News

HMDA Final Rule Update (10-19)

On October 10, 2019, the CFPB issued a final rule that could affect your HMDA reporting for 2020. The first part of the rule extends the 500 threshold for open-end lines of credit until January 1, 2022. This means that institutions that originate fewer than 500 open-end lines of credit in the two preceding calendar years will not be required to report these lines of credit on their 2020 and 2021 LARS.

This final rule also incorporates the partial exemptions that were laid out in EGRRCPA into Regulation C. It also incorporates clarifications that smaller institutions have encountered when collecting their data to comply with the partial exemptions. Such as, whether a partial exemption applies after a merger or acquisition.

A copy of the final HMDA rule can be found below.

https://files.consumerfinance.gov/f/documents/cfpb_hmda_final-rule-2019.pdf

At Regulatory Solutions, we have developed HMDA software in order to complete full HMDA scrubs, including for those who qualify for partial exemptions.

GSE Patch

On July 25, 2019, the CFPB issued an advance notice of proposed rulemaking looking for feedback on the expiration of the temporary GSE patch. This patch specifically grants Qualified Mortgage status to loans eligible to be purchased or guaranteed by Fannie Mae or Freddie Mac. As it stands, the GSE patch will end in January 2021 and the CFPB has stated their intention to let it expire. Along with announcing the expiration of the GSE patch, the CFPB is asking for feedback as to whether the definition of a Qualified Mortgage should be revised.

The full text of the advance notice with instructions on submitting feedback can be found here: https://files.consumerfinance.gov/f/documents/cfpb_anpr_qualified-mortgage-definition-truth-in-lending-act-reg-z.pdf

HMDA Scrub Sample Size

What percentage of loans or applications on the HMDA LAR should I scrub?

This is a question we get asked quite often and my response is that you should look to the percentage examiners scrub. The Federal Financial Institutions Examination Council’s (FFIEC) HMDA Examiner Transaction Testing Guidelines (Guidelines) describe the validation process which examiners use and the circumstances in which examiners may direct institutions to correct and resubmit HMDA data.  The examiners select a random sample of loans/applications to test using the following sample sizes and thresholds as indicated in the Guidelines at https://files.consumerfinance.gov/f/documents/201708_cfpb_ffiec-hmda-examiner-transaction-testing-guidelines.pdf:

 Total Sample Size (A) Initial Sample Size (B) Initial Sample Threshold (C) Resubmission Threshold (D)
# %
25-50  30* 15 2 3  10.0*
51-100 30 20 2 3 10.0
101-130 47 29 2 3 6.4
131-190 56 29 2 3 5.4
191-500 59 30 2 3 5.1
501-100,000 79 35 2 4 5.1
100,001+ 159 61 2 4 2.5

*If less than 30 LAR lines, the institution should use the full sample size and the resubmission threshold remains at 3.

Let us scrub your HMDA data against source documents and provide you with an exception-based report indicating the percentage of errors by data point. You select your sample size either using the Guidelines or a certain percentage of HMDA loans/applications.  Contact us today to discuss your HMDA scrub.

Construction Loans FAQ

Construction loans and their compliance with Regulation Z can be a struggle. The CFPB has recently published their first set of Frequently Asked Questions specifically addressing common compliance issues for construction loans that are subject to TRID. The Frequently Asked Questions can be found at https://www.consumerfinance.gov/policy-compliance/guidance/tila-respa-disclosure-rule/tila-respa-integrated-disclosure-faqs/#construction-loans.

Regulatory Solutions provides comprehensive TRID reviews to ensure compliance with TILA-RESPA requirements. Contact us today to find out how we can assist you with your TRID and other lending compliance reviews.

CFPB Proposed Rule for HMDA Reporting Requirements

The CFPB issued a proposed rule on May 2, 2019 that would change the HMDA reporting requirements and could have a significant impact on smaller financial institutions. The proposed rule would increase the closed-end coverage threshold from 25 to 100 loans originated in the previous two years. Additionally, it proposes to extend the current open-end threshold of 500 lines of credit until January 1, 2022. The proposed rule would also incorporate new interpretations and procedures into Regulation C. If this were to become part of the HMDA regulation, it would not take effect until January 1, 2020.

https://www.consumerfinance.gov/policy-compliance/rulemaking/rules-under-development

 

Regulatory Solutions Top 5 TRID Exceptions Noted During Our Loan Reviews

Last year, Regulatory Solutions completed TRID reviews on traditional mortgage loans, lot loans, constructions loans and construction/perm loans as well as home equity loans for lenders. While the number of exceptions varied per loan review, there were common TRID exceptions that occurred. Here are the top 5 TRID exceptions that Regulatory Solutions noted during our loan reviews:

 

                1. Disclosure issues in Block H of the Closing Costs Details table on page 2 of the Closing Disclosure. For example, the Real Estate Commissions fees are not always disclosed in Block H. These fees are required to be disclosed in Block H per 1026.38(g)(4) comment 4.

                2. Disclosure issues in Block B of the Closing Costs Details table showing the services that the borrower did not shop for on page 2 of the Closing Disclosure. For example, sometimes one or more of the Title fees are being placed in Block B when the borrower did not choose a service provider from the Settlement Service Provider List. Only fees that the borrower did not shop for should be placed in Block B per 1026.38(f)(2).

                3. The Amount Financed section of the Loan Calculations table on page 5 of the Closing Disclosure was not calculated correctly. Non-prepaid finance charges are being included in the calculation.

                4. The contact information for the participants in the transaction was not correct in the Contact Information table on page 5 of the Closing Disclosure. Lenders are still leaving out email addresses and contact information.

                5. The breakdown and other disclosure issues of the amount for taxes and other government fees listed in Block E of the Closing Costs Details table on page 2 of the Closing Disclosure. For example, the Transfer Taxes listed in Block E do not list the name of the government entity that is assessing the tax, which is required by 1026.38(g)(1)(ii).

While the portfolio loans we reviewed have similar TRID exceptions, they will occasionally have different reporting problems than loans sold in the secondary market. One of the most common exceptions for portfolio loans is the incorrect loan purpose being listed on the Loan Estimate and the Closing Disclosure. Whether the loan should be listed as a refinance or as construction are the two most confused loan purposes for portfolio loans.

Regulatory Solutions provides comprehensive TRID reviews to ensure compliance with TILA-RESPA requirements. Contact us today to find out how we can assist you with your TRID and other lending compliance reviews.

TRID Updates

On May 1, 2019 the Consumer Financial Protection Bureau posted a factsheet regarding whether Loan Estimates (LE) and Closing Disclosures (CD) were required for assumption transactions.  The factsheet consists of a flowchart and a narrative discussion to assist lenders in making the determination whether a loan would require the TILA-RESPA Integrated Disclosures.  The factsheet can be found at https://files.consumerfinance.gov/f/documents/cfpb_tila-respa-factsheet.pdf.

Regulatory Solutions specializes in TRID loan reviews, please contact us to schedule your review today.

Fannie Mae Quality Control Timing Requirements

Fannie Mae recently updated its Selling Guide with announcement SEL-2019-03 which includes the requirement that lenders notify Fannie Mae using the self-report functionality in Loan Quality Connect within 30 days if the lender’s post closing quality control cycle is in arrears more than one 30-day cycle.  Fannie Mae requires that mortgage loan post closing quality control reviews must be completed within 120 days from the month of the loan closing.  If you need assistance in meeting this timing requirement, please contact Regulatory Solutions for all your post-closing quality control needs. 

 

Guide to HMDA Reporting: Getting it Right!

The FFIEC has released the 2019 edition of the “Guide to HMDA Reporting: Getting it Right!” which is available at https://www.ffiec.gov/hmda/.  The new edition contains information regarding the amendments made to HMDA by the Economic Growth, Regulatory Relief, and Consumer Protection Act and updated HMDA interpretive and procedural rules issued by the Consumer Financial Protection Bureau.  2019 is the year to Get it Right!  Regulatory Solutions has developed proprietary HMDA scrub software and has the expertise to scrub your HMDA data on a monthly or quarterly basis.  Our HMDA scrubs compare your HMDA LAR to source documents. An exception report is issued to enable you to make corrections and a summary of exceptions is provided to assist you in addressing any systemic issues.  Contact Regulatory Solutions today to begin your HMDA Scrubs.

Home Mortgage Disclosure Act (FHA Requirements)

Have you revised your Quality Control Program yet to meet the new reporting requirements for HMDA? If not, it could play a part in your ability to sell loans to certain government agencies. FHA in particular requires that a lender’s Quality Control Program be compliant with the Home Mortgage Disclosure Act’s reporting requirements. The Quality Control Program should ensure that the information you are reporting is accurate and that the report itself is not only correct but is made timely. With the passing of the new HMDA regulation which became effective at the beginning of 2018, and for those lenders that became exempt from reporting the expanded data fields with the passage of the Economic Growth, Regulatory Relief, and Consumer Protection Act, you should ensure that your current Quality Control Program has been revised to meet the applicable HMDA reporting requirements.

At Culp QC, we provide services to meet all of your HMDA needs. We are capable of not only ensuring that your Quality Control Program meets the reporting requirements for federal agencies and federal regulations, but can also perform full HMDA scrubs.