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MortgagePoint » Your Trusted Source for Mortgage Banking and Servicing News 70 J O U R N A L May 2023 October 1, 2024. Lenders that originate at least 500 loans annually must collect data starting April 1, 2025. Lenders that originate at least 100 loans annually must collect data starting January 1, 2026. » Streamline and improve demographic and financial data collection: Small businesses will be able to self-identify as women-, minority-, or LGBTQI+-owned. Lenders will be able to rely on the finan- cial and other information provided by the small business. Loan officers will not be required to make their own determi- nations of an applicant's race, ethnicity, or any other demographic information. » Allow for the use of new digital tools developed by industry and technolo- gy partners: The rule allows financial institutions to work with third parties, including industry consortia, to develop services and technologies that will aid in collecting and reporting data. While indi- vidual lenders are ultimately responsible for ensuring fair and accurate collection and reporting, the rule permits them to work with third parties, including industry consortia and other partners, to collect and report data in ways that are tailored to their business model. » Give extra time to lenders with strong records of service to meet the needs of the communities they serve: The CFPB intends to issue a supplementary proposal that would, if finalized, provide additional implementation time for small lenders that have demonstrated high levels of success in serving their local communities, as measured by their performance under relevant frameworks like the Community Reinvestment Act and similar state laws. "While we are pleased that loans report- able under the Home Mortgage Disclosure Act will not need to be reported under the Bureau's final rule, it is disappointing that this exclusion is not applied to all investment property lend- ing," Mortgage Bankers Association (MBA) President and CEO Bob Broeksmit, CMB said. "MBA agrees with federal regulatory agen- cies' long-held view that lending to finance income-producing properties is not small business lending. The longer implementation timelines and higher loan reporting thresholds are appreciated, but we are concerned that the final rule imposes burdensome and costly data collection and reporting requirements on some commercial real estate lenders. Commercial real estate markets are already facing head- winds from financial market volatility, eco- nomic uncertainty, and higher interest rates. Preparing for new compliance obligations only adds to these challenges and will likely raise costs for borrowers." According to the CFPB, the nation's 33 million small businesses employ nearly half of all private sector workers in the United States and account for the majority of new job creation. Operators of small and local businesses finance their enterprises through a variety of sources, including loans from banks, credit unions, and nonbank finance companies. Many of these businesses have a relationship with a local financial institution to help grow their business. However, there is currently limited data on small business entrepreneurs' access to credit, and no comprehensive information available about small business lending. For decades, the government has assembled data pursuant to Congressional mandates on residential mortgages. Now, for the first time, data on small business lending will give investors and lenders more insights to identify new opportunities that support economic growth, help policymakers measure the effectiveness of any government programs, and provide a data-driven approach to detect potential discrimination. "Entrepreneurs are the economic engine of our nation and today's final rule is the culmination of more than a decade of advocacy to provide better data on the extent of discrimination encountered by small business owners seeking access to credit," read a joint statement from Congresswoman Maxine Waters of the House Financial Ser- vices Committee, and Congresswoman Nydia Velázquez of the House Small Business Com- mittee. "This critical rule will shine a light on disparities in lending to small business owners and help Congress understand how to ensure that banks and other lenders are meeting the credit needs of all of our nation's small businesses—especially those that are women-owned and minority-owned. This transparency will promote competition and help lenders, especially community financial institutions, identify new opportunities to serve the needs of small businesses." "This small business loan census will give the public key data on this market to ensure that banks and nonbanks are serving small businesses fairly." —Rohit Chopra, Director, CFPB