Okay, no one is really in love with HMDA, so referencing such a complex regulation in this fashion may not be the best analogy. However, small community banks have had it easy over the last couple of years when it comes to collecting data, reporting it on their Loan Application Register (LAR), and submitting it to CFPB. I'm afraid those times may soon be ending.

Much like the implementation of TRID, our regulators gave us an unofficial reprieve under the new HMDA data collection points and procedures as everyone tried to sort out the voluminous information, implement new software, and update internal process and procedures. Regulators even went so far as to indicate which data points would rise to the level of scrutiny and which data points might get a pass if reported incorrectly.

Webinar: State of HMDA in 2020

Speaker: Carl Pry

We’re now a couple years into the “new age” of HMDA – increased coverage requirements, data collection and submission, as well as risk. How are you doing with all this? 

Register Here

As loan operation departments across the country begin to submit their 2019 LAR, here are a few points for consideration:

  1. Don’t be too quick on that submission. LARs are not due until March 1, 2020. Too often a straggling mortgage loan gets lost in overall processing. Loan operation personnel have been busy with property tax payments, 1098 IRS reporting, and in some cases annual mortgage statements. Rushing to submit your HMDA LAR could result in missed records. Take your time and be thorough. 
  2. Independently scrub your HMDA LAR with a risk-based focus. Banks that originate fewer than 500 mortgage loans in the preceding year qualify for partial exemption of certain data points, yet their software may still be collecting all data points. Only focus on what you are required to report. 
  3. Outsource, outsource, outsource – especially if your bank lacks HMDA-trained personnel to scrub your LAR. This preventative cost will be less expensive than if you must scrub and re-file past LARs. Not to mention that CMPs are still applicable to HMDA violations. 
  4. Look for missing records, especially commercial loans secured by residential mortgages. These continue to evade our reporting as they don’t go through the normal mortgage loan processing channels. Using core system reports to identify these loans and compare them against your LAR should be your first step. 
  5. Take advantage of technology going forward. Your LOS systems can either interface or prepare your HMDA LAR these days. Find a vendor that compliments your internal process. Most errors occur when re-entry of the data points is necessary. 

As a community banker that served our state and industry on the Small Entity Review Panel when CFPB was drafting the new HMDA regulation, I can appreciate the nuance and struggles banks are facing when trying to comply. If your bank needs assistance with your HMDA scrubs and/or implementing efficient and effective processes, please contact FIPCO’s ShareFI team at jschmid@ficpo.com or 608-441-1220. Happy reporting! 

Schmid, CRCM, CERP is director of compliance and management services at FIPCO. He can be reached at jschmid@fipco.com or 608-441-1220.

Integrations for Precision, Efficiency 
To help promote efficiency and precision, FIPCO offers three interfaces that can transfer loan data from Compliance Concierge™ Loans and/or Mortgage directly to HMDA and/or CRA reporting solutions. As powerful tools for maximizing precision, interfaces work behind the scenes to provide direct and timely access to correct information, while streamlining productivity and reducing the potential for compliance errors. With HMDA/CRA reporting just around the corner, it’s time to take a closer look at FIPCO’s integration options from Compliance Concierge™ to QuestSoft Compliance Relief and HMDA Wiz. Contact fipcosales@fipco.com for more information or to schedule a free demo.