The Home Mortgage Disclosure Act (HMDA)
The Home Mortgage Disclosure Act (HMDA) was passed in 1975 and requires financial institutions to collect and report data related to certain applications/loans secured by a dwelling. Regulation C (12 CFR 1003) implements the Home Mortgage Disclosure Act. The purpose of these requirements is to show whether financial institutions are meeting the housing needs of their communities and/or if they are engaging in discriminatory lending practices. A financial institution’s HMDA data is one of the primary tools used by examiners to determine compliance with Fair Lending laws. A financial institution’s HMDA data is also available to the public each year.
There are over 50+ data fields a financial institution must collect/report for each applicable application/loan. The number of data points can vary; however, depending on a financial institution’s loan volume. The data to be collected/reported covers a wide range of both applicant/borrower data, loan data, and property data. For example, financial institutions must collect the race, sex, and ethnicity of an applicant/borrower, property location, income, credit score, total points and fees, lien status, etc., to name a few. While the process of collecting and reporting this data may seem fairly straightforward, the process is quite tedious and leaves very little room for error. If a financial institution exceeds the error thresholds, examiners can require the data to be corrected and resubmitted and/or impose civil money penalties. It is imperative that financial institutions invest adequate resources (training, personnel, systems, etc.) to ensure compliance with these requirements.
As mentioned above, the Home Mortgage Disclosure Act (HMDA) was passed in 1975 and has undergone many changes over the years. The most notable changes; however, occurred in 2015 with an overhaul that was mandated by the Dodd-Frank Act. The changes specified in the Final Rule were implemented in stages. The first stage went into effect on January 1, 2017, and dealt primarily with determining which banks were and were not subject to HMDA reporting. The second stage went into effect on January 1, 2018, and included the bulk of the changes. There were changes to the types of reportable transactions, the data required to be collected/reported was greatly increased and the process for reporting this data to supervisory agencies was also changed. On May 24, 2018, the Economic Growth, Regulatory Relief and Customer Protection Act (EGRRCPA) was passed. This implemented additional changes to the data collection/reporting requirement for certain institutions based on loan volume. Specifically, “small filers”, as we like to call them, are exempt from collecting/reporting data for over half of the data fields.
These “new” HMDA rules are certainly not set in stone and we will continue to see changes. In addition to the formal EGRRCPA tweaks, there are many informal tweaks that happen due to the varying interpretations of the requirements whether those come from the CFPB, examiners, and/or even your software/system vendors. While this is fairly normal when a Regulation experiences a major overhaul, it reiterates the need for you to stay in the know. You don’t want to miss a development or change and end up with HMDA violations.
BCC HMDA Training Resources:
We are in the business of educating bankers, and quality training is our top priority. Our goal is to see you and your financial institution succeed! You can be assured that everything we do, from in-person training and webinars to our magazine and blog, it is done in our signature, plain English style.
In-person HMDA training, whether it’s at one of our conferences or on-site at your financial institution, is as good as it gets. The benefits of face-to-face training vs. other mediums are innumerable. Face-to-face communication not only allows you to “hear” the material but also to “see” it and “feel” it. This personal interaction with both the presenters and the other attendees/co-workers will stay with you long after the training ends. Another perk of in-person, on-site training is that it can be customized to your specific wants and needs.
If you prefer a little more flexibility as to when and where you receive training, webinars are a great solution. We have a wide variety of webinars devoted to specific HMDA topics that you can choose from. The shortened format of a webinar (1-2 hours) really allow us to go in-depth with laser-like focus on certain areas of the HMDA requirements. For example, if your lenders are struggling with collecting Demographic Information, we have a webinar devoted only to that topic. If you want to look specifically at what loans are covered by HMDA or the just data reporting requirements, we have a webinar for you.
We discussed HMDA (and many other lending compliance topics) during our two-day Virtual Lending Compliance Conference. This can’t-miss annual event is a must, especially when new regulatory requirements are upon us.
Our blog is great for staying updated with regulatory developments and topics. If the CFPB issues a Final Rule affecting HMDA, our blog is the first place you will hear about it. The blog acts as a great supplement to more formal methods of training and better yet, it’s FREE!
Our Banking on BCC Magazine is a must for any compliance professional. This monthly, subscription-based electronic magazine is chock full of valuable compliance information. We cover a variety of lending, deposit, and BSA compliance topics, from recent developments to highlighting areas that have maybe fallen off your radar. HMDA seems to be one of those Regulations that is featured on a regular basis. Each month, in addition to great articles, we feature a Q & A Corner, highlighting a few compliance questions we’ve recently received. There is also BSA Bits & Pieces, Management Minute, and a Training Spotlight.
Our Monthly Connection is yet another way to stay up to date on HMDA issues and interact with your peers in the compliance industry. While we talk about a wide variety of topics each month, there is ample time to ask questions of our experts and also your peers. We have always said, “compliance is not competitive” and our Monthly Connection is a way for compliance people to help other compliance people.
There is no one-size-fits-all approach when it comes to a financial institution’s training needs. That said, we do recommend some variety in the methods you choose. Variety will not only help your budget but will give you different viewpoints. Maybe you attend an in-person conference every couple of years and then fill in the gaps with webinars. Maybe you follow the blog to monitor major regulatory developments and look to the magazine for more in-depth analysis. The point is you can tailor training to your wants and needs.
External Section HMDA Resources:
The Consumer Financial Protection Bureau (CFPB) has a wide variety of resources available on their Home Mortgage Disclosure Act page. These resources are designed to help the industry understand, implement and comply with HMDA. You can search for and browse any HMDA applicable Final Rule and/or Notice of Proposed Rulemaking that has been released. This page also includes tools such as timelines and charts to help navigate key dates related to HMDA as well as determining if HMDA applies to an institution. There are also links to compliance guides, frequently asked questions, and videos.
The Federal Financial Institutions Examination Council (FFIEC) also provides a lot of useful resources on their Home Mortgage Disclosure Act page. These resources are geared more toward the data requirements of the HMDA Rule. For example, you will find the Rate Spread Calculator, a Check Digit calculator and information on formatting your HMDA Loan Application Register. The Filing Instruction Guide is also beneficial when trying to determine the specific details related to the data you are reporting.