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Man reading HMDA rules and throwing paper on floor

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 new cfpb hmda platform faq



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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.

In October 2016, QuestSoft published final CFPB HMDA specifications to LOS partners and authorized customers. Customers can also obtain specifications via our website (via a signed Non Disclosure Agreement [NDA]). Download NDA [PDF]



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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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Your step-by-step roadmap to HMDA reporting success

First of all, don’t panic! QuestSoft will have you covered every step of the way. We’ve been in the HMDA business for 20+ years and we anticipated many of these changes immediately after the mortgage crisis of 2008. In fact, many of the “new” fields have been optional in HMDA RELIEF for years!

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new_icon  CLICK HERE to check out QuestSoft's CFPB HMDA 2018 Roadmap.

The next two years will see a rise in cottage industries who will claim to understand these rules and gladly take payment to help you comprehend them. We suggest however, taking a step back to let the regulation evolve into a natural part of your company’s general best practices. The intent of the Home Mortgage Disclosure Act has always been noble and that has not changed. In the next year, compliance officers should become familiar with these rules and develop plans for the accurate entry of the new data points. Front line training should begin in 2017.

With the CFPB's release of the technical specifications and enumerations for the new HMDA data, your Loan Origination System (LOS) vendors will now be able to add the new fields to their systems, but this will take time. QuestSoft is in contact with the CFPB and all of our LOS partners and we will keep our customers informed via this HMDA Resource page and our social media outlets:

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Luckily, due to the new Truth in Lending RESPA Integrated Disclosures (TRID) as well as other new rules, much of the base information being requested in the new HMDA is already part of your LOS. In addition, export files will use MISMO 3.3 or higher. Most LOS vendors will be using that interface standard by the end of the Q1 2016. This should lessen the burden substantially, leaving companies like QuestSoft -- who specialize in HMDA and automated compliance -- to help you prepare for 2018.

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HMDA Institutional Coverage Documents




         2017 hmda institutional coverage rules                        2018

CLICK FOR 2017 COVERAGE RULES CLICK FOR 2018 COVERAGE RULES



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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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Staff education on the new HMDA should begin now

You and your staff can get familiarized with the new HMDA reporting requirements by visiting the CFPB site at http://www.consumerfinance.gov/regulatory-implementation/hmda/

Tell your loan officers and staff that your company will be increasing data collection by twice as many fields, but that this will be phased in over the next two years. Lenders should prepare for more scrutiny on the new fields that will become part of HMDA requirements in 2018. Many of these fields are likely already in your mortgage software in some form today.

Addresses will need to be accurate at the time of application rather than just putting in placeholders to be corrected later. If this is not how you do business today, start training loan officers now! If your loan is denied or withdrawn without accurate information at the time of decision, you will need more than just census tract information to appease regulators. Actual addresses will be required in the new HMDA, and they need to be accurate.

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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.

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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.

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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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CFPB safe harbor geocoding

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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new cfpb HMDA platform

Do we need to sign up for access to the new CFPB platform for HMDA submission?

Yes! The CFPB has released a beta version of their submission platform. All customers will need to sign up for access to this platform. Currently the CFPB is not allowing vendors to access the platform, so initially at least, we will create the submission file for you to upload to the CFPB platform. QuestSoft, along with other industry vendors is working with the CFPB to simplify this process. Some of our customers are creating generic logins to the platform and sharing those logins with us, so that we will be able to help them with their submission questions come January/February. Rest assured, we will be here to assist you at every step along the way.

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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:

  • 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.
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