We have had an ongoing issue with MortgageBot this year. For some reason, they locked down the data collection method for ethnicity, race, and sex for not in person applications so that the only option is a 3 - NA. I don't believe this is correct based on 1003.4(10)(i) which states:
10) The following information about the applicant or borrower:
(i) Ethnicity, race, and sex, and whether this information was collected on the basis of visual observation or surname;
It does not state that you only have to report if it was collected on the basis of visual observation or surname if it is an in person application.
In addition, the "Getting It Right" guide seems to support this, as it states for the data collection method for ethnicity, race, and sex:
Code 3—Not applicable
NOTE: Use Code 3 if the requirement to report the applicant’s or borrower’s (ethnicity, race, sex) does not apply to the covered loan or application that your institution is reporting.
The only time it does not apply, according to Reg C, is if the borrower/applicant is an entity or if it is a purchased loan the FI has the option to report the DI or not. I also know in a FAQ that was issued that the CFPB stated that if the FI did not get the DI in a not in person application, that they prefer the FI use a 2 - not collected on the basis of visual observation or surname but that FIs could use a 3 - NA in those circumstances. And to me, it just looks odd that we are saying we aren't required to report the DI (3 - NA) when we clearly are required to under the regulation and we are reporting it for mail, internet, telephone, and other not in person applications.
We also had an exam at the beginning of the year and I asked our examiner about this and the response was that we should be using a 1 or a 2, not a 3, for not in person applications as well as in person applications. So now we are faced with hours of scrubbing before submitting the LAR next year or a possible 75% - 80% error rate in those fields.
So my question for MB users is - did you check with your examiners on this issue and what did they say? Is MB right, wrong, or indifferent?
And out of curiosity, if you use a different software, do you have this issue? We like MB, but if this is going to be an issue every year, we may have to look for different software.
'Never' is karma's doorbell.
It's for you. . . .