Due to increasing application volumes, internal technology changes and employee turnover, the HMDA reporting requirements continue to be challenge for many lenders. There is more to consider than just correcting HMDA Edits and creating a HMDA.txt file.

The following are the top questions submitted by attendees of QuestSoft’s annual HMDA Filing webinar. Answers are provided by Loretta Kirkwood, Senior Vice President of Lending Compliance for QuestSoft.

In recent years we’ve seen the rise of websites & applications that can automatically verify employment & income for lenders across the country. These programs are integrated with an employer’s HR records, and allow lenders to obtain an instant snapshot of the employee’s details & earnings. These are great tools, that have helped slash precious time off of originations. However, while the reach of these companies is growing, automated verifications will never be able to capture the entirety of the market. Here’s why:

With the expanded HMDA data requirements, it may seem impossible to consider that there is anything else lenders should be concerned about. However, it is important to address other potential data requirements. Regulatory examinations, HMDA data reviews and fair lending analysis generally expand data captured beyond what is reportable.

Regulators have been quick to issue guidance over the past few weeks due to the COVID-19 pandemic. However, it can be confusing to keep track of what is expected and what has been delayed or suspended with regard to supervisory activities and regulatory reporting. Regulators have continued to emphasize that working with consumers is the most important thing a lender can do, but many are continuing to conduct compliance examinations, albeit in different forms or manners.

Every year, lenders around the country compile, scrub and submit their HMDA data to the CFPB. While HMDA filing is not new; each year seems to bring its own changes, challenges and hopefully, success stories. This year was no different.

For those that are scrubbing their HMDA data, we wanted to share a few data integrity issues clients have identified or that have been the focus of recent regulatory examinations. Of course, we also want to offer some quick tips for addressing these key “red flags”.

On January 24th, the CFPB issued a policy statement to provide clarification on how it intends to apply the “abusiveness” standard in supervision and enforcement matters. Abusiveness is a component of the Dodd-Frank Act’s Unfair, Deceptive, or Abusive Acts or Practices (UDAAP) rule. The CFPB has acknowledged there is still uncertainty as to the scope and meaning of abusiveness, which creates challenges for complying with the law.

In the past few months, the constitutionality of the Consumer Financial Protection Bureau (CFPB) has been hotly debated and has grabbed many industry headlines. While compliance professionals tend to be more realistic about the CFPB, there are always a minority of vocal individuals who cling to the hope that compliance requirements and reporting will cease to exist. The current concern revolves around the inability to remove the standing director unless just cause, described as “inefficiency, neglect of duty, or malfeasance in office,” is present. While some agree that this is a just and fair way of conducting this governmental entity, others feel that it neglects the current checks and balances of our executive branch.

The 2018 HMDA aggregate data was released in early September – much later than originally planned. It is interesting to note that the data has been published in two separate views – snapshot data and dynamic data. The snapshot data is as of August 31, 2019 while the dynamic data is updated every Monday to reflect the most currently submitted 2018 HMDA data. The underlying question is which dataset will examiners use when comparing lender performance to peers?