ANOTHER PIECE OF THE HMDA PUZZLE RELEASED

I am an avid fan of the show Blindspot!  For those of you who are not familiar, it revolves around a mysteriously tattooed woman found in a bag in Times Square who has lost her memory and does not know her identity.  The FBI discovers that her tattoos contain clues to crimes they have to solve.  One tattoo is revealed and investigated per episode and the crime is solved in the one-hour episode.  I sometimes feel the CFPB and assisting agencies are trying to develop their own drama television series by the way they release tools and information to us one piece at a time.

We have been anxiously awaiting the release of additional information that will assist your financial institution with the collection of your 2017 HMDA data that will be required to be reported to the CFPB.  On January 4, 2017, the Federal Financial Institutions Examination Council (FFIEC) and U.S. Department of Housing and Urban Development (HUD) published updated resources for financial institutions required to file HMDA data, these resources include:

  1. The 2017 Loan/Application Register (LAR) Formatting Tool, and
  2. Modifications made to the previously released Technology Preview, Filing Instructions Guide for data collected in or after 2018, and Frequently Asked Questions.

While the data fields and covered loans are not changing until January 1, 2018, there are significant changes with reporting the data that you collect in 2017.  Wouldn’t it have been beneficial to know the details of the Formatting Tool prior to 2017?

Formatting Tool:

The LAR Formatting Tool is intended to assist small volume financial institutions to create an electronic file that can be submitted to the HMDA Platform.  The HMDA Platform is the web-interface you will utilize to upload your 2017 HMDA data to the CFPB by March 1, 2018; the platform has yet to be made available.

As pointed out by the FFIEC in the LAR Formatting Tool instructions, the Tool is a Microsoft Excel workbook created by the CFPB to provide a means for HMDA filers to enter and format the collected data into a pipe delimited text file, the required format for submitting the 2017 data.  This is a tool that will be utilized by those financial institutions that:

  1. Do not use a vendor or software to prepare their HMDA data for submission;
  2. Previously entered each loan manually using the FFIEC’s Data Entry Software (DES); and
  3. Typically file small volumes of covered loans and applications.

If your financial institution utilizes software that can format the LAR into a pipe-delimited format, this LAR Formatting Tool will not be needed.  If you are entering your 2017 data into the FFIEC’s DES you will need to stop utilizing it now and begin to utilize this LAR Formatting Tool.

If the LAR Formatting Tool is necessary within your institution, you can download the spreadsheet by accessing the information on the CFPB’s website:  https://www.consumerfinance.gov/data-research/hmda/lar-formatting-tool.  Also, available on this page is a detailed 15-page instruction manual necessary to utilize the formatting tool.

Once downloaded, the LAR Formatting Tool, specifically the “Data” tab, is utilized to gather all HMDA data collected in 2017.

Technology Preview:

The technology preview has been updated to include more information regarding the LAR Formatting Tool, as well as, clarifications in various other sections.  One specific update to the preview occurred within the HMDA edits section that incorporates a reminder that all edits must be resolved prior to the March 1st annual HMDA submission deadline and that filers are encouraged to allow sufficient time, prior to the filing deadline, in order to address any edits.  Keep in mind, those edits have to be completed electronically through the HMDA Platform.

Filing Instructions Guide for data gathered in or after 2018:

Minor updates were made within this FIG, and can be viewed on the Version Log on page 1.  The changes primarily encompassed updates to character width (from 50 to 100 characters) for certain categories including Ethnicity, Race, Name/Version of Credit Scoring Model, and Reason for denial which was extended up to 255 characters.

Frequently Asked Questions:

This document was updated significantly with 15 new additional Q/A’s specifically addressing use of the LAR Formatting Tool.

While this was a significant release of new information and tools for financial institutions that are already collecting in 2017, we still await additional resources, such as the HMDA Platform.  While we sit on the edge of our chair and wait with bated breath for the next tattoo…uh, tool to be released from the agencies involved in HMDA filing, we will keep you up-to-date on additional releases!

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