Okay, I know there are a smidgen of days left before HMDA goes into effect, but I am doing my training in the morning to the lending staff for Reg B and HMDA.

I was wondering how everyone's training went and if there were any specific areas of concern by the lenders. (i.e. ethnicity vs. race or the big issue of how to show intent for a co-applicant)

Your input will help me prepare for the questions our lending staff may ask about that I have not considered or adequately addressed in my presentation. Thanks in advance!

I have not done the Reg B training yet, but I did the HMDA a couple of weeks ago. The ethnicity/race seemed to go OK, it was the new definition of refinance that caused the biggest stir. Getting it into their heads takes a little talking.

My lenders like example transactions that illustrate what I'm trying to say. Also, most of their questions seemed to start out like: "I have this application on my desk right now...would this be HMDA-reportable??"

We had tons of questions on the new definition of refinancing. I ended up reworking the training material to simplify it as best I could.

Also had to have a separate session for our commercial lenders only - you can guess why.

I did separate sessions for our mortgage originators, mortgage back office folks and for our other lenders. The mortgage LOs had lots of concern about the race and ethnicity changes. The commercial lenders were very focused on the new refinance defintions. There was some confusion among some folks regarding the differences between the HMDA rate spread and HOEPA.

I also had lots of questions about hypothetical examples or loans they had on their desks. The sessions did take about 2 hours with all of the questions. Given the complexity of the information, I'm going to do some sort of follow up training, probably in the form of memos, quizzes or maybe just some visits to loan committee to see if there are any new questions after they work with this for a while. I'm also planning a follow up audit very soon to see what other training issues need to be dealt with.

One other thing that we did, although it doesn't pertain to training. We forwarded out the new applications (URLA and Credit) and had the lenders sign stating that they had received them and would use these after 1/1/04 and destroying the old ones. I don't want anyone coming back saying 'I didn't get those'.

I'm posting anon in case this turns out to be a REALLY stupid question. I'm the compliance officer, internal auditor, cra officer, etc. I review all files for HMDA input on the LAR. I have reduced the HMDA changes to a word doc and have emailed it to the mortgage dept. They have the new apps and are prepared to have a shred party with the old ones on 1/1. We have not had a "training session" in the old fashioned sense, just the emails. Is this a problem? Do I need to do a form for everybody to sign and hold an inpromptu meeting at some point this week?

You may have a small shop and an impromptu meeting may work for you.

Think about your training this way – At your next compliance exam, when the examiner asks for a copy of the names of who received training, what will you give them? If you only have the names of your email addresses to whom you sent the info… well, we all get a ton of email and don’t read 99% of it.

This is the time to CYA – I’m not making light of training and keeping names of attendees (compliance training is what I do). But it may appear that educating the right staff with the right knowledge (tools) is not too important if an examiner asks for training records and you can’t reasonably “prove” that staff even read the emails you sent.

Another issue is: what if there are problems/errors discovered and senior management asks you ‘where were you in providing training to staff to make sure they stay in compliance?’ I would want more than a handful of emails that I sent as proof…

As important as defining who did receive the training is who did not, and following up with those folks.

Your short memo is what I used to call a "Compliance Quickie". I used them to reinforce training more than to initiate it on a new subject, especially one that touches so many hands and has this level of importance. If your volume and infrastructure support this, go with it. But I'd recommend doing some cold call testing to ensure the users received and understood it. Ask some questions and see how they do. Document your files and move on or take corrective actions prior to having lots of problems come your first quarter update.

Okay, here is my follow up to my Reg B and HMDA training I did this morning...(okay, deep breath and count to ten..1, 2, 3, etc...)

You know the little thing about showing INTENT to become jointly liable for credit? Yeah, that little Reg B requirement. Here I am in the middle of my training to the lending personnel, pres and CEO and I have provided a sample application from the Reg to show how an application can be modified to document the co-applicants intent. This particular one had a place for each applicant to sign. All of a sudden the CEO says "We are not putting that on our application. I think that should be run by an attorney!"...ummmmmm okay, suit yourself (I'm thinking). Then the discussion turns to "what? we can't require the wife to co-sign on the loan?!" - ummmmmm not if he can obtain the credit on his own! Then the CEO chirps in again with "yes you can." AAAgggghhhhh! Get me out of this hell in which I live, please!

Can you believe this? These folks have been in banking for almost longer than I have been out of diapers and this is what I get.

I'd nip it in the bud and first send them any supporting articles you have along with the reg cites and offer to meet with them to elaborate if needed.

I went through this some years ago and spent I don't know how many hundreds or a thousand dollars to have Wash. DC counsel tell the bank my interpretation was correct.

I recommend this for a number of reasons. 1. It clears up a misconception. 2. Lenders won't rely on the "word of management" to support what they do incorrectly. 3. It adds to your credibility on the next issue. This should increase support from management.

Thanks Andy, I am currently working on that. Since I was slotted at the end of their meeting I was told to keep it brief, and therefore I did not include the usual copies of regulations, supporting articles that I had, etc.. Obviously I am preparing these now so they can read them on their own.

MackenzieS - good luck. I've been where you are and it's not a lot of fun. Just show him/them in black and white and hopefully they will see the entire picture.

I've been there, too. An examiner posed this scenario - individual borrower, jointly held collateral with spouse, does the spouse sign the note? - correct answer is no, they only sign a hypothecation so we can reach the collateral. But a branch manager, a junior lender, AND a senior lender all said the wrong thing. We did a 2-year file search & wound up releasing 14 non-applicant obligors. (This was less than a year into my new posting as compliance manager, over a dozen years ago.) Trust me, you do NOT want this aggravation...

We are due for a compliance exam during the 1st quarter 2004. Under the FDIC's new exam procedures where they have used the "interview" method with management, this is where they find out what bankers really know and understand about regulations. It scares me that this type of response came out of our training today. It is my job to supply them with the tools, but ultimately it will be their decision to accept this and change their philosophy or face the FDIC's repercussions.

Ok, my turn to show my naivete. We're a small mortgage lender and our loan application system is updated for the new HMDA fields. I've shown loan officers the things they're responsible for, including the pre-approval box, loan purpose definition changes, property type changes for manufactured homes, and the ethnicity/race changes. All other changes will be inputted by back office staff/processors, who I have trained separately. Except for getting loan officers to not use old forms (but most fill them out online) and to fill out these four choices correctly, is there something else I'm missing? I guess I'm confused, while knowing these HMDA reporting changes are big, I don't see that they're impacting the loan officers so much, but more the processors who finalize the info for the LAR.

Have I really missed the boat?

We had separate training for our retail lenders and our commercial lenders. I am concerned that no one had any questions???? The comment was that they probably won't start thinking about it until they take their first application in 2004. In our shop, the lenders don't enter any of the information on the LAR, that is done in a separate area so what they needed to know is a little different than what the input folks need to know. Can't wait until we do our first review of the LAR....

They have to know what to get and when. Is it HMDA reportable, what if the customer starts on the phone and then comes in, how does that effect data gathering, etc.

Get some $5 bills tomorrow, go to the department, ask questions and pay rewards.

Our HMDA training went ok. The questions were about the rate spread and refinancings. We did not include Reg B - "intent to be a joint applicant evidenced at time of application" at this time. I think this is effective 4/15/04. Our forms vendor does not have the consumer application ready. They are not adding the model language to the Uniform Residential Loan Application (1003). They did not think it applied. However,I attended a seminar where the speaker indicated it was needed on Form 1003. So which is it?

Oh Mac, my sympathies. All this from the CEO??!! Good luck!!!

I did HMDA training the first two weeks in December. The biggest area for questions was the refinance definition. The commercial lenders especially... because they like to call everything they do either a renewal or a modification... you know not HMDA reportable. So... I had to re-define a few things because most of what they used to do that was not HMDA reportable will now be HMDA reportable using the new refinance definition. To be consistent we now say... If you change any terms from the original note, other than the maturity date… it is a refinance.

When I got to HOEPA status... I saw a lot of dazed looks. In the past we've spot checked loans and have not had any even close to being covered under HOEPA. Well... since this is a new HMDA input item... I am requiring that each loan subject to HOEPA be tested. So... that was kind of fun to go through the exercise of completing the checklists.

Now that 2004 is here... let's see if the training was effective.