HMDA “Loans in Limbo”: 2017-2018 Timing Issue

Article By: Ben Giumarra, Spillane Consulting Associates, Inc.

Remember this later with that 2017-18 reporting window, but also understand now if you’re thinking strategically about HMDA 2018.

We know that January 1, 2018 is the date new HMDA data collection rules kick in. But what exactly do we do with “loans in limbo” – loans where we take an application in 2017 but don’t take final action until 2018?  

  • Side note: I bet a lot of people are going to have this question, but only for a short period of time. Maybe Bryan Noonan, who runs our Compliance Hotline service can set this newsletter as an automatic reply and relax a little for once! (Fat chance of that happening, knowing him …) 

But besides just helping operationally (for that short window of time), this is also an important issue to understand when strategically considering how to safely get your organization to cross over to the new HMDA requirements. So let’s discuss:

General Rules

1. Application in 2017:  Final Action in 2017

New HMDA rules do not apply. This isn’t a loan in limbo. Not affected by the upcoming changes. So when you take final action on a loan in 2017 – don’t sweat it!

2. Application in 2017: Final Action in 2018

New HMDA rules DO apply! That’s because the final action date is the trigger for compliance with new HMDA reporting rules. So make sure you’re planning for this when you take loans late in 2017.  

Demographic Data: Special Transition Rule

There are special rules available, however, when it comes to collection of the new expanded demographic data on ethnicity, etc. The good news is that these special rules were added in to provide our industry with flexibility in how we adapted to these new rules. So it’s for our benefit, so nice of them right? 

Here goes: 

A lender may collect the new demographic data early (in 2017) but then has the following options regarding reporting data:

  1. If final action is taken in 2017, the lender must report the old demographic data.

  2. If final action is taken in 2018, the lender has the option of either (a) reporting the new demographic data in 2018 or (b) reporting the demographic data as required by the old rules. 

This gives the lender the flexible to voluntarily collect the new demographic data in 2017 (for practice) and to make the transition period easier (rather have a chance to test ourselves before we go live with this) if it chooses to. It also avoids the complication that might have arisen with collecting an application in 2017 and then, being surprised by a loan staying in the pipeline longer than expected, having to go back and ask a borrower for their ethnicity, race, etc. after working with them for a lengthy period. 

What are your plans here? Take a second to answer a poll I created (it’s only 1 multiple choice question, I promise) and I’ll share the results with you all next week! (anonymous of course). Click here to answer poll. 

In Other News

  • Yet another crazy housing price story from Boston – in the Globe story here.

  • Hey congratulations to us at SCA for placing “Silver” in the 2017 Banker & Tradesman’s Best in the category for consulting companies.

  • Well after a whole lot of arguing over crystal ball interpretations – the CFPB has actually finalized its payday lending rules.  How are auto title lenders and large depositories going to react? How is this going to impact small-dollar lending? (Leave comments below!) 

On My Mind …

Anyone use unorthodox job titles at your company? I’m not sure if I’m completely sold on the following ideas, at least not all of them, but I’m against putting people in boxes with stuffy old formal titles – better to have no formal title sometimes …often it reminds me of the serial numbers used for inmates. Thinking of this after reading about Umpqua Bank’s use of unique job descriptions and then doing some online investigation to find a Forbes article which stated as follows:

In today’s era of ruthless competition and continuous innovation, people don’t want stodgy, confining job titles. Rather than calling employees by a traditional moniker, many leading companies opt to use more playful titles for their employees. This energizes team members. Because we’re in a creative economy, your people are your differentiation – if you want them to think outside the box, why should they have an “in the box” title?

Some of the creative job titles that came up:

  1. VP of Misc. Stuff – does a little of everything – Quicken Loans

  2. Director of First Impressions – receptionist – Houghton Mifflin Harcourt

  3. Catalyst – executive assistant/office manager – Detroit Venture Partners

  4. Creator of Opportunities – SVP of business development – Allen & Gerritsen

  5. Ambassador of Buzz – corporate communications associate – Grasshopper

  6. Digital Prophet – attempts to predict trends – AOL

  7. Chief Amazement Officer – founder – Shephard Presentations 

“No matter what degree we’ve earned, or what initials come after our nameplate, we must keep increasing our competency on a daily basis. Growing up on a farm, I learned that healthy things will die, whether sheep, corn, or the family dog. It is the same with people and organizations.”   – David Horsager

And thank you to Gregg Oberg for keeping compliance fun … I think he created about a hundred memes similar to this the other afternoon, so don’t be surprised if you start seeing compliance memes pop up in certain places!  P.S. For everyone reading this as a .PDF, this isn’t going to make any sense at all – enjoy this GIF on our website instead.

Thanks so much for reading our weekly newsletters. We’re not always going to be perfect, but because we always do our best and try not to overpromise, we hope that we’re always going to be trustworthy. Your calls and e-mails are very helpful – please keep contributing.

**These are our opinions. We’re not authorized, or willing, to express those of others.**

Thank you to Ben Giumarra, Spillane Consulting Associates, Inc., a member of our Education Committee, who with the support of other experts at SCA have put together this newsletter.


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