If an application is marked that it is not taken face to face, then the visual observation portion of the DI form is not to be completed. When the information is entered into our HMDA software, are all application that are not taken face to face marked NA for the Method of Collection. In other words only application taken face to face will be marked as Collected on a visual bases or Not collected on a visual bases.

Yes

Thank you Joker, I am starting to doubt myself on some of this.

I'm sure we all are

You only report NA for purchased loans or if the applicant/co-applicant is not a natural person. If the application was not taken face-to-face you would report 2. not collected based on visual observation/surname.

I believe this thread might help

https://www.bankersonline.com/forum/ubbt...ion#Post2163037

LALendingLady, the CFPB recently clarified this with a leading HMDA consultant and stated you report NA for all loans not taken F2F. 1 and 2 ONLY apply on F2F.

We are in the same camp as LALendingLady. Reporting a 2. The CFPB made it clear (as mud) that three is for non-persons and purchases.

I suppose no matter what we use we could be doomed for despite whatever the CFPB has clarified to a consultant doesn't mean that it's been clarified to whatever FDIC examiner we get.

I'm hoping that by the time we have to submit next year they issue something in writing to clarify this.

I agree. I'm sticking with what the FIG shows - report NA for non-natural persons and purchased loans only. Until the CFPB makes this public, it would be tough to defend anything different than what is publicly stated in the FIG.

I know the application form says "for applications taken in person", hence it makes it sound like this is NA when the applications are not F2F. However, the FIG and CFPB's "NA" guide indicate you must report 1 or 2 for all applications for natural persons.

I agree with David 100%, I'm sticking with only using code 3 for non-natural persons and purchased loans.

I think that's the more conservative and accurate approach, rather than relying on informal guidance that I didn't directly receive myself. I'm not sure saying to an examiner "Well, the FIG may say that, but I read on BOL post that 'a leading HMDA consultant' was informally told to do it another way, so that's what we followed."

There are validity errors if you report code 2 and the data reflects DI codes for not provided.

This ^^^

Strange. We use Compliance Relief as our HMDA software and when I code these as a 2, it doesn't give me a validity error.

They must have missed this.

From the FIG

V629.3 If Ethnicity of Applicant or Borrower Collected on the Basis of Visual Observation or Surname equals 2, then Ethnicity of Applicant or Borrower: 1 must equal 1, 11, 12, 13, 14, 2 or 3, and cannot be left blank, unless an ethnicity is provided in Ethnicity of Applicant or Borrower: Free Form Text Field for Other Hispanic or Latino.

There are comparable edits for the other DI fields.

According to the 2018 FIG (see page 104 Edit ID V629 as the first example)

3) If Ethnicity of Applicant or Borrower Collected on the Basis of Visual Observation or Surname equals 2, then Ethnicity of Applicant or Borrower: 1 must equal 1, 11, 12, 13, 14, 2 or 3, and cannot be left blank, unless an ethnicity is provided in Ethnicity of Applicant or Borrower: Free Form Text Field for Other Hispanic or Latino.

There are additional Edits for the Race and Sex for both Applicant and Co-Applicant.

That leads me to believe that I can choose 2 if the application was not taken F2F.

Part of the confusion here is that the "Face to Face", "Telephone Interview" etc. is not part of HMDA. That's an addition to the government monitoring requirements by the GSE's, that doesn't tie into the codes reported for HMDA.

HMDA and the FIG say you have to report whether the applicant's race (etc.) was collected on the basis of visual observation or surname, and says you can only report "Code 3 - NA" when the Ethnicity (etc.) is also "Code 4 - NA". It spells out that NA is only applicable for non-natural persons etc., so I fail to see the disconnect in the FIG or Reg. C, or anything suggesting you don't need to report whether the ethnicity was collection on the basis of vis. ob or surname just because it isn't taken face to face. It sounds like you're arguing with the defaults of your LOS provider only, do you know what actually gets reported? There is nothing anywhere that supports the idea that you don't need to complete the "Collection on the basis of visual observation.." portion for Reg. C if the application isn't face to face.

I think the disconnect is the application form itself. It says "To be completed by Financial Institution (for an application taken in person)"

That would lead you to believe that you don't need to completed this for non F2F applications.

I agree, David. Also, if you look at the regulation (not the Appendix), 1003.4(a)(10)(i) states:

(i) Ethnicity, race, and sex, and whether this information was collected on the basis of visual observation or surname;

A very literal reading of this is that you MUST report whether the information was collected on the basis of visual observation or surname. It does not state "only if the application was taken face to face" here. The requirement is that it has to be reported. Some may argue that reporting "NA" is reporting, but I disagree. "Not Applicable" does not answer that question. You can only answer "NA" if the data field is not relevant at all. If the data field IS relevant, then you must answer the question.

Did the CFPB then proceed to "misdirect" with Appendix B and, further, with the Data Collection Form? Of course!!!

From my conversations with the CFPB: The regulation itself is making a statement re what the topic is about, not an instruction. The Commentary sends you to B for instructions. Item 10 of B then on discusses reporting whether based on visual observation/surname in the context of F2F.

The FIG is for coding and I agree it is misleading in the shorthand description given and I did state that to the CFPB and suggested it be clarified.

The FIG is at the bottom end of priority in instructions right above the Small Entity Guide, while Appendix B is official instructions.

The demographic collection form follows this thought...report yes/no IF the application was taken in person.

The discussion in the intro to the fnal rule in October 2015 discussed this and states that the form is carrying out its decision. (See below.)

Do I think this needs to be made clearer? Yes. I do not anticipate consistency in filing, some of that will be driven by vendors taking different approaches. I have passed that opinion on to the CFPB.

Here is the intro discussion in the final rule where the form is mentioned in this context.

"The Bureau has considered this feedback and determined that the appropriate approach to
further HMDA’s purposes is to continue to require that financial institutions collect the ethnicity,
race, and sex of applicants on the basis of visual observation and surname when an application is
taken in person and the applicant does not provide the information. The Bureau agrees with both
industry and consumer advocate commenters that recognized the importance of data on an
applicant’s or borrower’s ethnicity, race, and sex to the purposes of HMDA. The Bureau has
determined that removing the visual observation or surname requirement from the final rule
would diminish the utility of the HMDA data to further HMDA’s purposes. The Bureau has also
determined that requiring financial institutions to report whether the applicant’s ethnicity, race,
and sex was collected on the basis of visual observation or surname improves the utility of
HMDA data. Accordingly, the Bureau is maintaining the current requirement in appendix B that
when an applicant does not provide the requested information for an application taken in person,
a financial institution is required to collect the demographic information on the basis of visual
observation or surname. In addition, the Bureau is adopting a new requirement in
§ 1003.4(a)(10)(i) of the final rule that requires financial institutions to report whether the
applicant’s ethnicity, race, or sex was collected on the basis of visual observation or surname.
The Bureau is adopting new instructions and modifications to the sample data collection form in
appendix B to capture this new reporting requirement"

Pretty clear if you ask me! Thanks, Kathleen, for taking the time to confirm this. Hunting for the precise language is really time consuming for some of us on the front line!

Thanks KB. I do have 1 comment (not directly related to this topic). You said:
The FIG is at the bottom end of priority in instructions right above the Small Entity Guide, while Appendix B is official instructions.

When the CFPB released their loan scenarios in July 2017, there were several errors in it when compared to the FIG. I have an email from an attorney at the CFPB that said "the FIG is the controlling document if the reg text and OSC do not specifically address data point completion, NOT examples or other illustrations provided by the CFPB."

Just thought I'd pass this on.

I'm on an Ellie Mae call and they say they are defaulting the fields to say not collected based on visual observation unless the application is taken face to face.

I guess this will shake out eventually.

What they have been doing is update the FIG when errors are found, because errors have been found in the FIG. They either have to update the reg/commentary/appendix if they made a decision and put it in the FIG or vice versa.

My comment on the FIG is from the CFPB.

And meanwhile we develop ulcers waiting for them to get it together!

Thank you, Kathleen!!

Have you contacted Ellie Mae support on this, bOaty?
So far, every HMDA 2018 thing I've contacted them about, they either go silent or give me a 'work around'.
Not really happy with their service at this point.
I keep telling myself there's 9 more months to get it right!