moved from the consumer- to the mortgage-lending divisions of
financial institutions. Some also argued that reporting open-end
lines of credit would require institutions to spend even more time
and money on quality control and pre-submission auditing, and
would increase the risk of errors…”
These considerations and concerns are extremely valid, thus
it is imperative, if not already done, that institutions make such
strategic decisions as soon as possible. This requires mapping
out action plans for each LOB, and pulling together compliance/
risk management (senior managers and their designated middle
managers and line staff) who will execute on the relevant data
points for their area. The compliance officer/manager and other
compliance staff should be overseeing all action plan execution.
To save resources and incur as minimal a burden on staff and
systems as possible, it can be most effective to focus on loan sys-
tems and system integration first.
Once the LOBs that have HMDA reporting responsibilities have
been identified, and any realignment decisions have been made, FIs
must identify the systems where the loan origination, non-originated
loan application, and purchased loan data are housed. For newly-reporting open-end focused lenders that meet the 100 open-end
lines of credit test for two consecutive years, there is no way around
it—they must bite the bullet on some significant start-up expenses,
system changes, and all other operational changes just identified.
However, for existing HMDA reporters that will be adding
new LOBs and/or systems, there is an alternative: ensure that
each individual system contains the necessary data points that
will need to be reported. FI reporters may download the FFIEC
HMDA Data Entry Software that was released in January 2017.
Consolidated Data Application/Platform
For financial institutions faced with reporting HMDA data
through more than one system, you may want to consider:
1. Building a data application or platform, and
2. Using your IT staff (or a third-party application developer)
to consolidate all HMDA data (from the LOB’s systems that
are housing the loan application, origination, and purchased
loan data) into that data application or platform.
In this way, your FI can collectively submit a Loan/Application Register (LAR), then either map to the FFIEC’s or a vendor’s
HMDA product, or send it directly to the prudential regulator.
The Data Points
Next, the focus needs to be on getting all of the new and changed
data points/fields right. Although all subsections of Section 1003.4
have system and training implications, and all should be read thoroughly, the following comments are offered either to underscore
important components or Bureau quotes from the October 2015
Final Rule. These are only a subset of the important components:
■ ■ ■ Identifying universal loan identifier (ULI) (§1003.4(a)( 1)
(i)): FIs should follow the regulatory character prescription;
no symbols and nothing in the unique 23-character identifier
segment should potentially identify the applicant or borrower.
Purchase of covered loans must use the ULI assigned previously.
The Bureau gave the following two key exceptions that apply:
• “…if a quarterly reporter “ABC Bank”… purchases a covered
loan from a financial institution that is an annual reporter
“XYZ Bank”…then ABC Bank must use the ULI that XYZ
Bank assigned to the loan.;” and,
• “…assume ABC Bank takes final action on an application in
the first quarter and submits it with its first quarter information. If in the second quarter during the same calendar year,
ABC Bank reconsiders the application and takes final action
that is different than in the first quarter, ABC Bank may
use the same ULI that was reported in its first quarter data.”
(Emphasis added: Alternatively, it may create a separate ULI
for the final action. The key: apply a consistent approach.)
■ ■ ■ Application date (§1003.4(a)( 1)(ii)): Whichever option the
institution’s LOBs select, they must be consistent within separate
■ ■ ■ Covered loan type (§1003.4(a)( 3)): Institutions now must
differentiate cash-out refinances from refinances that are not
cash-out. This is a key section for business/commercial loan
areas, since most commercial-purpose transactions (i.e., loans
or lines of credit not for personal purposes) are subject to new
Regulation C only if they are for the purpose of home purchase,
home improvement or refinancing.
■ ■ ■ Request for pre-approval program (§1003.4(a)( 4)): Current
Regulation C requires “preapproval not requested,” only if there
is no preapproval program as defined; revised Regulation C
indicates a FI complies if either it has a defined program and
it isn’t requested; or if it doesn’t have any such program. There
is no longer a “not applicable” selection for this data point.
■ ■ ■ Construction method (§1003.4(a)( 5)): Report if the property
is site-built or a manufactured home.
■ ■ ■ Principal residence, second residence, investment property
(§1003.4(a)( 6)): Bureau note: “multi-family owner-occupied
rental properties would be identifiable as principal residences
with more than one unit reported under… §1003.4(a)( 31).”
The whole of the HMDA mass must be broken
down into functional parts—segmented first
by the impacted lines of business, then by the
data collection systems being used within each