GMI Update – Latest Information
On August 24, the CFPB issued several clarifications to the HMDA regulation that will take effect in 2018. One of the major areas clarified is in regards to the GMI and certain situations that can occur.
One area that has been specifically addressed is when an applicant selects an ethnicity or race subcategory, but not the main aggregate category. When reporting this on your HMDA LAR, only the selected subcategories should be entered. The CFPB has clarified that an institution should not report an aggregate category that the applicant did not select.
The other situation addressed is when the borrower selects the option of “Other” when identifying their ethnicity or race. The CFPB states that the applicant may complete the “Other” subcategory even though they did not specifically select the subcategory of “Other”. If this occurs, the institution may, but is not required to, select the Other category. The institution would then report this accordingly.
There is also a clarification as to how the Other” race or ethnicity subcategory (when selected) should be reported. The 2018 HMDA regulation allows the institution to report up to five selections for each section of the GMI. When an applicant selects “Other” and also provides a specific ethnicity or race, it is only counted as one selection on your HMDA LAR.
Probably some of the biggest changes that will come with the 2018 HMDA regulation has to do with the collection of what is commonly referred to as Government Monitoring Information (GMI). Starting in 2018, an institution must now report the borrower’s age along with their ethnicity, race and sex. While the majority of what must be reported is nothing new to institutions, the ethnicity and race data points have been altered so as to give the borrower the option of being more detailed. This information will now be more expansive so as to provide financial institutions and those who monitor their activities, a better idea of who their consumers are. As it was under the old regulation, the borrower can decide whether or not they wish to provide their ethnicity, race or sex.
When it comes to reporting ethnicity, the borrower first has two options. They can either indicate that they are Not Hispanic or Latino or that they are Hispanic or Latino. If the borrower indicates that they are Hispanic or Latino, then the borrower has the option to select up to four subcategories. These are: Mexican, Puerto Rican, Cuban, and Other. If Other is selected, the borrower can provide the specific ethnicity that was not listed as a subcategory. The financial institution should then report both the selection of Other and the additional information that the borrower has provided.
The borrower’s race is another data point that will be expanded in 2018. Along with the usual aggregate categories that financial institutions have been collecting, there are now subcategories that correspond with those choices. The options that the borrower has to identify their race are: American Indian or Alaska Native; Asian (Asian Indian, Chinese, Filipino, Japanese, Korean, Vietnamese, or Other Asian); Black or African American; Native Hawaiian or Other Pacific Islander (Native Hawaiian, Guamanian or Chamorro, Samoan, or Other Pacific Islander); White; Information not provided by applicant in mail, internet or telephone application; and Not Applicable.
Each race category that is selected must be reported by the financial institution as the borrower is able to select more than one. As it was when reporting the borrowers’ ethnicity, if Other has been selected and additional information is given, both must be reported. The regulation does limit how many selected categories may be reported. The 2018 HMDA regulation states that only five aggregate race categories and race subcategories combined can be reported. If the borrower selects all five of the race categories and also some of the subcategories, then the financial institution would report just the five aggregate categories. Just remember, there is no limit as to how many boxes that a borrower can report.
The last data point that must be collected for the GMI is the borrower’s sex. Here, the borrower has the option to indicate whether they are male or female. If the borrower selects both, then the financial institution should report it as such.
As it was under the old HMDA rule, if during a face-to-face interview a borrower chooses not to provide any of the GMI, the loan officer should indicate this and then collect the information themselves based on visual observation. If this occurs, the loan officer should not choose any of the subcategories when reporting the borrowers’ ethnicity or race.
The borrowers age is a new data point that must be collected in 2018. The borrower/co-borrowers age should be reported as it was on the day the institution received the application. If the loan in question was purchased from another institution, then there is the option to report the borrower’s age as being Not Applicable. The only other situation in which Not Applicable may be reported for the age is when the borrower is not a natural person (i.e. a trust, corporation, or a partnership). The one caveat to this rule is that the age of the borrower must be reported if they are the beneficiary of a trust.
While these additions are not required to be collected until 2018, the CFPB has stated that they are allowing institutions to use the new GMI form for any application that is taken in 2017, in order to help loan officers become accustomed to the new form and to hopefully diminish the amount of reporting mistakes come 2018. If you would like to see what the new GMI addendum will look like, both the CFPB ( Consumerfinance.gov/HMDA) and Fannie Mae (Fanniemae.com/1003) have published examples.
For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.