HMDA.... Hum... Data?
By Eliott C. Ponte, Regulatory Compliance Counsel
Last week, the Consumer Financial Protection Bureau (CFPB) and the Federal Financial Institutions Examination Council (FFIEC) released two file specification instructions for complying with the updated Home Mortgage Disclosure Act (HMDA) data submission requirements. These file specification instructions follow the CFPB's 2015 Final Rule (Final Rule) that amends HMDA, which is implemented by Regulation C. The file specification instructions describe the format used when submitting HMDA data to the CFPB. While the CFPB's Final Rule does not become effective until January 1, 2018, the file specification instructions impose changes for data submitted both before and after the Final Rule becomes effective. Thus, credit unions will need to ensure that its data submission for the calendar year before the Final Rule becomes effective complies with the file specification instructions.
One significant change for data collected in 2017 is that the file format is being changed from a fixed field file to a delimited file format. According to the file specification instructions, this means that, among other things:
- Each data field within each row will be separated with a pipe ( | );
- These are not fixed length fields, therefore leading and trailing zeros, or spaces will not be needed;
- Filler data fields will no longer be used in the file; and
- The file will be a text file with a .txt file format extension.
The file specifications for 2017 and 2018 are available for download at on the CFPB's website.
In addition to the file specification changes, covered credit unions will report data using the new web-based submission tool beginning in 2018. According to HMDA's amended Appendix A, covered credit unions must electronically submit its loan/application register. Effective January 1, 2019, however, appendix A is removed from Regulation C. Covered credit unions will report the new dataset using the new platform and submission procedures. Access to the submission platform will be provided at a later date. Moreover, the CFPB has not indicated when subsequent guidance will follow. NAFCU will provide more information on this platform when it becomes available.
A Final Action!
While on the topic of submitting data for HMDA purposes, it is important to note when a credit union is required to use the expanded data points under the Final Rule.
The Final Rule applies to covered loans and applications with respect to which a final action is taken on or after January 1, 2018. A final action includes an origination or purchase of a covered loan, sale of a covered loan in the same calendar year it is originated or purchased, or denial or withdrawal of an application. For instance, if a credit union receives an application on December 4, 2017, but takes a final action on the application on January 7, 2018, it is required to collect and report the loan according to the expanded data points. Thus, whether to use the expanded data points under the Final Rule depends on when the credit union takes a final action.
The commentary, however, contains an exception for data regarding a person's ethnicity, race, and sex. Buried in the commentary of the amended Regulation C is a transition rule for information collected prior to January 1, 2018. See Comment 4(a)(10)(i)-2 of the Final Rule. According to the commentary, a covered credit union that receives an application on or before December 31, 2017, and collects the applicant's ethnicity, race, and sex in accordance with the rules in place on that date will not need to amend its information if a final action occurs on or after January 1, 2018. Therefore, the final action date will determine whether the credit union must use the expanded data points unless the data is about a person's ethnicity, race, or sex and based on the timing falls into the first year transition rule.
Cyber Fraud: Payment Fraud and Member Account Takeover
Available On-Demand: Wednesday, March 9
Part of the Loss Prevention Webcast Series
Cybersecurity remains a hot topic, and it isn't dwindling anytime soon. In fact, as new fraud trends and tactics emerge, cybersecurity issues for credit unions increase. Join this vital webcast to find out what motivates cyber fraud and what you can do to improve overall security and minimize losses. You'll learn preventative and mitigating controls that work, and examine case studies from breach analysis reports. Learn what the hackers know and ensure that your credit union is ready to tackle big or small breaches.