Every year, HMDA loan data is made public on all reporting institutions. This data is used by public groups, agencies and businesses to assess mortgage lending and develop better ways of doing business. By analyzing the data, businesses can extrapolate trends and issues across the mortgage industry.

This week, QuestSoft will be releasing the latest Compliance RELIEF update to enable customers to live test their 2018 data against the 215 new validity error codes and 42 new quality checks—three months ahead of the implementation deadline of January 1st. These new error codes have no ties to historical codes, allowing lenders to start with a “clean slate” and adjust to new standards and conditions throughout their operations.

The CFPB recently addressed how it planned handle the privacy concerns of its new HMDA reporting and collection requirements. The number of submitted fields is nearly tripling, and these fields must be stored by both financial institutions and the CFPB. With the recent security breaches at Equifax and the SEC, the privacy and security of this expanded dataset is a major concern.

The CFPB just issued a no-action letter to Upstart Network, an online lending platform, which uses alternative data to make credit and pricing decisions. This means the CFPB will not take legal action against the company for actions that are not technically legal, but are acceptable as long as Upstart provides certain information to the CFPB regarding the loan applications it receives, how it decides which loans to approve and how it will mitigate risk to consumers. The CFPB wants to study how alternative data can be used to better serve the credit needs of underserved populations.

The CFPB has stated that fair lending enforcement is a priority and has issued more than $45 million dollars in remediation since 2016 for violations. Institutions that are able to take advantage of the new HMDA data expansion will not only have smoother examinations, but will also be able to make data-backed business decisions.

Artificial Intelligence (AI) and automation are common buzzwords used these days. With new advancements in technology many people are asking the question “When will humans be replaced by automation and AI?” “The largest banks, including JPMorgan and HSBC, have doubled the number of people they employ to handle compliance and regulation. Compliance now costs the banking industry $270 billion a year and accounts for 10% of operating costs,” according to The Financial Times[CA1] . As the cost of compliance continues to rise, financial institutions are looking for new technology to solve their business needs. With the popularity of electronic mortgages, it is logical to assume that automated compliance software should already be part of a compliance management system; but AI can take it one step further.

There are 3 phases to an examination: 1. Pre-examination Planning: Examiners gather information from the FDIC records and contact the institution to request specific information and documents. 2. Review and Analysis: Examiners evaluate an organization’s compliance management system and its effectiveness. They will analyze any weaknesses and violations. Examiners will also assess risk to consumers based on a bank’s practices. 3. Communicating Findings: Examiners will discuss their findings with management and provide a Report of Examination that documents both the strengths and weaknesses of a bank’s CMS.

Geocoding takes addresses or descriptions of locations and turns them into a specific location on the earth’s surface. Through this process we can gather demographic data about these specific locations. While geocoding is used by many industries for various purposes, the mortgage industry uses geocoding to submit a variety of accurate data to government regulators.

The mortgage industry has been slow to change over the past decade. Besides adapting to new regulations, financial institutions have not had to change the fundamental way in which they operate for many years. However, in 2015 Rocket Mortgage was launched. Quicken Loans, who developed Rocket Mortgage, touts it as “The first completely online mortgage experience…” It allows prospective home buyers to complete mortgage applications online in 5 minutes or less

In 2008, the SAFE Act was created to require all state mortgage licensees to submit a report of loan activity and financial condition to the NMLS. Thus, the beloved Mortgage Call Report was created. Companies that hold a state license or state registration through NMLS (Nationwide Mortgage Licensing System) are required to complete a Mortgage Call Report (MCR). The NMLS provides a FAQ page to answer many questions about MCR’s.