CFPB To The Rescue: Revisions To The Revised HMDA Rules


BLOG VIEW: With mortgage lenders just getting over the challenges created by the qualified mortgage/ability-to-repay rules, as well as the TILA-RESPA Integrated Disclosures rule, they’re now faced with a new hill to climb: new reporting requirements for the Home Mortgage Disclosure Act (HMDA).

The Consumer Financial Protection Bureau (CFPB) just released a set of technical corrections and clarifying amendments to the HMDA and has asked for feedback. These are intended to update and clarify the HMDA final rule that the bureau issued in October 2015.

The rules are due to take effect for loan information gathering and reporting in January 2018.

As is to be expected with any regulatory change, there has been some confusion and uncertainty surrounding these new rules. Some of the uncertainty was clarified initially, before the bureau finalized the rule, but now, the CFPB has released a new proposal that further clarifies what is required.

Confused? You’re not alone.

The new proposal is intended to clarify some definitions and what needs to be reported, and by what institutions, under certain circumstances. This is important, as a lender is not required to report all data for all loans.

For example, the new proposal clarifies that transition rules would allow a lender to report the loan purpose and loan originator identifier as “not applicable” for loans purchased that were originated before certain regulatory requirements took effect.

The proposal would also clarify that NY CEMA loans are included for reporting purposes while expanding the definition of multifamily residential structures and clarifying when data needs to be reported for loans made on such dwellings. It also clarifies what is considered “temporary financing” and doesn’t need to be reported.

The proposal includes technical corrections to the amended rules, with updates and modifications to the related commentary, to clarify the meaning and intent of certain requirements. For the most part, the proposed changes cover technical info, and they do not reduce or change the amount of new data that needs to be reported by a lender on covered transactions, as required by the October final rule.

One more thing: The CFPB developed an online geocoding tool for a lender’s use in identifying and reporting the required census tract information. Nice touch, but it’s maybe a little late. If a lender uses this tool, it will not be held accountable for any errors reported, as long as the data entered to obtain the information is accurate. It would be nice if lenders can integrate this tool into their HMDA systems.

It is good to see that the CFPB is listening to the industry and doing what it can to help.

I suggest you take a few minutes to review the proposal and provide any comments/suggestions you deem appropriate.

Time is running out. In case you care (and you should), there’s only about 38 weeks before the new reporting requirements under HMDA take effect.

Michael Vitali is chief compliance officer for LoanLogics, a provider of automated compliance and quality control solutions to the mortgage industry.

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