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An Interesting Twist on the New HMDA

By Temenos reporter 28 Sep 2016

You’re slowly getting into the groove of plowing through the new HMDA rules, wrapping your mind around the absurdity of “disaggravated” – I mean “disaggregated” categories. You see the dark world of “How to get a fair lending violation without any effort” on the horizon.  January 1, 2018 will be here soon enough.  But wait, the CFPB has invited you to join the long black train early. This week the CFPB announced that a creditor may, at its option, during 2017, permit applicants to self-identify using disaggregated ethnic and racial categories as instructed under the new HMDA rules effective 2018. You would not have to report the subcategories on your loan application register (LAR). Rather, the message is more like, give it a go and see how that works for you. So, if you want to open yourself up to a world of hurt, cost, and potential fair lending violations in 2017, you can start collecting all that aggravation early.  Disregard system readiness (many are still waiting of the Military Lending Act updates and that is just 2 weeks away), policies, procedures, training, legal advice – you can whip it all up into shape in just 3 short months; no problem.

From the absurd to the sublime. You may not have to report the disaggregated categories, but your regulators will likely look at it. The new rules are intense with respect to fair lending concerns. Give me a bucket of data, and I am sure I can make it look like any result I want it to – a little sort here, sort there, let’s leave that column out on this one, etc.  

Take your time. Get all your ducks in a row. No rules have even been finalized on how all this new data will be masked to fully protect consumer identity.  Don’t fall prey to you won’t be penalized theories. You collect the data and some attorney will be asking for it; once again, no civil liability protection for the institution. 

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