The Consumer Financial Protection Bureau (CFPB) and the Federal Housing Finance Agency (FHFA) have teamed up to begin working on the new National Mortgage Database—the industry’s first ever comprehensive repository of detailed mortgage loan information. The two agencies will use this new database to help support policymaking, research efforts, and to better understand emerging trends in the mortgage and housing markets.
The FHFA and the CFPB have signed an agreement with one-another that outlines the terms of the database’s development, maintenance, and funding. The agencies will pay Experian Information Solutions $11.1 million to build the new database, and the software company will do this by collecting and compiling consumer credit record files and merging them with other data sources. An early version of the new National Mortgage Database is expected to be completed in 2013.
Both agencies have noted that although the mortgage market is the single largest market for consumer finance, there is a clear lack of comprehensive data available on a complete and national scale. Multiple federal and state agencies, as well as private vendors, have collected and maintained information in the past, but there has never been a single database that contains all relevant information in one place. The creation of this new National Mortgage Database will be the first step in a broader strategy to help streamline data for research and policy analysis, as well as to ensure that accurate and comprehensive information is more easily accessible for monitoring the market.
The two federal regulators have also noted that they’re building the database to: track the relative health of mortgage markets and outcomes for consumers; provide insights on consumer decision-making; monitor the volume and performance of mortgage products and identify their potential risks; view both first and second-lien mortgages for a given borrower; and understand the impact of consumers’ debt burdens.
The new database will include information that spans the entire life of a mortgage loan—from origination through servicing—and will also include a variety of borrower characteristics. It will specifically include loan-level data about the mortgage, such as: the borrower’s financial and credit profile; the mortgage product and terms; the property purchased or refinanced; and the ongoing payment history of the loan. However, both the CFPB and the FHFA have stressed that the new database will not contain personally identifiable information.
Data will be continuously updated within the new National Mortgage Database on a monthly basis, and track as far back as 1998. The database will also fulfill an FHFA requirement under the Housing and Economic Recovery Act of 2008 (HERA) to conduct a monthly mortgage market survey, which has clearly been ignored to this point.
It’s still not clear whether the database will be accessible outside of the CFPB and the FHFA, but never-the-less the effort to create this National Mortgage Database is a positive step forward for the industry. For too long both regulators and industry professionals have relied on mortgage risk information that fails to keep pace with the complexity and speed of product development and structured finance—causing confusion and aggravation.