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I recently spoke with Brian Honea of The MReport about how lenders might be affected by the upcoming HMDA changes. You can read my comments HERE. Take a look.
The requirements to capture and report new data elements for HMDA may seem like a long way off, but funny how time files when you’re programming for changes. Think of TRID and the time we had to get ready, only to scramble at the end…after an extension.
The HMDA changes require the capture of 24 new date elements, along with the 24 now being reported, on the loans you originate. These elements deal with loan pricing, origination fees, and discount point, among other things.
The consumer information is much more detailed allowing an applicant to provide specific information about race and ethnicity. This will provide the CFPB with much more detail for analyzation that may lead to unfair and/or deceptive lending claims against lenders.
Now is the time to prepare for the capture and reporting of the new required data, and the time to review loans and your origination processes to ensure these are being handled correctly. Don’t wait until the last minute to pull together reporting that hasn’t been completely reviewed and vetted on the loans you are originating. Know what will be reported to CFPB.
Lenders need to take a close look at their lending areas, practices and pricing to protect against any potential or perceived improprieties. Be careful of pricing adjustments to certain borrowers that may create disparate impact or appear to be discriminatory. All applicants must be treated equally and fairly, and all price adjustments must be justified and documented as to the specific reason.
Don’t leave anything to chance. Begin the process for the programming to capture and report the required data now, and begin carefully reviewing your loans to ensure compliance and correctness. You can’t be too careful.
HMDA is going to put much more detailed loan and consumer information in the hands of the CFPB. This is not fear… it’s fact. If you’re doing everything according to the rules, you have nothing to fear. If you’re trying to skirt them, watch out. That’s fact.
BTW, do you have your documented CMS up to date? More on that later.
