New HMDA - A Multi-step Process
No matter what you do, everything is a multi-step process that involves doing the steps and testing them before you have an issue. Just recently I did an oil change on my tractor – a multi-step process. I did it in one building where I do my project work and upon completion moved the tractor to its storage building about 100 yards away, only to find that within the buildings and between the two, most all of my oil had leaked out. This could have been a disaster, but fortunately was not, involving only new oil cleanup. This was all because before moving the tractor, I had failed to test and make sure the gasket was in place.
A lot of vendors are offering very good training on the new HMDA rules and with their training they are spending a lot of time on the particulars of the new data fields...but is this detailed data field training, time best spent??
No doubt one of the chief risks on new HMDA is getting the data for the new required data fields – especially on commercial applicable HMDA loans for purchase, improvement, or refinance – since in community banks in general, commercial lenders have often not been used to a formal application process. Hopefully, your bank has also purchased a HMDA vendor software that will move the data in the new required format for HMDA reporting.
So, I would consider the following a simplistic set of HMDA steps for a community bank.
- Training of staff on the new HMDA requirements including the bank methodology for information acquisition.
- Purchase of HMDA software which flows information in compliant format directly into the new HMDA reporting.
- Purchase or creation of a HMDA compliant commercial loan application, complete with the new race and ethnicity data fields.
- Purchase or creation of HMDA worksheets, perhaps completed centrally, from which combined with the new application, data will be compiled to flow into HMDA software.
- Testing well in advance of January 1, 2018.
In simplistic fashion, following of these five steps, should put your bank well on the way to HMDA compliance for January 2018. Completing step 5 well in advance of that date could prevent an oil leak that could be a disaster.