the 2015 and 2017 hmda rule and emerging issues . 2015 and 2017 hmda rule key (cont’d) federal...

THE 2015 and 2017 HMDA Rule and Emerging Issues

1

FEDERAL DEPOSIT INSURANCE CORPORATION

AGENDA

2015 and 2017 HMDA Rule Key Changes and Effective Dates Introduction Covered Institutions Covered Transactions Reportable Data New GMI Data Collection Form Revised Reporting Requirements Revised Disclosure Requirements Enforcement Provisions Mergers and Acquisitions

Practical Implementation Considerations

General Compliance Considerations

Compliance Management System Considerations

Questions and Answers and Additional Resources

2

Introduction and Covered Institutions

Presented by Robin O’Connor, Compliance Examiner

3


2015 and 2017 HMDA Rule Key Changes and Effective Dates

Introduction

Home Mortgage Disclosure Act (HMDA) was enacted by Congress in 1975.

Regulation C implements HMDA and sets out specific requirements for the collection, recording, reporting, and disclosure of mortgage lending information.

The data-related requirements in HMDA and Regulation C serve three primary purposes:

(1) to help determine whether financial institutions are serving their communities’ housing needs; (2) to assist public officials in distributing public investments to attract private investments; and (3) to assist in identifying potential discriminatory lending patterns and enforcing antidiscrimination statutes.

Source: Home Mortgage Disclosure (Regulation C) Small Entity Compliance Guide (CFPB)

4


Introduction (cont’d)

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) transferred rulemaking authority for HMDA to the Consumer Financial Protection Bureau (CFPB), effective July 2011.

On August 29, 2014, the CFPB published proposed amendments to Regulation

C to implement the Dodd-Frank Act changes and to make additional changes. On October 15, 2015, the CFPB issued the final “2015 HMDA Rule” (Rule)

amending Regulation C. The Rule implements the Dodd-Frank Act amendments and makes other changes to Regulation C.

On August 24, 2017, the CFPB issued a final “2017 HMDA Rule” (Rule) amending the 2015 HMDA Rule. The Rule made some technical corrections and to clarify and make changes to certain requirements adopted by the 2015 HMDA Rule.


5

2015 and 2017 HMDA Rule Key Changes and Effective Dates (cont’d)



Covered Institutions

The Rule changes institutional coverage in two phases.

As of January 1, 2017, a bank, savings association, or credit union is not subject to Regulation C in 2017 unless:

It meets all of the coverage criteria for depository institutions

under current Regulation C; and it originates at least 25 home purchase loans (including

refinancings of home purchase loans) in both 2015 and 2016. 12 CFR 1003.2 (financial institution)(1).


6


2015 and 2017 HMDA Rule Key Changes and Effective Dates

Covered Institutions (cont’d)

Effective January 1, 2018, the 2017 HMDA Final Rule temporarily changed the uniform loan-volume threshold for all financial institutions. Beginning in 2018, a financial institution will be subject to Regulation C if it:

originated at least 25 covered closed-end mortgage loans in each

of the two preceding calendar years; or originated at least 500 covered open-end lines of credit in each of

the two preceding calendar years; and meets other applicable coverage requirements. 12 CFR

1003.2(g)(1)(2)


7



Covered Institutions (cont’d) Effective January 1, 2020, the open-end loan thresholds of the 2015

HMDA Final Rule will be restored and a financial institution will be subject to Regulation C if it:

originated at least 25 covered closed-end mortgage loans in

each of the two preceding calendar years; or originated at least 100 covered open-end lines of credit in each

of the two preceding calendar years; and meets other applicable coverage requirements. 12 CFR

1003.2(g)(1)(2)

Source: Home Mortgage Disclosure (Regulation C) Small Entity Compliance Guide (CFPB) 8


Additional Information – HMDA Institutional Coverage

For more information regarding HMDA Institutional Coverage, see Section 3 of the CFPB’s HMDA Small Entity Compliance Guide:

http://files.consumerfinance.gov/f/201512_cfpb_hmda_small-entity-compliance-guide.pdf and the 2017 and 2018 HMDA Institutional Coverage Charts: http://files.consumerfinance.gov/f/201510_cfpb_2017-hmda-institutional-coverage.pdf http://files.consumerfinance.gov/f/201510_cfpb_2018-hmda-institutional-coverage.pdf

Source: Home Mortgage Disclosure (Regulation C) Small Entity Compliance Guide (CFPB) 9

http://files.consumerfinance.gov/f/201512_cfpb_hmda_small-entity-compliance-guide.pdf

http://files.consumerfinance.gov/f/201510_cfpb_2017-hmda-institutional-coverage.pdf

















Covered Transactions, Reportable Data, and New GMI Data Collection Form

Presented by Christopher Self, Senior Compliance Examiner

10


Covered Transactions

Covered Transactions

Beginning on January 1, 2018, Regulation C generally adopts a dwelling-secured standard for transactional coverage.

Dwelling is defined as a residential structure with no requirement that

the structure be attached to real property or that it be the applicant’s or borrower’s residence.

A home improvement loan will no longer be subject to Regulation C

unless it is secured by a dwelling.


11


Covered Transactions (cont’d)

Covered Transactions (cont’d)

The Rule retains existing categories of excluded transactions. The Rule changes the scope of the collection, recording, and reporting

of covered preapproval requests.

Currently, optional under Regulation C. Beginning January 1, 2018, required for approved but not accepted

preapproval requests for home purchase loans. However, preapproval requests for open-end lines of credit, reverse

mortgages, and home purchase loans to be secured by multifamily dwellings will not be covered transactions under the Rule.


12


2017 HMDA Rule Clarifications

Two categories of transactions are excluded as temporary financing Definition of what is not a loan secured by a multifamily dwelling Reporting requirements for home improvement loans secured by

mixed-use property Meaning of an Automated Underwriting System (AUS)

Meaning of income for the purpose of reporting gross annual income How to collect Race and Ethnicity information

13


Reportable Data

Reportable Data

Effective January 1, 2018, the Rule changes the data that must be collected, recorded, and reported for Covered Loans and Applications, as reflected in the chart below 12 CFR 1003.4:

Source: American Bankers Association

14


Sample GMI Data Collection Form

Sample GMI Data Collection Form CFPB Small Entity Compliance Guide


15

Revised Reporting and Disclosure Requirements

Presented by Angela Sprinkle, Compliance Examiner

16


Revised Reporting Requirements

Revised Reporting Requirements

The Rule maintains the annual reporting requirement, but requires Financial Institutions (FI) to submit data electronically.

The Rule requires a FI to submit its annual LAR in electronic format to its

appropriate Federal agency by March 1 of the year following the calendar year for which data is collected.

The Rule requires an authorized representative of the FI, with knowledge of the

data to certify the accuracy and completeness of the data submitted.

Banks should be guided by the following resources for reporting their annual HMDA data, as determined by when the data is collected. Appendix A to Part 1003 (through December 31, 2018) 12 CFR 1003.5(a)(1)(i) (after December 31, 2018)


17


Revised Reporting Requirements (cont’d)

Revised Reporting Requirements (cont’d) A FI must retain a copy of its submitted annual LAR for at least three years

in either paper or electronic form.

For more information on reporting under the Rule or on the electronic submission of data, please see http://www.consumerfinance.gov/hmda .

Effective January 1, 2020, the Rule requires some FIs to report data on a quarterly basis, as well as on an annual basis.


18

http://www.consumerfinance.gov/hmda



Revised Disclosure Requirements

Revised Disclosure Requirements

Effective January 1, 2018, changes to Regulation C’s disclosure statement requirements apply to data collected in 2017 and later years.

No later than three business days after receiving notice from the FFIEC,

the FI must make available to the public, upon request, a written notice that clearly conveys that the FI’s disclosure statement may be obtained on the CFPB’s website at www.consumerfinance.gov/hmda.

A FI may, but is not required to, use the sample notice in Attachment C

of the CFPB’s HMDA (Regulation C) Small Entity Compliance Guide to satisfy the Rule’s disclosure statement requirement.


19



Revised Disclosure Requirements (cont’d)

20


Effective January 1, 2018, the Rule changes a FI’s obligations with respect to disclosing its modified LAR.

The new requirements apply to data collected in 2017 and later years. Beginning in 2018, a FI must provide a written notice that clearly conveys

that the FI’s modified LAR may be obtained on the CFPB’s website. A FI may use the sample notice in Attachment C for purposes of this

disclosure requirement and the disclosure statement requirement discussed in the previous slide.

The notice must be made available in the calendar year following the

calendar year for which the FI collected data. Source: Home Mortgage Disclosure (Regulation C) Small Entity Compliance Guide (CFPB)



21


The Rule also modifies Regulation C’s posting requirement. Beginning January 1, 2018, a FI must post, in the lobby of its home

office and each Branch Office physically located in an MSA or MD, a general notice about the availability of its HMDA data on the CFPB’s website.

Again, the FI may, but is not required to, use the sample notice in

Attachment C to satisfy this requirement. In any case, the notice must clearly convey that the FI’s HMDA data is available on the CFPB’s website.


Enforcement Provisions and Mergers and Acquisitions

Presented by Patrick Wells, Compliance Examiner

22


Enforcement Provisions

Enforcement Provisions

Administrative enforcement A violation of HMDA is subject to administrative sanctions as

provided in section 305 of the HMDA (12 U.S.C. 2804), including the imposition of civil money penalties, where applicable.

Bona fide errors

An error in compiling or recording data for a covered loan or application is not a violation of the HMDA or section 305 if the error was unintentional and occurred despite the maintenance of procedures reasonably adapted to avoid such an error.

Quarterly recording and reporting


23


Mergers and Acquisitions

Mergers and Acquisitions

Determining Coverage

Reporting Responsibility for Calendar Year of Merger or Acquisition

Changes to Appropriate Federal Agency

Determining Quarterly Reporting Coverage


24

Practical Implementation, General Compliance, and CMS

Considerations

Presented by Patrick Wells, Compliance Examiner

25




An institution should determine:

1. Whether or not it will be an FI subject to the Rule;

2. Which of the FI’s products and services involve covered loans and reportable activity under the Rule;

3. What information must the FI report and how will it collect this information; and

4. Which of its systems, departments, and staff will be affected.


26


Practical Implementation Considerations (cont’d)

Practical Implementation Considerations (cont’d)

A review should be conducted of existing business processes, policies, and systems that the FI, its agents, and other business partners use.

FIs should review their arrangements and agreements with third parties engaged for services related to mortgage or other support activities.


27




Implementation Plans

Develop implementation plans and follow change management procedures to implement the requirements of the Rule based on an assessment of overall risk.

Develop in consultation with, or reviewed by, key stakeholders such

as legal, compliance, and information technology departments. Implementation plans should be proactively and clearly

communicated to the Board of Directors and senior management.


28




Policies, Procedures, and Process Maps

Update to reflect the changes made to business processes in response to the requirements of the Rule.

Adjust compliance management systems and other risk

management supporting activities.

The Rule changes the way that HMDA data will be disclosed. These changes will require FIs to provide new notices and post revised notices. They may also affect policies and procedures.


29


Compliance Management System Considerations (cont’d)


(cont’d)

Data Collection

Revised collection or application forms (revised data points) Effective dates (final action date vs. application date) Transition provision (ethnicity, race, and sex information)

Accuracy (collection procedures, resources, and tools)

Timeliness


30


Compliance Management System Considerations (cont’d)


(cont’d)

Staffing and Training Evaluate current staffing levels relative to the execution of tasks

related to the preparation of reports or records. Determine adequacy of training provided to employees, and other

individuals that the FI, its agents, or its business partners employ.

Monitoring and Audit

31


32

Questions


33

HMDA Resources

CFPB – Home Mortgage Disclosure Act Rule

http://www.consumerfinance.gov/policy-compliance/rulemaking/final-rules/regulation-c-home-mortgage-disclosure-act/

CFPB - Implementation Website Page

http://www.consumerfinance.gov/policy-compliance/guidance/implementation-guidance/hmda-implementation/

CFPB – HMDA (Regulation C) Small Entity Compliance Guide

https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/cfpb_hmda_small-entity-compliance-guide.pdf






















Disclaimer

The information contained in this presentation is for informational purposes only and is provided as a public service and in an effort to enhance understanding of the statutes and regulations administered by the FDIC. It expresses the views and opinions of FDIC staff and is not binding on the FDIC, its Board of Directors, or any board member, and any representation to the contrary is expressly disclaimed.

the 2015 and 2017 hmda rule and emerging issues . 2015 and 2017 hmda rule key (cont’d) federal...

Documents