HMDA NOW AND WHAT'S NEXT - 051315 TTSttsmedia.ttstrain.com/HMDABNT051315.pdf · 2015-05-08 ·...

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I N S T R U C T O R :

S U S A N C O S T O N I S , C . R . C . M .s u s a n c o s t o n i s @ m s n . c o m

C o m p l i a n c e T r a i n i n g & C o n s u l t i n g f o r F i n a n c i a l I n s t i t u t i o n s

Presents

HMDA (Home Mortgage Disclosure Act)What to Know Now & What’s Next?

May 13, 2015

OVERVIEW2

On July 24, 2014 the Consumer Financial Protection Bureau published long-awaited proposed revisions to its Home Mortgage Disclosure Act rules. The 573-page proposed rule would make sweeping changes to Regulation C, anddramatically expand financial HMDA reporting and compliance obligations.There are potential fair lending implications – more data means more analysisto detect potential discriminatory lending practices. The proposed changesinclude required reporting of 37 new data fields, 20 of which are not requiredby HMDA and represent additional information the CFPB would like to collect.

Overview of the HMDA requirements for 2015 activity Best practices for HMDA data validation What will the proposed rules change? HMDA Toolkit

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HMDA HISTORY3

1975: HMDA was enacted by Congress, and was implemented by the Federal Reserve Board’s Regulation C.

1989: Congress expanded HMDA to require financial institutions to report racial characteristics, gender, and income information on applicants and borrowers, among other things.

2002: The Federal Reserve began requiring identification of higher priced mortgage loans, identification of manufactured homes, reporting of denials from pre-approved programs conformed data on ethnicity and race to standards

2010: Congress amended HMDA in the Dodd-Frank Act, which also transferred HMDA rule-making authority to the CFPB

2014 – The CFPB announces a proposed rule that contains the Dodd-Frank requirements and many additional reporting changes

WHAT DOES THIS MEAN? In the years since HMDA was originally enacted, it has shifted from being a statue aimed at monitoring and redlining prevention to one widely used by the regulators as a Fair Lending tool. With the new proposed changes, it appears this trajectory will continue.

HMDA CHANGES PROPOSED

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1. RULE OF 25

2. TYPES OF TRANSACTIONS

3. ALIGN DATA REQUIREMENTS

4. NEW DATA POINTS REPORTED

Information about applicants

Information about property

Loan features

Certain unique identifiers5. MODIFICATIONS TO DISCLOSURE AND REPORTING

REQUIREMENTS

6. CLARIFY THE REGULATION

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CFPB GOALS IN THE HMDA PROPOSAL5

BETTER INFORMATION ABOUT THE MORTGAGE MARKET

MONITORING ACCESS TO CREDIT STANDARDIZE THE REPORTING THRESHOLD EASE REPORTING REQUIREMENTS FOR SOME

SMALL BANKS ALIGNING REPORTING REQUIREMENTS WITH

INDUSTRY DATA STANDARDS IMPROVING THE ELECTRONIC REPORTING

PROCESS. IMPROVING DATA ACCESS

SPECIFIC DATA FIELDS6

1. Information about applicants, borrowers, and the underwritingprocess, such as age, credit score, debt-to-income ratio, reasonsfor denial if the application was denied, the application channel,and automated underwriting system results.

2. Information about the property securing the loan, such asconstruction method, property value, lien priority, the number ofindividual dwelling units in the property, and additionalinformation about manufactured and multifamily housing.

3. Information about the features of the loan, such as additionalpricing information, loan term, interest rate, introductory rateperiod, non-amortizing features, and the type of loan.

4. Certain unique identifiers, such as a universal loan identifier,property address, loan originator identifier, and a legal entityidentifier for the financial institution

EFFECTIVE DATE: Possible January 1, 2016 or 2017. Staytuned!

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CURRENT REPORTING REQUIREMENTSCURRENT REPORTING REQUIREMENTS DODD-FRANKDODD-FRANK

Loan Application: Application number, date, type of loan and purpose and amount requested;

Action Taken: the type of action taken and the date; optional reporting for denial reasons (for OCC banks)

Loan Information: rate spread for certain types of higher-priced loans; lien status

Property Information: property type, owner/occupancy status, location by MSA, state, county, census tract

Applicant information: ethnicity, race, sex, annual income

The 17 fields in Dodd-Frank Total points and fees; Rate spread for all loans; “Riskier” loan features like

prepayment penalties, teaser rates and negative amortization;

Unique identifiers for the loan officer (NMLS#) and the loan;

Application channel (retail, broker, or other)

Property value and more detailed property location information and

The borrower’s age and credit score

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HMDA NOW AND IN THE FUTURE

CURRENT REPORTING REQUIREMENTSCURRENT REPORTING REQUIREMENTS CFPB PROPOSED FIELSCFPB PROPOSED FIELS

Loan Application: Application number, date, type of loan and purpose and amount requested;

Action Taken: the type of action taken and the date; optional reporting for denial reasons (for OCC banks)

Loan Information: rate spread for certain types of higher-priced loans; lien status

Property Information: property type, owner/occupancy status, location by MSA, state, county, census tract

Applicant information: ethnicity, race, sex, annual income

1. Debt-to-income ratio2. Combined loan-to-value ratio3. Automated Underwriting

System results4. Denial reason would be required5. Qualified mortgage status6. Additional information on the

rate; total points and fees;7. Additional property information

(type of construction; affordable housing information)

8. Manufactured housing data -does the applicant own the land

9. A unique financial institution identification number.

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HMDA NOW AND IN THE FUTURE

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PURPOSE AND COVERAGE9

HMDA applies to a variety of both depository and non depository institutions including banks, savings and loans, credit unions, and mortgage companies. These institutions are required to report date relating to applications, preapprovals, originations and purchases of:

home purchase loans

home improvement loans and

refinancings

HMDA FLOW CHART10

Is the loan secured by and made for purpose of purchasing a dwelling? Is it temporary financing? Are any of the proceeds to be used for home improvement? (secured by

dwelling) Is it a line of credit? Are any of the proceeds to be used for home improvement? (not secured

by dwelling) and is classified as home improvement? Will the new loan secured by a dwelling replace and satisfy an old loan

which is also secured by a dwelling? (Refinance – purpose does NOT matter)

Dwelling means any residential structure regardless of the number of acres, number of units (4-plex or greater), whether or not it is the primary dwelling, second home, rental property. The term dwelling includes condos, mobile home or manufacture home or apartment building. It doesn’t include transitory residences like hotels or dorms.

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HMDA REPORTING BASICS

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WHO REPORTS HMDA DATA?

Lenders who qualify based on asset size and location of a branch in a MSA

WHEN IS IT REPORTED?

By March 1st for the activity completed in the prior year

HOW IS IT REPORTED? Sent electronically to the FFIEC or by paper

WHAT IS REPORTED? Twenty six data fields for each covered application

WHAT TYPES OF LOANS ARE REPORTED?

Three types of applications – home purchase, home improvement, refinancing.

WHAT IS OPTIONAL? Reporting denial reason is optional, except for OCC Banks; certain pre-approval codes are optional; home equity line of credit reporting is optional

WHO REPORTS HMDA DATA?12

Banks, savings associations, or credit unions that

Exceeds the asset threshold that is adjusted annually

Had an office in an MSA on the preceding December 31st

Meets certain federal criteria, such as being FDIC insured

Adjusted asset-size exemption threshold for 2015 to $44 million

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IMPORTANT HMDA DEFINITIONS13

DWELLING A “dwelling” is a residential structure whether or not it is attached to real property located in the U.S., District of Columbia or Puerto Rico. A dwelling includes:• not only a principal residence but also a vacation

home and rental properties, individual condo units, mobile home or manufactured home and “camps”

• multifamily structures like apartment buildings

A dwelling DOES NOT include RVs and campers or transitory residences like hotels and hospitals, dorms whose occupants have a principal residence elsewhere.


HOME PURCHASE LOANS

A home purchase loan is a loan that is both secured by and made for the purpose of purchasing a dwelling. This includes a loan secured by one dwelling that is used to purchase another dwelling

Mixed-use property

A dwelling-secured loan to purchase property that is primarily used for residential purposes is a home purchase loan. For example, an apartment building could include a convenience store but the primary property use is residential. Any reasonable standard can be used to determine primary use from square footage to income. This can be done on a case-by-case basis.

Farm loans A loan to buy property that is primarily for agricultural purposes is not a home purchase loan, even if it includes a dwelling. Any reasonable standard can be used to determine primary use, like the RESPA exemption of 25 acres or more. This can be done on a case-by-case basis.

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Commercial and other loans

A home purchase loan does not need to be made solely in the mortgage or consumer loan department. The purchase of an apartment building (that is secured by that or any other dwelling) is reported as a home purchase loan.

Construction and permanent financing

A home purchase loan includes a combinedconstruction/permanent loan; it does not include a construction-only loan which is considered temporary financing.

Second Mortgage down payment

If an institution makes a first mortgage to a purchase and a second mortgage loan to the same purchases to finance all or part of the down payment, it reports each loan separately.

IMPORTANT HMDA DEFINITIONs16

HOME IMPROVEMENT LOANS

For HMDA reporting purposes, a home improvement loan is: • A loan secured by a lien on a dwelling that is for

the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located

• A non-dwelling secured loan that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located and that is classified by the financial institution as a home improvement loan.

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Dwelling secured home improvement loans

Institutions must report under the home improvement loan category any loan OR application for loans secured by a lien on a dwelling if any portion of the loan proceeds would be used to repair, rehabilitate, remodel or improve a dwelling or the real property upon which it is located.

Non-dwelling secured home improvement loans

Non-dwelling secured loans and applications that are for the purpose, in whole or in part, of home improvement continue to be reported only if the institution classifies them as a home improvement loan. This could be done by computer coding, color coded files, or the call report.


Improvements to real property

Home improvement include not only improvements to the dwelling itself, but also improvements to the real property upon which the dwelling is located, for example installing a swimming pool, construction of a garage, or landscaping.

Commercial and other loans

A loan to improve an apartment building through the commercial department is a home improvement loan if it’s secured by a dwelling or if unsecured it is classified as a home improvement loan.

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Mixed-use property

A dwelling secured loan to improve property that is for both residential and commercial use is considered home improvement only of the loan proceeds are used primarily to improve the residential portion of the property. Any reasonable standard can be used to determine primary use from square footage to income. This can be done on a case-by-case basis.

Multiple-category loans

A loan for purchase as well as home improvement or refinancing is reported as HOME PURCHASE. Purchase trumps ALL categories if a loan or application qualifies as a home improvement loans AS WELL AS refinancing, it must be reported as HOME IMPROVEMENT. Home improvement TRUMPS refinance. Remember H before R.


REFINANCINGS A refinancing is a new obligation that satisfies and replaces an existing obligation. If the existing obligation is not satisfied and replaced, not only renewed, modified, extended, or consolidated, the transaction is not a refinancing for HMDA purposes. NOTE: If a new note is prepared and signed for a HMDA reportable renewal, it IS considered a refinancing for HMDA .

Reportable refinancings

Refinancings are reported under HMDA only if both the existing obligation and the new obligation are secured by liens on dwellings. Lenders may rely on the applicant’s statement about whether or not the loan being refinanced is dwelling-secured.The purpose of the loan being refinanced is not relevant to determining if the loan qualifies as a refinance.

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REFINANCING FAQS FROM THE FFIEC21

Refinancing --- loan purpose. If an obligation satisfies and replaces another obligation, is the purpose of the replaced obligation relevant to whether the new obligation is a reportable "refinancing" under Regulation C?

Answer: No. The new definition of a reportable refinancing looks only to whether (1) an obligation satisfies and replaces another obligation and (2) each obligation is secured by a dwelling. Thus, for example, a satisfaction and replacement of a loan made for a business purpose is a reportable refinancing if both the new loan and the replaced loan are secured by a dwelling.

Refinancing --- cash out for home improvement. How should a lender code a dwelling-secured loan when the borrower uses the funds both to pay off an existing dwelling-secured loan and to make improvements to a dwelling?

Answer: A dwelling-secured loan that meets the definitions of both "home improvement loan" and "refinancing" should be coded as a "home improvement loan.”

TEMPORARY FINANCING FAQS 22

Temporary Financing. When is a loan "temporary financing" such that it is exempt from reporting?

Answer: The regulation lists as examples of temporary financing construction loans and bridge loans. See 203.4(d)(3). Construction and bridge loans are illustrative, not exclusive, examples of temporary financing. The examples indicate that financing is temporary if it is designed to be replaced by permanent financing of a much longer term. A loan is not temporary financing merely because its term is short. For example, a lender may make a loan with a 1-year term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. Such a loan must be reported as a home purchase loan. See 203.2(h).

THINK **********FIX AND FLIP***************

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GOVERNMENT MONITORING INFORMATION23

In an application for a HMDA reportable loan, an institution must collect the applicant’s ethnicity, race, and sex as PART of the application process.

This information is not required when the applicant is a legal entity, such as a corporation or partnership, rather than an individual. If the applicant is a sole proprietor YOU MUST STILL COLLECT THE MONITORING INFORMATION. This will mean you also report income of the sole proprietor if it was relied on to make the credit

decision.

GOVERNMENT MONITORING INFORMATION24

Consumer loan requests to purchase a principal dwelling or refinance the purchase money should be taken on a FNMA 1003 application.

Other requests (home improvement and non-purchase money refinance requests may be done on a consumer application along with a HMDA data collection form.

The form is found in Appendix B of the Getting it Right Guide

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HMDA DATA COLLECTION FORM25

OBTAINING GOVERNMENT MONITORING INFORMATION

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The applicant must be informed that the federal government requests this information in order to monitor compliance with antidiscrimination laws.

The applicant must be informed that if he or she does not provide the information when the application is taken in person, the lender is required to note the date based on visual observation or surname.

Document HOW the application was taken –in person, by mail, by phone or via the Internet. SEE THE FAQs

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OBTAINING GOVERNMENT MONITORING INFORMATION

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In person application – always request the information by reading the form; if the applicant refuses to provide it make a visual observation and document accordingly

Telephone applications – always request the information by reading the form; if the applicant refuses to provide it document accordingly

Mailed applications – the monitoring information should be included on the application. If it wasn’t on the application, send a form letter and monitoring information form. If YOU MEET THE APPLICANT PRIOR TO APPROVAL the information must be requested and the “in-person” requirements apply.

ALWAYS DOCUMENT how the application was received.

HMDA DATA EXCLUSIONS28

There are six exclusions for HMDA reporting in Regulation C. Financial institutions should NOT report the following:

1. Loans originated or purchased by the financial institution acting in a fiduciary capacity (such as trustee)

2. Loans on unimproved land

3. Temporary financing (such as bridge or construction loans)*4.

4. The purchase of an interest in a pool of loans (such as mortgage-participation certificates, mortgage-backed securities, or real estate mortgage investment conduits)

5. The purchase solely of the right to service loans

6. Loans acquired as part of a merger or acquisition, or as part of the acquisition of all of the assets and liabilities of a branch office as defined in Sec. 1003.2.

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HOW TO TELL WHETHER A LOAN IS HMDA REPORTABLE

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Purchase a dwelling

Refinance

Home Improvement

Construction only

Construction/perm

HMDA LAR DATA FIELDS AND CONTROL METHODS

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BEST PRACTICES FOR FILE DOCUMENTATION

1. Create a HMDA file folder for each LAR entry that can be verified by a person or team that is knowledgeable in HMDA procedures

2. Label EACH data field in this file with the numbers that correspond to the HMDA LAR (1-26)

3. Highlight each data field on the source document next to the number of the data field.

4. Perform a second review of the data5. Sign-up for the FFIEC e-mail alerts for HMDA; maintain a current copy of the

“HMDA Getting it Right Guide”6. Revised written procedures as needed when changes are made to HMDA or

deficiencies are noted in audits and exams.7. Train new employees; provide refresher training for all lending employees.

Annual training is not required but should be done in accordance with exam and audit findings.

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BEST PRACTICES FOR FILE DOCUMENTATION31

DATA FIELD CONTROL METHOD COMMENTS

1. Application or Loan Number

Loan number if originated; unique code number if denied, withdrawn, or approved and not accepted – this may be date of application with a “D”, “W” or “A”.

Do not use Social Security number or other personally identified information

2. Date Received Date indicated on Consumer or Commercial Approval Worksheet for originated loans; date that the application received on denied/withdrawn loan worksheet.

Common error if the applications are not date-stamped or systematically created in loan application software. Often a problem with business purpose loans and there may not be a commercial loan application

3. Loan Type Usually conventional loans Can be a problem if there is a great deal of secondary market activity. Use software to populate this data field if possible


DATA FIELD CONTROL METHOD COMMENTS4. Property Type Real Estate collateral codes.

Property type for denied or withdrawn or approved but not accepted loans on Denied-Withdrawn Worksheet

These are the property types to verify: 1. One to four-family (other than

manufactured housing)2. Manufactured housing3. Multi-family

5. Purpose of Loan

Purchase (secured by a dwelling)Home improvement – can be secured or unsecured (purpose driven)Refinance – purpose doesn’t matter, collateral driven

Purchase trumps all, home improvement trumps refinance. construction loan that is being converted to a permanent loan –report as a purchase loan

6. Occupancy Use codes on boarding data if originated; require this information in the application process

Code 2 for second or vacation homes and rental properties. Code 3 multi-family loans, property is not in an MSA, in an MSA without a branch.

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7. Loan Amount Use the amount of the note if originated; use the application amount if denied, withdrawn, or approved but not accepted

Highlight loan amount on note for originated loans, highlight loan amount on application or adverse action notice. Loan amounts are ROUNDED to the nearest $1,000; example: a loan for $167,300 would be 167 and $15,500 would be 16.

8. Pre approval Code

Always 3 if there is no pre-approval program.

Can be a high error field when beginning a pre-approval program


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9. Action Taken Type

1 Loan originated2. Application approved, not accepted.3. Application denied 4. Application withdrawn by applicant5 File closed for incompleteness6. Loan purchased by financial institution7 Preapproval request denied by financial institution8. Preapproval request approved by not accepted (optional reporting)

1. Have copy of the note in file2. Documentation must be clear.3. Copy of adverse action notice4. Document date of withdrawal, only use if it was withdrawn by applicant prior to credit decision5. Copy of adverse action notice6. Copy of purchase info in file. 7. Documentation should be clear and copy of letter.8. Documentation should be clear and support the preapproval program guidelines.

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10.Action Taken Date Date of loan if originated, denial date, withdrawal date, date that customer declined loan approval

Copy of note, highlight date; copy of denial; file documentation of withdrawal notice or note to file that customer did not accept approval.

11.MSA/MD FFIEC website Make sure you have geo-coded the correct property and used the CORRECT geo-code year; don’t use appraisal or flood determination information unless verified to FFIEC

12.State FFIEC website

13.County (Parish) FFIEC website

14.Census Tract FFIEC website



15.Ethnicity (Applicant) Request for in-person applications (must make visual observation or surname if the applicant declines to provide it) Read during phone applications; request for mailed applications

If the borrower is not a natural person (corporation or partnership) use the code for “not applicable”. The FDIC requires monitoring info for a sole proprietor.

16.Ethnicity (Co-Applicant)

If there is more than one co-applicant, provide monitoring info for the first co-applicant listed.

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17. Race (Applicant) Applicants can select more than one race, enter all codes they designate

18. Race (Co-Applicant) If there is more than one co-applicant, provide monitoring info for the first co-applicant listed.



19.Sex (Applicant) If the borrower is not a natural person (corporation or partnership) use the code for “not applicable” The FDIC requires monitoring info for a sole proprietor.

20.Sex (Co-Applicant) If there is more than one co-applicant, provide monitoring info for the first co-applicant listed.

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21. Income The gross income your institution used to make the credit decision.

Round to the nearest thousand. Report $35,500 as 36. If the borrower is not a natural person (corporation or partnership) use the code for “not applicable”. Loans for multi-family should use NA for income.

22. Purchase Type See codes in the Guide Enter the code sold to the secondary market within the same calendar year

23. Reasons for denial Optional; see codes REQUIRED for OCC banks


DATA FIELD CONTROL METHOD COMMENTS24. Rate Spread Report for purchase, refinancing,

or dwelling secured home improvement loans that are made for a consumer purpose that are originated. CRITICAL to document the date the interest rate was set for the final time before closing.

Do NOT report rate spreads for loans that aren’t subject to Reg Z or unsecured home improvement loans. The format is 03.29 (leading zero and two decimal places; rounded if more than two decimals). Make sure that the lien status is accurate.

25. HOEPA status Report as code 1 for loans subject to HOEPA that were originated

26. Lien Status Use the collateral codes on the boarding data as documentation

The accuracy of lien status is critical for determining rate spreads correctly.

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LIST OF HMDA PROBLEMS AND SOLUTIONS41

1. Failure to include loan applications that resulted in denial or withdrawal. Solution: Develop and follow sound HMDA reporting procedures. REMEMBER: If A NEW note was prepared, it is a possible HMDA refinance transaction.

2. Failure to include applications for mobile homes or multifamily dwellings originated as part of the consumer or commercial loan portfolio.

3. Reporting temporary construction loans. Solution: Follow written procedures for the definition used by your bank for “temporary” loans. REMINDER: FIX & FLIP LOANS ARE PURCHASE TRANSACTIONS!


4. Reporting multi-purpose loans – If a loan is a home purchase loan as well as a home improvement loan, or a refinancing, an institution reports the loan as a home purchase loan. If a loan is a home improvement loan as well as a refinancing, an institution reports the loan as a home improvement loan. Purchase trumps all. Home improvement trumps refinance. Solution: Remember the codes: 1 = Purchase; 2 = home improvement; 3 = refinance !!!!!

5. Second mortgages that finance the down payments on first mortgages – if an institution making a first mortgage loan to a home buyer also makes a second mortgage loan to the same purchases to finance part or all the home purchaser’s down payment, the institution reports each loan separately as a home purchase loan. Solution: Code these types of loans correctly and follow written HMDA procedures.

6. Which income should be used? The gross annual income is the income that your institution relied upon in making the final credit decision. Solution: Be consistent is reporting this information!

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LIST OF HMDA PROBLEMS AND SOLUTIONs43

7. Income must be rounded to the nearest thousand. Solution: Take the time to record this correctly.

8. Dwelling is NOT limited to the principal or other residence of the borrower and includes vacation or second homes and rental properties. Solution: Be cautious with any loan request that involves the purchase, improvement or refinance of a dwelling.

9. Property location – Multiple properties – For a home improvement loan, an institution reports the property being improved. If more than one property is being improved, the institution reports the location of one of the properties (more common method) orreports the loan using multiple entries on the LAR (with unique identifiers) and allocating the loan amount among the properties. Solution: Follow your bank’s written procedures.


10. Multiple properties – For a home purchase loan, an institution reports the property taken as security. If an institution takes more than one property as security, the institution reports the property being purchased if there is just one. If the loan is to purchase multiple properties and is secured by multiple properties, the institution reports the location of one of the properties (more common method) or reports the loan using multiple entries. Solution: Follow your bank’s written procedures.

11. Mixed-use property – A loan to improve property used for residential and commercial purposes (for example, a building containing apartment units and retail space ) is a home improvement loan if the loan proceeds are used primarily to improve the residential portion of the property. If the loan proceeds are used to improve the entire property (for example, to replace the heating system) the loan is a home improvement loan if the property itself if primarily residential. An institution may use any reasonable standard to determine the primary use of the property, such as by square footage for by the income generated. An institution may select the standard to apply on a case-by-case basis. Solution: Follow your bank’s written procedures.

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12.Failure to collect monitoring data (ethnicity and race). Solution: follow your bank’s procedures. Remember that you are required to READ the data collection information to phone applicants and request it from in-person applicants. Appropriate forms should be included with applications sent by mail to applicants. It is critical that you document HOW an application was taken – in-person; by phone; by mail.

13.Rate-spread calculations – this is a 2 decimal point field and should be rounded and reported as 7.29% if the calculation was 7.286%


14. Correct purchase codes. This question was sent prior to the presentation: “What is the correct code for a loan that is sold to the Federal Home Loan Bank? For many years the bank reported these loans as a code 6 (commercial bank). The regulator questioned this code during the last exam and said they should be coded as a 9. A message was sent to the HMDA Help Desk AND directly to a regulator. Both confirmed that the correct code should be a “9” for “Other type of purchaser”. When asked about the number of years that might have to be submitted, the HMDA Desk said that the regulator is the final authority but they will only accept the last two years of reporting.

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COMMON HMDA PROBLEMS FOUND IN INDEPENDENT AUDITS

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1. Lack of written procedures for entire HMDA process.

2. Lack of effective "scrub" processes – this should be done at least quarterly. The individual who has collected the initial information and completed the input should NOT be the person to perform the scrub. The person doing the scrub should be knowledgeable about HMDA requirements and not be involved in the collection and input process. All LAR entries should be completed within 30 calendar days after quarter-end for qualifying applications.

3. HMDA reportable loans found on loan trial or in adverse loan files but not on LAR. The regulators request a loan trial and sort by loan date and collateral to identify potential loans that should be on LAR. Ideally, the monthly “new loan report” and applicable adverse action, withdrawn, and approved but not accepted files should be compared EACH month to the LAR.


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4. There is often confusion between "short term" and "temporary" financing. Banks have failed to report the "fix and flip" loans. See “Temporary Financing” Flowchart in the Toolkit.

Another example would be a 6 month loan for dwelling renovations where repayment coming for insurance proceeds or bonus money. The loan is reportable - it is short term but not "temporary financing."

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Third example – Borrower had bought a property at sheriff sale with their money. The applicant then requests a loan to reimburse himself. The loan is secured by the purchased property. The loan is NOT HMDA reportable as it is not a purchase, refinance, or home improvement.

Fourth example – Borrower made a construction/perm loan at the bank to build personal residence. Construction costs exceed loan amount. Borrower requests additional funds to complete residence to be secured by a CD. The CD secured loan is not HMDA reportable as it is not purchase, refinance or home improvement.

SEE FDIC SUGGESTIONS for Ensuring completeness Ensuring Accuracy


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5. There is often a problem with relying on “automation” to complete the LAR. This may happen when a bank uses a mortgage underwriting system to capture the information. If there are inconsistencies with the data fields, there will be errors in the LAR. (aka…garbage in, garbage out)

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HMDA DATA ANALYSIS 51

STEPS IN HMDA DATA ANALYSIS – THE FUNDAMENTALS

1. Compare apples to apples; segment products based on the eight types of loan products used by regulators in HMDA analysis.

2. Compare apples to apples; compare the loan pricing within each product between target groups to detect potential discrimination

3. Ensure the accuracy of data to be reviewed

4. Look for potential redlining in your assessment areas and any conspicuous gaps to serve target groups

HMDA QUESTIONS AND QUICK REFERENCES52

[email protected] – E-mail is the preferred method of correspondence with HMDA Operations staff to resolve issues about HMDA.

[email protected] – This address is used for submitting the HMDA Internet e-mail submissions only. No other correspondence should be sent to this address.

During January through May, the busiest part of a year for HMDA data collection and processing, [email protected] an increased volume of inquiries. Please understand the response time could exceed 2 business days.

We highly recommend you utilize the resources listed below prior to your "help" inquiry to assist with HMDA processing and reporting questions.

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A GUIDE TO HMDA REPORTING: GETTING IT RIGHT!

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The 2013 version of the HMDA GETTING IT RIGHT GUIDE can be found on the FFIEC website. This is the link: http://www.ffiec.gov/hmda/guide.htm

Any questions or requests for additional information should be directed to: Assistance Line: (202) 452-2016; Internet E-Mail Address: [email protected]

SUGGESTIONS:

1. Print the GUIDE and highlight sections that contain common problems or helpful guidance. The GUIDE is 119 pages. Appendix A has instructions for completing the LAR. Appendix D has the official staff commentary to HMDA and can be very helpful to understand the reporting requirements.

2. SAVE a copy of the PDF on the computers of HMDA review employees. Use the “FIND” function of Adobe to search for key words to locate ALL the references to a given topic like “applicant” or “purpose code”, etc.

3. Keep copies of any E-mail responses to inquiries received from the HMDA Help Desk

FFIEC HMDA PAGE54

Sign-up for E-Mail Alerts

What’s New?

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TOOLKIT55

HMDA CIVIL MONEY

PENALTIES IN 2012-2014

CFPB FACT SHEET FOR HMDA CHANGES

CFPB HMDA VISUALIZATION TOOL

2013 HMDA DATA RELEASED SEPTEMBER 22, 2014

LINKS TO CHECKLISTS

LOAN APPLICATION CODE SHEET

FDIC HMDA VALIDATION PROCEDURES

(FAQS) FROM FFIEC.GOV

COMPLIANCE RESOURCES

HMDA QUESTIONS AND QUICK REFERENCES

USING THE GETTING IT RIGHT GUIDE

FFIEC HMDA -WHAT’S NEW

FFIEC NEW GEOCODING SYSTEM

HMDA TEMPORARY FINANCING

HMDA TEMPORARY FINANCING FLOWCHART

REAL ESTATE LOAN MATRIX

MATRIX FOR 8/1/15 - TRID

ATTACHMENT – EXCEL HMDA WORKSHEET

QUESTIONS!!!56

5/13/2015

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Thank You!

Susan [email protected]

Mark [email protected]

Upcoming WebinarsMay 14th - RC-C Loan Codes for the Call Report

May 14th - Dealing with Casual Days, Dress Codes and Work Appearance

May 15th - Excel Explained: Introduction to Spreadsheets

May 18th - Developing and Organizing an Effective Remote Deposit Capture Program (RDC)

May 19th - Calculating and Maintaining the Allowance for Loan and Lease Losses

May 20th - Mortgage Loan Originator Required Training Series - Part 1

May 21st - Compliance Perspectives: A Monthly Update

June 2nd - Seven Habits of Effective Credit Administration in Commercial Banks

June 2nd - CRA Nuts & Bolts - Five Steps to Pass the Exam

June 3rd - Advanced Business Account Issues: Multi-tiered Businesses, Agents, Escrows and More

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HMDA – NOW & WHAT’S NEXT?

HMDA NOW AND WHAT'S NEXT - 051315 TTSttsmedia.ttstrain.com/HMDABNT051315.pdf · 2015-05-08 ·...

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Transcript of HMDA NOW AND WHAT'S NEXT - 051315 TTSttsmedia.ttstrain.com/HMDABNT051315.pdf · 2015-05-08 ·...