Application Channel and New HMDA Data

There are two questions for this data point that must be reported as part of the new HMDA data. First, you must report whether the applicant submitted the application directly to your financial institution. For HMDA purposes, an application is treated as being submitted directly to your financial institution if the applicant was directed to a third-party agent who performed origination activities on behalf of the financial institution. However, this would not be the case if the third-party agent assisted the applicant with their application for a loan with another institution. If the applicant completed an application with a broker or correspondent who then sent the application to your financial institution for approval, then this would not be reported as being submitted directly to your financial institution.

The other data point that must be reported is whether the obligation that arises from the application is or would have been initially payable to your financial institution. For applications that are withdrawn, denied, or closed for incompleteness, this particular data point should be reported as “not applicable” if at the time action was taken, the financial institution had not determined whether the loan would be initially payable to this institution.

The one major exception is when you are reporting on a purchased loan. In this instance, both of these data points should be reported as being “not applicable”.

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.

Property Value Must Be Reported Under 2018 HMDA Regulation

Under the 2018 HMDA regulation, the value of the property that is (or will be used) to secure the loan must be reported. This data point depends upon which value the institution uses to determine the loan-to-value ratio. If the institution relies on the appraisal for this determination, then the appraised value is reported. The other option that an institution can rely on is the purchase price of the property. When entering the property value, the institution should enter the full amount with rounded to the nearest dollar. It is important to note that the method that is chosen should remain consistent throughout the HMDA LAR.

If the file was closed for incompleteness or withdrawn before a credit decision was made, then this data point should be reported as “not applicable”. This remains true even if the institution determined a value for the property before final action was taken.  When an institution makes a credit decision without relying on the property value, then “not applicable” should also be entered on the HMDA LAR.

 

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.

Credit Score Information New 2018 HMDA Requirement

The 2018 HMDA regulation will require an institution to report an applicant’s credit score information. While this is a new data point, it is relatively straight-forward. An institution must report both the credit score and the name and version of the scoring model that was used when making the credit decision. If multiple scores were relied upon, then the institution should report only one of those scores. When this occurs, deciding which score to report is up to the institution but the method should remain consistent throughout the HMDA LAR. On the other hand, if the loan had more than one applicant and the institution relied on only a single credit score then that score should be reported for either the applicant or the co-applicant.

 If a credit scoring model was used that was not an option provided by the HMDA regulation, then the institution should report this data point as “other”. If this is selected, the specific credit scoring model that was used must be entered.

Reporting this data point as “not applicable” is an option. This can occur when the loan was: a purchased loan, the institution did not rely on a credit score, closed for incompleteness, withdrawn before a credit decision was made, or if the applicant is not a natural person.

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.

HMDA Compliance Alert: CFPB Proposes New Changes

On April 13, 2017, the Consumer Financial Protection Bureau issued a much-ask-for proposal to clarify and facilitate HMDA compliance with the 2015 updates to the Home Mortgage Disclosure Act rule set to take effect next year. According to the CFPB, “The proposed changes would help financial institutions comply with the 2015 HMDA Final Rule by clarifying the information they are required to collect and report about their mortgage lending.”

“These changes are monumental to HMDA collection and reporting requirements and will require a substantial amount of planning to implement the new data fields,” stated Rhonda Wannemuehler, Executive Vice President of Regulatory Solutions. “The CFPB gave the industry about three years to become compliant to the updates released in October 2015 with most of the requirements taking effect in January 2018.”

Read the full article on HousingWire.

Consumer Financial Protection Bureau website to review the proposal and other quick references. 

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