QuestSoft PowerPoint Template 2016

Transcription

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© 2016 QuestSoft Corporation. All Rights Reserved.
The New CFPB
HMDA Rules
What You Need to Know
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www.QuestSoft.com
Today’s Panelists
Kathleen Ryan
Counsel
BuckleySandler LLP
Leonard Ryan
President
QuestSoft Corporation
Moderator
Scott Mortenson
Marketing Director
The New CFPB HMDA Rules:
What You Need To Know
May 24 and June 2, 2016
Kathleen C. Ryan
Counsel
Overview of New HMDA Rule
• The new rule changes:
•
•
•
•
•
Who must collect and report HMDA data
What applications and loans must be reported
What data points must be collected and reported
When data are reported (for large-volume filers only)
How the data be made public
• The new rule does not address:
• What data will be released to the public
• CFPB will seek public input on public release and the balance
between borrower privacy and HMDA’s disclosure purposes
(800) 575-4632
www.QuestSoft.com
© 2016 BuckleySandler LLP / QuestSoft Corporation. All Rights Reserved.
When is the New Rule Effective?
• Most of the rule is effective for applications for which
final action is taken on or after January 1, 2018
• Exceptions:
• Expanded race and ethnicity categories (effective for information collected
on or after January 1, 2018)
• Quarterly reporting for FIs who reported at least 60,000 LAR lines in the
previous calendar year (effective in 2020)
• Exemption for depository FIs who make less than 25 closed-end covered
loans (effective January 1, 2017)
• Submit data to CFPB (not FRB) by March 1, 2018 for Year 2017 data
(800) 575-4632
www.QuestSoft.com
Who Must Collect and Report Data?
• Financial Institutions that—
• Made at least 25 closed-end dwelling-secured loans in each of the two
preceding calendar years or
• Made at least 100 open-end dwelling-secured lines of credit in each of the
two preceding calendar years; and
• Have a home or branch in an MSA
• But, depository FIs who fall below the asset threshold published
annually by the Bureau are exempt in the next calendar year
(800) 575-4632
www.QuestSoft.com
What Loans Must Be Reported?
• More transactions must be reported:
• Closed-end dwelling-secured loans/applications if FI made at least 25 such
loans in either of the last two calendar years
• Open-end dwelling-secured lines/applications if FI made at least 100 such
lines in either of the last two calendar years
Exceptions: The new rule has kept many of the current exceptions, e.g.,
temporary financing, construction-only loans, and agricultural loans
Note: some commercial-purpose loans and lines must be reported if dwellingsecured and are for home purchase, home improvement or refinancing, and
not otherwise excluded (eg. construction loan)
• Deletions: FIs will no longer report any unsecured home improvement loans
under the new rule
(800) 575-4632
www.QuestSoft.com
What Data Must Be Reported?
• Application/loan information
• Application date
• Preapproval request (modified) approved but not accepted mandatory
• Loan amount (modified)
• Action taken/date (modified)
• Reason for denial (modified) includes free form field for other
(800) 575-4632
www.QuestSoft.com
• Application/Loan Information
• Application channel -wholesale vs. retail
• Reverse mortgage Flag
‒ Open-end Flag
‒ Business or commercial purpose Flag
• Home purchase, home improvement, refinancing purpose
flags (modified)
(800) 575-4632
www.QuestSoft.com
• Property information
•
•
•
•
Occupancy type (modified)
Construction method (modified) site built vs. manufactured home
Manufactured home secured property type (-secured by land or not
Manufactured home land property interest(-is land owned or leased
(800) 575-4632
www.QuestSoft.com
• Property information
‒ Property value
‒ Total units
‒ Multifamily affordable units (new)-income restricted units
• Property information/location
• Property location (modified)
• Property address-street number, city, zip code
(800) 575-4632
www.QuestSoft.com
• Identifiers
‒ Mortgage Loan Originator (MLO) Identifier
‒ Legal Entity Identifier (LEI)-identifies reporting institution
‒ Currently, transmittal sheet requires ID
‒ Uniform Loan Identifier (ULI) –must include the LEI
‒ Currently, loan/application number
(800) 575-4632
www.QuestSoft.com
• Applicant information (GMI)
•
•
•
•
•
Whether collected by visual observation or surname
Ethnicity (modified)-allow subcategories, “other”
Race (modified)-allow subcategories, “other”
Sex
Age in years as computed from date of birth on application
(800) 575-4632
www.QuestSoft.com
• Applicant/underwriting information
•
•
•
•
•
Income (clarified)
DTI ratio - “relied on”
CLTV ratio
Credit score - score, name, version
AUS results - result, system that is “used to evaluate”
(800) 575-4632
www.QuestSoft.com
• Pricing information
• Total loan costs
• From TRID Closing Disclosure or “points and fees” for loans
not subject to TRID
• Origination charges
• From TRID Closing Disclosure
• Discount points
• Lender credits
• Interest rate
(800) 575-4632
www.QuestSoft.com
• Pricing information cont’d
• Rate spread (modified)-expanded to all Reg Z loans
• Other information
•
•
•
•
Type of purchaser
HOEPA status
Lien status
Loan type, e.g., FHA
(800) 575-4632
www.QuestSoft.com
• Loan features
•
•
•
•
Loan term (new)
Prepayment penalty term (new)
Introductory rate period (new)
Non-amortizing features (new)
(800) 575-4632
www.QuestSoft.com
When Must The Data Be Submitted?
• Annual submissions –for all FIs covered by the rule—submissions are
due by March 1 of the calendar year that follows the calendar year in
which the data was collected
• Quarterly submissions—only for FIs who reported at least 60,000 LAR
entries (excluding purchases) in the preceding calendar year– must
submit data within 60 days of the end of each of the first 3 quarters
(Q4 is filed with the annual submission). Effective in 2020.
(800) 575-4632
www.QuestSoft.com
How Will The Data Be Made Public?
• LARs--FIs will make their LARs available upon request by pointing
requestors to the CFPB’s website
• FFIEC--The CFPB has not yet announced what data, if any, will be
redacted for privacy reasons
• The CFPB has indicated that it will give the public an opportunity to comment
on privacy protections
(800) 575-4632
www.QuestSoft.com
The New CFPB HMDA Rules:
Rule Implementation
May 24 and June 2, 2016
Leonard Ryan
President
Universal Loan Identifier (ULI)
The New Required Way to Identify Loans
A 45 character string of specific numbers
The internal loan number may use numeric or alphanumeric and
you as an lender have up to 23 charters to use.
(800) 575-4632
www.QuestSoft.com
Universal Loan Identifier (ULI) Elements
Legal Entity Identifier (LEI)
20 Character Field to be standard for all lending institutions
Your Loan Number
Up to 23 characters PLUS a 2 digit check digit
ULI Required for All HMDA Transactions 2018 +
Action Code 1 Always Assigns
Action Code 6 (Purchased) Assigns for loans prior to 2018
(800) 575-4632
www.QuestSoft.com
Legal Entity Identifier (LEI)
What is the LEI?
The LEI is a unique, 20-digit alphanumeric
identifier associated with a single legal entity
and is intended to serve as a uniform
international standard for identifying
participants in financial transactions
Already in use by many countries
Mandated in the U.S. for money funds and
derivatives reporting
Where do you get one today?
https://www.gmeiutility.org/
(800) 575-4632
www.QuestSoft.com
Government Monitoring Information (GMI) Expansion
New GMI will be problematic
Ethnicity Adding Four Sub-Ethnicities
11-Mexican, 12- Puerto Rican, 13-Cuban, 14-Other
If other, specify
Race Adding Eleven New Sub-Races
21-Asian Indian, 22-Chinese, 23-Filipino,
24-Japanese, 25-Korean, 26-Vietnamese,
27-Other Asian, If other, specify
41-Native Hawaiian, 42, Guamanian or Chamorro,
43-Samoan, 44- Other Pacific Islander (specify)
(800) 575-4632
www.QuestSoft.com
Government Monitoring Information (GMI) Expansion
Free Form Entries
For American Indian or Alaskan Native, must provide tribe.
(According to the Federal Register, there are 567 tribes as of July 2015.)
All “Other” Fields require entries. Other Race can be anything
Visual Observation Confirmation Expanded
Separate confirmation fields for Ethnicity, Race and Sex
How is a LOS or HMDA Management System supposed to monitor this?
Any loan taken in person would require Sex field?
What if you accidentally check out their Linked In page?
You receive their driver’s license and it says “F” under the Sex field?
Few or No LOS really has a background Race, Ethnicity, Sex field
so your visual observation prints on the URLA or has data issues.
(800) 575-4632
www.QuestSoft.com
CFPB HMDA GMI Info Being Added to New URLA
Summary of URLA Form Updates
Removed a number of fields including (but not limited to) property legal description,
automobile owned, year built, and net worth.
Updated borrower contact information, such as cell phone number and email address.
Added a new military service section to assist veterans seeking and qualifying for VA loan
opportunities.
Made it easier to identify employer and self-employment information.
Included fields to collect more detailed information about the property and loan purpose,
including refinance types, energy improvements, and project types.
Added amortization types and loan features describing the mortgage and loan terms.
Updated the acknowledgement, agreement, and authorization sections to benefit the
consumer and industry participants who use the loan application (e.g., mortgage insurers).
Revised government monitoring information (ethnicity and race) in accordance
with the new Home Mortgage Disclosure Act requirements issued by CFPB.
(800) 575-4632
www.QuestSoft.com
CFPB HMDA Field Collection Requirements
Government Monitoring Information
Existing selections can continue to be collected
By law and regulation, the new selections
CANNOT begin to be collected until 1/1/2018
Compliance RELIEF will issue validity error in
CFPB HMDA screen if used for testing in 2017.
All other Fields must be collected in 2017 for loans
with Final Actions of 1/1/2018 or later… PERIOD!
(800) 575-4632
www.QuestSoft.com
GMI Use in Future Regulations
Where Else Might This New GMI Data Be Applied?
Community Reinvestment Act (CRA)
Dodd-Frank Act requires CFPB to develop rules to collect
information on women-owned, minority-owned and small businesses.
CFPB has stated it is building off of the HMDA rule as it works
on this project.
Expect to hear something from the CFPB in the fall of 2016 or later.
Auto Lending
Both Direct Sales and Auto Title Companies
Student Loans
Payday Lending
(800) 575-4632
www.QuestSoft.com
Regulation Specs That Make Software Companies Cringe
What to Do With “Other”?
Do we allow for “Free Form” entry?
Will produce many inconsistencies
For Indian tribes (Sioux, Sue, Seuw)
For Other Asian do we get Philapino or Philipano or Philapines
(or even Philadelphian) rather than the already added Filipino?
Will be nearly impossible to manage in larger operations
Do we lock in “Other” choices?
Will that create fair lending issues with steering their “Other”
selection choice?
Will there be any statistical relevance to any of the “Other” categories
or is this going to turn out as just a busy exercise for the industry?
(800) 575-4632
www.QuestSoft.com
Geocoding and Parcel Numbers
Geocoding Combines Four Fields Into Two
County Field is combo of State Code and County Code
Census Tract is combo of State Code, County Code & Census Tract
Property Address Required to Satisfy Parcel Info
According to Page 213 of the final regs, the CFPB considered
requiring parcel numbers too burdensome and non-standard.
Therefore, they plan to use Property Address and shift the process
of obtaining and storage of parcels to the bureau.
(800) 575-4632
www.QuestSoft.com
QuestSoft CFPB HMDA Geocoding Enhancements
CFPB Expected to Upgrade Geocoding
Will Allow QuestSoft to Integrate CFPB Geocoding
into Instant Geocoder
Will Enable Instant Geocoder to geocode
using multiple sources without increased costs
We will offer more Features and Protection
More ability to cross reference sources to ensure accuracy for
QuestSoft customers.
There are between 1.2 MILLION and 2 MILLION address changes
per year. Accuracy is still the most important element.
(800) 575-4632
www.QuestSoft.com
Industry and Vendor Considerations
When Does the Work Start with LOS Systems?
First The File Specifications
LOS Vendors and HMDA Management Systems needed the File Specs before
business analysts that design the systems can document the changes. These
were not October, 2015. These were issued February, 2016.
Then File Definitions
The CFPB has indicated a July estimated time frame for these.
Again, this affects the designers of the LOS systems
Then Estimating the Scope and Scheduling programming
Programmers want to do this once the first time and then deal with
corrections. They are not sitting there waiting for the CFPB. They have to
program in the new URLA, the ULDD, and deal with other enhancements that
customers want to actually bring in business.
(800) 575-4632
www.QuestSoft.com
Good News for QuestSoft Customers
QuestSoft Already has most of the fields
Only about 15% of fields need to be added by LOS vendors
Fair Lending features and Integrations have already covered
most of the fields.
New Fair Lending fields to further protect our customers being
added to formats.
(800) 575-4632
www.QuestSoft.com
Internal Challenges of CFPB HMDA
Definitions of Application
Differences Exist Between TRID and HMDA
Differences Between HMDA and NMLS MCR
How Many Application Dates Can a LOS Program Have?
Error Rates and Data Integrity Issues
New GMI Fields need to be programmed by all LOS systems
Three Times the fields = Ten Times the possibility of errors
Your organization has never scrubbed these new fields before
Bad Data greatly expands exposure to fair lending risk
(800) 575-4632
www.QuestSoft.com
QuestSoft Products to Support CFPB HMDA
Compliance RELIEF
CFPB HMDA
Available Jan 1, 2017
Real Submission =
2017 Format
with
Free Supplemental
2018 testing *
* subject to data exported
by your LOS vendor.
(800) 575-4632
www.QuestSoft.com
Examples of Data Expansion in CFPB HMDA
(800) 575-4632
www.QuestSoft.com
Difference - Current HMDA and CFPB HMDA
(800) 575-4632
www.QuestSoft.com
QuestSoft’s Plans for Our Customers
Data Specs to LOS Vendors – In Process Since 4/16
Operational System By October 2016
QuestSoft will certify LOS Systems for CFPB HMDA During 4th Qtr
Error Testing Starting with 2017 Data
Available in Compliance RELIEF and Instant HMDA only
Use live data to discover errors using 2018 rules
Objective is to have all data collection issues and customer training
concerns addressed, corrected and adjusted by January 1, 2018.
(800) 575-4632
www.QuestSoft.com
QuestSoft Software Transition
New CFPB HMDA Capabilities will Only Exist in
Compliance RELIEF and Instant HMDA products
HMDA RELIEF will be sunset December 31, 2017
Will be able to submit in new CFPB format when they take
over the 2017 submission in First Quarter 2018.
NMLS Mortgage Call Report Will be Solely
Supported in Compliance RELIEF Beginning in 2017
(800) 575-4632
www.QuestSoft.com
Reasons Why Compliance RELIEF Will Remain The Best
New CFPB HMDA Provided Error Checking
Additional QuestSoft Error and Accuracy Checking
Cross Reference of fields to Catch Inconsistencies
Multiple Geocoding Sources to Ensure Better Accuracy
Additional Fair Lending Coverage Above CFPB Fields
You are Far Better Prepared to Defend Your Institution
PRIVACY – CFPB Watching Your Every Entry?
Scrubbed Data Consistency Across Regulations
HMDA, Fair Lending, CRA, NMLS MCR, State Reports
(800) 575-4632
www.QuestSoft.com
WARNING: Instant Fair Lending!
Everything is pointing to highly automated
FAIR LENDING
The analysis will be created within minutes
Data Accuracy and Integrity MUST be elevated
There will be no second chance with the media
and consumer groups
Regulators will probably accept resubmissions
Community groups will publish your first results on front page
Corrections will be in a little box on an inside page, if at all
(800) 575-4632
www.QuestSoft.com
Impact on Fair Lending Compliance
Information currently proprietary will
now be shared among regulators
Regulators and Examiners no longer
need to wait until examination time
to assess fair lending compliance.
Agencies will have comparison data
from all other institutions and geographies
Determination of lowest tier or outliers will be immediate
(800) 575-4632
www.QuestSoft.com
Impact on Fair Lending Compliance (continued)
It’s probably only a matter of time for
most of the data to be made public.
“public HMDA data [should] be modified only when the
release of the unmodified data creates risks to applicant
and borrower privacy interests that are not justified by the
benefits of such release to the public.”
In other words, protecting the privacy of mortgage
applicants will be the only limit on how the data is released
New Fields to expect to be released immediately will be NMLS LO ID,
New GMI info, possibly total points, fees, loan costs, application channel,
loan type expansion for reverse mortgage, business purpose
(800) 575-4632
www.QuestSoft.com
What to Do Today
Don’t Panic
Nothing Officially Changes on Data Collection
until 2018
Don’t Push LOS Vendors Until 2017
Most of the fields are in systems already.
They just need some expansion of
enumerations. Also CFPB is still tweaking specs.
Do Start to Plan Data Collection and Training
Think Fair Lending & Multiple Co-Borrowers
(800) 575-4632
www.QuestSoft.com
CFPB HMDA Resources
Accessing Information on New HMDA Rules
www.consumerfinance.gov/regulatory-implementation/hmda/
(800) 575-4632
www.QuestSoft.com
QuestSoft’s Webinar Survey
Only 5 Questions
Less than 2 Minutes
Will be sent about 10
minutes after the end of
this Webinar
Free HMDA Analysis Summary
of the latest public report on your
institution
The first 9 completed surveys = $25
Each 10th completed survey = $10
(800) 575-4632
www.QuestSoft.com
Questions?
Kathleen Ryan
Counsel
BuckleySandler LLP
Leonard Ryan
President
(800) 575-4632
www.QuestSoft.com
Reminder: QuestSoft’s Webinar Survey
Only 5 Questions
Less than 2 Minutes
Will be sent about 10
minutes after the end of
this Webinar
Free HMDA Analysis Summary
of the latest public report on your
institution
The first 9 completed surveys = $25
Each 10th completed survey = $10
(800) 575-4632
www.QuestSoft.com
Thank you for attending.
The webinar has now ended.
You may continue to present questions for the
next few minutes.
For a copy of today’s presentation,
go to http://questsoft.com/cfpb-info

QuestSoft PowerPoint Template 2016

Transcription

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