CFPB Proposed Rule amending Regulation C/HMDA

Posted By: GTS333

CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 09:16 PM

It's official as of today. The CFPB has issued a proposed rule amending HMDA.

Announcement: http://www.consumerfinance.gov/newsroom/...20140724+regimp

Proposed Rule: http://files.consumerfinance.gov/f/20140...egulation-c.pdf

Enjoy!
Posted By: Tater

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 09:27 PM

Holy wow. The proposed rule is SIX-HUNDRED PAGES LONG!!!!

It'll take two years just to read it! Ha.

We knew it was coming...but still doesn't mean we have to like it smile
Posted By: Queen Mum

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 09:41 PM

OK....I am reading the information on the CFPB website and it is confusing me. First it states:

Depository institutions, such as banks, satisfying HMDA’s general reporting requirements must submit HMDA data, even if they make only a single home-purchase loan or refinancing in a given year.

Then it goes on to say:

With the proposed standardized reporting threshold, small depository institutions that have a low loan volume—fewer than 25 mortgages a year—would not have to report HMDA data. For small banks with few staff members, this change could make a significant impact in easing compliance costs. The new threshold would reduce the overall number of banks required to report HMDA data by 25 percent, but, because those lenders receive a low volume of applications and originate a low volume of mortgage loans, the change would not compromise the usefulness of the dataset.

Is this not contradictory? You have to report if you have even one but yet banks with less than 25 are exempt? No where does it mention anything about being in a MSA. Is that part staying the same?

We are a small rural community bank and if we have to start reporting HMDA it would be a big headache and change for us! Let alone the cost and time involved.
Posted By: DoS

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 09:42 PM

ugh ... what a nightmare
Posted By: TMatt87

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 09:44 PM

QM, I think it's talking about the current reporting requirements vs. the proposed.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 09:54 PM

The one is the current rule, then they discuss the proposed.
Posted By: Queen Mum

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 10:05 PM

Are they changing the MSA part of it? I just don't want to have to start collecting this information and reporting.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/24/14 10:41 PM

No, the MSA rule remains but only if you hit the 25 loan threshold, not 1 as it is now.
Posted By: Sinatra Fan

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/25/14 12:48 PM

I'm half convinced that they deliberately make these proposed rules so large to discourage the industry from reading them and commenting on them. I mean, seriously, it's a struggle to read the final rules, let alone read the proposed rules as well. mad
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/25/14 12:56 PM

It is long but mostly because of the discussion of information received from the meetings held and other comments from the industry, and details on why certain changes are proposed. I find that to be interesting and important but you could just go right to the proposal and skip the discussion and analysis.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/25/14 01:08 PM

See my comment here.

http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1945658&#Post1945658
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/25/14 02:28 PM

Originally Posted By: Kathleen B
It is long but mostly because of the discussion of information received from the meetings held and other comments from the industry, and details on why certain changes are proposed. I find that to be interesting and important but you could just go right to the proposal and skip the discussion and analysis.

Yes, it's interesting. But I tend to agree with Sinatra Fan about burying stuff. I'd hazard to say that the majority of us working compliance simply haven't got the time to devote to sitting down and reading something this voluminous, yet alone do so without constant interruptions and side tracks.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/25/14 02:31 PM

However, if regulators did not provide the discussion and analysis, they would be criticized for that. They can't just toss out the proposed rules without discussion of the reasoning and asking for comments.

It has always been a struggle for banks to stay on top of proposed and new regulations and they have to either provide for that in house or rely on external parties (like BOL).
Posted By: JC (Darth HMDA)

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/26/14 12:49 AM

Anyone have a summary available yet? haha
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/26/14 12:49 AM

I am working on it! Sitting here reading right now.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/26/14 02:26 AM

Reading it and envisioning bankers falling in the aisles.

How about this...report the MLO identifier (SAFE Act) so that training deficiencies can by identified!

"The Bureau believes that implementing the Dodd-Frank Act
requirement for a mortgage loan originator unique identifier will improve HMDA data and assist in identifying and addressing potential issues, such as training deficiencies with specific loan originators, as well as strengthen the transparency of the residential mortgage market. The ability to identify an individual who has primary responsibility in the transaction will enable new dimensions of analysis, including being able to link individual mortgage loan originators or groups of mortgage loan originators to a financial institution."

I am chuckling here.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/26/14 06:14 PM

Here are the proposed fields. There is a lot of explanatory data that is key to when and what to report.

§ 1003.4 Compilation of reportable data.
(1) A universal loan identifier
(2) Insured Under National Housing Act
(3) Loan Type
(4) Preapproval
(5) Construction Method
(6) Principal Residence
(7) Amount
(8) There is no 8
(9) Location including address and geocoding
(10) Ethnicity Rate Sex and Age and Gross Annual Income
(11) Purchaser Type
(12) Rate Spread
(13) HOEPA
(14) Lien Priority
(15) Credit Score
(16) Denial Reasons
(17) Points and Fees
(18) Itemized Amounts Paid At or Before Closing
(19) Points to Reduce Rate
(20) Interest Rate if no points
(21) Interest Rate
(22) Prepayment Penalty Term in Months
(23) Debt to Income Ratio
(24) Loan to Value
(25) Term in Months to Maturity
(26) Months to First Interest Rate Change
(27) Negative Terms (Balloon, Interest Only, Negative Amortization)
(28) Property Value
(29) Manufactured Home – Real or Personal Property
(30) Manufactured Home – Land Owned or Leased
(31) Number of Dwelling Units
(32) Number of Affordable Housing Units if Multifamily
(33) Channel
(34) MLO NMLSR ID
(35) AUS System Name
(36) Reverse Mortgage Identifier
(37) Open End Line of Credit/HELOC identifier
(38) ATR and QM Identifier
(39) Amount of draw at account opening for HELOC and open end Reverse Mortgage
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/27/14 09:33 PM

I think a key to commenting is to determine which of these pieces of info (several line items are multiple fields) are already captured by your system and could be fed to the LAR and what would be needed to do that).

Also, does your Core and/or origination system already support MISMO standards even if you have not been using it.

Basically, think it through before commenting.
Posted By: Sinatra Fan

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 12:55 PM

Originally Posted By: Kathleen B
Reading it and envisioning bankers falling in the aisles.

How about this...report the MLO identifier (SAFE Act) so that training deficiencies can by identified!

"The Bureau believes that implementing the Dodd-Frank Act
requirement for a mortgage loan originator unique identifier will improve HMDA data and assist in identifying and addressing potential issues, such as training deficiencies with specific loan originators, as well as strengthen the transparency of the residential mortgage market. The ability to identify an individual who has primary responsibility in the transaction will enable new dimensions of analysis, including being able to link individual mortgage loan originators or groups of mortgage loan originators to a financial institution."


What if there is no MLO for a specific transaction? Do they give the option of N/A?
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 01:49 PM

Proposed instruction 4(a)(34)-2 in appendix A provides that, in the event that the mortgage loan originator is not required to obtain and has not been assigned an NMLSR ID, a financial institution must enter “NA” for not applicable.
Posted By: GTS333

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 04:49 PM

Anyone have an idea yet on what the effective date of all of these changes would be?

I know that Dodd-Frank said that any new data that is required to be collected would not be required to be reported before the fist January 1 that occurs after the end of the 9 month period beginning on the date of the file rule, but that's only the new data elements. I have also seen comments in the proposal that talk about things like the quarterly reporting not taking effect until 1 year after the other elements taking effect. Anyone have a clear description of the actual proposed timelines for effectiveness at this point??

Thanks
Posted By: Queen Mum

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 04:53 PM

I just received an e-mail from another source that expected it to be January 2016 according to Dodd-Frank.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 04:57 PM

The comment period does not end until October 22, 2014. If they got a final rule out December 31, 2014, the earliest could be 1/1/2016 to start collecting for 3/1/2017 reporting.

I wouldn't be surprised if that pushed out a year from those dates to allow for the extensive programming changes needed.
Posted By: GTS333

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 04:59 PM

I assume that is the requirement to start collecting any new data elements? So, any new report including that data wouldn't arise until 2017??
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 05:00 PM

As I said, collecting 1/1/2016 for reporting in 2017.
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 05:02 PM

Originally Posted By: Kathleen B
I wouldn't be surprised if that pushed out a year from those dates to allow for the extensive programming changes needed.

Agreed, especially in light of the burden the cost of implementation for the 8/1/15 changes for the integrated disclosures is going to put on banks.
Posted By: RockChucker, CAMS

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 05:12 PM

Originally Posted By: Kathleen B
Here are the proposed fields. There is a lot of explanatory data that is key to when and what to report.

§ 1003.4 Compilation of reportable data.
(1) A universal loan identifier
(2) Insured Under National Housing Act
(3) Loan Type
(4) Preapproval
(5) Construction Method
(6) Principal Residence
(7) Amount
(8) There is no 8
(9) Location including address and geocoding
(10) Ethnicity Rate Sex and Age and Gross Annual Income
(11) Purchaser Type
(12) Rate Spread
(13) HOEPA
(14) Lien Priority
(15) Credit Score
(16) Denial Reasons
(17) Points and Fees
(18) Itemized Amounts Paid At or Before Closing
(19) Points to Reduce Rate
(20) Interest Rate if no points
(21) Interest Rate
(22) Prepayment Penalty Term in Months
(23) Debt to Income Ratio
(24) Loan to Value
(25) Term in Months to Maturity
(26) Months to First Interest Rate Change
(27) Negative Terms (Balloon, Interest Only, Negative Amortization)
(28) Property Value
(29) Manufactured Home – Real or Personal Property
(30) Manufactured Home – Land Owned or Leased
(31) Number of Dwelling Units
(32) Number of Affordable Housing Units if Multifamily
(33) Channel
(34) MLO NMLSR ID
(35) AUS System Name
(36) Reverse Mortgage Identifier
(37) Open End Line of Credit/HELOC identifier
(38) ATR and QM Identifier
(39) Amount of draw at account opening for HELOC and open end Reverse Mortgage


If there is an 8 how can there be "no 8"?
I'm confused
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 05:14 PM

I haven't figured that out yet, but in that section there is no 8! That is my comment....the numbering went 7 to 9.
Posted By: RR Becca

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 06:51 PM

#8 must be for the flood zone, because it looks like that's the only thing missing from just making this the full loan record.
Posted By: Midwest Banker Too

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 07:14 PM

My guess is #8 is "type of action taken, and the date" per the current version of 1003.4.
Posted By: Sinatra Fan

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 09:36 PM

Originally Posted By: Kathleen B
Proposed instruction 4(a)(34)-2 in appendix A provides that, in the event that the mortgage loan originator is not required to obtain and has not been assigned an NMLSR ID, a financial institution must enter “NA” for not applicable.


Excellent. Thanks!
Posted By: fmissle

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 11:37 PM

Still reading, but....

Lower the threshold for reporting to 25 covered transactions.
-My response "Awesome! We won't have to report"

Covered transactions now include business loans secured by residence.
-My response "Damn. Now we have to report again."
Posted By: JC (Darth HMDA)

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 11:52 PM

oh....my.....goodness.....
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/28/14 11:51 PM

Yes, I plan to comment on that as it also creates a great conflict with CRA that must be resolved if this goes forward as is. There are 2 very limited exceptions in CRA. If they do this, I hate to say it, but we need a marker for business purpose loans because they cannot be double counted. Banks would lose credit for many small commercial loans that have a residence as secondary collateral or even taken in an abundance of caution.

Understand that the proposed broadened definition of covered transaction came about because folks in the small business panels said it was too hard to figure out what was reportable!

Be careful what you ask for.
Posted By: complymuch, crcm

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/29/14 12:53 PM

Does anyone have a link to the Small Business Review Panel report? I have been unable to locate a copy of the report even though it's referenced multiple times in the proposed rule.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/29/14 12:57 PM

Bottom of this page.

http://www.consumerfinance.gov/newsroom/...ortgage-market/
Posted By: complymuch, crcm

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/29/14 01:00 PM

Thank you!
Posted By: JWills, CRCM

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/29/14 01:15 PM

Originally Posted By: RR Becca
#8 must be for the flood zone, because it looks like that's the only thing missing from just making this the full loan record.


Maybe it will be the borrowers blood type. smile
Posted By: Red Raiders

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 03:44 PM

Originally Posted By: RR Becca
#8 must be for the flood zone, because it looks like that's the only thing missing from just making this the full loan record.



Or....favorite ice cream flavor! smile
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 03:46 PM

It has to be the action codes (action taken and date).
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 04:40 PM

so is it true that this proposal would take the number of reportable fields from 26 to 54 as stated in an article today? Zounds!
Posted By: Dan Persfull

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 05:52 PM

Beginning on page 531 they refer to if the dwelling will be a primary, secondary, etc. dwelling of the applicant or borrower. It does not refer to the owner.

So if a child is borrowing money for a covered purpose and securing the loan with the parent's home they (parents) live in but the parents do not sign the note, only the security agreement, according to the language beginning on page 531 the owner-occupancy would be non-owner occupied.

This reverts back to the reporting requirements prior to the 2004 changes.

Have I missed something?
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:09 PM

Page 139:

"For these reasons, to implement section 304(b)(2) of HMDA and pursuant to its authority under sections 305(a) and 304(b)(6)(J) of HMDA, the Bureau is proposing to modify § 1003.4(a)(6) to provide that a financial institution shall report whether the property identified in § 1003.4(a)(9) is or will be used by the applicant or borrower as a principal residence, as a second residence, or as an investment property."
Posted By: RR Becca

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:14 PM

So that's a yes - we're going back to the pre-2004 practice of reporting borrower occupancy instead of owner occupancy. Right?
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:18 PM

I'm confused. That doesn't answer Dan's question, Kathleen.
What would you report re: primary, secondary or investment on the parents' house as collateral?
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:18 PM

Well, as proposed. But they are asking for comments, so that would be good to point out and inquire!

I am starting a list, because I do plan to submit a comment letter.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:19 PM

Originally Posted By: Truffle Royale
I'm confused. That doesn't answer Dan's question, Kathleen.
What would you report re: primary, secondary or investment on the parents' house as collateral?



I am merely quoting what the bureau has stated and they do NOT reference a property owned by a third party, merely reporting property owned by the applicant/borrower. I will check the proposed commentary to see what that might have to say on what they intend.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:21 PM

Keep in mind this is a proposal. They are asking for comments on what is proposed; request clarification where you need it.
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:24 PM

Editorial rant warning!

Does the OWNER of the property currently occupy the premises taken as collateral.
That's basic, easy to understand English so of course CFPB is going to mess with it!
Can you just see the myriad of errors that's going to make?
And there isn't a pivot table in existence that will catch that.
mad
I'm tired of this stuff going overboard.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:23 PM

What Dan stated is from the commentary. My cite is from the discussion at the beginning.
Posted By: RR Becca

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:24 PM

Thanks, Kathleen. Your insight on this is a huge help!
Posted By: Dan Persfull

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:26 PM

So the owner-occupancy status will revert back to pre 2004 reporting. IOWs the new categories will be based on the applicant/borrower and not the owner.

Paragraph 4(a)(6)—Occupancy Type.

1. Indicate the occupancy status of the property to which the covered loan or application relates by entering the applicable Code from the following:

Code 1—Principal residence
Code 2—Second residence
Code 3—Investment property with rental income
Code 4—Investment property without rental income

So, in my example of a son/daughter borrowing money for a covered purpose and secures the loan with their parents home but the parents are not an applicant or borrower which code do you use? The parent's residence is not the applicant's/borrower's principal residence, second residence, income rental or non income rental. (shaking my head)

And for community banks this does happen more often than one may think.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:26 PM

Happens at big banks too (think Private Banking).
Posted By: RR Becca

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:27 PM

I see loans like that at least a couple of times a month, Dan. This is kind of a big deal for us.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 06:28 PM

Originally Posted By: Truffle Royale
Editorial rant warning!

Does the OWNER of the property currently occupy the premises taken as collateral.
That's basic, easy to understand English so of course CFPB is going to mess with it!
Can you just see the myriad of errors that's going to make?
And there isn't a pivot table in existence that will catch that.
mad
I'm tired of this stuff going overboard.


Then comment or submit comments to an industry group or someone else who plans to comment. That is the purpose of a proposal and request for comments. If you do not comment and no one else does on that topic, it stands as proposed.
Posted By: fmissle

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 08:23 PM

Just to note, it appears that comments for this proposal should be submitted via e-mail to FederalRegisterComments@cfpb.gov
Posted By: fmissle

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/30/14 11:26 PM

Well, after carving out a few hours each day, I have drafted my comments for the proposal. I'll spend a couple days reviewing and then send it in.

All in all, it's not that bad. Many of the items they had to add due to DFA. I don't like that they're collecting so much information, but I don't think we can get away from that. Some of the changes are nice, like the Disclosure Statement being at the FFIEC. I also recommended that the modified LAR be available at the FFIEC and Institutions direct all requests for HMDA data there.

I do hope they're able to exempt business transactions that are not the purchase or refinance of dwellings (i.e. business lines of credit where the RE is additional collateral to shore up the deal). I don't think the data they'd get from those deals would be worth it.
Posted By: NU Rhules

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/31/14 06:28 PM

Doyoucanoe, Actually, their own document states that you can go to Regulations.gov to comment. Which according to law is how it's been done until the CFPB came along. I'm still waiting for the Federal Register to publish this NPRM so I can comment. If I was not on the CFPB mailing list I'd have no idea about this proposal. I kinda feel for those who are disenfranchised. sniff. A search today on the regulations.gov web site shows no existence of said document.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/31/14 07:35 PM

Once it is in the federal register, we can comment that way.
Posted By: fmissle

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/31/14 08:05 PM

Originally Posted By: Cornhusker
Doyoucanoe, Actually, their own document states that you can go to Regulations.gov to comment. Which according to law is how it's been done until the CFPB came along. I'm still waiting for the Federal Register to publish this NPRM so I can comment. If I was not on the CFPB mailing list I'd have no idea about this proposal. I kinda feel for those who are disenfranchised. sniff. A search today on the regulations.gov web site shows no existence of said document.


Guess I shouldn't have skipped over that part.
Posted By: Sinatra Fan

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/31/14 09:05 PM

Click here to read Blair Rugh's comments on the proposal: https://www.trinovus.com/2014/07/30/better-never-than-late/

The guy is always lucid, succinct, and on point.
Posted By: WI Banker

Re: CFPB Proposed Rule amending Regulation C/HMDA - 07/31/14 09:46 PM

Originally Posted By: Truffle Royale
Does the OWNER of the property currently occupy the premises taken as collateral.
That's basic, easy to understand English so of course CFPB is going to mess with it!


Not so basic for our bank. Our compliance department insists this means borrower occupied and our loans are reported as such.
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/02/14 05:39 PM

WI Banker, then you're lucky that in most instances the borrower is actually the owner and occupying the premises. Under the current rule and using Dan's example, your compliance department would be dead wrong to report the borrower's occupancy. It could be cited as a violation in an exam.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/03/14 01:51 PM

Proposed Definition of Dwelling

The new definition has exclusions that definitely clarify what is a reportable dwelling. Many of the property types that have caused much agonizing in the past would be clearly not reported, such as RVs or boats used a primary dwellings, house boats, floating homes, etc. The commentary also clearly states that residences purchased to be used for a non-residential purpose such as an office will not be reportable, clearing up that misunderstanding that confused many banks. (It is no longer a house!)

"Exclusions. Recreational vehicles, including boats, campers, travel trailers, and park model recreational vehicles, are not considered dwellings for purposes of § 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976, are also excluded, regardless of whether they are used as residences. Also excluded are transitory residences such as hotels, hospitals, and college dormitories, and structures originally designed as dwellings but used exclusively for commercial purposes such as homes converted to daycare facilities or professional offices. "

Comments are requested on the exclusions.
Posted By: Sage

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/07/14 07:42 PM

Is it worth commenting that they should eliminate the Information for Monitoring under Reg B if you are a HMDA reporter?
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/07/14 08:01 PM

It is worth mentioning, especially with the proposed expanded "reportable loan" definition under HMDA.
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/07/14 09:40 PM

I agree! This "collect but don't report" [censored] is worthless and confusing to lenders. If you're a HMDA reporter, examiners do not look at the non-HMDA GMI information. They don't have a way to process it. I'd put that in my comment letter.
Posted By: Snowgirl

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/07/14 10:08 PM

Originally Posted By: Kathleen B
The comment period does not end until October 22, 2014. If they got a final rule out December 31, 2014, the earliest could be 1/1/2016 to start collecting for 3/1/2017 reporting.

I wouldn't be surprised if that pushed out a year from those dates to allow for the extensive programming changes needed.


So just wondering. We currently are not subject to HMDA, however, we are anticipating purchasing a branch in a MSA area which would then thrust us into the HMDA arena. If we purchased this bank before year end 2014, we would be reportable in 2015 at the current criteria of 1 loan per year. With the new definitions would it be the 25 per year? Trying to figure out how this will work. I pulled a report from 2013 and we only did 22 loans and 4 HELOCs (26 total). I haven't looked at the numbers from this year yet. Would it be worth our time to push the purchasing of this branch off until the first of the year (2015)? Any thoughts?
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/07/14 10:29 PM

HELOCs don't count in the 25 as proposed.

I would not be surprised if we don't see a final rule until next year.

Even if the rule comes out in 2014 it won't affect collection of data in 2015.
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/08/14 04:45 PM

Here's my crystal ball on the proposal/final rules:
Comment period ends in Oct 2014. They issue final rules by 3/31/15 that go into affect 1/1/16.

So, in addition to Kathleen's comment, if you can delay the purchase of the branch until 2015 it would be wise from a HMDA perspective. Otherwise, you may be subject to HMDA (& have to train extensively) under the current rules in 2015 and then have to retrain for the 2016 rule changes. That would be difficult and something to have management consider when looking at the purchase date.
Posted By: Snowgirl

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/08/14 06:37 PM

Thanks David: That is kind of what I was thinking, but I don't think they listen very well!!!
Posted By: Compliance Chick

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/12/14 10:08 PM

I have only skimmed it so far but what is the story about mobile homes? It looks as though loans secured by a mobile home, whether or not land is included in the loan, are reportable?
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 12:45 AM

Originally Posted By: Compliance Chick
I have only skimmed it so far but what is the story about mobile homes? It looks as though loans secured by a mobile home, whether or not land is included in the loan, are reportable?


Mobile homes could be reportable with or without land under present rules. That is not new. There are some firm lines drawn in the proposal which if enacted would end a lot of agonizing (regardless of the increased reporting triggered by other parts of the proposal.)

The proposed definition is:

(f) Dwelling means a residential structure, whether or not attached to real property. The term includes but is not limited to a detached home, an individual condominium or cooperative unit, a manufactured or other factory-built home, or a multifamily residential structure."

The present definition is:

"Dwelling means a residential structure (whether or not attached to real property) located in a state of the United States of America, the District of Columbia, or the Commonwealth of Puerto Rico. The term includes an individual condominium unit, cooperative unit, or mobile or manufactured home."

The proposed definition removes mobile home, excluding older mobile homes built prior to the HUD rules effective in 1976 and requiring reporting only of the "manufactured homes" with HUD identifiers.

The proposal also is recommending some additional slicing and dicing of reporting on manufactured homes. Reporting entities would be asked to identify if a manufactured home is treated as real or personal property and whether it is on owned or leased land.

"(29) Manufactured Home – Real or Personal Property If the dwelling related to the property identified in paragraph (a)(9) of this section is a manufactured home, whether it is legally classified as real property or as personal property.

(30) Manufactured Home – Land Owned or Leased - If the dwelling related to the property identified in paragraph (a)(9) of this section is a manufactured home, whether the applicant or borrower owns the land on which it is or will be located through a direct or indirect ownership interest or leases the land through a paid or unpaid leasehold."

Finally, the commentary on "dwelling" is expanded with some bright lines on what is not to be reported. Some nice changes are clearly ruling out RVs and boats used as residences.

2(f) Dwelling.

1. General. The definition of a dwelling is not limited to the principal or other residence of the applicant or borrower, and thus includes vacation or second homes and investment properties. A dwelling also includes a multifamily residential structure such as an apartment, condominium, or cooperative building or complex.

2. Exclusions. Recreational vehicles, including boats, campers, travel trailers, and park model recreational vehicles, are not considered dwellings for purposes of § 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976, are also excluded, regardless of whether they are used as residences. Also excluded are transitory residences such as hotels, hospitals, and college dormitories, and structures originally designed as dwellings but used exclusively for commercial purposes such as homes converted to daycare facilities or professional offices.

3. Mixed-use properties. A property used for both residential and commercial purposes, such as a building containing apartment units and retail space, is a dwelling if the property’s primary use is residential. An institution may use any reasonable standard to determine the primary use of the property, such as by square footage or by the income generated. An institution may select the standard to apply on a case-by-case basis. However, an institution shall consider a property that includes five or more individual dwelling units to have a primary residential use."

The current commentary simply states:

"Dwelling.

1. Coverage. The definition of “dwelling” is not limited to the principal or other residence of the applicant or borrower, and thus includes vacation or second homes and rental properties. A dwelling also includes a multifamily structure such as an apartment building.

2. Exclusions. Recreational vehicles such as boats or campers are not dwellings for purposes of HMDA. Also excluded are transitory residences such as hotels, hospitals, and college dormitories, whose occupants have principal residences elsewhere. "

Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 04:51 PM

Quote:
Finally, the commentary on "dwelling" is expanded with some bright lines on what is not to be reported. Some nice changes are clearly ruling out RVs and boats used as residences.

Kathleen: I don't believe this is a correct statement. The Commentary to §1003.2(f)#2 (page 513) states Recreational vehicles are excluded. That's true under today's rules too. Then the proposed commentary states "Houseboats, floating homes & mobile homes constructed prior to 6/15/76 are excluded even if used as a residence.

Therefore, new (after 1976) houseboats, mobile homes, etc. that are NOT recreational ARE reported.

If someone lives in a houseboat (think Seattle area) or in a camper (my dad did for 7 years), that's not recreational. It's their dwelling and is reported for HMDA.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 05:12 PM

David, here is a quote from the analysis:

"Regarding houseboats and floating homes that may be used as residences, certain financial institutions in areas where houseboats and floating homes are more common report loans related to floating homes and houseboats on their loan application registers. These institutions may receive consideration under the CRA for financing houseboats or floating homes. The Bureau recognizes that while these loans may provide housing for certain communities, the Bureau believes that financing of such loans is different from other home loans and the incidence of such housing is highly localized. Unlike manufactured housing, discussed below, usage and financing of houseboats and floating homes is not as prevalent, and the small number of houseboats used as residences suggests that loans secured by such properties should not be included in HMDA data. Therefore, the Bureau believes that excluding houseboats and floating homes will facilitate compliance with HMDA. However, the bureau solicits feedback on whether these exclusions are appropriate. "
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 05:25 PM

David, you have to consider "mobile homes constructed prior to June 15, 1976" by itself. That is the dividing line for the HUD manufactured home standards. 1976 has no bearing on anything other than manufactured homes.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 05:38 PM

And lastly, campers and RVs used as residences would be excluded. The full commentary statement:

"2. Exclusions. Recreational vehicles, including boats, campers, travel trailers, and park model recreational vehicles, are not considered dwellings for purposes of § 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976, are also excluded, regardless of whether they are used as residences. Also excluded are transitory residences such as hotels, hospitals, and college dormitories, and structures originally designed as dwellings but used exclusively for commercial purposes such as homes converted to daycare facilities or professional offices."
Posted By: Sage

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 07:54 PM

[i]The proposal also is recommending some additional slicing and dicing of reporting on manufactured homes. Reporting entities would be asked to identify if a manufactured home is treated as real or personal property and whether it is on owned or leased land.[/i]

Would the above additional information have to be reported on all applications- even those that do not close? For those that get denied, or do not close-would you know that information?
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 08:47 PM

Thanks Kathleen. I have not yet read the section by section analysis. I went straight to the reg - from where I quote that houseboats are covered, if built after 1976.

Which makes me wonder about the portions you quote. From the section by section analysis, It sounds like ALL houseboats & campers are excluded, but in the regulation/commentary, it doesn't say it that way. Wonder why?

This is definitely something that should be asked to be clarified in comment letters.
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 08:52 PM

Let me throw out one specific example of how this is confusing. I have an aunt that lives full time in what you and I would call an RV. It's a $300,000+ rolling home (bus). She has a garage and pad on a lot in Idaho, but there's no house there any longer. She travels around in this bus (that is nicer than my stick built home).

Would you say this "dwelling" is excluded from HMDA because it's a camper? Or because you call it an RV? It's not recreational. It's her primary residence.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 09:17 PM

Yes, excluded. They discuss bankers telling them those have been reported for HMDA and the CFPB says they don't want them reported. They need to beef up the reg and commentary so that we don't have to carry the analysis around with us.
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/13/14 10:13 PM

Quote:
They need to beef up the reg and commentary so that we don't have to carry the analysis around with us.

Well said! smile
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/20/14 09:30 PM

Here's my analysis of the COVERAGE. I’m only concentrating on the coverage (what’s a covered loan and what’s exempt from reporting at this time) of the proposal. I'm also approaching this for bankers (not brokers) as they are our clients. I will begin to read the data reported next.

Please read my comments and let me know if you disagree or if I'm missing any thing important. Thanks!


Who must report:
Any financial institution that makes 25 closed-end, dwelling secured loans is to report. You don’t count HELOC’s in this test.
No change to the requirement of having an office in a MSA and assets in excess of an annually threshold.

What do you report:
All applications for a “Covered Loan” (Closed-end & Open-end HELOC’s secured by a lien on a dwelling).
• This means home equity loans, not used for home improvement purposes, are reported.
• HELOC’s, as defined in Reg Z are reported. [§1003.2(o) – page 461]
o Includes business lines too (“without regard to whether the credit is for personal . . . purposes, without regard to whether the person to whom credit is extended is a consumer”).
o Therefore, ALL business LOCs secured by a dwelling are reported.
• Unsecured Home Improvement loans that are classified as “home improvement” are no longer reported. The loan must be secured by a lien on a dwelling. (non-dwelling secured loans and classification issues are gone)
• A mobile home without land is still reported.
• Home improvement is not “majority wins”. If any % is for HI, the entire loan amount is reported.
• If a loan is for HI to a mixed used property, report IF the proceeds are used primarily to improve the residential portion. [Commentary to §1003.2(i)#4 – page 517]
• Therefore, if you have a dwelling as collateral, it’s probably being reported. If you don’t have a dwelling as collateral, it is never reported.
• All agricultural purpose loans are exempt [1003.3(c)(9) – page 462]
o What about Ag LOC’s secured by a dwelling. Does the HELOC inclusion “win” or does the “ag purpose exclusion “win”?
o What about those that are refinanced? Does the ag exemption trump the refinance definition?

Dwelling [§1003.2(f)]:
Any place where someone dwells (vacation, rental, multifamily).
Dwelling does not include:
• Recreational vehicles, boats, campers, travel trailers and park model recreational vehicles. [Commentary to §1003.2(f)#2 (page 513)]
• Transitory residences (hotels, hospitals, dorms)

Mixed used property [Commentary to §1003.2(f)#3 – page 513] = determine the primary use. You can use any reasonable standard and apply it on a case-by-case basis.

Refinancing: [§1003.2(p)]
The definition of “refinancing” is cleaned up a little.
• I’d like to see clarification of when 2 loans are needed to replace 1 loan. Is either a refinancing?
• There’s clarification of “same borrower” in the commentary: Only 1 borrower must be the same on both the old and new loan. [Commentary to §1003.2(p)#3 – page 520]
(I don't this is a change but a clarification and can be used under the current HMDA rules before this proposal is finalized and in place)

What do you not report [1003.3(c)]:
Unimproved land;
Temporary financing
Loans < $500
Loans used primarily for agricultural purposes (but what about a refinancing of these?)

Preapproval & Prequalification [§1003.2(b)(2)]:
I don’t see any differences in the new definitions from the old.
There’s clarification that a bank can do preapprovals on an ad hoc basis and not have a preapproval program. In other words, an occasional preapproval does not get reported [Commentary to §1003.2(b)#3 on page 512]. What’s occasional?
(I don't this is a change but a clarification and can be used under the current HMDA rules before this proposal is finalized and in place)
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/20/14 09:51 PM

David, you can see my thoughts on several of the issues

here.
Posted By: complymuch, crcm

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/21/14 11:22 AM

I did not see anything in the proposed rules/commentary as to what data fields would be required or answered NA for denied, withdrawn and cancelled applications.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/21/14 12:05 PM

The proposed changes to Action Taken are merely to the commentary. Additionally, denial reasons would be required.
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/25/14 04:45 PM

From the ABA Staff Commentary out Friday comes this:
Quote:
To help alleviate burden, filers would no longer have to provide copies of their HMDA-LAR but would be able to refer requesters to the Federal Financial Institutions Examination Council (FFIEC) website to obtain copies of disclosure statements.
I've gotten two requests in the last ten years. Pardon me, CFPB, but you can keep your bone. This is not going to touch the additional burden you're lining up for me. mad
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/25/14 05:02 PM

Everyone has been asking for this for years. If they ignored the requests, they would get complaints.
Posted By: Truffle Royale

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/25/14 05:06 PM

It's the 'to alleviate burden' bit that annoys me, Kathleen. Just say it's no longer a requirement instead of making it sound like you're doing such a favor for us all.

:sigh: rant over
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 08/25/14 05:06 PM

You have to read each statement separately. It alleviates the burden of that particular requirement.
Posted By: SnuffytheSeal

Re: CFPB Proposed Rule amending Regulation C/HMDA - 09/16/14 02:39 PM

Okay... so if I have a manufactured home, built prior to June 1976 (no HUD plate), I do not have a covered loan? Even though it's dwelling secured.

Oh my.......
Posted By: SouthoftheBorder

Re: CFPB Proposed Rule amending Regulation C/HMDA - 09/25/14 03:52 PM

Quote:
Unsecured Home Improvement loans that are classified as “home improvement” are no longer reported. The loan must be secured by a lien on a dwelling. (non-dwelling secured loans and classification issues are gone)

I am particularly HAPPY about this. Last year HMDA Help and FDIC indicated if the loan purpose was stated on the application as home imrovement this 'classified' the loan on the books even though unsecured. Many in these forums indicated they did not report these types of loans and several others indicated they did report unsecured HIL's even though not classified as such. grin
Posted By: Rocky P

Re: CFPB Proposed Rule amending Regulation C/HMDA - 09/25/14 07:50 PM

Originally Posted By: SouthoftheBorder
[quote]Unsecured Home Improvement loans that are classified as “home improvement” are no longer reported. The loan must be secured by a lien on a dwelling. (non-dwelling secured loans and classification issues are gone)

Great for fair lending. In a comparative file review (where policy was no bankruptcies within 3 years) regulators matched $10,000 home improvement loans:

denied was to a protected class who was renting (therefore unsecured) and
approved was to a control group applicant who pledged $20,000 in CD's (CD exception to bankruptcy was in policy)

We were required to explain the differences why both HIP loans had different outcome.
Posted By: raitchjay

Re: CFPB Proposed Rule amending Regulation C/HMDA - 09/25/14 08:25 PM


"Last year HMDA Help and FDIC indicated if the loan purpose was stated on the application as home imrovement this 'classified' the loan on the books even though unsecured..."



I'd love to know how home improvement being stated on the application equates to the bank 'classifying' the loan as HI on its books.
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 09/25/14 08:36 PM

It doesn't. HMDA Help and FDIC are wrong. The loan must be classified on the bank's SYSTEM. This is clear in the commentary. Loan officer and/or applicant comments make no difference for this issue.
Posted By: John Burnett

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/06/14 02:02 PM

The question above about what to use if a primary MLO hasn't been identified for the loan being reported isn't answered by the provision allowing for "NA" if the MLO doesn't have an NMLS ID.

And just an observation: In some higher volume lending organizations, it may be the underwriter that has the most influence over the fate of the application, not the MLO.
Posted By: INOH

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/06/14 07:44 PM

So, just to make sure I understand...

we are not in a MSA but do make more than the 25 loan threshold. Would be have to start reporting?
Posted By: TMatt87

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/06/14 11:01 PM

The MSA test is still included in the coverage test, so no you would not have to start reporting.
Posted By: purllow182

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/09/14 08:33 PM

Where is everyone's comment letters??? There's less than 30 posted - with 2 weeks left?!
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/09/14 09:46 PM

I'm drafting mine.
Posted By: TMatt87

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/10/14 06:36 PM

Just posted my comment letter this afternoon.
Posted By: LuckySoFar

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/29/14 06:56 PM

Originally Posted By: purllow182
Where is everyone's comment letters??? There's less than 30 posted - with 2 weeks left?!


It's the last day and as of now there are 69 letters (ours is in) which don't seem like enough....is this a normal amount? Or are most institutions convinced the proposals will stand as-is no matter what comments are made?
Posted By: David Dickinson

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/29/14 09:10 PM

I submitted a comment letter too. This seems like a low number, but it's not unusual that people don't write comment letters - even when they don't like the proposal. I think people simply believe they'll get what they get and their comments don't matter. Not true! Sad.
Posted By: Kathleen O. Blanchard

Re: CFPB Proposed Rule amending Regulation C/HMDA - 10/30/14 01:04 AM

I submitted and suggested that we go back to the old days of no business loan reporting except for rental real estate.