It’s down to the wire for new HMDA reporting requirements

Written By: Joel Palmer, Op-Ed Writer

Have you ever planned a wedding? No matter how soon you begin preparations, there always seems to be a last-minute rush to ensure everything is set for the big day.

Or have you noticed how, despite getting seven years to prepare, host cities for the Olympic Games seem to always be making last-minute arrangements right up to the Opening Ceremony?

Preparing for new mortgage reporting requirements isn’t quite the same as planning for a one-day celebration or a three-week global event.

But one thing that the impending release of new Home Mortgage Disclosure Act (HDMA) reporting requirements has with these two examples is that, despite two years of planning and preparation, last-minute details are making a lot of industry professionals nervous.

With just over four months until updates to the HMDA take effect, the Consumer Financial Protection Bureau (CFPB) provided a preview of its new reporting portal.

But as of the August 3 training session, the reporting portal is not yet accessible. According to reports, CFPB said a Beta version of it will be available “around the end of the third quarter,” which means in about a month. From there, the bureau will use input from this testing period to make any revisions to the portal during the last three months of the year before the final version is released.

CFPB also informed attendees that the portal will only initially be available to submit data, and not to view data reports.

According to CFPB, the HMDA platform will require all mortgage personnel responsible for HMDA reporting will need to register on the portal and establish an account. The portal will enable financial institutions to upload a loan/application register (LAR), “check on which stage it is in within the filing process, complete the review and verification steps, and submit the LAR.”

The American Bankers Association recently advised institutions on a number of tasks to prepare for the new reporting requirements: “Be prepared for spending time to ensure that your data edits (quality, validity, macro and/or syntactical errors) are resolved, validated and explained before you sit down to submit. Plan time for any manual work to enter this information into the portal, and have a signing officer available to submit. Any steps you can take to improve data integrity now will help you significantly in the hectic months of January and February.”

The CFPB training session occurred a week after a formal request by several mortgage industry trade associations to delay implementation of the new HMDA. 

In a letter dated July 28, the American Bankers Association, Consumer Bankers Association, Consumer Mortgage Coalition, Housing Policy Council of The Financial Services Roundtable, and the Mortgage Bankers Association asked CFPB Director Richard Cordray for a one-year delay. 

They expressed several concerns with the current deadline for reporting requirements, including:

•    Incomplete regulatory process
•    Lack of a finished technology framework
•    Amendments that are not yet finalized
•    Lack of a data reporting portal, geocoding tools, data validation, and finalized instruction guide
•    Insufficient time remaining to test and integrate requirements since reporting will have to begin in late 2017 to collect data for loans where action is taken on or after January 1, 2018.

“All of these items are needed to ensure compliant business process and systems changes by the effective date,” the letter stated.

The organizations also expressed concern that the CFPB has not yet determined how to address the potential release of private financial information, such as credit scores, to the public. Even if this type of information was released anonymously, the industry associations said other forms of data could be used to identify specific individuals.

“If it is determined some data should not be released, follow-on issues that need to be addressed include data security controls and, more broadly, whether such data should be routinely collected and reported at all.  These concerns should be addressed before the new data points are required,” the letter stated.

About the Author

As an NAMU® Opinion Editorial Contributor, Joel Palmer is a freelance writer who spent 10 years as a business and financial reporter and another 10 years in marketing for the insurance and financial services industries. He regularly writes about the mortgage industry, as well as residential and commercial real estate, investments, and retirement income planning. He has also ghostwritten books on starting a business, marketing, and retirement income planning.

Opinion-Editorial (Op-Ed) Disclaimer For NAMU® Library Articles: The views and opinions expressed in the NAMU® Library articles are those of the authors and do not necessarily reflect any official NAMU® policy or position. Examples of analysis performed within this article are only examples. They should not be utilized in real-world application as they are based only on very limited and dated open source information. Assumptions made within the analysis are not reflective of the position of NAMU®. Nothing contained in this articles should be considered legal advice.