As the March 1 deadline for filing Home Mortgage Disclosure Act looms and lenders work overtime to meet it, there are some HMDA filers that aren’t getting an Excedrin headache over the huge annual data roundup.
That’s because while the biggest upcoming changes to HMDA don’t go online until 2018, there’s one that’s live this year. Depositories with assets between $43 million and $44 million who had to file last year, are exempt this year as the exemption limit has been raised by $1 million.
Other than those lucky few, the approximately 7000 mortgage lenders that still have to file are not going to have much down time before they must turn their attention to how to comply with an aggressive set of HMDA changes promulgated by the Consumer Financial Protection Bureau. These include not only many technical changes, but substantially different ways of doing things than before.
And lenders who think they can comply at the last minute should consider the example of TRID (TILA-RESPA Integrated Disclosure) reform. That one, also courtesy of the CFPB, tied the mortgage industry into knots as lenders first tried to get a stay of execution and when that failed then frantically tried to comply by the deadline last year.
The changes coming up are major, especially a big increase in the number of fields required (more than 40 new or modified fields). That’s to fill in the blanks for data that CFPB says needs to be in the annual reports. And some of the biggest lenders, those with a total of 60,000 or more apps and covered loans, will be facing a quarterly filing, with the first one due on May 30, 2020.
In order to provide better information (and more transparency) by CFPB’s determination, lenders will need to supply new market data, including “for applicant or borrower age, credit score, automated underwriting system information, unique loan identifier, property value, application channel, points and fees, borrower-paid origination charges, discount points, lender credits, loan term, prepayment penalty, non-amortizing loan features, interest rate, and loan originator identifier as well as other data points.” That sounds like a lot, and it is.
And, to monitor fair lending compliance and access to credit, HMDA filers will have to report an applicant’s debt-to-income ratio, the interest rate of the loan, and the discount points charged for the loan.
CFPB says it is easing reporting burdens in some respects, such as by aligning HMDA data collection with methods institutions currently use as industry standards, to avoid duplicate efforts, and by narrowing the scope of depositories that have to file. However, the sound of applause from the industry has been hard to detect.
I could take up a whole additional blog detailing the rest of the changes, which are substantial and even a little daunting. On race and ethnicity data, for instance, the firm will be required to report how they obtained that information, whether by visual observation or surname.
All the changes are available at the CFPB website, consumerfinance.gov, and will be mandatory reading in the years to come.
(Mark Fogarty is a journalist and analyst who has been covering the mortgage industry for more than 30 years.)