In a previous blog, I touched briefly on some of the changes for HMDA that required action in 2017. This week, I will refresh your memory on the 2017 requirement. I will also discuss how you can be sure you are ready for what is yet to come as the changes for 2018 are definitely going to take center stage.
The only change for 2017 came in the form of who is responsible to report and, at this point, you should have already made this determination. If you don't report, you don't collect so you get to exit stage left, for the time being. Remember, the rule is as long as you still meet the asset-size, location, federally related, and loan activity exemptions or you do not originate at least 25 home purchase loans (or refinancings of home purchase loans) in each of the two prior calendar years (2015 and 2016), you do not have to gather information this year to report next year.
While the new data elements are not collected until next year, it is important to go ahead and start working on policies and procedures so that you can be ready and can conduct training early. There are several data elements that allow institutions to choose how/what they will report. You need to nail down how/what you will report now, put those choices in your procedures and train your employees. Do not wait until October of 2017 to nail things down and then start training in November and December when everyone is focused more on the holidays and what they will get for Christmas. There is less room for error when you have specific choices and procedures for making those choices.
So, how do you make these decisions? Choose a member from each line of business and create a HMDA Implementation Committee. You want someone from IT, senior management, lending, loan maintenance/processing, compliance, etc. Identify those areas that allow an option and allow the committee to decide what the best option is for your institution. The Implementation Committee will also be beneficial for developing timelines along the way to keep you on target for the 2018 mandatory compliance date. Meet regularly to gauge where you are in your processes and to identify areas that need to be worked on.
Contact your vendors early. Find out what their plans are for complying with the new rules and what their targeted dates are. Ask specific questions such as, "Will they be assisting with the creation of the two digit check digits that are assigned to the ULI?" Monitor their progress and stay in touch.
Last, but not least...train, train, train! With information for 54 data elements to be collected and reported, it is vital that your employees understand what to collect, when to collect, and how to collect; train early and test for understanding. There is no such thing as being too prepared.
On April 13, 2017, the CFPB issued a proposal to amend the 2015 Home Mortgage Disclosure Rules. The proposal seeks to clarify key terms such as "temporary financing" and "automated underwriting system". There are also number of technical corrections as well as some minor changes to the HMDA regulation. The proposal would also, for example, establish transition rules for reporting certain loans purchased by financial institutions as well as rules to facilitate the reporting of the census tract of a property utilizing a new geocoding tool provided by the CFPB online. One major change is the treatment of five or more 1-4 family dwellings of fewer than five units as multifamily dwellings. The comment period expires on May 25, 2017, so stay tuned for updates once the final rule is published.
With all the current rules and new proposed changes lurking, you may feel like the weight of the world (or the lights from many cameras) is on your shoulders. If you are a client, you can breathe easier, we're here to help. Not only do we have a team of advisors ready to answer any questions you may have, but we are also proud to offer to our clients a free Action Plan Quick Compliance Guide, together with an example already completed, to assist you in putting a plan in action. You can find this Action Plan and the example on our website under the "Quick Guides" listing. If you are not a current client, it's is a great time to take action and receive these excellent services.