news.cuna.org/articles/108158-compliance-continued-hmda-dig-reveals-more-required-data-points

Compliance: Continued HMDA dig reveals more required data points

October 26, 2015

WASHINGTON (10/26/15)--CUNA’s compliance attorneys are continuing their deep dive into the latest Home Mortgage Disclosure Act (HMDA) requirements and have identified a number of newly required data points.

While the Dodd-Frank Act only requires 17 data points, the Consumer Financial Protection Bureau (CFPB) wants an additional 16 data points to be reported.

CUNA believes the final rule will have a significant impact on any credit union that reports HMDA data or will be required to report such data. The drastic expansion of the new data that financial institutions must collect and report--coupled with the need to change and integrate systems and operations, as well as train staff--will certainly create additional expenses and burden for credit unions.

The CPFB is required by Dodd-Frank to collect information on:

  • The applicant or borrower’s age and credit score;
     
  • Application channel---whether the borrower submitted the application directly to the creditor;
     
  • Loan term;
     
  • Postal address and property location;
     
  • Property value;
     
  • Total points and fees payable at origination in connection with the mortgage;
     
  • Rate spreads for all loans;
     
  • Riskier loan features including teaser rates, prepayment penalties and non-amortizing features; and
     
  • Universal loan identifier for each loan or application reported.

Revisions to these data points include:

  • Reasons for denial: The proposal would make the reporting of reasons for denial mandatory instead of optional;
     
  • Occupancy type: The proposal would remove the requirement to report a property as owner-occupied and instead require it to be reported as a principal residence, second residence, investment property with rental income, or investment property without rental income;
     
  • Lien priority: Currently, institutions must report the lien status of the loan or application (i.e., first lien, subordinate lien or not secured by a lien). The reporting of lien status on purchased loans is currently not required due to an exclusion. However, the rule removed the exclusion and requires reporting of lien status on purchased loans;
     
  • Home Ownership and Equity Protection Act (HOEPA) status: Regulation C requires institutions to report whether HOEPA applies to a loan. The proposal would require institutions to report whether the loan qualifies as a high-cost mortgage because its annual percentage rate exceeds HOEPA’s threshold or because its points and fees exceed the HOEPA threshold;
     
  • Loan type: The proposal would eliminate the home-improvement loan designation and require institutions to distinguish between cash-out refinances and rate/term refinances; and
     
  • Loan amount: The proposal would require that institutions report the loan amount as the exact amount in dollars rather than rounded to the nearest thousand dollars. For open-end credit, the loan amount would generally be the amount of credit available. For reverse mortgages, the amount would be the initial principal limit.

The CFPB’s rule would require additional reporting of:

  • Debt-to-income ratio;
     
  • Combined loan-to-value ratio;
     
  • The name of the automated underwriting system used to evaluate the application and the system’s recommendation;
     
  • Number of dwelling units in the property;
     
  • Construction method--“site-built” or “manufactured housing;”
     
  • Manufactured housing information: such as whether the home is real or personal property, whether the borrower owns the land on which the manufactured home will be located and the type of ownership of the land;
     
  • The number of individual dwelling units that are income-restricted pursuant to federal, state or local affordable housing programs;
     
  • Borrower-paid origination charges for certain loans;
     
  • Discount points for certain loans;
     
  • Interest rate for the loan;
     
  • Non-discounted interest rate for certain loans--institutions would report the interest rate the borrower would receive if they didn’t pay bona fide discount points; and
     
  • Mortgage loan originator identifier.

(This article is part of a new News Now series running every Monday, in which CUNA compliance experts will highlight top compliance issues facing the credit union system. Share this link with those who would be interested in a free News Now subscription: http://news.cuna.org/subscribeNN.)