Disclosure Act bringing big changes

by Donald Horne26 Jan 2016
The coming changes to the HMDA have some industry players crying foul, viewing the new regulations as just more interference in the origination process.

“’It’s just a way to keep the PhD’s employed in Washington, DC!’ Such was the statement that a CEO of a regional mortgage banker said to me recently about the new changes to the Home Mortgage Disclosure Act,” says Jonathan Foxx, president and managing director of the Lenders Compliance Group. “’More statistics that go nowhere and tell us nothing,’” he said, “’and more ways to interfere in our loan origination process.’

“I grant that the regulatory burdens these days are demanding,” said Foxx, “but I was surprised by the sense of futility in those remarks.”

At the core of the revisions undertaken by the Consumer Financial Protection Bureau is the commitment to consumer protection laws generally, and, by enhancing the metrics of HMDA data collection, the commitment in particular to strengthening fair lending standards. What better way to understand fair lending than through a deep analysis of the HMDA Loan Application Register?
“The fact is, the new changes to HMDA will derive over 250 million data points from financial institutions related to mortgage loan applications and originations in 2018,” said Foxx.

The amendments to existing HMDA requirements through the implementation of Regulation C, will be spread over four effective dates between January 1, 2017, and January 1, 2020. However, the key date that contains most of the amendments, will be the compliance effective date of January 1, 2018.

“On that effective date, financial institutions will be required to collect HMDA data for applications they receive and loans they originate on or after January 1, 2018,” said Foxx.

Certain changes will be new to non-banks, though familiar to depository institutions. For instance, beginning in 2018, non-banks will be required to record HMDA data internally within 30 days of the end of the quarter in which final action was taken. Regulation C has not previously required quarterly recording for non-banks, so this will be a new undertaking for non-depository institutions.

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