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.
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.
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.
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.