When it comes to the new expanded requirements under the Home Mortgage Disclosure Act, neither compliance officers nor the IT fraternity are to be envied. Not only must the operational changes be in place quite soon, but the challenge represents something of a moving target.
During a recent webinar Wolters Kluwer polled nearly 700 attendees about their banks’ readiness for the new requirements. What the firm found was not a pretty picture.
When asked if their banks have a process in place to collect and report on the 110 data fields required under HMDA in 2018, 76% of the bankers said they were not ready.
When asked what their greatest concern was, regarding the new rules, respondents reported as follows:
• Lack of overall HMDA readiness, 36%
• New data fields, including government monitoring information, 28%
• Data integrity, 24%
• New submission requirements, 9%
• Other, 3%
A touch of gallows humor could be seen in the polling choices and answers concerning the question, “How ready are you to do fair-lending analysis on the expanded HMDA data fields?”
• “Where should we start?” 43%
• “Alexa, start regression analysis for us” 26%
• “We are pen-and-paper ready” 17%
• “We have built a robust data analytics solution” 14%
HMDA keeps moving around
What accounts for these depressing survey results?
Barbara Boccia, senior director for advisory services and regulatory relations at Wolters Kluwer, says part of the problem has been that the situation has not been static.
“Things are changing as we speak,” says Boccia. The Consumer Financial Protection Bureau has been issuing changes, which affect banks’ ability to ready themselves, and some elements of what institutions need for compliance, such as the planned small entity compliance guide, have only been published recently.
Awareness and allocation of resources aren’t part of the problem, generally, according to Boccia. “Banks are spending a lot of money on this rule,” she explained.
One other factor is that the mechanism through which banks will submit their expanded data set has not yet been turned on. The CFPB’s HMDA platform, through which LAR (loan application register) data should be reported isn’t available for banks and vendors to explore.
How much will be public?
The only bright spot, according to Boccia, is that this should be a familiar pattern for veterans.
“You can’t be a compliance officer,” says Boccia, “and get stressed out over change.”
Even once the logistics get worked out, Boccia noted, there are issues not yet addressed. One is what portion of the new data CFPB will make available to the public. Another is how regulators will be slicing and dicing the expanded data set to examine banks’ lending behavior.
“Banks should start thinking about the fair-lending analysis that the expanded data feeds will make possible,” Boccia says.