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Home Mortgage Disclosure Act and Regulation C (Part 1003) - Information to Help Financial Institutions Plan, Manage Risk and Compliance


Background

Home Mortgage Disclosure Act (HDMA) is a federal Act enacted in 1975. The Federal Reserve Board implemented this Act. However, its rule-writing authority was passed on to the Consumer Financial Protection Bureau (CFPB) on July 21, 2011.

The HMDA and Regulation C requires certain financial institutions including banks, credit unions, savings associations, and other mortgage lending organizations to collect, report, and disclose certain information about their mortgage lending activity annually to the regulatory authorities.

Risks

The data fields collected are required to be disclosed to the public. Even partially exempt institutions need to report with the option of reporting on data or an exempt code. The CFPB will make some adjustments and make a public disclosure.

Fraudsters are always looking for new opportunities and new weaknesses. The availability of customer data on the black-market gives them just the tools they need. A financial institution has responsibilities to its shareholders and customers to protect them from these ever-changing threats.

This HMDA reporting webinar furnishes attendees with a complete understanding of the changes in the fraud arena and the strategies needed to combat fraud.

Purpose of HMDA and Regulation C

The regulation provides the disclosed loan data which helps:

  • In evaluating if the needs of the communities are met by the financial institutions
  • In the decision-making of the distribution of the public sector investments to draw private investments in localities where needed.
  • In evaluating if the financial institutions are treating their consumers indiscriminately

The CFPB continues to make changes to the HMDA rules. Data reporting requirements have become much more complex with more than double the data fields.

Recent Amendments

On July 24, 2014, the Bureau issued a proposed rule to amend Regulation C, which was published in the Federal Register on August 29, 2014 (the 2014 HMDA Proposal or the proposal). The final rules were published in Oct. came into effect on January 1, 2018. Pdf of the rule here. Modifications included:

  1. Modifications to Institutional and Transactional Coverage
  2. Modifications to Reportable Data Requirements
  3. Modifications to Disclosure and Reporting Requirements

Compliance Issues

The ever-increasing regulatory changes factoring into the HMDA collection and reporting cycle are posing serious challenges to financial institutions. They are required to adjust to the new changes and prepare for compliance in 2020 and beyond.

Besides relevant banking and financial services compliance training programs, the leadership team of financial institutions must also develop and implement an effective compliance action plan.

Developing and implementing the plan of Action for HMDA and Regulation C Compliance

To manage HMDA and Regulation C compliance, Financial institutions must develop a plan of action and implement it. Here are some tips to include in the plan:

  • The sequence to achieve the goals
  • Finding the lines of business that will be impacted by HMDA
  • Developing a working group from business units, departments, and operational areas that will be impacted by HMDA and assigning roles and accountability to ensure successful planning
  • Determining staffing and resource needs
    • Compliance resources who can understand, outline, and train about the changes
    • Operational and IT staff who can complete forms, systems, and processes
    • Resources who control, document and audit
    • Analytical staff who can interpret data aright
    • Whether to have resources in-house or outsource considering the budget and cost
  • An ongoing process to understand what is changing
  • Where you are today
  • What gaps must be addressed to achieve the goals
  • How to ensure timely submission of data, exams, analysis
  • Steps to understand the implications of the data collected for your organization
  • Steps to take corrective action
  • Training to build a strong understanding of the process within the organization

For HMDA and Regulation C Compliance, browse through the ComplianceOnline training programs for Banking and Financial Institutions.