■ ■ ■ In how to report information for loans started in 2017 but
reported in 2018;
■ ■ ■ Related to the Automated Underwriting System (AUS)
information that needs to be reported (read through the associated commentary on the AUS information waterfall and
ask yourself how easy that sounds (hint: not very));
■ ■ ■ Related to whether and how to implement New HMDA
along with the New 1003;
■ ■ ■ Related to how New HMDA connects to the Uniform
Closing Dataset (UCD) and NMLS Mortgage Call Report
■ ■ ■ Connected to whether you should consider re-evaluating
your definition of a “HMDA application” in connection
with the new rule. (Regulation C has always provided wide
latitude in how to interpret what is (or is not) a HMDA application. Many lenders use TRID as their definition of a
HMDA application, but that’s not a requirement. You may
want to push the definition out to later in the process.)
Seriously, go through the rules and think about how they
apply to your organization. As we said at the top, this is not just
a rule about data, and there’s more to New HMDA than just
collecting a few additional fields.
We hope that conveying just a couple of these difficult scenarios to your business folks will go a long way towards getting
them to react to these New HMDA changes in the same way
that they reacted to the TRID changes in 2015.
So you have their attention, now what?
■ ■ ■ Information Technology/LOS Vendors
As a compliance officer, it would be smart to reconcile all
of the new or modified HMDA fields to what your LOS
currently captures. As you do this reconciliation (because
you’re smart) you will want to review what your LOS vendor has proposed in terms of implementation. At this stage,
most (if not all) LOS vendors have a plan in place for the
implementation of HMDA. If you speak to your vendor
and they ask for a link to the rule, you should seriously
consider changing LOS providers (not joking here). Assuming your vendor is on top of the requirements, look at how
they’re proposing to implement the rule and see if it makes
sense for your organization. You might want to change
how the information is collected, when it’s collected, who
collects the information, on what screen the information
is collected... There is no one-size-fits-all approach to New
HMDA compliance. Implement the rules in a way that’s
most effective and efficient for your organization.
■ ■ ■ HMDA Software Providers
If you’re not taking your HMDA extract from your LOS and
uploading it directly to your Regulator, then you’re likely
using a HMDA Software Provider. If so, spend the time to
make sure that the data extract from your LOS “plays nice”
with your HMDA provider’s software. Like LOS vendors,
HMDA Software Providers are also doing a lot of work to
enhance their systems in light of the new rule. Ask to see
beta versions of the new software to see how everything
fits together. At this stage in the game, you might have the
ability to speak directly to the HMDA provider and ask for
some tweaks for usability or functionality.
■ ■ ■ Partnering with Business
Now you understand that the way you implement New
HMDA will impact how your institution takes applications
and ultimately fulfills loans. Talk to your business partners
and walk them through the changes. Give them an opportunity to voice how they want to implement these changes.
You’ll also need to work with the business when it comes to
things like scripting requirements, training requirements,
etc. Production employees are your primary source for gathering accurate HMDA data. Make sure that they have a say
in how your New HMDA solution will ultimately work.
Don’t Freak Out
No matter how much (or how little) you’ve done to implement
these New HMDA rules, you shouldn’t freak out. That’s not
going to help. Instead, here is a short list of To-Dos:
■ ■ ■ Start small. Read the Bureau’s Small Entity Compliance
Guide to familiarize yourself with the rule before digging
into the more complex commentary.
■ ■ ■ Make a list. Start charting out the new fields and what systems changes you might need to make.
■ ■ ■ Engage your Business. Get your business folks on board.
Explain the rules and what they can expect come January 1,
■ ■ ■ Engage your Vendors. Unless you have built your own
LOS, you need to work your vendors. See how much of their
work you can leverage.
■ ■ ■ Make a plan. Plan for implementation, including training,
scripting, and post-implementation monitoring.
After you’ve started those few things, make sure to buy
tickets to see “A Terrible Consumer Experience.” I’ve heard it’s
great! Five stars! ■
1 DISCLAIMER: Please do not shoot your IT people in the arm (or
anywhere else). The author is not responsible for direct, indirect, incidental
or consequential damages to IT people shot in the arm (or anywhere else).
2 The writer assumes that logarithms are hard, but is unwilling to research
how much harder (or not harder) they really are.
3 My daughter would actually say something more like “I want to dance,” but
she loves New HMDA. It’s been her bedtime story for the past 6 months.
ABOUT THE AUTHOR
NIMA VAHDAT, CRCM, CAMS, is the Senior Vice
President and Associate General Counsel
of loanDepot.com, LLC acting as its Fair & Responsible
Lending Officer. Prior to joining loanDepot, Nima has
worked in banking compliance at organizations
including Discover Financial Services and Washington Mutual
Bank. Nima received his law degree from the University of
Michigan and his MBA from California State University, Fullerton.
He resides in Orange County, CA with his beautiful wife, 5 kids, and
5 surviving fish (he’s replenished his supply). Nima can be reached
at email@example.com and (949) 235-9694.