Tuesday, February 28, 2023

HMDA Data Reporting Process Changes - LOWER THRESHOLDS

Substantially lower reporting thresholds mean most LENDERS must report HMDA data - Implications for non-delegated correspondents

As you may be aware, a Federal District court ruling in September 2022 changed HMDA reporting thresholds. The previous lookback formula stated that if you made credit decisions on 100 mortgages in each of the previous 2 years, you were required to report in the current year. The ruling reduces the threshold for reporting based on the number of mortgages with credit decisions to 25 in each of the previous 2 years.
Section of manual describing threshold changes

Implications for Non-Delegated Correspondents

It has come to our attention that equal numbers of wholesalers do NOT report HMDA data on correspondent loans as those who do. The HMDA rules stipulate as the credit decision maker must report (in other words, the underwriter/approver), but not all companies follow this edict. Some believe that if your name is on the note, you are the lender of record, and so reporting is your responsibility. YOU MUST CHECK with each wholesaler to find our what their procedures are. If they do not report for you, and you have over 25 loans closed, you must report HMDA data. 

Retroactively Effective

Since the ruling reverses a previous regulation it now applies retroactively. If you were previously not a reporter because you made fewer than 100 loans in each of the previous 2 years, you most likely are now. If you’re a broker, you’re not making credit decisions, so this does not impact you, UNLESS you are denying loans. The CFPB has stated that it will not penalize those organizations which now must report due to the change who are now implementing the new reporting.

We have updated our HMDA Policy to reflect these changes. You may download it here:

Download Updated HMDA Policy

Insert it in your Section 2-42 of your 2-0 Compliance Module

Download Updated HMDA Policy