42 new or modified data fields
The CFPB has added or modified 42 data points to be collected, recorded and reported, bringing the total number of HMDA fields in 2018 and beyond to 110! This includes the addition of Reverse Mortgages and Open-End Lines of Credit. In addition, the new HMDA rules will not be purpose driven for consumer loans. The new rules require reporting of all dwelling secured consumer transactions regardless of purpose.
CLICK HERE to see all the fields.
New Government Monitoring Information (GMI) Demographic fields
On September 28, 2016 the CFPB issued a notice detailing its approval of the use of the new 2016 Uniform Residential Loan Application (URLA) for the expanded collection of information relating to ethnicity and race under the Home Mortgage Disclosure Act (HMDA).
The bureau said financial institutions may use the new URLA between Jan. 1, 2017, and Dec. 31, 2017, to collect certain disaggregated race and ethnicity data. The bureau specified that the data collection is not a violation of Regulations B’s or C’s provisions regarding data collection.
The CFPB also said the 2016 URLA is approved under Regulation B provisions related to requests for information regarding spouses and marital status.
CLICK HERE to view the issued final rule.
Will QuestSoft’s Compliance RELIEF allow for importing of the new GMI Demographic fields in 2017?
At this time, since the new demographic fields will not be part of the 2017 CFPB submission; QuestSoft has opted not to include these fields in our 2017 HMDA module. We believe this will simplify an already complex transition.
All 2018 imports will allow for the new demographic fields. And our 2018 CFPB Testing Module is available now for testing imports with Compliance RELIEF.
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New loan types, mandatory GMI and denial reasons, and more with new HMDA rules…
The big change to HMDA will be evident to lenders and vendors who specialize in HELOCS and new loan types not normally associated with mortgage software. Since HELOCS have been traditionally optional for HMDA reporting, most consumer loan software used in banks and credit unions does not include fields to collect Government Monitoring Information (GMI). This will need to change.
CFPB HMDA specifications add both GMI and denial reasons as mandatory fields starting in 2018. Therefore, if you are not currently reporting HELOCS, it would be a good idea to touch base with your vendor to make sure they will be prepared for this major change. You might even consider collecting the information by January 1, 2017 so you can run internal tests before the CFPB HMDA collection becomes mandatory in 2018.
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Fair Lending becomes more automated raising the risk of penalties and corrective actions
Since the fallout from 2008, HMDA has been morphing into Fair Lending. If you have not yet implemented a fair lending analysis program, now is the time.
You may find some regulators jumping the gun on the GMI/Denial Reason fields by January 1, 2017 for fair lending purposes. At present, race, sex and ethnicity information is a calculated “guess” for loan types outside of HMDA. With the expansion to commercial/consumer systems, there will now be a formalized process to collect this information. We expect these trends to continue, and lenders need to be prepared.
Fair Lending under the new CFPB HMDA will become more automated and more judgmental. The new rules will see 6,000+ lenders sending fair lending information to the CFPB. It will be very easy for the CFPB and other regulators to apply massive fair lending analysis to all of the data and release the top 10, 100 or 1,000 egregious violators along with the appropriate fee and corrective action for your lending sins. Therefore, we recommend you investigate and consider our fair lending offerings for implementation sometime in 2016 if you haven’t already.
LendingPatterns™ will give you a perspective based on almost 10 years of historic HMDA information and provide a detailed fair lending footprint of you and your peers. This web-based software is a perfect complement to small and mid-tier lender’s fair lending budgets and will ensure that you know how fair you are actually being in your lending operations, before the examiners arrive. The Fair Lending Magic™ product addresses matched pair and regression analysis which is probably something to consider if your company’s profile is higher in the industry.
Contact us today for more information.
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The Q617 edit has been generating a lot questions as there is still quite a bit of industry confusion surrounding the logic behind it. Most frequently it is seen in FHA loans. Based on feedback from the CFPB and various LOS partners, here is what we know:
- FHA standards are established for qualification purposes – CLTV is calculated using the “base loan amount” for LTV/CLTV limits.
- HMDA requires the CLTV to be calculated using the “total amount securing the debt”.
- The Q617 Quality Edit is intended to identify a potential error. If the error is systemic in nature, the reporting entity must make the appropriate correction prior to submission.
- If your LOS allows you to establish business rules for populating specific data fields on your HMDA screens, we encourage you to consider creating such rules to manage CLTV.
In the past there has been some ambiguity regarding how the CFPB intends to calculate the Q617 ‘comparison LTV’, specifically around decimal accuracy. The CFPB has recently confirmed with QuestSoft that they will calculate the LTV to the same number of decimal places as the CLTV reported in the LAR file. For example, if the CLTV for a given loan is reported as 95, the CFPB will calculate the LTV as a whole number. Alternatively, if the CLTV is reported as 95.123, the CFPB will calculate the LTV to three decimal places. This logic will be incorporated into the Q617 calculation and included in our next quarterly release.
We continue to monitor this topic closely and expect to continue making minor adjustments to the logic around Q617 throughout the year as we learn more from the CFPB.
Will Compliance RELIEF generate a Universal Loan Identifier (ULI) for us if our LOS doesn’t?
Even though your LOS will mostly be responsible for ULI generation, QuestSoft has added a ULI generator to our CFPB Testing Module in Compliance RELIEF. This allows users to create an individual ULI with check digit from an existing Legal Entity Identifier (LEI) and Loan/Application Number. We are currently evaluating batch generation of the ULI at import.
Will Compliance RELIEF verify the two-digit check digit required for the Universal Loan Identifier (ULI)?
Yes, we will offer the ability to verify the check digit on every ULI.RETURN TO TOP
Will Compliance RELIEF generate a Legal Entity Identifier (LEI) for us?
No. If your company does not already have an LEI you will need to obtain one as soon as possible from the GMEI Utility. The website is endorsed by the Global LEI Foundation and also has a search function. There are some frequently asked questions on their website and here are a few highlights derived from those FAQs:
- Who can register the company: You must currently be an employee of the company you are registering, and be authorized by the company to register for an LEI. Alternatively, financial institutions may use a third party through an assisted registration process. The person registering the firm will need a user account, which can be created here.
- What information is needed to register: The basic information listed in the ISO 17422 such as the company’s legal name, registered address, headquarters address, legal form, etc.
- How much does the registration cost: GMEI Utility charges $200 for a registration request, with a $19 surcharge. To maintain the LEI moving forward, the fee is $100 with a $19 surcharge. For more information, here are the FAQs specific to payment.
- How long does this process take: Once payment is processed, the GMEI will validate the company using public sources. Once this process is complete, it takes about three business days for an LEI to be issued in the GMEI database. Overall, GMEI Utility’s FAQs say most requests are “cleared” within three to five business days.
Does QuestSoft’s check digit calculator match the CFPB's Check Digit Tool?
Yes. Check Digit calculations are universal. In addition, QuestSoft plans to add a batch ULI generator in a future release.RETURN TO TOP
QuestSoft supports you with educational HMDA webinars
QuestSoft has hosted a number of webinars to provide information on what is changing, what you need to look out for, and what your organization needs to do. CLICK HERE to view our recent webinar series.
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QuestSoft software updates in progress already
Absolutely. QuestSoft is already in the process of updating our software to CFPB HMDA standards and will provide upgrades as needed. Our new Compliance RELIEF platform - which features HMDA, CRA, Geocoding, Fair Lending and more - will have everything you need to adhere to the new HMDA rules and take the complexity out of compliance.
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QuestSoft products will comply with every element of new CFPB HMDA
QuestSoft products are being modified and updated to comply with every element of the new CFPB HMDA changes. We have been on top of these changes since before they were even announced and have been adding new fields to our software for the past several years. We added web submission last year as well. Rest assured, QuestSoft will be ready and able to handle everything in the new regulations before they will be required. We’ve been doing HMDA for 21 years. It’s what we do. See our Today's New Compliance Challenges & Solutions webinar series for more information.
Do we need to sign up for access to the new CFPB platform for HMDA submission?
Yes! All customers will need to sign up for access to the CFPB Platform. QuestSoft, is your conduit to the CFPB. We have assembled all submission related information on our Submission Central website. It answers all of your burning questions about the new submission process. Rest assured, QuestSoft will be here to assist you at every step along the way.RETURN TO TOP
Does QuestSoft’s Rate Spread calculation match the results of the new CFPB Rate Spread Calculator?
Yes, the Rate Spread calculation method has not changed. The CFPB simply added the FFIEC Rate Calculator engine to their website* and changed the file formats for the APOR tables from CSV to pipe delimited. QuestSoft has always calculated the Rate Spread per the regulation. Please note that if the calculated Rate Spread in Compliance RELIEF differs from the spread calculated by your LOS, you have the option to change the Decimal Accuracy and Rounding Method under HMDA Preferences.
* Please note, QuestSoft has discovered a discrepancy in the CFPB Calculator for 2017 rate set dates and DOES NOT RECOMMEND using the new calculator for dates in 2017.RETURN TO TOP
Will QuestSoft be offering the CFPB geocoding solution that provides Safe Harbor?
QuestSoft has always maintained that accurate geocoding is the hallmark of compliant HMDA (and CRA) submissions. Our Instant Geocoder software boasts the highest accuracy rates in our industry.
As of November, 2017 the CFPB geocoding platform has yet to be released, but rumor has it that it will use less accurate publically available data, thus the offer of "Safe Harbor".
There are several sections in the CFPB Revisions of the final revised rules released on August 28, 2017 that discuss geocoding and Safe Harbor. Pages 117-119 indicate the following:
“The Bureau believes that an accurate census tract should be reported in as many cases as possible. At the same time, however, a financial institution should not face compliance risk for inaccuracies resulting from information provided by the geocoding tool on the Bureau’s website.”
“The Bureau did not intend, as commenters appear to have inferred, that only census tract errors generated by the geocoding tool on the Bureau’s website are bona fide errors. Current § 1003.6 states that an error in compiling or recording data for a covered loan or application is not a violation if the error was unintentional and occurred despite the maintenance of procedures reasonably adapted to avoid such an error, and neither the 2015 HMDA Final Rule nor this final rule changes that provision. New comment 6(b)–2 merely clarifies that the geocoding tool on the Bureau’s website serves as one example of a procedure reasonably adapted to avoid incorrect entries for census tract numbers. Obtaining census tract numbers using other geocoding tools may constitute a procedure reasonably adapted to avoid geocoding errors, depending on the facts and circumstances. If a financial institution chooses to use an alternative geocoding tool that constitutes a procedure reasonably adapted to avoid census tract errors, the financial institution will receive the same Safe Harbor protections."
QuestSoft’s plan is to cross check the CFPB geocoder against geocoding data that costs money and WILL BE more accurate. We understand the default of examiners will be the CFPB Geocoder, especially if they are not well versed in geocoding. However, while the Bureau has yet to release its geocoder, their statements indicate the use of free sources that traditionally have not measured up to acceptable accuracy of current examinations. We feel the likelihood of errors may double or triple with these databases despite any safe harbor. Any institution selling loans to gain CRA credit or additional basis points MAY have a problem if the property is proven to not lie in an LMI tract but is identified as such using the CFPB geocoder. Therefore, QuestSoft feels the only way for an institution to protect itself and for the industry to maintain trust and integrity in the loans it is making, is to always judge a geocode on its accuracy.
We are also contemplating several solutions, which are all dependent on the CFPB releasing an open source geocoder. If they do as promised, we will offer a dual solution that allows our customers to make the choice that’s right for them. We would love to hear comments and/or suggestions.RETURN TO TOP
In previous years, we were able to print their HMDA Loan Application Register (LAR). In 2018, when we go to the Reports tab in HMDA RELIEF we can’t print the LAR report any longer. Why?
Beginning in 2018, the CFPB has advised the following:
“Given the new format with 110 fields and the new tools available, the printed LAR form is no longer in use.”
We know that many of our customers miss the old LAR form. Unfortunately that format is no longer feasible (or printable) with 110 HMDA fields. To accommodate our customers, Compliance RELIEF now allows the export of your HMDA data to an Excel spreadsheet from the Reports=>LAR tab. The spreadsheet contains all of the HMDA reportable fields as they pertain to the Filing Instructions Guide Table 2. To simplify the form, we have combined the GMI fields. Please note that this report is not to be used for submission or re-importing into the software.
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The recent passage of Senate Bill S.2155 commonly referred to as Dodd-Frank Regulatory Relief, raises many questions about the future of HMDA. Only 21 provisions of S.2155 were effective immediately and unfortunately, Sec 104 / HMDA was not one of
them. Here’s how we think it will (and will not) affect our customers:
1. If you are NOT a bank or credit union with under 500 HMDA originations, nothing with HMDA is going to change.
S.2155 was designed to provide a reduced HMDA reporting burden only to low volume banks and credit unions. If you are a non-depository of any size, this bill will not provide any promised relief.
2. All HMDA filers must still collect and submit HMDA data.
S.2155 has provisions where smaller banks and credit unions (it is unclear if this includes subsidiaries) will not need to submit “expanded” data under HMDA in the future. All data points you have submitted since Year 2004 are still required. Though the new data elements may not need to be submitted any longer, you may still be held accountable for them. Additional questions and concerns regarding the expanded government monitoring information, still very much remain.
3. The CFPB (BCFP) will most likely require preliminary rulemaking, public comment, and final rulemaking before there is any change in data collection or submission.
QuestSoft is watching every change at the Bureau and will conform to the standards just as you have come to expect. At this moment and possibly through the end of the year, you are still required to collect all HMDA data fields even if you are a bank or credit union with lower volumes.
4. The time savings and impact may not be as significant as your board and management team expects
QuestSoft recently released an extensive study on S.2155 in which we contacted lenders, regulators and industry attorneys. Regulators indicated that since the industry has now spent tens of millions of dollars making it easy to produce the new HMDA file, they will simply ask for the information for multiple years before your exam. The attorneys agreed. Also, it is expected that consumer groups may sue for access knowing the data can now be easily provided. Smaller banks and credit unions that relax internal controls and do not continue to ensure the accuracy of this information may find it worse than if they still had the submission requirement. Therefore, our recommendation is to continue to address data accuracy issues with the expanded data expecting that it will be requested.
Since Compliance RELIEF already streamlines the scrubbing and submission process, the difference will be negligible.
5. Your loan origination system (LOS) won’t spend money reverting back to the pre-2018 HMDA data.
We know of no LOS that plans to revisit HMDA based on the passage of this bill. That’s why companies like ours exist, we specialize in a process that no one wants to manage. Loan Origination Systems have moved on to Digital Mortgages and reducing the time required to fund loans. The HMDA train has left the station! One thing you might see vendors change is the addition of a checkbox to indicate the type of submitter you are. However, they are not going to remove data elements as they will still be required of larger depositories and all non-depositories.
If you are a bank or credit union that will benefit from the new law, we recommend you download and read our study for complete analysis of your situation. It can be found at:
In summary, QuestSoft is in weekly conversations with the CFPB and the prudential regulators (OCC, FRB, FDIC and NCUA) to ensure we understand the timeline and process for implementing the changes. During the recent ABA Regulatory Compliance Conference, Mark Pearce, Director, Division of Depositor and Consumer Protection for the FDIC was asked about this issue and told the audience of 2,000 bank attendees to, “Continue to apply the law that currently exists.” The CFPB, OCC and FRB representatives all agreed. The ABA recently published a timeline of effective dates and stated that, “The exemption of some community banks and credit unions from the expanded HMDA reporting will require some rewriting of the HMDA reporting expansion regulations to make sure that they harmonize with the statutory changes. (Sec. 104).
Now it’s a waiting game to see how the CFPB plans to implement the bill. The formal process to amend affected regulations to reflect the statutory changes of the Economic Growth, Regulatory Reform, and Consumer Protection Act will take some time. It will involve a comment period and an implementation timeline. Until that happens, Compliance RELIEF will continue to function with the current 2018 rules. We will not change our software without specific instructions from the Bureau and prudential regulators. Banks and Credit Unions should ensure close coordination with their primary regulator during this period. Please follow us on social media for the latest news. We remain committed to ensuring your success through our accurate and easy to use software products. Thank you.
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