HMDA Data Collection FAQ: Should You Start, Stop, or Continue?

5/17/2018 - By Jennifer Paradise, CRCM

UPDATED 10/31/18: This article relates to provisions of the 2015 HMDA Rule.  Since its publication, the Economic Growth, Regulatory Relief, and Consumer Protection Act (the ‘Act’) was signed into law.  The 2018 Partial Exemption Rule implements new HMDA provisions of Section 104 of the Act.  Please see "CFPB Delivers Rulings on HMDA Relief" for information regarding the impact of the partial exemptions on insured depository institutions.  

Collecting for HELOCs and Closed-end Loans Under the New 2018 Amendments 
At Saltmarsh Cleaveland and Gund, questions from our clients tend to fall across a broad spectrum.  Although many of them are truly specific to each institution, questions related to the Home Mortgage Disclosure Act (HMDA) are not. Many of our clients are asking the same questions, and rightly so given the number of HMDA related proposed and final rules, amended rules, charts, and guidance documents published since early 2015.  Below we share answers to the most common questions we receive related to the ‘new’ HMDA.

Question 1: If prior to 2018 we have been reporting closed-end loans or open-end lines of credit for HMDA, can we continue to collect the demographic information for these loans?

You are permitted to continue to collect the demographic related information after becoming exempt from HMDA reporting, if you previously collected and reported closed end loans within the last 5 years.  In this instance you may then collect for another 5 years. Likewise, if you previously collected and reported open-end lines within the last 5 years (because you were required to, or because you opted to), then you can collect for another 5 years.  If you weren’t required to report or you did not opt to report for any of the previous 5 calendar years, then you can’t collect it now. You may only begin collecting for demographic information following the second year after a threshold is met, unless you voluntarily collect per the paragraph below.

Question 2: Currently we are not required to collect demographic information for closed-end loans or open-end lines of credit and have not been required to do so in the last 5 years. When is the soonest we can start collecting this demographic information?  

The October 2017 final rule amending Regulation B of the Equal Credit Opportunity Act (ECOA), identified scenarios which would permit creditors to voluntarily collect applicant demographic information when they would not otherwise be required. The 2017 amendments specifically permit a creditor that exceeds the Regulation C loan-volume threshold in the first year of the two-year threshold period, to collect applicant demographic information in the second year, for a loan that would otherwise be a covered loan under Regulation C.  Therefore, you may collect in the year following the institution meeting the threshold for reporting, on loans that would be subject to HMDA.  

Question 3: If we voluntarily collect data in the second year following the year that we hit a threshold, must we also report the second-year data, even if we don’t hit the threshold in the second year? 

Yes, collecting and reporting are hand in hand thus they always go together.  You cannot collect for the sake of collecting, and not report it.

In closing, we remind you not to confuse HMDA collection and reporting issues with the separate collection requirements of the ECOA.  Institutions are still required to collect GMI data for applications to purchase or refinance principal residence dwellings.  Regulation B was revised to allow non-HMDA institutions to collect this information in either aggregate or disaggregate formats. 

We’ll continue to keep you updated as we identify trends or pain points in the new HMDA landscape. If you have any further questions or concerns concerning this issue, email me or any member of our Financial Institutions Consulting Team.

This article is current as of May 17, 2018 and may not be updated for regulatory changes occurring after this date. 

About the Author | Jennifer Paradise, CRCM
Jennifer is a consultant in the Financial Institutions Advisory Group at Saltmarsh, Cleaveland & Gund and has been serving the financial institutions industry since 1990. She is primarily involved in performing fair lending, loan internal audit, loan compliance, and other consulting services for the firm's financial institution clients throughout the region. 

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