Your top 10 HMDA questions answered: Part 8

Where should lenders currently be in the process of preparing for HMDA?

The Home Mortgage Disclosure Act deadline looms closer, but many questions still remain unanswered.

To combat this, HousingWire set to work to bring readers answers to the most asked questions as we countdown to the end of the year.

Most of the 2015 updates to HMDA take effect in January 2018.

However, lenders also have a bit more breathing room now, as regulators announced they will not be assessing any penalties for 2018 HMDA data filed in 2019.

Before reading today’s question, make sure you’re all caught up in the series by the previous parts of this series:

Part one 

Part two 

Part three 

Part four

Part five

Part six

Part seven

This is part eight.

Where should lenders currently be in the process of preparing for HMDA?

In short, experts explain that with the HMDA deadline nearly here, lenders should be ready.

“Lenders should have all of their LOS and downstream system implementation and testing completed,” said Scott Dunn, Wipro Gallagher Solutions head of product management, strategy and compliance.

“As well, all production systems should now be live with HMDA programming,” Dunn told HousingWire. “As most entities have a year-end code freeze and the deadline is looming, all systems and training should be complete.”

As 2017 draws to a close, Beji Varghese, Navigant Capital Advisors managing director, explained lenders should be running their final checks to quality control, and by 2018, they should have completed all system enhancements required for the new HMDA rule.

Here is what Varghese told HousingWire lenders should be doing in 2017 and into next year:

2017: Lenders should be in the process of quality control checking their Loan Application Registry for this year’s filing.  Special attention should be given to “Action Taken Date” and “Action Taken Reason” especially around web applications where the lenders have lost contact with the borrower and the applications are stale or where the borrower has withdrawn and the lender did not correctly document that action. 

2018: Lenders should have completed all system enhancements required to support HMDA 2018. User acceptance testing should be completed for the new required data elements. Additionally, they need to update policies, procedures, process maps and training documents. Partner with industry experts to provide detailed training to staff on unique scenarios that could arise due to the new requirements. Testing process should be in place to validate live data if possible.

And one expert agreed lenders should be done, or almost done, updating their systems for the 2018 changes.

“With the January 1, 2018 effective date less than two weeks away, lenders should be done, or almost done, with all software calibrations and staff trainings,” Digital Risk Staff Attorney Meaghan James said. “At this point, lenders should have already consulted with their legal counsel and compliance departments, should have reported changed to upper-management and executives, should have all updated processes and procedures in place, and should currently be testing systems and staff to ensure all new data capture and reporting is working as expected.”

“Lenders should also be considering and implementing the use of outside vendors to conduct quality control testing on their HMDA data capture and reporting; this extra level of QC is important when implementing such a widespread change,” James said.

Check back Thursday to read part nine of this series as we count down until the end of 2017.

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