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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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! 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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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.