The banking industry has been put through its paces in recent years, and more challenges are coming.

Fortunately by this point most of our banking brethren are familiar with what it takes to prepare for and comply with ramped up regulatory requirements; unfortunately, the process is still exacting, burdensome and frustrating.

Oversight of Regulation C of the Home Mortgage Disclosure Act (HMDA) was transferred to the Consumer Finance Protection Bureau in response to the fallout from the foreclosure crisis in 2011. The new oversight overlord decided that the current reporting requirements – established in part to help prevent discrimination in mortgage lending – were insufficient. Thus in January of next year, mortgage originators and lenders will be required to report vastly more information about their applicants.

In some cases these institutions may already have that data to hand and are refining the ways they collect, store and report it; in other cases, new software product offerings are needed or old systems revised. (Say what you will about regulatory requirements; they are certainly a job-creator.) In either case, compliance with the requirements will require retraining and education of front-line and backend staff.

Loans originated in 2017 but closed in 2018 will require compliance with the new regulations, as will all loans moving forward. That means the industry now is preparing for implementation of those requirements, identifying pain points and workflow issues – see Jim Morrison’s article in this issue on the topic of how bankers and originators are preparing now for implementation later.

But there’s another point to consider, as correspondent Christina O’Neill’s article makes clear. There’s a movement afoot in Washington to replace or roll back some (or all) of the legislation enacted in the aftermath of the recession, and HMDA reporting requirements are certainly part of that.

More than a dozen bankers contacted for Morrison’s story declined to comment or did not respond to requests seeking comment. To be sure some allowance must be made for the schedules of these professionals; mortgage originators are pretty busy at the moment – while the spring market has ebbed, it’s still a hot market and competition for new loans is fierce. And of course some of their prep work is not information they would like to share with their competitors.

Still one wonders how many of these lenders are not preparing at all for a regulatory deadline that may not come to pass. If the CFPB is disbanded, if Dodd-Frank is repealed, replaced or rolled back, it’s possible the new HMDA reporting requirements will not be required after all.

That’s a dangerous bet. This Congress has so far proven itself to be incapable of passing any legislation at all, let alone repealing past legislation. It’s possible it will at some point get it together and act on the bills currently languishing in committee, but the clock is ticking on HMDA reporting requirements. With just six months left in the year, to hesitate now – to wait and see what this ineffective Congress chooses to do, especially distracted as it is by other matters – is foolish indeed.

Hesitation On HMDA

by Banker & Tradesman time to read: 2 min