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.
What new HMDA requirements might catch us by surprise?
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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What is this I hear about CFPB HMDA rules automating Fair Lending analysis? Will this put my company at greater risk?
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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Why am I receiving a Q617 Quality Edit on my loans?
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 NULI for partially exempt institutions?
Yes, after setting your “Preferences” for “Partial Exempt Reporting”, Compliance RELIEF will replace the ULI with a NULI. The NULI will use the Application/Loan Number and an optional year prefix.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
Will there be webinars?
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.
Sign up to receive notifications of upcoming webinars from QuestSoft.RETURN TO TOP
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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How does QuestSoft handle partial exemptions from S.2155, the Dodd-Frank Regulatory Relief bill?
The CFPB procedural rule to implement and clarify changes made to HMDA by the Regulatory Relief Bill S.2155 has been fully implemented into HMDA RELIEF. If you missed our recent S.2155 HMDA implementation webinar, you can access the recording here.
The rules are as follows:
- 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.
- All HMDA filers must still collect and submit HMDA data. S.2155 has provisions where smaller banks and credit unions 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.
The recent CFPB Executive Summary provides some much-needed guidance and clarification:
- The LAR format will not be changed.
- Institutions subject to the “partial exemption” of data will enter an exemption code.
- The CFPB released its updated Filing Instructions Guide (FIG), which defines the exempt fields and applicable codes.
- All HMDA reporters will use the same CFPB HMDA platform which QuestSoft integrates with.
So, what does this mean?
Institutions that are exempt have the option to designate themselves as such within the HMDA tab of the Preferences menu of Compliance RELIEF.
Here you can mark your institution as exempt. Additionally, you will have several data points available to mark that your institution chooses to report, regardless of your exemption status (sort by LAR order, or Alphabetically).
After the Exempt Institution option is checked, when viewing a loan record you will now have the following new options at the top right of the screen:
The system will default to “Data View” which allows you to see all data fields imported.
However, if you click the “Exempt View” radio button, you will see all exempt fields change as shown below:
You will also be able to view your exempt preferences by clicking the “View Exempt Pref.” button shown here:
In this view-only window, you can review your exempt preferences:
We have also created an internal field reconciliation and identified the value of all exempt fields.
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Are we able to test how HMDA RELIEF integrates with the CFPB Submission Platform before January 1st?
Yes! We encourage customers to test their HMDA data with the beta version of the CFPB Platform before year-end. The beta release provides financial institutions an opportunity to become familiar with the HMDA Platform and, in particular, determine whether their sample LAR data in HMDA RELIEF complies with the reporting requirements outlined in the Filing Instructions Guide for HMDA data collected in the previous year. It’s important to test the system when the CFPB makes changes to their filing requirements. The beta testing period typically starts in early December and will close on January 1st. After January 1st, you will be able to upload data into the official version of the Platform.RETURN TO TOP
Will we be penalized for submitting inaccurate HMDA data in 2018?
The 110 fields that now make up the HMDA data are new and therefore prone to errors. Although there is an amnesty letter from the CFPB, there are also the Interagency Key Field announcements (links below), which identify 37 fields (listed below) that “examiners will typically use to test and validate the accuracy and reliability of home mortgage loan data collected beginning in 2018.” We have created a spreadsheet of HMDA - Key Fields for your reference. Our understanding from speaking with regulators is that during 2018, the focus will be on the accuracy of these 37 key fields.
Interagency Key Field Announcements:
- https://www.federalreserve.gov/supervisionreg/caletters/caltr1809.htm (updated for partial exemption)
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How do we report complex mobile home scenarios?
In the following situation, here is what we advise:
- Purpose = purchase a mobile home (non-owner occupied)
- Collateral = subordinate lien personal residence (owner occupied)
- Business or commercial purpose = primarily for a business or commercial purpose
You should understand that the property securing the loan would be reported for property location and property address. Should other fields be reported based on the property being purchased or the property securing the loan – see chart below:
|Field||Purchase of Mobile Home||Property Securing Loan|
|Construction Method||Manufactured Home||Site Built|
|Occupancy||Non-Owner Occupied||Owner Occupied|
|Lien Status||Subordinate Lien|
|Manufactured Home Secured Property Type||Manufactured Home and Not Land||N/A|
|Manufactured Home Land Property Interest||Direct Ownership||N/A|
The HMDA Guide and HMDA Charts reference either the “the property securing the covered loan” or the “Identified Property” for each data point. We know this causes some confusion. The answer is that they are both the same!
“For purposes of this guide, the property for which the Financial Institution has provided the address and location for these data points is called the Identified Property. “
So, the following data points/fields are reported based on the “Property Securing the Covered Loan” or the “Identified Property”:
- Loan Purpose
- Construction Method
- Occupancy Type
- Property Address – Street Address, City, State, Zip Code
- Property Location – County, Census Tract
- Lien Status
- Property Value
- Manufactured Home Information – Secured Property Type, Land Property Interest
- Total Units
- Multi-Family Affordable Units
- Combined Loan-to-Value