Independent Banker - October 2017 - 70

Risks & Rules
generally applies to consumer-purpose,
closed-end loans and open-end
lines of credit that are secured by a
dwelling, including business-purpose
loans. The HMDA Rule adopts a
uniform loan-volume threshold for
all institutions of at least 25 closedend
mortgage loans or at least 500
open-end home equity lines of credit
(HELOC) originated in each of the
two preceding calendar years.
In August, the CFPB did increase
the threshold on HELOCs to 500
loans through calendar years 2018
and 2019 to reduce the compliance
burden for smaller institutions.
While many community banks
may be relieved of the burden to
collect HMDA data on HELOCs,
Haynie observes that the reduction
in HELOC coverage will not have a
meaningful impact on the overarching
burden to develop systems and
procedures to implement the rule and
to train and monitor staff for data collection
and reporting.
Data collection, recording and
reporting
The Dodd-Frank Act amended
HMDA to require financial institutions
to report new data points and
authorized the CFPB to require financial
institutions to collect, record, and
report additional information. The
bureau's final rule for HMDA reporting
includes 25 new data points, 14
fields revised from prior requirements
and nine mostly unchanged
data points, bringing the total to 48
unique data fields for which covered
financial institutions must collect
and report data on most residential
mortgage loan applications-not just
approved loans.
" It's critical to check your systems
and test them to be sure all the new,
modified and current data points can
be pulled, " notes Boccia. " There are
some good resources available that
detail each reporting field. One is
the CFPB's " Summary of Reportable
HMDA Data - Regulatory Reference
Chart " that is on its website. "
Banks must begin well ahead of
the Jan. 1 start date, because some of
the data have prerequisite actions.
For instance, the first step to record
HMDA data is assigning a Universal
Loan Identifier (ULI), which identifies
a loan or application. It begins
with the financial institution's Legal
Entity Identifier (LEI), followed by
an internally generated sequence of
characters that are in a format specified
by Regulation C, and a check
digit. Community banks must apply
ahead of time for the LEI.
Boccia also sees documentation
as a critical component to successful
HMDA data collection and reporting
compliance. Using a document
hierarchy to guide data collection
produces a more consistent process.
Checklists or worksheets that are
completed for each reportable file
also make data collection more
consistent and help prevent gaps.
Planning now for accurate, consistent
and complete documentation facilitates
data validation during and after
the reporting year.
Disclosure requirements
Beginning in 2018, covered institutions
will no longer have to provide
a disclosure statement or a modified
loan/application register (LAR) to
the public upon request. Instead,
a covered institution will post a
notice that its disclosure statement
and modified LAR are available on
the CFPB's website. The HMDA
Rule includes sample language that
covered institutions for the notice.
Although this technical change will
need to be addressed, Boccia notes
that the CFPB will not have data
until 2018, when reporting begins for
2017. She recommends banks train
branch personnel so they are aware
of the change and prepared to offer
past years' data upon request. Banks
should also watch for the CFPB to
issue a change on this requirement in
the coming months.
Each bank must gain a full understanding
of the new requirements
and how it may be affected. Haynie
encourages community banks to take
advantage of the ICBA summary
document (see page 69) but advises
banks to review the actual rule in its
entirety. Although data collection
begins in 2018 and won't be reported
until 2019, with the first application
for a covered transaction on or after
Jan. 1, banks need to be ready to preclude
creating a backlog of files that
must be handled again and again to
address compliance.
" ICBA has been working through
its advocacy efforts to delay the
implementation or change reporting
70 ICBA IndependentBanker October 2017
Independent Banker - October 2017

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