Category Archives: Lending

Your top 10 HMDA questions answered: Part 10

The Home Mortgage Disclosure Act deadline looms closer, but many questions still remain unanswered.

To combat this, HousingWire set to work to bring readers answers to the most asked questions as we countdown to the end of the year.

Most of the 2015 updates to HMDA take effect in January 2018.

However, lenders also have a bit more breathing room now, as regulators announced they will not be assessing any penalties for 2018 HMDA data filed in 2019.

Before reading today’s question, make sure you’re all caught up in the series by the previous parts of this series:

Part one 

Part two 

Part three 

Part four

Part five

Part six

Part seven

Part eight

Part nine

This is the final part, part 10.

How should LOS providers differentiate to help lenders today?

One expert explained that the key for LOS providers will be ensuring consistency in their systems’ underwriting decisions.  

“LOS providers should integrate with systems that ensure consistency in underwriting decisions, as well as prices given,” LoanScorecard Executive Director Ben Wu said. “Some lenders already use Fannie Mae’s Desktop Underwriter or Freddie Mac’s Loan Prospector, but in the case of non-agency loans, they will need to turn to an alternative automated underwriting system to show how the underwriting and pricing applied to each loan were based on the same objective criteria.”

“LOSs should also be able to capture and store all of this data so that each decision could be understood and justified in an audit,” Wu told HousingWire.

And another expert said lenders should automate as much as possible in order to reduce the risk of fair lending violations.

“Automate as much as possible,” said Scott Dunn, Wipro Gallagher Solutions head of product management, strategy and compliance. “This will help to reduce the risk of non-compliance and allow LOS providers such as WGS to differentiate from the competition.”

“Customers need this kind of help from technology providers in order to keep up with the demands of regulatory changes,” Dunn told HousingWire. “Providing ease and adaptation of the functionality has a positive impact and helps to bridge any training gaps that operations personnel have to quickly get up to speed with when there are such massive waves and transformation of the rules.”

But most importantly, LOS providers must ensure that their systems are up to date with the latest HMDA changes.

“LOS providers need to assure lenders that the origination systems are up to date with data requirements,” ComplianceTech, a provider of fair lending and CRA solutions, explained. “In addition, lenders should be able to utilize the data in the system for external analyses. It should be relatively easy for Lenders to extract data from the LOS to use in fair lending analytical tools.”

Beji Varghese, Navigant Capital Advisors managing director, gave a list of what LOS providers should do:

  • Provide support for “covered” transactions including open ended transactions
  • Support for multiple channels like retail, wholesale and correspondent
  • Calculate Universal Loan Identifier taking into consideration the capability to support multiple Legal Entity Identifier’s.  Additionally they should also be able to store ULI’s on purchased transactions
  • Ability to generate the Loan Application Register file as required
  • Help lenders map their data to the new requirements
  • Assist with UAT testing
  • Establishing illogical condition checks for various fields to prevent incorrect reporting

“Most of the LOS providers are updating the user interfaces to ensure data capture for the new requirements,” Digital Risk Staff Attorney Meaghan James said. “The LOS providers also must consider the 2017 GMI data versus the new rule requirements.”

“This work should lead to updated LAR exports which will be reportable for 2019,” James told HousingWire. “If the provider has correspondent lenders, they will need to ensure fields are exchanged or passed.”

Article source: https://www.housingwire.com/articles/42171-your-top-10-hmda-questions-answered-part-10

Your top 10 HMDA questions answered: Part 9

The Home Mortgage Disclosure Act deadline looms closer, but many questions still remain unanswered.

To combat this, HousingWire set to work to bring readers answers to the most asked questions as we countdown to the end of the year.

Most of the 2015 updates to HMDA take effect in January 2018.

However, lenders also have a bit more breathing room now, as regulators announced they will not be assessing any penalties for 2018 HMDA data filed in 2019.

Before reading today’s question, make sure you’re all caught up in the series by the previous parts of this series:

Part one 

Part two 

Part three 

Part four

Part five

Part six

Part seven

Part eight

This is part nine.

What should be keeping a lender awake at night now?

One expert explained lenders should be careful to be looking for errors now, saying if they wait until the end of February, it will already be too late.

“The expanded HMDA dataset will give regulators, advocacy groups and plaintiff’s attorneys unprecedented visibility into how a lender underwrites and prices loans,” LoanScorecard Executive Director Ben Wu said. “So, it’s important for lenders to be prepared before the CFPB sees their data.”

“If lenders wait until February 28 to scrub year-end HMDA data for ‘errors,’ it will be too late,” Wu said. “At that point, lenders have long since made their underwriting and pricing decisions—whether or not they comply with Fair Lending.”

Another expert agreed, saying the new HMDA changes will make it hard for lenders to defend themselves against fair, impartial and unprejudiced lawsuits.

“One of the looming concerns in respect to the HMDA changes are around the Fair Lending Laws,” said Scott Dunn, Wipro Gallagher Solutions head of product management, strategy and compliance.

“The granularity of the newly collected data creates more transparency of data as it now includes additional characteristics that of the protected law, and because of this will inevitably make it more challenging for lenders to defend themselves against ‘fair, impartial and unprejudiced’ law suits,” Dunn told HousingWire.

ComplianceTech, a provider of fair lending and CRA solutions, told HousingWire that while lenders have had plenty of time to adjust for the new changes, it could be overwhelming as the new Filing Instruction Guide is 150 pages with about 60 pages devoted to edit checks.

And one expert reminds lenders that even some loans started in 2017 will be subject to the new guidelines if any action is taken on them in 2018.

“Obviously the January 1, 2018 deadline will be keeping every lender’s HMDA department staff awake at night,” Digital Risk Staff Attorney Meaghan James said. “The biggest HMDA issue that should be on lender’s minds right now is the strategy and effectiveness of transitioning from the 2017 requirements to the 2018 requirements.”

“Applications that are taken in the final weeks of 2017, but on which no action has been taken before 2018, will be required to be reported under the new 2018 requirements,” James said.  “Therefore, lenders should be capturing the expanded 2018 data points for these types of loans in anticipation of the possibility that the action taken on the loan will not occur until 2018 and thus be subject to 2018 reporting requirements.”

Check back Friday to read part 10, the final part of this series as we count down until the end of 2017.

Article source: https://www.housingwire.com/articles/42164-your-top-10-hmda-questions-answered-part-9

Freddie Mac: Mortgage rates surge to five-month high

Mortgage rates increased in the final week of 2017 to a five-month high, according to Freddie Mac’s Primary Mortgage Market Survey.

“As we expected, mortgage rates felt the effect of last week’s surge in long-term interest rates in the final, shortened week of 2017,” said Len Kiefer, Freddie Mac deputy chief economist. “The 30-year fixed mortgage rate increased five basis points to 3.99% in this week’s survey.”

Click to Enlarge

(Source: Freddie Mac)

The 30-year fixed-rate mortgage increased to 3.99% for the week ending December 29, 2017. This is up from last week’s 3.94% but still down from 4.32% last year.

The 15-year FRM also increased, rising to 3.44%, up from 3.38% last week but down from 3.55% last year.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.47% this week, up from 3.39% last week and from 3.3% last year.

“Although this week’s survey rate represents a five-month high, 30-year fixed mortgage rates are still below the levels we saw at the end of last year and early part of 2017,” Kiefer said. “Mortgage rates have remained relatively low all year.”

Article source: https://www.housingwire.com/articles/42162-freddie-mac-mortgage-rates-surge-to-five-month-high

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