The Home Mortgage Disclosure Act’s (HMDA) Regulation C (Reg. C) was established in 1975 to increase transparency in mortgage lending practices and aid in identifying discriminatory lending practices. Reg. C addressed concerns that financial institutions – including banks, savings associations, credit unions, and other mortgage lending institutions – were not providing sufficient credit opportunities to qualified applicants in certain geographic areas. The requirements involve gathering and annually reporting applicant and borrower demographic data on the Loan Application Registry to the Federal Financial Institutions Examination Council.
In October 2015, the Consumer Financial Protection Bureau amended HMDA to improve information reported by financial institutions about the mortgage market. With many of the updates to the Home Mortgage Disclosure Act rule taking effect January 2018, many questions about HMDA remain unanswered.
In this HousingWire 10-part series, Managing Director Beji Varghese comments on pressing HMDA-related questions, on what to expect, and how to prepare.
Top 10 HMDA questions answered, include:
What are the latest changes coming to HMDA?
Do the HMDA changes lay the foundation for a new reporting system to be in place by January 2020? If so, what does this process look like?
What do the recent amendments and publications to HMDA mean for a lender?
What will the regulators expect now and going forward?
How are the LOS providers generating the ULI and on what document will it be placed?
How do you define an origination to meet the threshold for HMDA reporting?
How does HMDA regulation address non-delegated correspondents when the investor underwrites all the loans? Would certain types of mortgage banks be exempt due to fewer than 25 loans originated per year? What is required for correspondent loans?
Where should lenders currently be in the process of preparing for HMDA?
What should be keeping a lender awake at night now?
How should LOS providers differentiate to help lenders today?
In 2018, Lenders should have completed all system enhancements required to support HMDA 2018. User acceptance testing should be completed for the new required data elements. Additionally, they need to update policies, procedures, process maps and training documents. Partner with industry experts to provide detailed training to staff on unique scenarios that could arise due to the new requirements. Testing process should be in place to validate live data if possible.