Now that you have filed your 2019 Home Mortgage Disclosure Act (“HMDA”) data, it is time to focus on 2020. The CFPB has issued the new 2020 Filing Instructions Guide (“FIG”) for submissions and data collection which can be found on the FFIEC website. The 2020 updates incorporate changes to the HMDA Rule issued by the Consumer Financial Protection Bureau in October 2019. The 2020 FIG can be found at https://www.ffiec.gov/hmda/guide.htm
While there are no substantial changes as to how you compile and submit your data, it is important to point out that we are seeing regulators requiring resubmissions and rescrubbing of HMDA data if it is not completed correctly. If you struggled with compiling and scrubbing last year’s HMDA data, Regulatory Solutions is here to help. Using our proprietary HMDA software, we compare your source documents in the loan file to the data points recorded on the HMDA LAR and provide you with an exception report detailing data points which need correction. Contact us today to begin your 2020 HMDA LAR Data Scrub.
The Federal Financial Institutions Examination Council (FFIEC) issued the 2020 “A Guide To HMDA Reporting: Getting it Right!”. This guide is to be used for HMDA Submissions due March 1, 2021. Culp QC, using its proprietary HMDA Software, has scrubbed over 9,000 HMDA loans/applications for financial institutions comparing the data on their 2019 and 2018 HMDA LARs to source documentation. Do not wait until 2021 to begin your HMDA scrub, contact Culp QC today. Let us provide your HMDA scrubs on either a monthly or quarterly basis so next year you will be ready to submit your HMDA LAR. The 2020 “A Guide To HMDA Reporting: Getting it Right!” can be accessed at https://www.ffiec.gov/hmda/guide.htm
On December 18, 2019 the CFPB released guidance for disclosing construction and construction-permanent loans under TRID. They published two guides on their website. The first is focused on disclosing construction and construction-permanent loans with separate Loan Estimates and Closing Disclosures for each phase of the loan and the second is on how to disclose a combined Loan Estimate and combined Closing Disclosure for both phases of a construction-permanent transaction. You can access both of the construction disclosure guides at: https://www.consumerfinance.gov/policy-compliance/guidance/tila-respa-disclosure-rule/.
Fannie Mae has just announced a change in their mortgage insurance forms. Any loan with mortgage insurance that is sold or securitized by Fannie Mae must be insured using one of the new approved forms. This will take effect on any loan application that was taken on or after March 1, 2020. Fannie Mae has stated that if an application taken after that time with mortgage insurance is insured under any previously approved form, it will not be eligible for delivery and will be subject to repurchase. There is an exception to this change. Loans that are refinanced into a High LTV Refinance loan may continue to be insured under the previously approved form. However, if a new mortgage insurance certificate is issued, then this exception does not apply.
On October 31, 2019, the CFPB announced an increase for the special appraisal requirements for higher-priced loans from $26,700 to $27,000. This will take effect January 01, 2020 and it will be based on the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) as of June 1, 2019.
The special appraisal requirements for higher-priced mortgage loans was added in 2010 to TILA. This requirement makes the creditor obtain a written appraisal based on a physical visit to the home’s interior before making a higher-priced loan.
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.
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.
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)
*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.
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.
I must tell you that you folks have been a “breath of fresh air” in working with us to get the system and process down.