2013 HMDA Survey and Case Study

Transcription

1 2013 HMDA Survey and Case Study Volume I: Survey Summary April 21, 2014 Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 1

2 Table of Contents Section Page Foreword 3 I. Executive Summary 4 II. Overview of Survey Results 5 III. Statutory Basis for HMDA Data Availability and Accessibility 6 IV. Survey Methodology 7 V. Survey Conclusions 10 VI. Survey Index Summary 11 VII. Contact Information 11 Exhibit A Selected 2013 HMDA Survey and Case Study Dashboards 12 Exhibit B CFR Title 12 Part 1003 Section Exhibit C Survey Recipient Letter 1 18 Exhibit D Survey Recipient Letter 2 19 Exhibit E Survey Recipient Letter 3 21 Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 2

3 Foreword Data is important. Mortgage lenders and their regulators are recognizing that advanced analytics involving large volumes of enterprise, industry, and referential data are emerging as a differentiator for those that want business sustainability and success. Right now, data collected and made available pursuant to the Home Mortgage Disclosure Act (HMDA) is understandably at the center of negotiations over the scope, accessibility, and use of data. Recognizing the value of HMDA data, Mortgage TrueView conducted a survey to empirically understand the ease with which HMDA data could be acquired and accessed. The results of this survey, which are set forth in this Report, simply provide the facts regarding the acquisition and accessibility of HMDA data. Among other things, the reports arising from this Survey confirms that while there is much more to be done, HMDA data is the first step in identifying enterprise and market exposures and opportunities. This Survey was conducted to ensure that all stakeholders have access to industrywide data and informed insights. Accordingly, this Report will be followed by a second report Volume II: 2013 HMDA Data Insights to provide absolute and relative insights, based on earlier access to market data, that enhance corporate governance, improve regulatory compliance, and manage operational and business risks. Data is indeed important. Intelligence is essential. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 3

4 I. Executive Summary 1. The 2013 HMDA Survey response rate 1 indicates a reasonable basis for expecting HMDA Respondents to provide their 2013 HMDA Data upon request. o Responses were evaluated based on the following standard a prompt written communication from the survey recipient indicating, among other things, that the requested information for one or more indicated MSAs/MDs is available for inspection at a designated location and that a copy of such information may be subject to a reasonable fee. The basis for this standard, which is set forth in Section III, is confirmed by market practice as summarized in this Report. 2. The 2013 HMDA Survey responses indicate a lack of consensus among market leaders as to whether or not transparency includes ease of use. o o Machine readable data was the most common response form. This data format greatly simplified the loading of data for purposes of our Case Study. Hardcopy responses included reports comprised of hundreds and in one case over one thousand pages which suggests some respondent protocols are not based on minimizing costs but rather, perhaps, literally adhering to rules that complicate analysis of their data. 3. The 2013 HMDA Survey non-response rate indicates two potential issues insufficient request routing protocols and/or an affirmative decision that no written response was required. o Our multi-request methodology set forth in Section IV was designed to minimize the rate of non-response due to non-receipt of our HMDA data requests. Therefore, the level of non-response likely indicates either (a) lack of sufficient protocols to route such requests to the appropriate contact or (b) an affirmative decision that there is no obligation to provide a written response indicating the data would either (i) not be provided or (ii) how the data may be accessed. 4. The 2013 HMDA Survey provides valuable rule-making insights o o Survey results indicate that stakeholders need to substantively address the availability (i.e., acquisition) and accessibility (i.e., usability) of HMDA data as part of HMDA changes under consideration pursuant to the Dodd-Frank Wall Street Reform Act of Updating the means of acquiring and accessing HMDA data to incorporate technological and analytical developments achieved over the past 40 years may obviate or temper the need to incorporate additional HMDA data elements such as those that could possibly identify loan applicants. 1 Survey Recipient responses received subsequent to the publishing of this Report will be accepted and incorporated into our Survey and Case Study Dashboards available on our website. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 4

5 31 II. Overview of Survey Results 2 Comprehensive interactive survey results are available on our website 3. Selected HMDA 2013 Survey and Case Study Dashboard graphics are included in Exhibit A. The following tables summarize key survey results: 1. Coverage and Response Rates: Survey Category Institution Application Population Percent Count Count Population Percent Recipients 1,161 7,253 16% 17,085,398 18,691,551 91% Respondents 381 1,161 33% 11,106,539 17,085,398 65% Non-respondents 780 1,161 67% 5,978,859 17,085,398 35% The high percentage of applications reflects participation of seven Top 10 respondents and fifteen Top 20 respondents. 2. Form of Response: Response Description Respondent Application Percent Count Count Percent No Filing Required 2 1% 30,713 0% On-Site 31 8% 219,059 2% Upon Payment 30 8% 297,886 3% Hard Copy (Fee) 2 1% 3,012 0% Hard Copy (No Fee) 39 10% 419,209 4% PDF (No Fee) % 1,143,159 10% Machine Readable (No Fee) % 8,993,501 81% Total % 11,106, % PDFs can be converted into machine readable form using OCR software. Therefore, total machine readable respondent count and application count percentages are 72% and 91%, respectively. 3. Machine Readable: Description Respondent Count Percent Applications Percent.csv 3 2% 16,188 1%.dat % 8,308,212 92%.txt 1 1% 9,072 0% Excel 34 21% 660,029 7% Total % 8,993, % Data provided in.dat format required less than 10 minutes to incorporate into our Case Study which confirms a high accessibility factor. 2 Survey Results reflect responses received through April 20, Dashboards are accessible at Complementary access credentials can be requested as set forth in Section VII or through mortgagetrueview.com. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 5

6 III. Statutory Basis for HMDA Data Availability and Accessibility Our definition of a conforming statutory response to our request for a HMDA Respondent s Loan Application Register ( LAR ) is based on Section of Regulation C 4 which sets forth the following: Paragraph (c) provides that [a] financial institution shall make its loan/application register available to the public after removing the following information regarding each entry: The application or loan number, the date that the application was received, and the date action was taken. An institution shall make its modified register available following the calendar year for which the data are compiled, by March 31 for a request received on or before March 1, and within thirty calendar days for a request received after March 1. The modified register need only contain data relating to the MSA or Metropolitan Division for which the request is made. Paragraph (d) provides [a] financial institution shall make its modified register available to the public for a period of three years and its disclosure statement available for a period of five years. An institution shall make the data available for inspection and copying during the hours the office is normally open to the public for business. It may impose a reasonable fee for any cost incurred in providing or reproducing the data. Paragraph (e) provides [a] financial institution shall post a general notice about the availability of its HMDA data in the lobby of its home office and of each branch office located in an MSA and Metropolitan Division. An institution shall provide promptly upon request the location of the institution's offices where the statement is available for inspection and copying, or it may include the location in the lobby notice. 5 Based on the provisions of Section (c) through (e), we considered a literally compliant response to be a promptly written communication from the recipient indicating, among other things, that the requested information for one or more indicated MSAs/MDs is available for inspection at a designated location and that a copy of such information may be subject to a reasonable fee. While the value of literally compliant responses as set forth in the preceding paragraph would be of limited benefit to our Case Study, we believe that understanding the level of such compliant responses would be beneficial to stakeholders in considering availability and accessibility updates to Regulation C to in the interest of enhancing transparency. 4 See Exhibit A. 5 Because the purpose of posting a general notice as set forth in (e) is to provide an address where the information can be requested, we believe that sending a request to the address set forth in the HMDA filing is sufficient to expect that an institution will promptly provide a response to our request. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 6

7 IV. Survey Methodology 1. Survey Recipients. Based on loan applications reported in the 2012 FFIEC HMDA data, we selected identified the top 1,161 mortgage originators, representing 91% of 2012 loan applications, for inclusion in our survey. Survey Recipients are detailed in our Survey and Case Study Dashboards. 2. Survey Distribution. The FFIEC 2012 HMDA data contains the HMDA Respondent s address but not a named point of contact. As a result, we could only identify a mailing address and not a named point-of-contact. In an effort to identify either a named point-of-contact or a functional title, we judgmentally selected approximately 300 of the targeted recipients, primarily the largest originators, and conducted web-based research and direct telephone contact in an effort to identify a named contact. This protocol resulted in identifying a limited number of names and prompted us to conclude that our requests should be jointly addressed to a Survey Recipient s CEO/Chief Compliance Officer. 3. Survey Request. Our preparation for this survey included research into prior efforts to acquire HMDA data subsequent to its submission and before it is published by the FFIEC. Among other things our research identified chat room content as far back as 2007 in which HMDA preparers expressed concern that their data was being requested for purposes they deemed unacceptable. This finding prompted us to retain FITECHS, Inc. to conduct this survey and to direct FITECHS, Inc. to design and implement a neutral contact strategy. In general, a neutral contact strategy extends a general request without specific statutory citations, stressed reciprocal benefits, and solicits questions or expressions of concern arising from the request contained in our Survey. The following summarizes our written requests to Survey Recipients: i. First Mailing (Exhibit B). This letter was mailed to arrive on or about February 28, Letters sent to the top 60 respondents were sent via certified U.S. Mail. ii. Second Mailing (Exhibit C). This letter was mailed on or about March 17, 2014, to non-respondents as of that date. This letter included comments intended to respond to common questions raised by survey recipients. iii. Third Mailing (Exhibit D). This letter was mailed on or about March 28, 2014, to non-respondents as of that date. The letter indicated that the response window had been extended as we had been contacted by state and national trade associations seeking information about our survey. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 7

8 IV. Survey Methodology (continued) 4. Survey Follow-up. a. Telephone Contact. We attempted on multiple occasions to contact the Top 300 non-respondents via telephone or other electronic means. In general, we were unable to identify an appropriate point of contact. b. In-Person Request. We visited the offices of approximately 15 Survey Recipients located in Orange County, California and surrounding areas and personally delivered one or more the letters set forth above in connection with an in-person request for their HMDA data. The results were mixed. See Survey Index Summary for further details.. c. On-Site Pickup. In two instances we indicated our desire to pick up the information in person and pay and related fees and charges. We followed through in one instance. The Survey Recipient in the second instance indicated that they did not need to provide the data and only agreed to provide the data following questions from us about their interpretation of relevant regulations. We concluded it was best to effect a tactical retreat. 5. Other. We briefed certain third-parties on our survey goals, objectives, and/or results. Generally, such discussions included the following topics: Determination of Survey Respondents Survey Recipient obligation to response Responses of one or more group of survey recipients Enhancing response rates. We visited separately with representatives of three trade associations whose members engage in mortgage lending activities and the results were mixed: The first trade association initially expressed a strong interest in supporting our survey for the purpose of including all HMDA filers and providing their members with valuable analytical insights. This trade association was subsequently unable to allocate the necessary resources. The second trade association asked for the subset of respondents meeting their membership thresholds. We declined to provide respondent-level information prompting the trade association to request further survey updates. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 8

9 IV. Survey Methodology (continued) The third trade association contacted us after members had raised questions about our survey. We provided this trade association with an overview of our survey goals, objectives, methodology, and preliminary results and they then updated a working group of members on our survey and indicated that the 2013 HMDA survey merited a response. This trade association has expressed interest in providing their members with additional information on the issues addressed in our Survey and Case Study. At least one Credit Union responded that they were exempt from the public disclosure provisions of HMDA. This unexpected response prompted us to solicit guidance from the National Credit Union Administration. After discussion of the issue that prompted our call, we agreed to provide a presentation summarizing Credit Union attributes of our survey and case study to the National Credit Union Administration. Our presentation did not include the names of any Credit Unions. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 9

10 V. Survey Conclusions This survey identified a number of areas for improvement including the following: 1. HMDA compliance activities should be actively overseen by executive management to ensure that compliance protocols are actively managed rather than conducted in a complete the filing and check-off the list manner. 2. The method of acquiring HMDA data should be updated to include either a named or a functional point of contact on the HMDA respondent s website. 3. The requirements associated with responding to requests for HMDA data should be more clearly and concisely articulated to eliminate the range of views encountered in our survey. 4. The requirement to specify Metropolitan Statistical Areas and/or Metropolitan Districts should be eliminated to provide a more meaningful assessment of a HMDA Respondents mortgage lending activities in an era of Internet mortgage lending and branch rationalization. 5. HMDA data should be provided in machine-readable or OCR-enabled form to reduce a Respondent s compliance costs and eliminate the potential for literal compliance as the means to limit the data s usability. 6. Non-regulatory groups should provide leadership and training that supplement technical compliance guidance with content that outlines the full range of governance, risk management, and compliance benefits associated with HMDA data. 7. HMDA rendering data protocols are, with limited exceptions, highly automated and, as a result, HMDA data should be available on a more frequent (i.e., quarterly) basis. Conclusions arising from our Case Study are set forth in Volume 2 Case Study Summary Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 10

11 VI. Survey Index Summary All survey responses have been indexed and subjected to dual evaluation to ensure proper response classification. An index of all survey results with respondent identification redacted is available upon request. Among other things, this index indicates: 1. Summary of any commentary accompanying a Survey Recipient s response. 2. Summary of any commentary received from non-respondents. 3. Form of delivery (i.e., USPS, , secure file transfer) 4. Password protection (if any) 5. PDF Format (i.e., OCR enable) VII. Contact Information Access Credentials: To secure access credentials to our survey results and case study on our website, please contact Tom Engebretsen at tom@mortgagetrueview.com. Survey Index: To acquire a copy of our Survey Index, please contact Becky Walzak at becky@mortgagetrueview.com Questions and Comments: Please address any questions or comments about this survey to David K. Moffat at david@mortgagetrueview.com. Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 11

12 Exhibit A Selected 2013 HMDA Survey and Case Study Dashboard Overview: HMDA Respondent and Application Trends (2010 to 2012) 2013 HMDA Survey Recipient Count 2013 HMDA Survey Recipient and 2012 Applications as a percent of total Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 12

13 Exhibit A Selected 2013 HMDA Survey and Case Study Dashboard Availability Summary Survey response summary Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 13

14 Exhibit A Selected 2013 HDMA Survey and Case Study Dashboard Accessibility Summary: Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 14

15 Exhibit A Selected 2013 HMDA Survey and Case Study Dashboard Accessibility Machine Readable: Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 15

16 Exhibit B Title 12: Banks and Banking 6 PART 1003 HOME MORTGAGE DISCLOSURE (REGULATION C) Disclosure and reporting. (a) Reporting to agency. (1) By March 1 following the calendar year for which the loan data are compiled, a financial institution shall send its complete loan/application register to the agency office specified in appendix A of this part. The institution shall retain a copy for its records for at least three years. (2) A subsidiary of a bank or savings association shall complete a separate loan/application register. The subsidiary shall submit the register, directly or through its parent, to the same agency as its parent. (b) Public disclosure of statement. (1) The Federal Financial Institutions Examination Council (FFIEC) will prepare a disclosure statement from the data each financial institution submits. (2) An institution shall make its disclosure statement (prepared by the FFIEC) available to the public at the institution's home office no later than three business days after receiving the disclosure statement from the FFIEC. (3) In addition, an institution shall either: (i) Make its disclosure statement available to the public, within ten business days of receiving it, in at least one branch office in each other MSA and each other Metropolitan Division where the institution has offices (the disclosure statement need only contain data relating to the MSA or Metropolitan Division where the branch is located); or (ii) Post the address for sending written requests in the lobby of each branch office in other MSAs and Metropolitan Divisions where the institution has offices; and mail or deliver a copy of the disclosure statement within fifteen calendar days of receiving a written request (the disclosure statement need only contain data relating to the MSA or Metropolitan Division for which the request is made). Including the address in the general notice required under paragraph (e) of this section satisfies this requirement. (c) Public disclosure of modified loan/application register. A financial institution shall make its loan/application register available to the public after removing the following information regarding each entry: The application or loan number, the date that the application was received, and the date action was taken. An institution shall make its modified register available following the calendar year for which the data are compiled, by March 31 for a request received on or before March 1, and within thirty calendar days for a request received after March 1. The modified register need only contain data relating to the MSA or Metropolitan Division for which the request is made. (d) Availability of data. A financial institution shall make its modified register available to the public for a period of three years and its disclosure statement available for a period of five years. An institution shall make the data available for inspection and copying during the hours the office is normally open to the public for business. It may impose a reasonable fee for any cost incurred in providing or reproducing the data. (e) Notice of availability. A financial institution shall post a general notice about the availability of its HMDA data in the lobby of its home office and of each branch office located in an MSA and Metropolitan Division. An institution shall provide promptly upon request the location of the institution's offices where the statement is available for inspection and copying, or it may include the location in the lobby notice. 6 Citation Current as of April 17, 2014 Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 16

17 (f) Loan aggregation and central data depositories. Using the loan data submitted by financial institutions, the FFIEC will produce reports for individual institutions and reports of aggregate data for each MSA and Metropolitan Division, showing lending patterns by property location, age of housing stock, and income level, sex, ethnicity, and race. These reports will be available to the public at central data depositories located in each MSA and Metropolitan Division. A listing of central data depositories can be obtained from the Federal Financial Institutions Examination Council, Washington, DC Copyright 2014 Mortgage TrueView, Inc. All Rights Reserved. Page 17

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