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.
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:
This is part nine.
What should be keeping a lender awake at night now?
One expert explained lenders should be careful to be looking for errors now, saying if they wait until the end of February, it will already be too late.
“The expanded HMDA dataset will give regulators, advocacy groups and plaintiff’s attorneys unprecedented visibility into how a lender underwrites and prices loans,” LoanScorecard Executive Director Ben Wu said. “So, it’s important for lenders to be prepared before the CFPB sees their data.”
“If lenders wait until February 28 to scrub year-end HMDA data for ‘errors,’ it will be too late,” Wu said. “At that point, lenders have long since made their underwriting and pricing decisions—whether or not they comply with Fair Lending.”
Another expert agreed, saying the new HMDA changes will make it hard for lenders to defend themselves against fair, impartial and unprejudiced lawsuits.
“One of the looming concerns in respect to the HMDA changes are around the Fair Lending Laws,” said Scott Dunn, Wipro Gallagher Solutions head of product management, strategy and compliance.
“The granularity of the newly collected data creates more transparency of data as it now includes additional characteristics that of the protected law, and because of this will inevitably make it more challenging for lenders to defend themselves against ‘fair, impartial and unprejudiced’ law suits,” Dunn told HousingWire.
ComplianceTech, a provider of fair lending and CRA solutions, told HousingWire that while lenders have had plenty of time to adjust for the new changes, it could be overwhelming as the new Filing Instruction Guide is 150 pages with about 60 pages devoted to edit checks.
And one expert reminds lenders that even some loans started in 2017 will be subject to the new guidelines if any action is taken on them in 2018.
“Obviously the January 1, 2018 deadline will be keeping every lender’s HMDA department staff awake at night,” Digital Risk Staff Attorney Meaghan James said. “The biggest HMDA issue that should be on lender’s minds right now is the strategy and effectiveness of transitioning from the 2017 requirements to the 2018 requirements.”
“Applications that are taken in the final weeks of 2017, but on which no action has been taken before 2018, will be required to be reported under the new 2018 requirements,” James said. “Therefore, lenders should be capturing the expanded 2018 data points for these types of loans in anticipation of the possibility that the action taken on the loan will not occur until 2018 and thus be subject to 2018 reporting requirements.”
Check back Friday to read part 10, the final part of this series as we count down until the end of 2017.