S.2155 Implementation The Latest HMDA Changes The webinar will begin at the top of the hour. You may download the presentation at: www.questsoft.com/hmdachanges
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Today s Panelists Loretta Kirkwood Vice President, Compliance QuestSoft Corporation Leonard Ryan President QuestSoft Corporation Moderator Scott Mortenson Marketing Director QuestSoft Corporation
S.2155 HMDA Technical Requirements Wednesday, October 3, 2018 Loretta Kirkwood Vice President, Compliance
S. 2155 Section 104(a) HMDA Timeline Date Action 11/16/17 Introduced to Senate 12/18/17 Committee on Banking, Housing, and Urban Affairs 03/14/18 Passed Senate 05/22/18 Passed House 05/24/18 Signed by President 05/24/18 Became Law - Effective Date Not Specified 08/31/18 BCFP Interpretive and Procedural Rule / Revised FIG 09/07/18 Federal Register - Effective Date
BCFP References Interpretive and Procedural Rule Summary https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_hmda_interpretive-proceduralrule_2018-08_executive-summary.pdf Final Rule https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/bcfp_hmda_interpretive-proceduralrule_2018-08.pdf Filing Instructions Guide (FIG) https://s3.amazonaws.com/cfpb-hmda-public/prod/help/2018-hmda-fig-2018-hmda-rule.pdf Updated Reportable HMDA Data: A regulatory and reporting overview reference chart https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201710_cfpb_reportable-hmdadata_regulatory-and-reporting-overview-reference-chart.pdf
Partial Exemption Insured Depository Institutions and Insured Credit Unions ONLY! Originations Test ORIGINATED fewer than 500 loans in each of the two (2) preceding calendar years: Closed-End Mortgage Loans Open-End Lines of Credit Exemptions operate independently of one another! Institutions may be required to collect ALL data for Closed-End Mortgage Loans, but NOT for Open-End Lines of Credit (or vice versa) based on the threshold test. (Reference: Interpretive and Procedural Rule, Page 9 Footnote 27)
Partial Exemption Insured Depository Institutions and Insured Credit Unions ONLY! Open-End Lines of Credit Full vs. Partial Exemption Full exemption threshold for reporting = 500 originations or more in either of the two preceding calendar years. Required to report all applications! Partial exemption for data reporting < 500 originations in each of the two preceding calendar years. Not required to report additional data! Originations Report All Applications Data Exemption Both Years Year 1 Year 2 Year 2 Year 3 460 512 N Y Y 502 480 Y Y Y 502 517 Y Y N
Partial Exemption Insured Depository Institutions and Insured Credit Unions ONLY! CRA Exception Test As of December 31 of the preceding calendar year: Has NOT received a needs to improve rating in each of two (2) most recent CRA exams Has NOT received a substantial noncompliance rating in most recent CRA exam
Data Point vs. Data Field Data point = data element Data field = individual fields related to data point Example: Property Address = one (1) data point and four (4) data fields Street Address, City, State* and Zip Code *State is required for both Property Address AND Property Location data points and is NOT an exempt field. Description Data Points Data Fields Total 48 110 Non-Exempt 22 57 Exempt 26 53
Exempt Data Points Exempt Data Point / Single Field Universal Loan Identifier (ULI) Rate Spread Origination Charges Discount Points Lender Credits Interest Rate Prepayment Penalty Term Debt-to-Income Ratio Combined Loan-to-Value Loan Term Introductory Rate Period Property Value Manufactured Home Secured Property Type Manufactured Home Land Property Interest Multifamily Affordable Units Mortgage Loan Originator NMLSR Identifier Reverse Mortgage Open-End Line of Credit Business or Commercial Purpose Exempt Data Point / Multiple Fields Data Fields Property Address* 3 Credit Score 6 Reason for Denial* 5 Total Loan Costs or Total Points and Fees 2 Non-Amortizing Features 4 Application Channel 2 Automated Underwriting System 12 * Property Address required for geocoding * Denial Reasons required for national banks regulated by the OCC, as well as FDIC supervised state-chartered thrifts and OCC supervised federally chartered thrifts, previously supervised by the OTS
ULI vs. NULI Universal Loan Identifier (ULI) 10Bx939c5543TqA1144M999143X38 Unique within the industry Legal Entity Identifier (LEI) 20 characters Account reference number up to 23 characters Two-character check digit 2 characters Non-Universal Loan Identifier (NULI) 999143X Unique within the institution Account reference number up to 22 characters No LEI No Check Digit required* *May voluntarily include Check Digit in the NULI as long as the total field length does not exceed 22 characters.
ULI vs. NULI Clarification: Non-Exempt Institution purchases loans originated by a partially exempt institution that assigned a NULI rather than a ULI The purchasing institution: Does NOT report the NULI Assigns its own ULI (Reference: Interpretive and Procedural Rule, Page 20 Footnote 49)
Unchanged Data Points Unchanged Data Point / Single Field Record Identifier Legal Entity Identifier Application Date Loan Type Loan Purpose Preapproval Construction Method* Occupancy Type Loan Amount Action Taken Action Date County Census Tract State Income Type of Purchaser HOEPA Status Lien Status Total Units* Unchanged Data Point / Multiple Fields Data Fields Ethnicity 14 Race 18 Sex 4 Age* 2 * Construction Method + Total Units replaces Property Type * Age required as part of applicant demographic data under discretionary authority of the BCFP, such other information as the Bureau may require.
Regulatory Relief? Yes Data integrity testing for 57 fields vs. 110 No validation or scrubbing of 53 exempt data fields Public data reduced by 36 exempt data fields* Reduced reputational risk Limited pre-exam statistical analysis *Based on September 25, 2017 BCFP Disclosure of Loan-Level HMDA Data proposal.
Regulatory Relief? No Must maintain a satisfactory CRA rating Different data requirements based on independent tests for Open-End and Closed-End Will have to capture ALL data for investor decisioned applications if they are non-exempt Examiners may request additional data as part of fair lending examination Exempt data is needed for internal fair lending analysis
Optional Reporting Voluntary reporting is not all or nothing decision May select specific data points to report Must report all related data fields for reported data point Can decide to report at any time prior to submission! Example: If Non-Amortizing Features data point is selected for reporting, four (4) data fields must be reported Balloon Payment, Interest-Only Payments, Negative Amortization, and Other Non-Amortizing Features.
Optional Reporting vs. Data Capture Voluntarily Reporting Data? Selecting data to be reported ALL or some No difference in data based on independent partial exemptions Will require data integrity testing prior to submission Data will be publicly available Pre-exam analysis by regulators
Optional Reporting vs. Data Capture Capturing Data Maintain actual data, submit exempt codes No change in current data capture process Data will be available for fair lending analysis Enhanced internal assessment of competition / peers Limits confusion Training System control Investor requirement Exempt vs. non-exempt reporting
S.2155 HMDA Changes to QuestSoft Products Wednesday, October 3, 2018 Leonard Ryan President
New Features in Compliance RELIEF Addition of New Tab within HMDA Preferences Features: - Ability to turn on/off exemption and options by Reporting Year. - Includes all required data combinations that can be selected for voluntary reporting. - Data points required by regulatory agencies regardless of BCFP exemption are automatically activated. - Multiple sorting methods.
New Features in Compliance RELIEF Changes to Executive Dashboard Features: - If Exempt status is selected, the Current Status will display institution as an Exempt Institution. - Initial release will indicate the calculations for Exempt Rate Spread reporting. - Future releases will have a redesigned executive dashboard for both exempt and non-exempt institutions. - Future versions will also have a QS macro warning upon submission if total LAR count exceeds 500 records.
New Features in Compliance RELIEF Loan Records Selection Screen Features: Similar to the loan record screens, the record selection screen allows you to view data in its actual form or in its exempted status form when your Preferences are set to Exempt Organization.
New Features in Compliance RELIEF Exempt View or Data View Selection Features: - Exempt View displays record with the values that will be used for your file submission to the BCFP. - Data View displays record with the real value stored within Compliance RELIEF. - View Exempt Pref. displays the current settings for submission. To change, return to Preferences.
New Features in Compliance RELIEF View of a Record with Exemptions Applied Features: - Exempt View or Data View allows you to view for submission value or for use with fair lending or other analysis. - In Exempt View, exempted fields display submitted value vs. actual value. - NULI replaces ULI and uses Application/Loan No. unless you select ULI to voluntarily report. - BCFP HMDA Error Codes removed for exempted fields.
New Features in Compliance RELIEF Reports: New LAR Report Features Features: - Ability to turn on/off exemption and options by Reporting Year. - Includes all required data combinations that can be selected for voluntary reporting. - Data points required by regulatory agencies regardless of BCFP exemption are automatically activated. - Multiple sorting methods.
New Features in Compliance RELIEF BCFP Submission Process Improvements Features: - With Compliance RELIEF, you can elect to select Exempt status or change data points voluntarily submitted up to the point of processing the submission file for upload to the BCFP. - If any data point is changes from or to exempt, Compliance RELIEF requires a retest and will then advise if any validity or quality errors remain in your submission file.
New Features in Compliance RELIEF Exporting Records to your Examiners Features: - Exempt institutions have an added check box that exchanges actual values with exempt values in the export file to match your submission.
New Features in Compliance RELIEF A Word About Imports Our Advice to Customers and Vendors: - Please have your LOS/POS/Doc Vendor export EVERYTHING to us as they would a non-exempt lender. Reasons: - You will not be able to change exemption selections prior to submitting based on analysis if the vendor export is restricted. - Exemption codes for fields such as Property Address, City and Zip Code will cancel out your ability to geocode, research or reverify the accuracy of your geocoding. - Automation and analysis will be restricted. - If we receive data in some fields and exempt codes in others, that helps identify internal issues. - You will not be able to accommodate regulator requests or perform an accurate fair lending self-analysis if data is restricted.
Changes to Instant HMDA and Compliance EAGLE
Changes to Instant HMDA and Compliance EAGLE Currently Anticipating Nov/Dec Availability Instant HMDA Review to be changed to move exempted fields into a new category. A preferences section similar to Compliance RELIEF will be added to the Administrator screens to allow the Instant HMDA/Compliance EAGLE user to coordinate their selections to Compliance RELIEF or other HMDA management systems. Exempt Fields Provided Value Rate Spread 1.250 Origination Charges Exempt Discount Points Exempt Lender Credits Exempt Loan Term 1111
Questions? Loretta Kirkwood Vice President, Compliance QuestSoft Corporation (949) 614-8957 Loretta.kirkwood@questsoft.com https://www.questsoft.com Leonard Ryan President QuestSoft Corporation (949) 614-8950 Leonard.ryan@questsoft.com https://www.questsoft.com You can enter your question in the GoToWebinar application box in the Questions section. If we can t get to your question during this session, we will create a Q & A document with all the questions and answers for your review. For information on products referenced during this presentation, contact QuestSoft at 800-575-4632 option 1 or visit www.questsoft.com
QuestSoft Webinar Series Why CRA Data and Analysis is More Important Than Ever Wednesday, November 7, 2018 11 AM Pacific Expanded HMDA = Expanded Fair Lending Risk Wednesday, December 5, 2018 11 AM Pacific https://www.questsoft.com/2018series
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