HMDA Final Rule Update For Reporting In 2020
On October 10, 2019, the CFPB issued a final rule that could affect your HMDA reporting for 2020. The first part of the rule extends the 500 threshold for open-end lines of credit until January 1, 2022. This means that institutions that originate fewer than 500 open-end lines of credit in the two preceding calendar years will not be required to report these lines of credit on their 2020 and 2021 LARS.
This final rule also incorporates the partial exemptions that were laid out in EGRRCPA into Regulation C. It also incorporates clarifications that smaller institutions have encountered when collecting their data to comply with the partial exemptions. Such as, whether a partial exemption applies after a merger or acquisition.
A copy of the final HMDA rule can be found below.
https://files.consumerfinance.gov/f/documents/cfpb_hmda_final-rule-2019.pdf
At Regulatory Solutions, we have developed HMDA software in order to complete full HMDA scrubs, including for those who qualify for partial exemptions.
HMDA Scrub Sample Size
What percentage of loans or applications on the HMDA LAR should I scrub?
This is a question we get asked quite often and my response is that you should look to the percentage examiners scrub. The Federal Financial Institutions Examination Council’s (FFIEC) HMDA Examiner Transaction Testing Guidelines (Guidelines) describe the validation process which examiners use and the circumstances in which examiners may direct institutions to correct and resubmit HMDA data. The examiners select a random sample of loans/applications to test using the following sample sizes and thresholds as indicated in the Guidelines at https://files.consumerfinance.gov/f/documents/201708_cfpb_ffiec-hmda-examiner-transaction-testing-guidelines.pdf:
| Total Sample Size (A) | Initial Sample Size (B) | Initial Sample Threshold (C) | Resubmission Threshold (D) | ||
| # | % | ||||
| 25-50 | 30* | 15 | 2 | 3 | 10.0* |
| 51-100 | 30 | 20 | 2 | 3 | 10.0 |
| 101-130 | 47 | 29 | 2 | 3 | 6.4 |
| 131-190 | 56 | 29 | 2 | 3 | 5.4 |
| 191-500 | 59 | 30 | 2 | 3 | 5.1 |
| 501-100,000 | 79 | 35 | 2 | 4 | 5.1 |
| 100,001+ | 159 | 61 | 2 | 4 | 2.5 |
*If less than 30 LAR lines, the institution should use the full sample size and the resubmission threshold remains at 3.
Let us scrub your HMDA data against source documents and provide you with an exception-based report indicating the percentage of errors by data point. You select your sample size either using the Guidelines or a certain percentage of HMDA loans/applications. Contact us today to discuss your HMDA scrub.
CFPB Issues HMDA Consent Order
The CFPB recently issued a consent order against Freedom Mortgage Corporation for HMDA violations. These violations mainly revolved around the collection and reporting of applicant’s demographic information and spanned four years of HMDA reporting. Specifically, the Corporation was found to have violated Regulation C by:
- Selecting non-Hispanic white for the applicant’s race and ethnicity if the applicant did not provide the information for applications taken over the phone, regardless of the accuracy of the information.
- For applications taken over the phone, they misreported the applicant’s ethnicity and race as non-Hispanic white even when the applicants provided different information.
- Rather than addressing an internal system issue that would eliminate certain information if the applicant’s sex was not provided, the Corporation selected a sex for the applicant regardless of the accuracy.
None of the errors made by the Corporation were considered to be bona fide errors as allowed by Reg C. 1003.6(b)(1) which states that a bona fide error is an error in compiling or recording data that was unintentional and occurred despite procedures in place to avoid such an error. Among other orders, the Corporation was ordered to develop and maintain new policies and procedures to ensure accurate collection and reporting of their HMDA data. They also must pay a $1.75 million civil money penalty for these violations.
Regulatory Solutions has developed proprietary software to scrub and verify the data in your HMDA LAR. Please contact us today to discuss how we can help you to ensure that your HMDA data is correct.
CFPB Proposed Rule for HMDA Reporting Requirements
The CFPB issued a proposed rule on May 2, 2019 that would change the HMDA reporting requirements and could have a significant impact on smaller financial institutions. The proposed rule would increase the closed-end coverage threshold from 25 to 100 loans originated in the previous two years. Additionally, it proposes to extend the current open-end threshold of 500 lines of credit until January 1, 2022. The proposed rule would also incorporate new interpretations and procedures into Regulation C. If this were to become part of the HMDA regulation, it would not take effect until January 1, 2020.
https://www.consumerfinance.gov/policy-compliance/rulemaking/rules-under-development
Guide to HMDA Reporting: Getting it Right!
The FFIEC has released the 2019 edition of the “Guide to HMDA Reporting: Getting it Right!” which is available at https://www.ffiec.gov/hmda/. The new edition contains information regarding the amendments made to HMDA by the Economic Growth, Regulatory Relief, and Consumer Protection Act and updated HMDA interpretive and procedural rules issued by the Consumer Financial Protection Bureau. 2019 is the year to Get it Right! Regulatory Solutions has developed proprietary HMDA scrub software and has the expertise to scrub your HMDA data on a monthly or quarterly basis. Our HMDA scrubs compare your HMDA LAR to source documents. An exception report is issued to enable you to make corrections and a summary of exceptions is provided to assist you in addressing any systemic issues. Contact Regulatory Solutions today to begin your HMDA Scrubs.
HMDA FIG 2019 – New Values for Data Points
Now that you have filed your 2018 Home Mortgage Disclosure Act (HMDA) data, it is time to focus on 2019. The CFPB has issued the new Filing Instructions Guide (FIG) for submissions and data collection which can be found on the FFIEC website. The only major change to the new HMDA FIG 2019 is that it now includes the new values for the data points that were exempted under the Economic Growth, Regulatory Relief, and Consumer Protection Act that went into effect in May 2018. The HMDA FIG 2019 can be found here: https://ffiec.cfpb.gov/
While there are no substantial changes as to how you compile and submit your data, it is important to point out that 2019 is the first year that the CFPB will assess penalties under the revised HMDA regulation. If you struggled with compiling and scrubbing last year’s HMDA data, Regulatory Solutions is here to help. Using our proprietary HMDA scrub software, we compare your source documents in the loan file to the data points recorded on the HMDA LAR and provide you with an exception report detailing data points needing correction. Contact us today to being your 2019 HMDA LAR Data Scrub.
Frequently Asked Questions Relating to TRID
Today the CFPB posted four Frequently Asked Questions relating to TRID. Three of the questions relate directly to corrected closing disclosures and the three business-day waiting period before consummation and the fourth question relates to the model forms. You can read the CFPB questions and answers at https://www.consumerfinance.gov/policy-compliance/guidance/tila-respa-disclosure-rule/tila-respa-integrated-disclosure-faqs/.
Regulatory Solutions provides comprehensive TRID reviews to ensure you are in compliance with the TILA-RESPA requirements. If you would like to discuss how we can assist you with your TRID reviews, please contact us at Betsy.reynolds@regulatorysol.com or Rhonda.wannemuehler@regulatorysol.com.
2019 HMDA Asset-Size Exemption
The Consumer Financial Protection Bureau announced the adjusted asset-size exemption threshold for depository institutions for HMDA (Regulation C). The exemption threshold has been increased from $45 million to $46 million. Based on this adjustment, banks, savings associations, and credit unions with assets of $46 million or less as of December 31, 2018 are exempt from collecting data in 2019. Remember, 2018 HMDA data is reportable by March 1, 2019. If you need assistance with scrubbing your HMDA data for 2018, contact Regulation Solutions today!
Data Points Covered by Partial Exemptions
The Bureau of Consumer Financial Protection issued an interpretive and procedural rule on August 31, 2018, to implement and clarify section 104(a) of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which amended certain provisions of the Home Mortgage Disclosure Act (HMDA). The rule allows certain insured depository institutions and insured credit unions (based on thresholds for the number of closed-end and/or open-end loans originated during a given year) to be partially exempt for certain data point reporting. Below is a chart detailing the data points covered by the partial exemptions and the correct code to use on the HMDA LAR to signify exemption.
Regulatory Solutions has developed proprietary software to complete your HMDA Scrubs. Please contact us today to discuss how we can help you ensure your HMDA data is correct
Data Points Covered by Partial Exemptions
| Data Points Covered by Partial Exemptions | Correct Code for Exemption |
|---|---|
| § 1003.4(a)(1)(i) – Universal Loan Identifier | Unique, within the insured depository institution, loan or application identifier that can be up to 22 characters |
| § 1003.4(a)(9)(i) – Property Address (street address, city, zip code) | Exempt |
| § 1003.4(a)(12) – Rate Spread | Exempt |
| § 1003.4(a)(15) – Credit Score | 1111 |
| § 1003.4(a)(15) – Name and Version of Credit Scoring Model | 1111 |
| § 1003.4(a)(16) – Reasons for Denial | 1111 (Leave the remaining Reason for denial data fields blank) |
| § 1003.4(a)(17) – Total Loan Costs or Total Points and Fees | Exempt |
| § 1003.4(a)(18) – Origination Charges | Exempt |
| § 1003.4(a)(19) – Discount Points | Exempt |
| § 1003.4(a)(20) – Lender Credits | Exempt |
| § 1003.4(a)(21) – Interest Rate | Exempt |
| § 1003.4(a)(22) – Prepayment Penalty Term | Exempt |
| § 1003.4(a)(23) – Debt-to-Income Ratio | Exempt |
| § 1003.4(a)(24) – Combined-Loan-to-Value Ratio | Exempt |
| § 1003.4(a)(25) – Loan Term | Exempt |
| § 1003.4(a)(26) – Introductory Rate Period | Exempt |
| § 1003.4(a)(27) – Non-Amortizing Features Balloon Payment Interest-Only Payment Negative Amortization Other Non-Amortizing Features | 1111 (enter code for each one) |
| § 1003.4(a)(28) – Property Value | Exempt |
| § 1003.4(a)(29) – Manufactured Home Secured Property Type | 1111 |
| § 1003.4(a)(30) – Manufactured Home Land Property Interest | 1111 |
| § 1003.4(a)(32) – Multifamily Affordable Units | Exempt |
| § 1003.4(a)(33) – Submission of Application | 1111 |
| § 1003.4(a)(33) – Initially Payable to Your Institution | 1111 |
| § 1003.4(a)(34) – Mortgage Loan Originator Identifier | Exempt |
| § 1003.4(a)(35) – Automated Underwriting System (AUS) | 1111 (Leave the remaining AUS blank) |
| § 1003.4(a)(35) – Automated Underwriting System Result | 1111 (Leave the remaining AUS results blank) |
| § 1003.4(a)(36) – Reverse Mortgage Flag | 1111 |
| § 1003.4(a)(37) – Open-End Line of Credit Flag | 1111 |
| § 1003.4(a)(38) – Business or Commercial Purpose Flag | 1111 |
HMDA Scrubs And The New Reg C Rules
We are just over half way through the new year under the new Regulation C rules which changed the Home Mortgage Disclosure Act (“HMDA”) reporting requirements. Have you scrubbed your HMDA data in accordance with the new rules? If not, let Regulatory Solutions help! We have developed proprietary HMDA Scrub software to assist in the data integrity review of your HMDA data. Our software produces exception-based reports so that you know exactly what corrections need to be made by loan number. The report also provides you with a total number of exceptions and percentages based on data points.
If you are interested in Regulatory Solutions scrubbing your current HMDA data, please contact us at 855.734.7655 or email us through our contact page.