For years, HMDA has caused all kinds of headaches.  In fact, the acronym “HMDA” itself could just as easily stand for Head Migraine Day Again.  The reason for this, of course, is that HMDA is an infinitely detailed rule, but the rules don’t address every situation which often leaves those responsible stuck between a rock and a hard place, which I commonly refer to as the “gray area” of HMDA.  One area that seems to be in this category relates to how an interest buyout should be reported for HMDA purposes. This article attempts to break down the HMDA purpose reporting requirements for “interest buyout” loans.

There are rarely perfect scenarios in real estate lending.  Sure, occasionally a transaction will go as exactly planned, but there are usually one or two quirks in the process that must be addressed to ensure the loan remains in compliance.  One of these quirks I continue to see lenders struggle with is when an appraisal fee is collected before closing, but the actual cost of the appraisal comes in below what the creditor collected.  

Demographic Information for HMDA & Regulation B

What's the difference between government monitoring information and demographic information? This Compliance Clip (video) explains the differences in information collection under Regulation B and HMDA while also explaining when a bank must comply with one rule or the other for collecting information. In an attempt to make things easier to understand, Adam provides a number of common exemptions for collecting the GMI/DI information.

When a financial institution provides unnecessary Loan Estimates to applicants, this practice creates significant confusion regarding the “good faith” rules (i.e. the tolerance calculations).  For example, if a Loan Estimate is provided out of courtesy, the fees on the new LE cannot be used for calculating good faith (tolerances) under Regulation Z. This makes it very difficult for creditors, auditors, and examiners, to know which numbers are supposed to be used for good faith purposes. Therefore, it is important for every loan officer and loan processor to fully understand the changed circumstance rules so they know what exact conditions can reset the tolerances for determining good faith under TRID rules.

Over two and a half years after the privacy laws were amended by Congress, the CFPB has finalized the revisions to Regulation P.  This final rule affects financial institutions that do not share nonpublic information to third parties, though financial institutions who do share information will see little changes to their existing practices.  The final rule was released on August 10, 2018 and will become effective 30 days after publication in the Federal Register.​​​​​​​

This executive summary provides an overview of the changes which can be shared with management.

Closing a Loan with Force Placed Flood Insurance

Adam uses this Compliance Clip (video) to answer the question: Can you close a loan with force placed flood insurance? This question often comes up when an applicant has an existing loan with force placed flood insurance coverage and wants to refinance. Adam explains the conservative approach that will ensure compliance with flood insurance rules.

As most of you probably know, we have been expecting a revised Regulation CC for years now.  Sure, there were a few updates to Subparts A, C & D, such as new requirements for mobile deposit endorsements that went into effect on July 1, 2018, but what we are really waiting on are the revisions to Subpart B.  In the meantime, however, banks are still required to comply with the rules of Subpart B of Regulation CC, including hold time frames for deposits, account disclosures, and additional disclosure requirements. While these rules have been around for years, we still continue to see questions and misunderstandings about some of these rules.  In particular, I received a question this week regarding the lobby disclosure requirements under regulation CC.

Compliance requirements for CD secured loans are not typically a huge topic of discussion for compliance seminar speakers or article authors.  That said, one of our members suggested this topic (you know who you are!), and I think it is a great topic to write on from the perspective of CD secured loans, rather than just bringing up these loans when discussing applicable regulations (which is usually the way it happens). The truth is that most financial institutions (and regulators) just…

Each month, the FDIC and OCC each release a list of banks that have been evaluated under the Community Reinvestment Act (CRA).  This information is extremely valuable to CRA officers as one of the best ways to understand the CRA requirements for a financial institution is to read the performance evaluations of other financial institutions of the same regulator. This article summarizes some of the key points from these evaluations.

TRID Purpose on Construction Loans

This Compliance Clip reviews how to disclose the loan purpose for construction loans. This is a topic we continue to see issues on as it is actually a bit more complex than it needs to be. Adam breaks down examples of construction loans that are listed under TRID as a purchase, refinance, and construction loan.

On Tuesday, July 31, President Trump signed a four-month extension of the National Flood Insurance Program (NFIP) into law. As has been the case several times this year, the NFIP was set to expire on 7/31/2018 if congress did not step up and renew the program.  Though the House of Representatives had passed the renewal a while back, the Senate did not extend the program until the last minute before the program was set to expire - at midnight on 7/31/18. This short term, temporary extension is the…

It’s never a good idea to “guess” how a new law will be incorporated into a regulation, but I have received quite a few questions regarding how small HMDA reporters will report HMDA data once the CFPB finalizes the changes required by the Economic Growth, Regulatory Relief, and Consumer Protection Act of 2018.  Therefore, I want to share my understanding of what I think is going to happen, though you should know full well that this is (mostly) just speculation until changes to Regulation C become final.

In January of 2018, FinCEN provided an announcement that a new version of the Suspicious Activity Report (SAR) will be modified and available for use in June of 2018.  It is our understanding that, on Friday, July 28, 2018 FinCen finally released the new SAR Form (2018).

This revision marks the first update to the SAR form since releasing the electronic-only version (v1.1) of the form a few years back.  These SAR changes appear to be substantially similar to the 2017 revisions that were made to the Currency Transaction Report (CTR) as most changes are minor in nature and will not be substantial for most financial institutions.  That said, three of the five sections of the original version of the electronic SAR are reported o have been modified, though, again, most changes are not substantial to financial institutions - with the exception on SARs filed for a cyber-event.  

As compliance professionals, we have an opportunity to impact future rules and regulations by providing comments to proposed rulemakings.  This opportunity is actually built into the rulemaking process, and I can tell you from reading many final rules over the years that comments are at least considered and often addressed in final rules.  The truth is that comments can make a difference and, right now, we all have an opportunity to provide feedback (comment) regarding how disparate impact is evaluated under the Fair Housing Act.

Section 1026.19(e)(3)(iv)(D) of Regulation Z requires a creditor to provide a revised Loan Estimate within three business days after the date an interest rate is subsequently locked on a loan where an initial LE was issued without a (signed) rate lock agreement in place.  In other words, if a rate was initially floating and is later locked, a revised LE must be provided within three business days of the rate lock.