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I hope by now everybody knows or should know, that CFPB has increased the reporting requirements for data under the Home Mortgage Disclosure Act (HMDA). Even some people outside of our mortgage lending arena have asked me about it. Go figure.
Effective with loan action dates in 2018, lenders need to report 48 loan data elements to CFPB for each loan application or loan pre-approval decisioned in 2018.
This includes loans originated by a lender and those that they purchase; purchases, refinances, and HELOC’s. If it’s a loan secured by a dwelling, you probably need to report the required HMDA info.
Note however that on the loans being purchased, not all the data needs to be reported. For example, you can report income and approval data as “Not Applicable” for purchased loans. That is due to the fact that you did not originate or approve those loans.
You can get a complete list of what needs to be reported and what may be reported as “Not Applicable” on CFPB’s Website.
Are you ready to HMDA? Keep in mind that some of the loans you originate through year end will be decisioned in 2018. That means you’ll need to report the required 2018 data on those loans as well. Hopefully, you’re now prepared to start collecting all the new information on your current loan originations.
Beginning in 2018, you might want to consider a monthly review of your decisioned loans for complete and accurate HMDA data collection.
Going forward, it may not be enough to just report a data dump from your LOS. Do you believe that your LOS data is 100% accurate? Probably not! So, don’t take the chance of reporting inaccurate information.
The information should be extracted from your LOS, product and pricing engine, where applicable, and your loan documents. Once extracted, this information needs to be compared across all sources to ensure data, system, and document accuracy.
You can then quickly identify anything missing or needing correction and make the required adjustments before sending the info to the CFPB. Otherwise, you just might end up reporting inaccurate information on your lending activities and that ain’t a good thing.
Don’t kid yourself; CFPB didn’t increase the HMDA data requirements for the fun of it. There’s a reason. They want to ensure that lenders are doing things right; no redlining, no discrimination, no fair lending violations.
CFPB is looking for equal and fair treatment for all consumers by all lenders. You need to make sure your reported date reflects this.
Be smart. Use the information you’re required to collect to your benefit. Review it periodically for accuracy but also for potential problems. Problems that you can identify early for corrective actions before you need to report to the CFPB.
You can slice and dice the data to find out things like:
- Decline rates, by applicant type, branch, LO, and underwriter;
- Lending trends by product, branch, and LO
- Detection of pricing irregularities
- Determination of training and staffing needs
The HMDA data you collect is Big Data that can provide you with valuable information about the loans you make, where you do them, and for whom. Don’t pass up the opportunity to data mine this information for your benefit, before you pass it on to the CFPB for their purposes.
The HMDA data you collect and report today may determine, how (and if) you do business tomorrow.
The game continues to change. You need to play different. LoanLogics can help.
