Every March, HMDA reporting institutions must submit their prior calendar year LARs (Loan Application Records) to the FFIEC. HMDA data generally becomes publicly available by September of the following calendar year. Well, it is that time of year!
Any day now, we expect the FFIEC to announce the availability of data on mortgage lending transactions from the 7,000+ financial institutions covered by the Home Mortgage Data Act (HMDA). The imminent release of the 2011 data will cover applications, originations, purchases of loans, denials, and other actions such as incomplete or withdrawn applications. The FFIEC prepares and distributes the information on behalf of the member agencies (including the Federal Reserve, FDIC, NCUA, OCC and the CFPB) and the Department of Housing and Urban Development.
As a quick recap, the 2010 data revealed a few data points:
- Continued decrease in the number of companies reporting HMDA (2008 – 8,388 lenders; 2009 – 8,124 lenders; 2010 – 7,923 lenders)
- Decrease in number of loans
- Reduced incidents of higher-priced lending
- Heavy reliance on loans backed by FHA insurance (36% total) and VA guarantees (7% of total)
- Existence of denial disparities for blacks and Hispanics (similar to prior years)
This time of year serves as a reminder to all financial institutions that the regulators rely on HMDA (along with other factors) to evaluate fair lending risk.
EXECUTIVE MANAGEMENT AND COMPLIANCE OFFICER ACTION ITEMS:
1. FFIEC Disclosure Statement:
- 3 DAYS: Reporting financial institutions must make their disclosure statements available to the public at its home office within three business days after it is posted on the FFIEC website.
- 10 DAYS: In addition, reporting financial institutions must make its disclosure statement available to the public in at least one branch office in each additional MSA or MD where it has offices within ten business days of its posting on the FFIEC website - OR - post the address for requests in each branch office in each additional MSA or MD where it has offices, and send the disclosure statement within 15 calendar days after receiving a written request.
2. Other things the compliance department should be thinking about:
- HMDA LAR: An institution must make its loan application register available to the public after deleting application/loan number, date application and date of action take (privacy interests) and make it publicly available
- PUBLIC AVAILABILITY: The FFIEC produces aggregated tables to illustrate the lending activity of all covered financial institution in each MSA or MD. These tables and the individual disclosure statements mentioned above are available on the FFIEC website and through central depositories (such as public libraries) is each MSA or MD.
- THREE YEARS: Financial institutions must retain the full (unmodified) HMDA-LAR for at least three years for exam purposes. In addition, the financial institution must be prepared to make each modified HMDA-LAR available for three years.
- FIVE YEARS: The FFIEC disclosure statement must be available for five years.
The public nature of all the HMDA data is a large reason why financial institutions are encouraged to review their numbers and know what it says about the organization.
TRUPOINT Partners provides Fair Lending, HMDA and CRA reporting services, risk assessments and consulting to financial institutions and lenders across the country. Once the HMDA data is released later this month, our analysts will upload the information into our proprietary web-based systems that allow for detailed reporting and analysis. Our analysis is designed to be consistent with the Interagency Fair Lending Examination Procedures (e.g. Comparative Analysis of disparities in approval/denial rates, pricing, product mix, census tract, etc.). At TRUPOINT Partners, we provide our clients expert analytics, powerful insights and clear direction.
Want more?
- Reg C (The Reg that Implements HMDA - See Section 203.5): Click Here
- FFIEC HMDA Disclosure Public Access Site: Click Here
- If curious to review more about the 2010 HMDA data and the associated trends, the Federal Reserve issued a more detailed overview back in December, 2011 (click image below)
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