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HMDA Data Blow Up!

Now that the TRID drama is working its way out, it’s time for some new drama to shake things up.  This new drama is an old drama with a twist.  And this twist is a BIG one!

As many of you know, the reportable HMDA data is going to more than double!  Now that by itself may seem a little overwhelming, as most lenders have real data integrity issues with the present data they are required to submit.  What you may not know is HOW you submit this data will change as well.  Some of you are used to doing it yourself, others may use a software to convert your LOS data to HMDA Happy data.  However, next spring the CFPB will introduce their new and what we all hope is a user friendly portal to submit your HMDA data.

This means that you will have an entire re-vamp of the way that you submit your data, in addition to the vastly increasing data fields. And brokers, you have to do this to!  It’s not just the lenders who have to file HMDA reports.

Getting your plans in place is very important as next year is going to slip by fast; just like TRID snuck up on us.  Although you don’t have to file the new data until 2018, you have to start collecting the new data January 1, 2017.  This means that you have a little over 1 year to make sure your data collection systems are in place and working well.

So before we get too deep in the weeds on the workflow concerns, let’s take a look at what has been added and what impact this may have on the analysis of your operation.

Here are the NEW Fields:

Dodd-Frank Mandated Fields

Property Address

Origination Charges

Loan Term

Introductory Rate

Non-Amortizing Features (balloon, IO, Neg am)

Property Value

Application Channel

LO NMLS

Age

Credit Score

Total Loan Costs or Total Points and Fees

 

Fields Added by the CFPB

Discount Points

Lender Credits

Interest Rate

Prepayment Penalty

DTI

CLTV

Manufactured Home-Secured Property Type

Manufactured Home-Land Property Interest

Total Units

Multifamily Affordable Units

AUS

Reverse Mortgage

Open-end Line of Credit

Business or Commercial Use

I see a lot of pricing data that was added, that when collated and examined by Data Scientists at the CFPB, will cause quite a stir in our industry.

The CFPB has not decided if all of this data will be publicly available, but it will most likely be available to advocacy organizations.  Either way, I can see the privacy attorneys rubbing their palms together in anticipation of the lawsuits!  It doesn’t take a genius to see how some of this data in the wrong hands could release information that consumers do not want made available.  It’s an interesting quandary!

Speaking of geniuses, the Brainiac’s at Optimal Blue will be vetting through this data to anticipate possible outcomes for our lender clients.  These anticipated outcomes will help us build defenses to the whole data story versus just the HMDA data story.

In the meantime, I suggest the following for all lenders:

  1. Clean up your workflow and data integrity. You’re going to have to be sharp with this new rule.
  2. Make sure you are archiving data properly, for future recall, which is not burdensome to get at. For instance, if you are not locking in OB, aren’t up to date on integrations or not doing your lock changes in your pricing engine, it will cause issues in this exam or others.  We know this because our lenders who have been there and have done it have had to clean up these issues.
  3. Become laser focused on Fair Lending. Look at the data they are collecting.  It’s pretty much a no-brainer that they are going to intensify redlining issues, disparate treatment and disparate impact.

Yes, we need to become as intense as our bank partners when it comes to compliance, so if you are not there yet it’s time to start making it happen.

Here is the HMDA page on the CFPB Website that outlines the latest guidance!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

More posts by Tammy Butler, Master CMB

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