What are the Major HMDA related changes and When Do They Go into Effect?

A number of things are changing with the new rule that impacts process, workflow, and fields. The amount of data collection required is significantly increasing, above and beyond the original Dodd Frank mandate. The way you report that data is changing as well, with HELOC and Denial Reasons moving from optional submissions to required data elements. There’s also an expanded focus on accurately capturing and reporting borrower ethnicity.

Most significantly, the rule includes revisions as to how depository institutions and non-depository institutions are defined. This change is significant because it determines which financial institutions will have to report HMDA data to their regulators, based on these definitions and specific criteria, like loan volume.

For example, the definition of depository institutions has been expanded to include those that originated at least 25 closed-end loans or at least 100 open-end lines of credit in the previous two calendar years. The definition of non-depository institutions has been revised to include those with a home office or branch in a Metropolitan Statistical Area (MSA) that originated at least 24 closed-end loans or at least 100 open-end lines of credit. The new definition eliminates previous language involving total asset criteria of $10 million and 100 purchase loans, as well as that around volume based originations.

This effectively means that entities that close 2 loans per month are included under the purview of this definition of financial institution. 

Modifications and New requirements include:

• Expanded documentation of loan type to include FHA, VA, RHS, and FSA.
• More detailed information on occupancy, loan amount, and the action taken.
• New fields detailing the credit score(s) and model used to determine lending decision.
• Mandated reporting of up to four reasons for denial of application, beginning in the collection period (that information is optional until January 1 of that year).
• Required reporting for HELOC loans, or any loans providing via an open-end line of credit, which are presently optional until the 2018 collection of data.
• More detailed documentation of borrower ethnicity to ensure everyone is treated fairly, and to monitor compliance with equal credit, fair housing, and home mortgage disclosure laws.