HMDA: Avoiding the Hum-Doh’s

HDMA Compliance

HMDA is a big deal for the lending industry. Since 1975, this federal regulation has required institutions to report their data to supervisory agencies on a loan-by-loan or application-by-application basis. The Federal Financial Institutions Examination Council (FFIEC) then uses this data to create individual disclosure statements for each institution as well as aggregate reports that provide insights into the mortgage industry as a whole. These reports can be obtained by the public, making them an important part of the government’s efforts to increase transparency in the industry.

At Cyberlink, we’ve noticed that lenders tend to fall into two camps when it comes to HMDA (or Hum-duh) compliance. For some lenders, adhering to this regulation is kind of a no brainer. It may not be fun, but routine preparation and established processes make things pretty easy. For the other group, which we sometimes call the Hum-Doh’s (think Homer Simpson) things aren’t so easy. That’s because these lenders typically don’t do much preparation, causing them to sweat deadlines and even miss important things. They swear they’ll change, but these problems repeat year after year.

The good news for the Hum-Doh lenders is that change is possible. In fact, we’ve made HMDA compliance a whole lot easier for many clients. We keep up to date with all the latest regulatory requirements as well as all the best practices for the industry. Did you know that:

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  • There are 110 data fields required for 2018 reporting – this is 42 new or modified fields more than last year!
  • There are 2 scenarios for HMDA reporting provided by the Consumer Financial Protection Bureau (CFPB) – Single Family closed end purchase and Open Ended lines of credit. These 2 scenarios have received 23 updates since July 2017!
  • Beginning with January 1, 2018 the CFPB made Government Monitoring Information (GMI) and denial reasons for Home Equity Lines of Credit (HELOC) a mandatory data collection. Reporting of this loan program has previously been optional.
  • HMDA is essentially a Fair Lending review. With new rules, the CFPB will be receiving fair lending information from more than 7,400 lenders in an automated fashion, thereby allowing regulators a streamlined opportunity to analyze your practices

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During our onsite visits, we have seen a lot of different issues.  Some lenders struggle with manual spreadsheets to collect HMDA data. Others are doing their best with their LOS but are scrambling at the end of the year to fill in the missing data only to miss a component. Unfortunately, these errors can result in receiving regulators ongoing attention. If you need help with HMDA reporting, reconciliation, procedures , processes or drafting a Fair Lending Policy, call us! If you are a LendingQB customer call us to learn about our HMDA tips and tricks.