WASHINGTON—Monday is the compliance deadline for two CFPB final rules related to the Home Mortgage Disclosure Act – phase 2 of Regulation C and Regulation B. Ahead of the deadline, the CFPB released the HMDA Check Digit Tool and an updated Rate Spread Calculator to enhance data quality.
The check digit is a method for verifying the accuracy of the multi-digit universal loan identifier (ULI), which can be used to identify and retrieve the covered loan or application file. To create it, financial institutions must apply a mathematical function to the sequence of numbers or characters, NAFCU explained.
In October 2015, the CFPB amended Appendix C to give examples of creating a check digit and also indicated it was working on a tool to reduce the burden of generating the code, NAFCU noted. The final check digit tool is now available online.
The CFPB also has an updated Rate Spread Calculator available for HMDA reportable loans with a final action date on or after Jan. 1, 2018. The previous version of the calculator should still be used for loans with a final action date on or before Dec. 31, NAFCU explained.
Phase 2 of Reg C exempts credit unions from reporting HMDA data unless it meets the asset-size, location, federally related, and loan activity tests and it originates 25 or more covered closed-end mortgage loans or 500 or more covered open-end lines of credit in each of the two preceding calendar years. In 2020, the covered open-end lines of credit threshold is set to revert to 100, NAFCU noted.
The Reg B final rule adds certain model forms and removes the 2004 version of the Uniform Residential Loan Application (URLA), as well as makes amendments to assist in the collection and retention of information about the ethnicity, sex and race of certain mortgage applicants. The rule allows credit unions to adopt voluntary practices for collecting applicant information, NAFCU said.
Most of the new HMDA requirements become effective Jan. 1. They affect home equity lines of credit, establish transactional thresholds for coverage and expand the number of HMDA data points to be collected from credit unions.