Final Rule Issued

And it's out...

http://www.consumerfinance.gov/regulator...campaign=regimp

When do we have to start collecting under new rules?

2018

well, we ducked the quarterly reporting requirement.
I looked and read but didn't see where I can find a list of the race and ethnicity sub-categories. Just curious to see where it's going.

TR, check out page 234

I'm just going to wait for Danna's summary on this. smile

I was certain we would have to start collecting under the new rules starting 1/1/17. Sometimes I like to be wrong!

So nationality is now a sub-category of both Race and Ethnicity? Weird.

I know i'm going to regret asking this, but what about the "LEI" and "ULI"? I'm guessing/hoping that some time between now and 2018, banks will be assigned these numbers or something?

RR Becca, I see a lot more "decline to provide" GMI in our future!

I think there's going to be a lot of small banks that will be exempt in 2017. The 2017 Institutional Flowchart states:

In each of the two preceding calendar years, did the institution originate at least 25 home purchase loans, including refinancings of home purchase loans.

if not, the institution is exempt.

In 2018, it's the same test OR originate 100 open-end loans. The Executive Summary says "Dwelling-secured business-purpose loans and lines of credit will be covered only if they are home purchase loans, home improvement loans, or refinancings. Covered loans and lines of credit will not include agricultural-purpose transactions or other specifically excluded transactions, even if they are dwelling-secured."

Using the flow chart produced by CFPB, our institution answers "yes" until the 25 home purchase loans (including refinancings) in this case do we count secondary market loans in that 25? The loan closes in our name, but investor reports the loan for HMDA.

Thanks!

I'm sure they address your question in the Reg/Commentary. I was simply passing on a tidbit from the Executive Summary. I haven't gotten to the reg yet and don't plan to today. Maybe tomorrow, maybe.

I'm thinking more like 2016

Has the exemption from HMDA reporting changed for banks with branch offices in non metropolitan statistical areas?

Good timing. We just barely get the TRID project executed and we can start preparing for this.

Love the Summary of Reportable HMDA Data - Regulatory Reference Chart on the CFPB link above. I see 25-30% of my project plan just waiting to be dropped into Excel.

I was pleased to see that while all consumer purpose dwelling secured loans are reportable (open and closed end), for business purpose they retained the purpose requirement. Business purpose loans are reportable only if dwelling secured and for purchase, refinance or home improvement.

That's about the only positive change from the proposal that I could see. I was hoping for more fields to be eliminated.

The race and gender now uses the same categories as the census and other government monitoring programs.

Re ULI and LEI

Universal Loan Identifier
This number will consist of a maximum of 45 characters, with the first 20 characters representing the LEI. The last 2 digits are a check digit that allows an accuracy test. A new Appendix C provides details on the check digit methodology.

 
Legal Entity Identifier

Apply at gmeiutility.org

411 See generally Fin. Stability Bd., A Global Legal Entity Identifier for Financial Markets 38-39 (June 8, 2012),
http://www.financialstabilityboard.org/wp-content/uploads/r_120608.pdf?page_moved=1 (including a
recommendation on LEI reference data relating to ownership; Fin. Stability Bd., LEI Implementation Group, Fourth
Progress Notes on the Global LEI Initiative 4 (Dec. 11, 2012), http://www.financialstabilityboard.org/wpcontent/
uploads/r_121211.pdf?page_moved=1 (noting that the LEI Implementation Group is developing proposals
for additional reference data on the direct and ultimate parent(s) of legal entities and on relationship data more
generally).

One important point:

Once the new rules kick in, if a bank originates less than 25 closed end loans but 100 or more open end, it must report the open end.

If it originates 25 or more closed end but less than 100 open end, it must report closed end.

The two tests are standalone tests.

According to the CFPB summary chart of changes, there will be 25 new data fields, and 12 of the existing data fields will be modified. Only 6 of the existing data fields will be unaffected. 

Looks like a lot of programming for the LOS companies and HMDA software providers.

I think I saw where the CFPB says 22% of banks won't have to report under the new rules. Wonder if FRB or ABA or someone is going to take a poll to see how many banks that are currently reporting will not have to report under the new rules?

We have been a HMDA reporter for years because our home office is located in an MSA. Our home office is located 80 miles away from the city with lots of unorganized territory between (read woods, lakes, rivers, wildlife, etc.) while the rest of our branches were located in an underserved and distressed rural county. But because they stuck that little town into an MSA, we have had to report.

I don't see any relief for us yet, but maybe I can find something when I read the final rule this weekend. . . .

so who is going to be the first trailblazer to create a summary?

Heaven help us haha

Here you go
http://files.consumerfinance.gov/f/201510_cfpb_hmda-executive-summary.pdf

Is it really true that commercial purpose loans secured by a dwelling are exempt??

Here is what the summary says:

"Dwelling-secured business-purpose loans and lines of credit will be covered only if they are home purchase loans, home improvement loans, or refinancings."

Commercial purpose loans are not exempt. Commercial purpose loans are reportable when the purpose is purchase, improvement or refi. Consumer are covered regardless of purpose.

What about the AG exemption. Does that mean ANY AG loan is exempt..even if its dwelling secured. For example, a farmer has an ag loan for farming purposes secured by his farm (includes his home) and wants to refinance that note for a better rate. Would this continue to be HMDA now..or no since its "AG". OR what if a farmer is purchasing a farm and there happens to be a dwelling on it...?? I think we need their definition of "Agricultural loans".

Ag. purchases were already exempt; i haven't read the new rule yet, so i don't know if that has been expanded for other loan types or not.

In a nut-shell (I haven't read most of the 796 pages), business and ag PURPOSE loans are exempt even if they are cross collateralized by a dwelling.

Examples:
1. I need a business operating loan/line. The creditor takes my house as collateral. This is not reported and if/when the loan it is refinanced, it is not reported.

2. Ag loan to purchase tractor. Secured by farmers land including a dwelling. Not reported. Even if it's refinanced.

3. I own 45 rental dwelling properties. I get loan to improve them or buy another. This is a business purpose loan (per Reg Z), but it IS reported for HMDA.

The quote below from the ABA Newsbytes email this morning is a bit misleading....they forgot to mention the purpose test still applies for commercial. I was quite excited for a few hours.

"The rule also requires that covered lenders report information, with some exceptions, about all applications and loans secured by dwellings, including reverse mortgages and open-end lines of credit. One important exception -- which ABA and the state associations advocated vigorously for -- is for dwelling-secured transactions made for commercial purposes. Lenders do not need to report data for such loans."

Oh my!

Good point Mel. I've been struggling with how to explain this new twist too. I'm looking for a short, simple and yet understandable way of explaining the coverage of business/ag loans. Maybe we should hammer out something here that we can all use. I'll take a stab:

"HMDA does apply to business and ag loans if the purpose is to purchase or improve a dwelling and the loan is secured by a dwelling. HMDA also applies to the refinancing of these loans. HMDA does not apply to business & ag purpose loans where a dwelling is taken as collateral, but the purpose is not about the dwelling."

What do you think?

Ag purpose is exempt: 1003.3(9)

(9) A closed-end mortgage loan or open-end line of credit used primarily for agricultural purposes;

From the new Commentary:

1. Loan or line of credit used primarily for agricultural purposes. Section 1003.3(c)(9)
provides that an institution does not report a closed-end mortgage loan or an open-end line of
credit used primarily for agricultural purposes. A loan or line of credit is used primarily for
agricultural purposes if its funds will be used primarily for agricultural purposes, or if the loan or
line of credit is secured by a dwelling that is located on real property that is used primarily for
agricultural purposes (e.g., a farm). An institution may refer to comment 3(a)-8 in the official
interpretations of Regulation Z, 12 CFR part 1026, supplement I, for guidance on what is an
agricultural purpose. An institution may use any reasonable standard to determine the primary
use of the property. An institution may select the standard to apply on a case-by-case basis.

If there was an unusual situation where an ag loan was also buying a residence for rental, I could see that being reportable, but if the loan is ag purpose it is not reportable even if a dwelling is involved.

Sounds like the current HMDA rules for reporting would still hold then for business purpose loans (IOW, the 'purchase, refinance, home improvement' test), which wouldn't be hard to remember/implement. Is that right?

1. I need a business operating loan/line. The creditor takes my house as collateral. This is not reported and if/when the loan it is refinanced, it is not reported.

Granted I have not read these rules to any detail whatsoever but how does this loan when refinanced escape the refinancing definition?

4. Examples—excluded business- or commercial-purpose transactions.

iii. A closed-end mortgage loan or an open-end line of credit whose funds will be used
primarily for business or commercial purposes other than home purchase, home improvement, or
refinancing, even if the loan or line of credit is cross-collateralized by a covered loan.

2(p) Refinancing.
1. General. Section 1003.2(p) defines a refinancing as a closed-end mortgage loan or an
open-end line of credit in which a new, dwelling-secured debt obligation satisfies and replaces an
existing, dwelling-secured debt obligation by the same borrower. Except as described in
comment 2(p)-2, whether a refinancing has occurred is determined by reference to whether,
based on the parties’ contract and applicable law, the original debt obligation has been satisfied
or replaced by a new debt obligation. Whether the original lien is satisfied is irrelevant. For
example:
i. A new closed-end mortgage loan that satisfies and replaces one or more existing
closed-end mortgage loans is a refinancing under § 1003.2(p).
ii. A new open-end line of credit that satisfies and replaces an existing closed-end
mortgage loan is a refinancing under § 1003.2(p).
iii. Except as described in comment 2(p)-2, a new debt obligation that renews or modifies
the terms of, but that does not satisfy and replace, an existing debt obligation, is not a refinancing
under § 1003.2(p).

Yes. No change for business purpose. Business purpose retains the purchase/improvement/refinance purpose test.

Consumer changes to all dwelling secured.

Thanks KB.

Dan, I am still pondering that. If the intent is that a business purpose refi had to be a refi of a purchase or improvement loan, that does not come through. I think that will be a question for the CFPB.

DD: So, what about this? Is this correct?

Business/Commercial and AG loans (and the refinancing of these loans) = purpose test, purchase of a dwelling, Home improvement of a dwelling, refinance of a dwelling, then HMDA......any other purpose...NOT HMDA

Consumer loans (and the refinancing of these loans): collateral test, secured by a dwelling,... then HMDA

I haven't read these rules completely or thoroughly yet. But it was my understanding from the Exec Summary that you would no longer report a refinancing of an ag loan that is dwelling secured. IOW, purpose drives before collateral.

I think Winning's summary is correct, but again, I haven't dug too deep into this yet.

I agree it's not typical, but I occasionally see a "ag" loans where the farmer has a house for workers. This could be the purchase, improvement or refinancing or a dwelling for HMDA.

But could you make the case that the purpose is agricultural, especially if a temporary residence, not someone's permanent residence? I think you could say the purpose related to farm operations.

I think that would be a tough argument. These are typically not temporary residences. As farms have gotten bigger, many of the larger operations buy farm land that has a house on it. They then use those homes to house workers - sometimes the same person that sold them the farm land. They really are no different than any other rental house.

Footnote 221:

Prior to the proposal and in public comments on the proposal, the Bureau received feedback that agricultural purpose
refinancings should be excluded from Regulation C’s coverage. The final rule clarifies that all agricultural purpose
transactions, whether for home purchase, home improvement, refinancing, or some other purpose, are
excluded transactions. See the section-by-section analysis of § 1003.3(c)(9).


Business/Commercial and AG loans (and the refinancing of these loans) = purpose test, purchase of a dwelling, Home improvement of a dwelling, refinance of a dwelling, then HMDA......any other purpose...NOT HMDA

Consumer loans (and the refinancing of these loans): collateral test, secured by a dwelling,... then HMDA

AG Loans - exempt

Are you feeling the grey hairs growing in yet?

Good summary Dan & I agree. Here's my point:
If a farmer is buying a dwelling to house workers, is that an AG purpose or a commercial purpose? I've never know the dwelling owner to give free housing. So the question would be in what "bucket" does the purchase/improvement/refinance of that dwelling fall - commercial or ag?

What if the worker quits the job and moves and now the "farmer" rents the house to a non-worker? It's not uncommon around my part of th country to have these houses rented to anyone that will rent them. The farmer merely wanted the ag land, but got the house as part of the deal. I'd have a time time not calling these commercial purpose loans as renting houses is not a AG related purpose.

David I'm not sure if you meant we agreed on Winning's summary that I revised or the AG exemption but......

Again I have not read too deeply into this yet and probably won't for awhile due to other opportunities I'm dealing with but the way I read the exemption is if the loan's purpose is primarily for an agricultural purpose then it is exempt regardless if the loan is to purchase, improve or refinance a dwelling. The exemption does not imply the dwelling has to be used for agricultural purposes, such as housing workers.

If I had to opine right now I would have to say all loans that are agricultural in nature, and can be documented as such, are exempt regardless how any dwelling located on the property is being used, workers quarters or as a rental.

Thanks for the clarification Dan. I'd liked your revised summary.

Concerning the Ag exemption in your second paragraph: That's not quite my understanding, but I'm not able to intelligently discuss it at this point. You may very well be right and my summary was wrong. I'm not getting to worked up about these rules just yet. I'm busy with a few other things at the moment, as I'm sure you are too and I plan to get to reading the final rule soon. Until then, I'll probably just not post here. Hate to mislead anyone.

Thanks for your input.

Like you David I also don't want to mislead anyone. I will post the following and then like you I probably won't be back here for awhile.

Paragraph 3(c)(9).
1. Loan or line of credit used primarily for agricultural purposes. Section 1003.3(c)(9)
provides that an institution does not report a closed-end mortgage loan or an open-end line of
credit used primarily for agricultural purposes. A loan or line of credit is used primarily for
agricultural purposes if its funds will be used primarily for agricultural purposes, or if the loan or
line of credit is secured by a dwelling that is located on real property that is used primarily for
agricultural purposes (e.g., a farm). An institution may refer to comment 3(a)-8 in the official
interpretations of Regulation Z, 12 CFR part 1026, supplement I, for guidance on what is an
agricultural purpose. An institution may use any reasonable standard to determine the primary
use of the property. An institution may select the standard to apply on a case-by-case basis.


So based on this I will have to repeat that If I had to opine right now I would have to say all loans that are agricultural in nature, and can be documented as such, are exempt regardless how any dwelling located on the property is being used, workers quarters or as a rental.

I absolutely agree that loans that are primarily agricultural in purpose are exempt, even if a rental property sits on the property. The rule and commentary are very clear on this.

It is a primary use of funds rule.

I am slogging through the new rule and have looked at the first 300 pages. Lots of big changes. One thing that strikes me is the increased "granularity" pertaining to race/ethnicity - wow, now the minority categories are going to be broken into subcategories.

Has anyone else noticed a change in the hierarchy of loan purpose when it is a multi purpose loan?
HI is not trumping Refi now (I hope I am wrong on this one).
Also two categories of refinancing - refi and now a cash-out refinancing.

That seems to be the case. I just read the "purpose" field in the section by section analysis and it does add "cash-out refinance" and an "other" purpose.

You are also correct about Refi trumping HI. On page 195 of the final rule:

"The revised comment [4(a)(3)-3] would provide that a covered loan that is both a cash-out refinancing or a refinancing and a home improvement loan should be reported as a cash-out refinancing or refinancing."


There's definitely going to be a lot of new stuff to learn, but we have a little over 2 years to get it down.

You mean, 2 years for everyone to ignore us talking about it, then a couple weeks to have in place before January? Yeah, sounds right.

From page 154:

Examples of commercial-purpose loans that currently are reported are: (1) a loan to an entity to purchase or improve an apartment building (or to refinance a loan secured thereby); and (2) a loan to an individual to purchase or improve a single-family home TO BE USED either as a PROFESSIONAL OFFICE or as a rental property (or to refinance a loan secured thereby).

What? I have excluded these as they were not occupied as a residence, thus, not a dwelling (I thought....). Do you report single-family homes that are exclusively used as professional offices?

No, i'm with you...i don't know what they're talking about.

Yeah. I picked up on that as well. I figure it's just a typo and they'll clear it up.

No...they are pointing out that many did report them and the CFPB is now clarifying that the properties are not reportable, so that the loans do not clutter the data. If you did not report, you were in the group doing it correctly.

In reading the final rule so far, I found one area that I find especially asinine:

4(a)(26) will require us to report the term in months of any introductory rate period. Pages 354-355 of the final rule state that this will be calculated by the number of months from origination and not the number of months from the first payment (as it is in Reg Z).

What I find incredibly ridiculous is, from page 355 (emphasis mine), "the Bureau is adopting 1003.4(a)(26) generally as proposed but is modifying the scope of the provision to include applications"".

Applications do not result in origination, so how can we calculate the term of an introductory from the date origination, if there is no origination?

For example, a 5/1 ARM may have an introductory period of 60, 61, or 62 months, based on the date of origination. Which of those would you report in a cancel/denied/closed for incomplete application? It just doesn't make any sense.

Okay, not to seem dense, but can someone check me on this?

My institution will probably fall below the first threshold cutoff (25 home purchase loans, including refinancing of home purchase loans).

This would mean that I continue in 2016 the same thing I've done in 2015 and previous years. I report the same data.
However, beginning 2017, I will no longer be a HMDA reporting institution. Therefore in 2017 I will not collect HMDA data.

Right?

Right. But you will have to recheck the threshold for 2018, it changes.

I am not sure of what value the 2017 threshold is since banks can subsequently come under the 2018 and forward threshold.

Thank you Kathleen.

This has not changed. The coverage test has one added element even if there is an MSA office...the loan volume test.

If the loan purpose is to finance an agricultural purpose, as defined in Regulation Z, it is not HMDA reportable even if secured by a farm with a dwelling.

The regulation directs you to Regulation Z for the definition of agricultural purpose (which is financing of actual agricultural activities.)

If the loan is to take a world cruise and secured by a farm with a dwelling, it is not an agricultural purpose loan and will not be exempt.

HMDA will use the same categories as other government reporting, such as the census. The CFPB mentions that the OMB actually criticized them for NOT using the same detailed reporting as other government laws.

If a bank reports based on surname or visual observation, it will only report the same high level categories as now, but will have to report that the bank assigned the category.

You assign ULI; you apply for LEI.

And I want to add to this. If the primary purpose of a loan secured by a farm with a dwelling(s)is to finance agriculture as defined in Reg Z, the loan will not be reportable not matter what else is going on with dwellings. If a farmer takes out a separate loan to build a rental property, that would be a different story.

Most of the farms where I was in lending provided housing as part of the compensation or charged minimal rent. It wasn't a farmer in the business of renting out properties separate from operating a farm.

The test for 2018 changes from the 2017 test. In 2017 it is closed end for purchase or refinance of a purchase.

In 2018, the test looks at all closed end. That leaves me wondering why bother for 2017 (and can you continue to report if you will trip the test in 2018).

The CFPB issued a compliance guide for the new HMDA rule today. It is 109 pages. http://files.consumerfinance.gov/f/201512_cfpb_hmda_small-entity-compliance-guide.pdf

Wonder what's going to happen to the GIR Bible and the Geocoding/Rate Spread sites that are under FFIEC's authority.

The new HMDA guide has lots of good example, removes some of the legal-eze and appears to combine the regulation, commentary and important points from the section-by-section analysis. I like it.

I don't think my bank will have to report under the less-than-25 rule (unless I have missed some other criteria)

Thanks, I had missed that!

I don't think my bank will have to report under the less-than-25 rule (unless I have missed some other criteria)
Awesome!

Caution: be sure to read the institution coverage / volume test for 2018 very carefully. I've spoken with a few banks already that believe they won't be subject to HMDA in 2017 (because they make less than 25 purchase/refinancing loans), but probably WILL be covered in 2018. The "covered loan" test changes in 2018 and includes some loans that don't count in 2017.

I have been cautioning institutions to look at 2018 carefully before dumping hmda on 2017 rules. The closed end rules are broader plus there is a separate open end test.

Exactly! Odd, isn't it.

Apparently there was a desire to give some low volume reporters relief in 2017, but the new rules won't have kicked in at that point, so the 2017 volume test is under current rules. I think it is important to look ahead to the 2018 test to get an estimate of those results before stopping the HMDA process for 2017, only to have to restart again the very next year.

Also, the 2017 volume test applies only to depository institutions, the 2018 tests apply to all mortgage lenders.

Some eligible depository financial institutions may view the 2017 break as a chance to have time to work on the new rules going in effect in 2018, which are more complex; others might choose to continue to report so that staff does not get out of practice.

I received an email from a compliance consultant that we are to begin collecting under the new rule in 2017 for reporting in 2018. My interpretation of the HMDA Rule Key Dates Timeline was that we would collect the required data (ex: expanded fields, GMI & etc.) in 2018.

Sorry, when are we required to start collecting the information - applications dated 1-1-2018 and after?

Data collection under the new rules does not start until 1-1-2018.

Agree with ahou. The new data fields are required to be collected beginning with applications received on or after 1/1/18.

I believe the only thing changing in 2017 is the institution coverage rule. The CFPB actually issued a nice timing chart at:
CFPB chart

The only change for 2017 is the additional loan volume test. The new rules otherwise go into effect 1/1/2018. Then the quarterly reporting for large volume reporters goes into effect later.

The consultant is totally off base.

In the interest of getting all the dates in one place-------------

Begin collecting under the new rules for applications received on or after 1-1-2018.

The first REPORT under the new rules will be due 3-1-2019

The Bureau has a very good matrix showing all of the HMDA Rule key dates at http://files.consumerfinance.gov/f/201510_cfpb_hmda-key-dates-timeline.pdf

Thank you. I had interpreted the chart as applications received January 1, 2018, but our compliance consultant said 2017. Just wanted to clarify I was interpreting it correct. So nice to have BOL!

I was looking at the final rule and want to be sure I understand reporting "Total Units". Are we required to report 1 for a single family dwelling? The field does not seem to offer an option to report N/A.

Yes, single family will be reported as "1".

Thanks TMatt. I was getting myself confused.

Does the "less than 25" rule apply only to originated loans ? It does not include denied or withdrawn applications?

Short answer: only originated loans. Not denials, withdrawals, closed for incompleteness.
Long answer: Here's some info on this topic from our training outline:

In 2017:
3. Loan Volume Test:
Your bank originated at least:

a. One:
One home purchase loan or refinance of a home purchase loan secured by a first-lien, 1-4 family dwelling (exclude temporary financing) in 2016; and

b. 25:
A combined total of 25 home purchase loans or refinance of home purchase loans in each of the prior two calendar years (2015 and 2016).

i. Include:

A.) ANY Home Purchase Loan

B.) ANY Refinance of a Home Purchase Loan


ii. Do not include any of the following:

A.) Denied or withdrawn applications;
B.) Loans originated or purchased by the bank acting in a fiduciary capacity (such as trustee); 

C.) Loans secured by bare land; 

D.) Temporary financing (such as bridge or construction loans); 

E.) The purchase of an interest in a pool of loans (such as mortgage-participation certificates, 
mortgage-backed securities, or real estate mortgage investment conduits); 

F.) The purchase solely of the right to service loans; or, 

G.) Loans acquired as part of a merger or acquisition.

4. 2017 Only!
This criteria only applies in 2017. Even if exempt in 2017 you may be subject to HMDA again in 2018.

In 2018
3. Loan Volume Test:
Your bank originated at least:

a. One:
One home purchase loan or refinance of a home purchase loan secured by a first-lien 1-4 family dwelling in the prior calendar year; and

b. 25:
Closed-end dwelling secured loans (“loan”) in each of the prior two calendar years; or,

c. 100:
Open-end lines of credit secured by a dwelling (“line”) in each of the prior two calendar years.

4. 25 / 100 Calculation:
Do not include any of the following loans or lines of credit:

a. Denied or withdrawn applications;
b. Secured by bare land;
c. Primarily for agricultural purposes;
d. Primarily for business purpose (except Home Purchase, Home Improvement and Refinance);
e. Temporary Financing;
f. Less than $500;
g. Originated or purchased by the bank acting in a fiduciary capacity;
h. The purchase solely of the right to service a closed end loan or open-end line of credit
i. Purchased as part of merger or acquisition; or
j. Purchased as a partial interest.
k. The purchase of an interest in a pool of closed end loans or open-end lines of credit.

This is only a portion of the material and it's an outline, so I hope it makes sense. We'll be providing a webinar for BOL on this topic with lots more details.

Thank you David, that is the first piece of good news I have had all day. Looks like we will not be a HMDA reporter in 2017. When is your webinar?

Hi - I want to make sure I understand the conversation above regarding when to begin collecting the new attributes.

Are we to use the ACTION Date as the defining factor as to which LAR we report to? Ie: application date is 12/1/2017...application is terminated (denial, withdrawn etc) let's say on 1/25/2018...Is this HMDA reportable under the new HMDA Rule because it is going on the 2018 LAR, or no because the application date is in 2017?

I thought the new rule applies to loans (lines) being reported on the 2018 LAR (driven by Action Date), not only loans with an Application Date on or after 1/1/2018....Am I wrong?

Thank you...

Yes, the action date will determine if the application/loan goes on the 2017 or 2018 LAR.

If you take an application in 2017 and the application is denied, etc. or results in an originated loan that closed by 12/31/2017, it will be reported on the 2017 LAR.

If you take an application in 2017 and the final action (a signed, originated loan) or a denial, withdrawn, approved not accepted is decided on 1/1/2018, it will go on the 2018 LAR.

There is only one transition rule and it relates to the demographic date (GMI): if you taken an application say on 12/30/2017 but obtain the race/gender/ethnicity on 12/30/2017, you will report that data based upon old rules even though final action will be in 2018. If you for some reason you obtained the demographic data on 1/2/2018 on that application you will use the new rules when you collect the data.

Thank you for the clarification, Kaybee! I am sure I will be back with more questions...fun!

Well, we are all in this together! It will be exciting (in one way or another!)

....I'm not sure the term "exciting" is an accurate description. I can think of other, better choice words for the upcoming mess.

I think "horrifying" might be closer to what you're looking for there.

They said that about TRID too...I don't know about other FI's, but it left mine with some very deep scars. We're in the process of rebuilding relationships :-( One of our attorneys stated 2 weeks ago, that this will be 8 times worse than TRID. IS that even possible?

As being the one person in my institution responsible for reviewing and scrubbing the HMDA LAR, I feel it will be 100 times worse than TRID.

I truly feel that one person HMDA processes will no longer work unless there is an exceedingly small LAR. Even then, the time involved will be much more extensive. Similar to TRID audits, the time will grow exponentially.

And please prepare. Do not wait until late in 2017, or worse, until you start to enter loans on a 2018 LAR, to study how to complete each field. It is complex.

I think this will be much, much worse than TRID...

Our LAR is going to grow from about 1700 items to an estimate 5000.... Hope the departments get qualified HMDA staff because there is no way in [censored] this can fall on compliance's shoulders.

I think banks will be getting raked over the coals on this for the next decade. Havent heard anything about a grace period or changed permissible error percentage. If you fail an exam youll be scrubbing ALL of the new loans and ALL of the new fields. I cant even imagine. Might be very nice to be a consultant over the next 10 years haha.

Makes me groan every time i realize that the only reason we're a HMDA reporter is the one (very small compared to other MSAs) MSA we have a branch in, which accounts for maybe 15% of our LAR. The other 85% of our LAR entries are in areas that would, on their own, never make it onto a LAR because they're outside of an MSA.

I hate to say this, but I for one do not understand the reason for an exemption for financial institutions without an office in an MSA. I know of banks that, were it not for the lack of an office in an MSA, would have a LAR of several hundred entries. Given that part of the reason for HMDA is knowing what is going on with housing and the loans to finance housing, this makes no sense.

Good lobbying by someone, I guess.

I do agree with that KB....never really made sense to me either.

It would make more sense to raise the threshold and eliminate the MSA rule. But you never heard me say that.

I would like that change. Maybe that would exempt us (but i doubt it).

I'm a one person HMDA show with a LAR estimated to be about 1500 by 2018. It would probably be manageable if that we my sole responsibility, but I'm also the TRID guy, and the CRA guy and the Flood Insurance guy, and..... Should be fun.

I absolutely agree with Kathleen on this. I've already started educating the commercial loan department on HMDA itself. They really had no idea it affects multifamily, investor-owned residential, and mixed-use with a majority residential use loans. As I did with TRID, I've started putting out little bulletins about the HMDA changes to the entire lending staff.

My biggest concern is with the commercial area. On the residential side, we will be capturing the required information through our LOS. The commercial side does not use an LOS, so I'm trying to figure out how to automate capture of the data.

I also advise providing the full list of what will be required to report so that product areas (like residential, commercial, etc.) can begin to determine just where that data is housed and consider how it will be gathered to get into the LAR.

While an overworked compliance officer might feel they do not have time to start to learn the new HMDA rules, it would be unfair to not advise these product areas until the last minute that they will need to gather more data to complete the LAR.

What is the needed information?
Where is it housed?
Is it in a system or a paper document?
If in a system how, will it get to the LAR?
If paper, how will it be gathered to get to the LAR?
If different systems are involved, what are the vendors doing to prepare for HMDA?

Preparing for the new HMDA is not a one person show so at least educate others on what is needed, let alone the rules on what and how to report.

Based on what I understand, we start collecting, per the new rule, on 1/1/2018. Is this based on loan applications received on or after 1/1/2018?

For example, what if we have an application in December 2017, but the loan doesn't get approved and closed until 2018?

It is based on action date, so if you start an application in 2017 but it doesn't reach final action until 2018, you will have to report on the 2018 LAR under the new rules. The one exception is the ethnicity, race, and sex information. For applications started in 2017, it will be reported in the same way as it is currently reported (no sub-categories).

Will there be a 2018 HMDA topic opened in the Dodd-Frank area of the forum? Just starting to dig in and would like to see a specific area for these implementation questions rather than in this large final rule thread. It is going to be a long year and a half

Matt....i'm not very far along yet on this......where is the citation or interpretation that applications started in 2017, but closed in 2018, will have the GMI reported per 2017 rules? Thanks.

This is from the small entity guide:

Because the 2015 HMDA Rule changes the information that must be included on an Application form or other collection form, Financial Institutions must revise their forms. A Financial Institution must use the revised collection or Application form for Applications received on or after January 1, 2018. For Applications received prior to January 1, 2018, the Financial Institution does not use the revised collection form, but collects applicant information using a collection form that complies with the Regulation C requirements in effect prior to January 1,2018. The 2015 HMDA Rule provides a transition provision that allows a Financial Institution to report the applicant’s ethnicity, race, and sex required under the Regulation C requirements in effect at the time that the Financial Institution collects the information, not when the Financial Institution takes final action on the Application. Comment 4(a)(10)(i)-2.

And this from the final rule, page 739:

2. Transition rule for applicant data collected prior to January 1, 2018. If a financial
institution receives an application prior to January 1, 2018, but final action is taken on or after
January 1, 2018, the financial institution complies with § 1003.4(a)(10)(i) and (b) if it collects
the information in accordance with the requirements in effect at the time the information was
collected. For example, if a financial institution receives an application on November 15, 2017,
collects the applicant’s ethnicity, race, and sex in accordance with the instructions in effect on
that date, and takes final action on the application on January 5, 2018, the financial institution
has complied with the requirements of § 1003.4(a)(10)(i) and (b), even though those instructions
changed after the information was collected but before the date of final action. However, if, in
this example, the financial institution collected the applicant’s ethnicity, race, and sex on or after
January 1, 2018, § 1003.4(a)(10)(i) and (b) requires the financial institution to collect the
information in accordance with the amended instructions.

Thank you TMatt.

To summarize: It depends on when you collect the demographic data. If in 2017, follow today's rules. If in 2018, follow the new rules. It doesn't matter what the action date is.

It is important to understand the reason for treating the demographic (GMI) data differently. HMDA is an exception to the prohibition on asking applicant's race, ethnicity and gender information. Right now, we are authorized to ask the questions under current HMDA rules.

The expanded exception to ask for the additional data is not authorized until 1/1/2018.

All of the new HMDA is based on action date with this transition rule for GMI data due to the legalities involved in requesting the data.

I am little late to this party, but quick question: does anybody know, or think, if a new GIR will be issued? Also, regarding the link that started this thread, is that the best place to look to find the changes (or summary of) taking place? I am going cross-eyed trying to read through it!

I would look at the HMDA resources on this page. http://www.consumerfinance.gov/policy-co...implementation/

I would look at the compliance guide.
http://www.consumerfinance.gov/documents/709/201512_cfpb_hmda_small-entity-compliance-guide.pdf

I would also look at the filing instruction guides on the following page.
http://www.consumerfinance.gov/data-research/hmda/for-filers

The CFPB has pulled, for the most part (I am in the middle of confirming that all was carried over) what was in the FAQs and the GIR into the commentary. The Rule and Commentary, plus the FIG at the link above,

http://www.consumerfinance.gov/data-research/hmda/for-filers

is everything at the moment. Hopefully the commentary will be updated or FAQs will be issued to share what is being provided in questions posed to the CFPB.

I should add that the FIG has a small amount of data that is not provided in the rule and commentary, such as the added code for reporting sex when both male and female are selected, and the details for reporting rate spread.

Ya I won't be getting out of it either. We report every year and usually end up with over 700 on my LAR. And it's just little ol me that does it all, plus I do all the denials and w/d's, plus some real estate loan compliance review!!!

I'm going to be so exhausted with all this new stuff with HMDA! I believe it's going too maybe be too much for only 1 person to do all that I do, but I don't see the staffing changing!!

I have examiners here this week. Discovered we ARE a HMDA bank now. Yippie! He pretty much said several times that it will take more than 1 person doing it. Now all I have to is find someone who will be helping me!! Wish me luck!!

You are a HMDA bank for 2016 or starting in 2017? That determines how big a headache you will have.

Do we need to add the Universal Loan Identifier to the mortgage loan documents (i.e. Uniform Residential Loan Application, Mortgage Deed, Note, etc.)

See this thread: Answer