1. Burton Embry burton@mcpaoa.org 801-596-8707 x1000201

2. HMDA Changes – Operational Fundamentals
Presenters:
Lisa Klika Carol Carson
Chief Compliance Officer Chief Compliance Officer
Guild Mortgage Company Plaza Home Mortgage, Inc.

3. HMDA Changes – Operational Fundamentals
Revised and enhanced HMDA rules published October 15, 2015; most reporting changes effective for 2018 business
Includes revisions (new data fields) mandated by Dodd-Frank Act
Includes additional requirements (new data fields) imposed by the CFPB
Currently optional reporting of HELOCs and Denial Reasons will become mandatory
Posted lobby notice regarding modified LAR data refers requestor to CFPB; lender will no longer need to provide
2017 data to be filed under new process: all filed with CFPB; all data in pipe delimited text file format

4. HMDA Changes – Operational Fundamentals
Impact of Trump Regulatory Freeze
Trump Administration issued memo in January to freeze regulatory activity
Independent agencies do not appear to be covered by freeze
CFPB is an independent agency
Per MBA, CFPB is evaluating memo and whether it applies

5. Lender Identification = Legal Entity Identifier (“LEI”)
HMDA Changes
– Operational Fundamentals
Lender Identification = Legal Entity Identifier (“LEI”)
Each lender must obtain its unique LEI:
Obtain from Global Markets Entity Identifier Utility → go to GMEIUtility.org
Complete online application
Pay $219 fee
Need corporate information
Unique Loan Identifier = 45 character length (“ULI”)
LEI (20 characters)
Loan number (23 characters)
Check digit (2 characters)

6. HMDA Changes – Operational Fundamentals
The Loan Application Register (LAR) will expand from current 39 data elements to 110 data elements for the reporting year starting Among other new reportable items, new elements referencing the TRID CD. Here are just some of the new details:
Lender Credits (Section J)
AUS identification
Origination Charges (Section A)
Property address
Discount Points (Section A)
Lines of credit will be included (Reverse)
Total Loan Costs (Section D)
DTI/LTV ratios
Drill-down for ethnicities
Borrower credit score
Loan terms (maturity, interest rate, intro rate period)

7. Determining Loan Amount
HMDA Changes
– Operational Fundamentals
Determining Loan Amount
Different transactions require different values for reporting loan amount:
• Closed-End Loans:
Closed Loans – Amount to be repaid on legal obligation
Counter Offer – Amount of counter offer if accepted, else amount applied for
Approved Not Accepted or Preapproval Request Approved Not Accepted – Amount approved for
Denied, Withdrawn, Closed for Incompleteness – Amount applied for
Multi-Purpose – Entire amount (entire amount on Home Improvement even if only portion is being used for improvements)
• Purchased Loans – Unpaid Principal Balance at purchase
• Assumed Loans – Unpaid Principal Balance at assumption
• Open-End Line of Credit – Entire amount of credit available
• Reverse Mortgage – Initial Principal Limit

8. Reconciling Loan Purpose
HMDA Changes
– Operational Fundamentals
Reconciling Loan Purpose

9. “Relied-Upon” Factors
HMDA Changes
– Operational Fundamentals
“Relied-Upon” Factors

10. LOS Challenges System readiness Review of LOS Integrations
HMDA Changes
– Operational Fundamentals
LOS Challenges
System readiness
When will system(s) begin capturing the necessary data elements
Contingency plan for applications with missing HMDA data
Ensuring LOS flexibility to capture and report multiple races, and sub-ethnicities
Review of LOS Integrations
Lack of integration can create reporting inaccuracies
AUS Decision, Credit Report Companies
LOS Business Rule Updates
E.g., ability to select both male and female genders for a single individual
Mistakes from the increased flexibility in reporting
Test LOS HMDA download for accuracy & formatting
E.g., age reported should be as of application date

11. HMDA Processing Vendor
HMDA Changes
– Operational Fundamentals
HMDA Processing Vendor
Regular Communication
Including with LOS Vendor & IT Folks
Test, Test, Test
Application Considerations
Website Applications
Updates to collect new GMI data
Test online app/LOS integration
Training Loan Officers & Support Staff
Interview process is complicated by requirements for sub-race & sub-ethnicity categories, age, etc.
Pipeline Management
2017/2018 transitional considerations

12. The confluence of HMDA and the new URLA
HMDA Changes
– Operational Fundamentals
The confluence of HMDA and the new URLA
Fannie and Freddie have unveiled the new 1003 form
Initially planned effective date was January 1, 2018, to coincide with and complement HMDA effective date for most data-reporting enhancements
Now effective date TBD
However, Fannie and Freddie have produced and made available now a new Addendum to the 1003, on which lenders may capture the expanded demographic information
CFPB has itself developed a form to capture expanded demographic information

13. HMDA Changes – Operational Fundamentals
Less Wiggle Room: With new underwriting fields and fees & charges to be included, more robust attention to analysis for fair lending purposes. Previous and current HMDA data did not include this info, and lenders were in positions to more easily defend underwriting decisions. Under new rules, expect more second guessing and lenders even more on the defensive.
Privacy & Security Concerns: With more exact property information, it would not be difficult to identify specific borrowers and have access via the HMDA data to NPPI, including credit scores, DTI, etc.
Focus on security of export/import transmissions from third party service providers
Concern for security of data held by the CFPB from sophisticated hackers (e.g., DNC, HUD, FBI, IRS – all in 2016)

14. BE PREPARED! Technology: Employees: HMDA Changes
– Operational Fundamentals
BE PREPARED!
Technology:
Engage and coordinate with your LOS, HMDA Reporting, Online Application vendors and internal IT Dept. to make sure they are on track; demand a timetable
Perform gap analysis against HMDA rule
Population & accuracy testing
Ask for sample/prototype input screens
LOS vendor to test first
UAT testing early and often
Employees:
Determine who will have access to input and change data
Will you require second reviewer for data integrity check
Start now to draft your P&Ps
Start now to prepare training modules
Involve your IT department now

15. THANK YOU!