Compliance
Compliance Alphabet Soups Each month we will serve up cans of Alphabet Soup applicable to the mortgage industry. Each flavor of Alphabet Soup will include the soup’s acronym and its actual name, and a hyperlink to the regulation, law, or rule from the agency that administers it. It’s all right here; relax and enjoy reading your favorite bowl of Mortgage Compliance Alphabet Soup.
The Home Mortgage Disclosure Act The Home Mortgage Disclosure Act was enacted in 1975, and codified as the Federal Reserve’s Regulation C – Home Mortgage Disclosure Act (HMDA). In July 2011, rule-writing authority for Regulation C was transferred to the Consumer Financial Protection Bureau (CFPB). The HMDA requirements are intended to provide the public with data about certain applications for loans and their ultimate dispositions. The data can be used: • To help determine if financial institutions are serving the housing needs of their communities; • To assist public officials in distributing public-sector investment to needy areas as an inducement to private investment; and • To assist in identifying potential discriminatory lending patterns and enforcing antidiscrimination statutes. Regulation C requires specific financial institutions to collect, record, report, and disclose information about their mortgage lending activity. It also requires those institutions to disclose certain HMDA data to the public. Regulation C and HMDA are considered part of the consumer protection laws and regulations; however, if the transaction meets the HMDA reporting requirements, it is covered whether the purpose of the application or loan is for consumer purpose or business purpose. Covered institutions must collect certain data regarding applications their mortgage lending activity for each calendar year. The collected data must be recorded, within thirty calendar days after the end of the calendar quarter in which final action is taken (such as origination or purchase of a loan, or denial or withdrawal of an application), on a loan application register (LAR) in a prescribed format. The HMDA reporting requirements include timely and accurate compilation of the information and reporting the calendar-year data to the appropriate regulatory agency by March 1 of the following calendar year. Once the data has been submitted to the Federal agency, reviewed for accuracy and field validation, and any discrepancies have been resolved, the institution receives a report (‘disclosure statement’) compiled from its submission. Disclosure requirements for public review are also mandated. The CFPB issued a final rule for Home Mortgage Disclosure Act (HMDA) reporting. New data collection requirements began January 1, 2018, and the 48 new, revised, and current data points will first be reported in 2019. There are 25 new data points, 14 fields modified from previous requirements, and nine unchanged, bringing the total to 48 unique data fields. The new rule entails many changes and revisions, and some of them involve revisions to: • Institutional coverage • Transactional coverage – the new rule modifies the types of transactions in that Regulation C generally applies to consumer-purpose, closed-end loans and open-end lines of credit that are secured by a dwelling. Also, a home improvement loan is not subject to Regulation C unless it is secured by a dwelling. Additionally, the new rule applies to business-purpose, closed-end loans and open-end lines of credit that are dwelling-secured and are home purchase loans, home improvement loans, or refinancings.
The MORTGAGE BANKER Magazine
40
March 2020
