Redesigned uniform residential loan application
AML AND COMPLIANCE NEWS |
In August, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (collectively the Agencies) released the redesigned uniform residential loan application (URLA). This is the first major revision in more than 20 years. The changes to the URLA include a redesigned format, new and updated fields, clearer instructions, and changes to allow for the collection of expanded government monitoring information that will be required to be collected under the Home Mortgage Disclosure Act (HMDA) and Regulation C beginning Jan. 1, 2018.
The Consumer Financial Protection Bureau (CFPB or Bureau) has reviewed the redesigned URLA at the request of the Agencies for the purpose of granting its approval of the 2016 URLA in accordance with the Equal Credit Opportunity Act (ECOA) and Regulation B. As a result, the Bureau has issued a Bureau Official Approval which protects a creditor from civil liability under the ECOA if the creditor choses to use the 2016 URLA and collect the expanded HMDA data in 2017 (before the collection of the expanded data is mandated on Jan. 1, 2018). It is important to note that the approval does not require institutions to begin collecting the expanded HMDA ethnicity and race data. The Bureau believes allowing the collection of the expanded ethnic and racial information under Regulation C will give creditors an opportunity to begin implementation of the HMDA changes and modify their processes before the requirements actually become effective on Jan. 1, 2018, thereby reducing the compliance burden of these changes.
The approval includes a copy of the redesigned URLA and guidance and examples on submitting HMDA data on applications received during 2017 on which the expanded HMDA data relating to ethnicity and race was collected. According to the approval:
- For applications received from Jan. 1, 2017, through Dec. 31, 2017, and on which final action is taken during the 2017 calendar year, a financial institution shall submit the information concerning ethnicity and race, using only aggregate categories and the codes provided in the filing instructions guide for HMDA data collected in 2017, even if the financial institution has permitted applicants to self-identify using expanded categories.
- For purposes of submitting HMDA data for applications received on or after Jan. 1, 2017, and before Jan. 1, 2018, and on which final action is taken on or after Jan. 1, 2018, the financial institution, at its option, may submit the information concerning ethnicity and race using the expanded categories if the applicant provided such information instead of using the transition rule in Regulation C (comment 4(a)(10)(i)-2), or it may submit the information in accordance with that transition rule.
Creditors should carefully consider vendor readiness, system capabilities, compliance management system updates, employee training and data usage when determining whether to begin using the URLA and collecting disaggregated data prior to the Jan. 1, 2018, effective date for the mandatory collection of expanded HMDA data.
The Bureau is not amending the official interpretations to Regulation B contained in Supplement I to Regulation B at this time, but will consider whether to address the treatment of outdated versions of the URLA in appendix B and Supplement I to Regulation B at a later date.