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Your top 10 HMDA questions answered: Part 1

What are the latest changes coming to HMDA?

Time is up. Well, almost up. Most of the 2015 updates to the Home Mortgage Disclosure Act rule take effect in January 2018.

That’s just weeks away.

But despite the looming deadline, many questions about HMDA remain unanswered.

In fact, credit unions are even requesting that the deadline be extended as lenders continue to prepare for the changes. The National Association of Federally-Insured Credit Unions CEO Dan Berger sent a letter to Consumer Financial Protection Bureau Interim Director Mick Mulvaney requesting that the bureau delay the effective date of the HMDA final rule.

But it doesn’t look like he will get that extension, with the implementation date now less than a month out.  

Back in November, HousingWire hosted a webinar on HMDA, where panelists stressed the importance of preparing for the upcoming HMDA reporting requirements.

But due to an overwhelming demand, we are now presenting HousingWire readers with a 10-part series, each answering one of the most popular questions when it comes to HMDA.

Once the filing period officially opens next year, reporting institutions will have until March 1, 2018 to submit data for calendar year 2017.

The countdown has officially begun. Throughout the rest of 2017, check back as we publish our HMDA series on what to expect, how to prepare, and any other HMDA-related questions you might have.

This is part one.

What are the latest changes coming to HMDA?

Before the March 1st each year, reporting entities are required to submit HMDA data to the CFPB on the Loan Application Register, said Scott Dunn, Wipro Gallagher Solutions head of product management and strategy compliance. But starting in 2018, reporting data for 2017, the data will no longer be submitted to the FFIEC, but now to the CFPB.

Dunn told HousingWire that the data collection will be expanded by 42 new or modified data fields. Here are some of the new or modified fields HMDA filers will be required to disclose:

  • Applicant or borrower age
  • Credit score
  • Automated underwriting system information
  • Unique loan identifier
  • Property value
  • Application channel
  • Points and fees
  • Borrower-paid origination charges
  • Discount points
  • Lender credits
  • Loan term
  • Prepayment penalty
  • Non-amortizing loan features
  • Interest rate
  • Loan originator identifier
  • Additional demographic information fields

Another expert counted 25 new data points and 14 modified points, which is slightly less than Dunn’s count of 42.

“The new HMDA rule requires 48 data points be collected, recorded and reported: 25 are new data points and 14 are modified from the previous rule,” LoanScorecard Executive Director Ben Wu said. “A few of the new HMDA data fields point out underwriting and pricing disparity and allow regulators to drill down into denials or higher costs toward protected classes.”

“However, there are also new HMDA fields that let lenders justify any disparity to prove that underwriting decisions and prices given were objective and consistent,” Wu told HousingWire.

Other changes include the submission method, the submission file format and the number of institutions required to report on mortgage related transactions.

And why make all these changes? Dunn explains.

“The changes were a direct response to the Dodd-Frank Act mandate that requires the CFPB to expand HMDA reporting capabilities inclusive of those stated above,” he told HousingWire.  “Additional data collection that was not mandated by the Dodd-Frank Act can be used to monitor and investigate areas of the mortgage market and credit access to consumers.”

Wu explained that, under the old HMDA rule, regulators were unable to determine if a lender was violating fair lending issues. Now they will be better equipped.

“The old HMDA rule lacked the breadth of data to pinpoint potential violations to The Fair Housing Act and Equal Credit Opportunity Act,” he said. “Regulators had to ask for additional data from individual institutions that they suspected had Fair Lending issues.”

Be on the lookout for part 2 coming this Wednesday.

Consider yourself a HMDA expert and want in on the conversation? Email me: [email protected].

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