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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The recent passage of Senate Bill S.2155 commonly referred to as Dodd-Frank Regulatory Relief, raises many questions about the future of HMDA. 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:
QuestSoft will be making any and all necessary changes to our software as soon as the CFPB releases definitive changes to their Filing Instructions Guide. Until that time any formal changes to the HMDA filing process are merely speculation. 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.
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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.
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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.
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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.
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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.
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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.
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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:
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- 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.
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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