And So It Begins!

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Are You Ready to HMDA?

“Those required to report this information must make more careful efforts to follow the law,” CFPB Director Richard Cordray said in a press release. “Today we are sending a strong reminder that HMDA serves important purposes for many stakeholders in the mortgage market.”

Mr. Cordray was speaking about a $1.75 million fine levied against Nationstar Mortgage for HMDA reporting violations.

Though no consumers were affected by Nationstar’s actions (or inactions), CFPB stated that the magnitude of Nationstar’s errors, their history of violations, and their market size, all led them to assess the largest civil money penalty ever for a HMDA violations. EVER!

Mr. Cordray further stated that this fine CFPB is sending a strong message. So, if you’re a lender and you’re not taking HMDA seriously, you better have a quick change of heart and mind.

Under the new HMDA rules for reporting in 2019, lenders must begin to collect a total of almost 50 data elements about the applicants and the loans for all mortgage applications and preapprovals.

The biggest challenge may come from collecting applicant’s information on their ethnicity and race. Under the new rules, the applicant may have up to 20 different combinations for reporting this information.

If they chose not to report it, the lender must make such determinations based on a visual observance or applicant surname. Talk about a challenge.

Additionally, lenders must report information on the loan’s fees, cost, rate, and secondary market buyer. All things that are not required now.

So, if you’ve having problems with HMDA data collection or reporting now, you’re in for some real challenges beginning in 2018.

Hopefully, you are working closely with your LOS provider to have a process to capture the required data, review it, and periodically report on it.

I suggest the system have the capability to require the input of any required HMDA data into the loan at each stage when it should become available.

Don’t forget to also train your originators and support staff on what is required for HMDA reporting so they are aware of what needs to be collected and reported.

Are you ready to HMDA?  I sure hope so. It is evident that the CFPB is prepared to dance.

About the Author

Michael Vitali

Michael L. Vitali – Independent Consultant to the Mortgage Industry Mike Vitali is an independent consultant to the mortgage industry on matters concerning compliance and mortgage lending. He most recently served as the Senior Vice President and Chief Compliance Officer for LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties included research, interpretation, and analysis of existing and proposed legislation related to the industry in support of recommendations for policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management, and compliance. Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.