Home Mortgage Disclosure Act 2017, 2018, and Beyond. Presented by Marissa Blundell Bankers Advisory A CliftonLarsonAllen LLP Division

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1 Home Mortgage Disclosure Act 2017, 2018, and Beyond Presented by Marissa Blundell Bankers Advisory A CliftonLarsonAllen LLP Division

2 Home Mortgage Disclosure Act (HMDA) Consumer Financial Protection Bureau (CFPB) issued Final Rulemaking on October 28, 2015 Amends HMDA Implementing Regulation C 12 CFR Part 1003 Changes effective in 2018, mostly

3 HMDA Changes Timeline 2017 Exclusion for low volume depositories effective 2018 Collect HMDA data using Standards from New Rule

4 HMDA Changes Timeline 2018 Most institutional and transactional coverage provisions effective Submit 2017 data (collected under current rule) to CFPB (if under supervision of CFPB)

5 HMDA Changes Timeline 2019 First submission of data collected (in 2018) using the provisions of the New Rule 2020 Quarterly Reporting Provisions effective

6 Institutional Coverage 2017 Narrower scope for depository institutions bank, savings association, or credit union meets the current asset-size, location, federally related, and loan activity tests and originates at least 25 home purchase loans, including refinancings of home purchase loans

7 Institutional Coverage 2018 Uniform Loan-volume Threshold Includes depository and non-depository for-profit lending institutions originated 25 or more closed-end mortgage loans in each of the 2 preceding years or 100 or more open-end lines of credit in each of the 2 preceding years and meets other applicable coverage requirements

8 Transactional Coverage Changes effective January 1, 2018 Shift to dwelling-secured standard from purposebased standard for determining whether a transaction is HMDA Reportable closed-end mortgage loans open-end lines of credit secured by a dwelling

9 Polling Question 1 Do you speak HMDA? 1. Yes 2. No 3. Do not know

10 Transactional Coverage Exceptions Consolidation of Excluded Transactions Dwelling secured, closed-end mortgage loan or open-end line of credit is not reported, if originated/purchased by FI in Fiduciary Capacity secured by unimproved land total dollar amount less than $ temporary financing

11 Transactional Coverage Exceptions Consolidation of Excluded Transactions Dwelling secured, closed-end mortgage loan or open-end line of credit is not reported, if primarily for agricultural purpose primarily for business or commercial purpose, unless the transaction is a home improvement loan, a home purchase loan or a refinancing

12 Transactional Coverage Exceptions Consolidation of Excluded Transactions Dwelling secured, closed-end mortgage loan or open-end line of credit is not reported, if purchases of interests in pool of closed-end mortgage loans or open-end lines of credit purchases of servicing rights only purchases pursuant to merger or acquisition purchase of partial interest only

13 Transactional Coverage Exceptions Interplay between new Institutional and Transaction Coverage Tests Provides exceptions for low-volume open-end credit activity or closed-end mortgage loan activity

14 Transactional Coverage Exceptions Closed-end mortgage loan If the financial institution originated fewer than 25 closed-end mortgage loans in each of the two preceding calendar years

15 Transactional Coverage Exceptions Open-end Line of Credit Open-end credit transactions secured by a dwelling must be reported, ifinstitution originated at least 100 covered open-end lines of credit in each of the 2 preceding years

16 Transactional Coverage Home improvement loans will only be covered loans if they are secured by a dwelling

17 Transactional Coverage Preapprovals January 1, 2018 Requirement to report for approved, but not accepted preapproval requests for home purchase loans Exclusions for preapproval requests for open-end lines of credit, reverse mortgages, and home purchase loans to be secured by multifamily dwellings

18 HMDA Reportable Preapprovals Preapproval programs after a comprehensive analysis of the credit worthiness of the applicant, issues a written commitment to the applicant valid for a designated period of time to extend a home purchase loan up to a specified amount Unfair Deceptive Abusive Acts or Practices (UDAAP) concerns

19 Polling Question 2 Do you have a HMDA reportable preapproval program? 1. Yes 2. No 3. Do not know

20 Additional Data Collected & Reported January 1, 2018 Collection of additional data points identified in the Dodd-Frank Act, as well as data points that the CFPB determined will assist in carrying out HMDA s purposes

21 Reportable Data New Data Points o applicant or borrower age o credit score o automated underwriting system o property value o application channel o points and fees o origination charges

22 Reportable Data New Data Points o discount points o lender credits o loan term o prepayment penalty o non-amortizing loan features o interest rate o loan originator identifier

23 New Data Points Interest Rate applicable to the approved application, or closing, or account opening Costs and Fees total loan costs or total Points & Fees

24 New Data Points Total Debt-to-Income Ratio relied on for credit decision Loan to Value Ratio total amount of debt secured by the property to the value of the property

25 New Data Points Loan Term number of months Whether loan or application is for Reverse Mortgage, Open-end LOC, or primarily for a business or commercial purpose

26 New Data Points Whether contractual terms include or would have included any of the following: balloon payment, interest-only payments, negative amortization features, or any other term that would allow for payments which are not fully amortizing

27 Reportable Data Modified Universal Loan Identifier (ULI) must begin with FI s Legal Entity Identifier (LEI) plus 23 additional characters ending with a 2- character check digit Loan Purpose expanded to include a cash-out refinancing, or other purpose

28 Reportable Data Modified Applicant or Borrower Information report whether information was collected based on visual observation or surname for applications received in-person disaggregated ethnic and racial subcategories

29 Reportable Data Modified Ethnicity & Race Disaggregated ethnic and racial subcategories Sample data collection form Example: Other Hispanic or Latino Print origin, for example Argentinean Not required or permitted when identifying the applicant s ethnicity and race based on visual observation or surname

30 Data Submission Process CFPB web-based submission tool for reporting HMDA data in development Used for 2018 submission of data LAR required to be submitted electronically

31 Data Submission Process Is your LAR currently submitted electronically? 1. Yes 2. No 3. Do not know

32 Quarterly Reporting Beginning in 2020 for institutions that reported a combined total of at least 60,000 applications and covered loans in the preceding calendar year Does not count not covered purchased in the preceding calendar year

33 Disclosure of Modified LAR Beginning with data reported in 2018, institutions will no longer be required to provide a disclosure statement or a modified LAR to the public upon request In response to a request, a covered institution will provide a notice that its disclosure statement and modified LAR are available on the Bureau s website

34 Disclosure of Modified LAR Addressing privacy concerns raised by disclosure of expanded HMDA data CFPB will implement a balancing test to determine whether and, if so, how HMDA data should be modified prior to its disclosure More information to come, public comment period

35 Thank You! Presented by Marissa Blundell