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#2153693 - 11/15/17 05:30 PM Re: Reporting Visual Observation chellibird
bOaty Offline
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Thanks BK, I tried testing on my software but for some reason the validity edits are not updated.
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#2155827 - 12/02/17 10:19 PM Re: Reporting Visual Observation chellibird
Likes to Comply Offline
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If we receive an application by mail or it is dropped off and the LO calls the applicant because there are multiple items left blank on the application including the fact that the Demographic Information was not completed, is it ok to read them the disclosure and give them the opportunity to provide their information at that time or to indicate they do not wish to provide the information.
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#2155832 - 12/03/17 05:59 PM Re: Reporting Visual Observation chellibird
David Dickinson Offline
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I think you're required to. You have received an application by mail that is only partially completed. You're calling them to complete the rest of the application. Thus, you're taking a phone application and the rules indicate you are required to read them the disclaimer and attempt to collect the Demo Info when taking an application by phone.

Had they marked "I do not wish" on the mailed in application, you wouldn't request the Demo Info.
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#2156702 - 12/08/17 09:45 PM Re: Reporting Visual Observation Banker K, CRCM
Indy Banker Offline
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Regarding the "Collection Method" data field, there was an earlier thread that suggests NA could indeed be used for non-F2F applications. We thought the consensus was that you can't use NA unless its a purchased loan or non-natural person. So confused....
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#2156740 - 12/11/17 02:33 PM Re: Reporting Visual Observation chellibird
Banker K, CRCM Offline
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Yes see above from 11/15 - you will generate Validity Errors on your LAR if you report "NA" in collection method other than when applicant is an entity.

Other thread was last questionned in October and after that I had tested our LAR software. Hard to keep up with the different threads on same topics smile

I would go with this last update if I were you.
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#2156834 - 12/11/17 08:43 PM Re: Reporting Visual Observation chellibird
Banker K, CRCM Offline
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Since we have implemented the use of the new expanded GMI form, our Secondary Market area has reported that their LOS, Encompass, will not allow them to complete the "collection method" fields when the app is not taken F2F.

I asked them to submit a case to ask them to correct this - has anyone else ran across this issue?
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#2156836 - 12/11/17 08:56 PM Re: Reporting Visual Observation chellibird
Indy Banker Offline
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We have also queried Encompass about this issue as well.

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#2156855 - 12/12/17 04:23 AM Re: Reporting Visual Observation Banker K, CRCM
Truffle Royale Offline

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Originally Posted By Banker K
Since we have implemented the use of the new expanded GMI form, our Secondary Market area has reported that their LOS, Encompass, will not allow them to complete the "collection method" fields when the app is not taken F2F.

I asked them to submit a case to ask them to correct this - has anyone else ran across this issue?


I'm in the camp that doesn't consider this a problem, as I've acknowledged previously in this and other threads on the topic.
(David is in the other camp.)
I doubt Encompass, which is our LOS too, will consider this a problem. They may give you a work around as they have to us for other items that are different for our particular situation or by our choice.

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#2156873 - 12/12/17 02:06 PM Re: Reporting Visual Observation chellibird
Banker K, CRCM Offline
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@ Truffle Royale I'm not finding your posts about this not being a problem.

We cannot leave the field blank or we get validity errors on our LAR. If Encompass doesn't allow us to check the boxes on non-F2F apps, then those fields will be blank on the LAR for all non-F2F apps and we will generate validity errors that someone will have to manually go in on each loan and complete the boxes then. Sounds like a problem to me!
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#2156920 - 12/12/17 04:38 PM Re: Reporting Visual Observation chellibird
cgorham Offline
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I was hoping that Encompass was smart enough to still mark the LAR as "not collected on the basis of visual observation..." on these, but that doesn't appear to be the case. I just confirmed the LAR is always blank if marked telephone, internet, or mail.

Another thing to add to my list of open HMDA issues in Encompass I guess. Considering their dominant size, I've been thoroughly unimpressed with their programming for the HMDA updates.

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#2156969 - 12/12/17 06:46 PM Re: Reporting Visual Observation chellibird
Truffle Royale Offline

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Maybe I'm misreading this.
You only complete the 'not collected on basis of visual observation' when the application IS taken face to face.
From the Addendum:
To Be Completed by Financial Institution (for application taken in person):
Was the ethnicity of the Borrower collected on the basis of visual observation or surname?

As for getting validity errors, this is from the HMDA page:
HMDA Edits

The HMDA Edits (Quality, Validity, Syntactical) provide an explanation of specific edit questions and should be thoroughly checked to ensure the data are reported accurately. The data in question are either reported in error as invalid or do not agree with an expected standard (value). The Edits should be used to ensure data validity, accuracy and integrity. Reporting institutions should review for correctness and change only if erroneous data have been reported.

As the last sentence states, you only have to verify these and change if erroneous, which, in this specific instance, they are not.

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#2157002 - 12/12/17 07:46 PM Re: Reporting Visual Observation chellibird
Indy Banker Offline
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In the past, a LAR could not be submitted with Validity edits - Quality edits had to be verified and confirmed accurate as reported or corrected before submission would be accepted.

As far as Encompass, yes, leaving those fields blank is not the issue, its when you try to upload to your LAR interface (in our case, Questsoft) that you will get stopped with the Validity edits for leaving those fields blank.

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#2157006 - 12/12/17 07:57 PM Re: Reporting Visual Observation chellibird
Truffle Royale Offline

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I am just in the process of acquiring QuestSoft and Encompass is our LOS so hopefully soon I can see exactly what Indy and Banker K are hitting.
My initial reaction to the 'problem' is that QuestSoft needs to be tweaked to accept the blanks without generating validity errors.
But I'm speaking off the top of my head until I actually can get in and see for myself.

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#2157244 - 12/14/17 03:13 PM Re: Reporting Visual Observation chellibird
Banker K, CRCM Offline
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In the latest FIG for 2018+ on page 90, it states that if there is a validity error that the LAR still cannot be submitted. That is how it is today.

We are still arguing with Encompass to allow us to report "not collected..." when app is not F2F, since leaving blank generates a validity error.
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#2157256 - 12/14/17 03:35 PM Re: Reporting Visual Observation chellibird
Truffle Royale Offline

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BankerK, what happens if you put NA in?
As I said above, the question is whether or not the information was collected on the basis of visual observation if the application was taken face to face.
If the application wasn't taken face to face, then the question is NA, isn't it?

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#2157264 - 12/14/17 03:45 PM Re: Reporting Visual Observation chellibird
Banker K, CRCM Offline
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That's not one of the 'allowances' the CFPB gives for reporting NA in those fields though.
They're not an entity so they can't be "NA".

The issue is the regulation being misleading on saying "if F2F"...per a CALL with CFPB (of course nothing in writing) the only time it's POSSIBLE to be based on visual observation is if the app was F2F...but if not F2F app, then the "yes" wont apply, and they state we can't leave it blank. Therefore the only other option is to report "NOT collected...".

So this is what we are arguing. Would like to see what you find when you do testing, or if anyone else tests this on the CFPB tool.
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#2157267 - 12/14/17 03:53 PM Re: Reporting Visual Observation chellibird
Truffle Royale Offline

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I can't find anything where the CFPB addresses the three (if application taken face to face) questions.

There are three options for 'if F2F' reporting.
1. Collected the basis of visual observation or surname
2. Not collected the basis of visual observation or surname
3. Not applicable

I still contend that if the application was not taken F2F, you should be reporting NA.
Encompass options are yes/no/not applicable so I think they agree with me.

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#2157284 - 12/14/17 05:05 PM Re: Reporting Visual Observation chellibird
cgorham Offline
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If that is their stance, then they should at least spit out NA on the LAR if the fields are not going to be available instead of just leaving them blank. Though either is still going to be an issue with submitting.

Also of note is that Encompass does not ask how the application was taken like the references listed on the DI collection form and in the HMDA rule. Their fields actually ask how the demographic information was collected. In the case of a telephone/mail/internet application that doesn't complete the DI, later comes into the office, and we collect it manually, those two things are not the same.

In that situation, would we report No for the collected on visual observation data points because, even though we collected them visually in an in person meeting, it was not actually an in person application? That seems to adhere to the language of the reg, but it seems backwards.

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#2157286 - 12/14/17 05:16 PM Re: Reporting Visual Observation chellibird
Truffle Royale Offline

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^^^That would be support for my stance which disagrees with David about the need to collect the Demographic Information at any time all the way up to closing.

My HMDA view has always been that you complete the application once. It isn't an ongoing process.
The example I've used is for two applications received by mail both leaving the GMI (DI as of 2018) blank.
One is immediately denied and the GMI is reported as not received.
The other goes to closing.
If I collect the info on just the one that goes to closing, I'm skewing my LAR.

For the sake of this example, assume everything else is complete. Just the GMI/DI is left blank.
If the application was not complete in other areas, I'd have to contact the borrower and would read the section and record their answers as part of completing the application.

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#2157292 - 12/14/17 05:22 PM Re: Reporting Visual Observation chellibird
Truffle Royale Offline

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rereading your post, cgorham, you cannot just report based on visual observation at a later meeting. You would have to read the box to the applicant and report their answers.
But if you do that, I agree you're opening the Pandora box of when and how you determine the application was taken.
And I have no clue what the answer to that would be.

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#2157298 - 12/14/17 05:49 PM Re: Reporting Visual Observation chellibird
cgorham Offline
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I think that stance is a little risky, but I completely agree with all of your logic Truffle!

All of the different definitions of application, application process, etc. cause more compliance headaches than almost anything else, especially when they do not agree with each other. Maybe one day they will unify the regs and give us one solid definition to rely on. I expect this to happen shortly after scientists figure out how to unify the theory of general relativity and quantum mechanics smile

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#2157304 - 12/14/17 05:57 PM Re: Reporting Visual Observation chellibird
Truffle Royale Offline

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Ah but logic and government is as big an oxymoron as jumbo shrimp, isn't it. smile
Definitely agree with the government being more like an octopus than a unified entity, cgorham.
Not only does one tentacle not know what another is doing, a few of them are he// bent on choaking the life out of compliance bankers!
fwiw, I have tied the TRID 6 to my Reg C/HMDA GMI/DI cutoff and it works for us both internally and through various exams.

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#2157333 - 12/14/17 07:54 PM Re: Reporting Visual Observation chellibird
David Dickinson Offline
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Truffle: Let me clarify "my stance" on this. You said: [/i]My HMDA view has always been that you complete the application once. It isn't an ongoing process. [/i] I agree. I'm not trying to say you are completing the application.

Appendix B to §1003 #12 states: "If the meeting occurs after the application process is complete, for example, at closing or account opening, you are not required to obtain the applicant’s ethnicity, race, and sex." It's interesting you even used the words "ongoing process" in your last reponse.

That's exactly what I called the CFPB about - a scenario in which the application is complete (per Reg B), but I see the applicant when they drop off their verifications. The CFPB representative said they were not tying the word "application process" to Reg B's definition of "completed application".

As I posted earlier:
"While the definition of "application process" is not defined, I would suggest you interpret it as "anytime before closing". If you go with that interpretation, you can't go wrong or have to defend your position with an examiner that has a different understanding."
All I'm saying is you don't have to do this, but you may have an examiner argue that you should have collected since you saw them prior to closing. Then you'll have to argue when your application process (not completed application) is complete. It's a conservative approach - I admit. It's a fool proof approach, however.

I've never agreed with collecting at closing.
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#2157357 - 12/14/17 09:36 PM Re: Reporting Visual Observation chellibird
cgorham Offline
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My personal stance is in between. In my opinion, the "application process" lasts through credit approval. At that point, you have either approved the credit or denied it. If you are issuing a commitment letter saying it is approved at that point, then I don't see how they are still in the application process. Not saying that logic will hold up with an examiner, but if it is in our policy and we are consistent (which they really won't have a way of knowing) then I think it would be pretty unreasonable for them to have an issue with it.

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#2157392 - 12/15/17 01:29 PM Re: Reporting Visual Observation David Dickinson
Adam Witmer Offline
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Originally Posted By David Dickinson
"While the definition of "application process" is not defined, I would suggest you interpret it as "anytime before closing". If you go with that interpretation, you can't go wrong or have to defend your position with an examiner that has a different understanding."
All I'm saying is you don't have to do this, but you may have an examiner argue that you should have collected since you saw them prior to closing. Then you'll have to argue when your application process (not completed application) is complete. It's a conservative approach - I admit. It's a fool proof approach, however.


To me, this is the key. Why fight a battle with an examiner when the conservative approach seals up all of the loose ends?

Plus, it makes training your staff easy: Collect it any time you see them before closing. Sure, there are logistics involved in collecting the info (such as if you immediately scan the application and had previously checked not provided due to application received by mail), but I just can't see how an examiner can criticize this based on the commentary of "application process."

Are other stances/camps acceptable? Probably, due to the lack of clarity in the commentary - but the conservative and "fool proof" way takes away any room for examiner criticism.
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