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Dodd-Frank Regulatory Relief and Its Effect on Your HMDA Operations

May 23, 2018 by Brian Arnesen

On March 22, 2018,  the House of Representatives passed Senate Bill S.2155 commonly referred to as Dodd-Frank Regulatory Relief.

While there are many areas of the bill that provide all financial institutions a reason to rejoice, we want to recap what this bill specifically means for HMDA purposes and our customers.

1. All HMDA filers still MUST collect and submit HMDA data.

S.2155 has provisions where smaller banks and credit unions (it is unclear if this includes subsidiaries) will not need to submit “expanded” data under HMDA in the future. All data points you have submitted since Year 2004 still must be submitted. Additional questions regarding the expanded government monitoring information and other fields changed with the new Year 2018 CFPB HMDA rules still very much remain, as does the date any of these changes will go into effect. 

2. If you are NOT a bank or credit union with under 500 HMDA originations, NOTHING for HMDA will change.

S.2155 was designed to provide a reduced HMDA reporting burden ONLY to low volume banks and credit unions. If you are a non-depository of any size, this bill will not provide any promised relief. 

3. The CFPB (BCFP) will most likely require preliminary rulemaking, public comment, and final rulemaking before there is any change in data collection or submission.

QuestSoft is watching every change at the Bureau and will conform to the standards just as you have come to expect. At this moment and possibly through the end of the year, you are still required to collect ALL HMDA data fields even if you are a bank or credit union with lower volumes.

4. The time savings and impact may not be as significant as your board and management team expects.

QuestSoft recently released an extensive study on S.2155 where we contacted lenders, regulators and industry attorneys. Now that the industry has spent tens of millions of dollars making it easy to produce the expanded HMDA data, regulators know it is easily available and will likely ask for and expect you to immediately provide the information during a fair lending exam. The attorneys representing lenders agreed.

Smaller banks and credit unions that relax internal controls and do not continue to ensure the accuracy of this information may find it worse than if they still had the submission requirement. Therefore, our recommendation is to continue to address data accuracy issues with the expanded data expecting it will be requested.

Since Compliance RELIEF already streamlines the scrubbing and submission process, the difference will be negligible.

5. Your loan origination system (LOS) won’t spend money reverting back to the pre-2018 HMDA data.

We know of no LOS that plans to revisit HMDA based on the passage of this bill. That’s why companies like ours exist. Loan Origination Systems have moved on to Digital Mortgages and reducing the time required to fund loans. The HMDA train has left the station. One thing you might see vendors change is the addition of a check box to indicate the type of submitter you are. However, they are not going to remove data elements as they will still be required of larger depositories and all non-depositories.

If you are a bank or credit union that will benefit from the new law, we recommend you download and read our study for complete analysis of your situation. It can be found at:

https://www.questsoft.com/news/white-papers/regulatory-relief-bill-study

Of course, we welcome any measure that makes your lives easier and we look forward to some of the ancillary benefits of this bill. We remain committed to ensuring your success through our accurate and easy to use software products.

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