshold for new HMDA data for both mortgage loan type data and lines of credit to 500 without a good understanding about the real impact of doing so. At this level, 85 percent, or 5,400 depository institutions, and 48 percent of nonbanks, or 497 institutions, would be exempt. That’s 6,000 financial institutions that would no longer report important lending data. By prohibiting these important new data fields from being reported under HMDA, regulators will not be able to fully determine the extent of redlining, discrimination, and other harmful practices. This will make it harder for fair lending violations to be detected as HMDA data are routinely used by the Department of Justice to identify and remedy discrimination in lending and these new data fields are essential for shedding light on the kinds of discrimination—like age—that now flies under the radar.

It is not surprising that over 170 civil rights, fair housing, consumer, and community organizations across the country have come out strongly against this bill. These groups have stated that “the updated HMDA data will provide critical information about whether similarly situated borrowers and underserved communities are receiving equitable access to mortgage credit, data that we lacked a decade ago when the crisis hit.”

I recognize the need for Congress to consider tailored and sensible regulatory relief to community financial institutions, but this bill is not that relief. Financial institutions are already required to collect this data as part of existing mortgage regulations or as part of the mortgage underwriting process.

I cannot support H.R. 2954 because it undermines effective fair lending enforcement by reducing HMDA data. This bill will contribute to unequal access to affordable credit for people of color, low‐ to moderate-income families, and borrowers in rural areas.

History has repeatedly shown us that when financial institutions are merely trusted to operate in good faith, American consumers are left vulnerable to discriminatory and predatory lending, communities are stripped of wealth, and our economy is weakened.

For these reason, I urge my colleagues to reject this rollback of a key fair lending tool and join me in opposing H.R. 2954.

I reserve the balance of my time.

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