(Updated on 12/10/2018)
On September 8, 2018, the Consumer Financial Protection Bureau (CFPB) released an update in the Federal Register (83 FR 45325) modifying the HMDA Filing Instructions Guide (FIG) to allow optional partial exemptions for HMDA reporting for depository institutions and insured credit unions with fewer than 500 closed-end mortgage loans or fewer than 500 open-end mortgage loans (or both) in each of the preceding two calendar years.
The partial exemption applies to closed-end or open-end mortgage loans (or both) originated by a company or by an organization with its own LEI functioning as a separate legal entity within a company. Lenders have the option to report some or all of the HMDA fields subject to the partial exemption rule based on their compliance policy and the requirements of their regulator.
Although the rule allows lenders to classify loans as partially exempt, lenders may not be eligible for partial exemption if data in the exempt fields is required by the lender’s regulator (FDIC or OCC).
If you use an external vendor to prepare or manage your LAR, please review your vendor’s instructions for processing partially exempt transactions.
To support the partial exemptions, updates have been made to the Encompass HMDA Information input form and the Encompass HMDA Profiles setting to support optional partial exemptions to HMDA reporting. Detailed descriptions of these features are provided in the sections below.
New Checkbox and New Button for Partial Exemptions Workflow
(Updated on 12/27/2018)
A new Loan is Partially Exempt checkbox (field ID HMDA.X113) and a new Apply Partial Exemption button (field ID BUTTON_APPLYPARTIALEXEMPTION) have been added to the 2018 HMDA Originated/Adverse Action Loans tab on the HMDA Information input form to implement the workflow for entering partial exemption data for a loan. Administrators can use a Persona Access to Fields business rule to enable or disable user access to the checkbox or button.
- Select the Loan is Partially Exempt checkbox to indicate that a loan is partially exempt. The recommended best practice is to create a business rule to select or clear this checkbox when a loan is created based on the HMDA years and loan types for which you are claiming exemption.
Selecting the Exclude loan from HMDA report checkbox excludes the loan entirely from the HMDA reporting LAR. Selecting the Loan is Partially Exempt checkbox merely indicates that some of the data in the loan is exempt from HMDA reporting, but the loan is still included in the HMDA reporting LAR.
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Click the Apply Partial Exemption button to apply the exemption to all fields allowable under the partial exemption rule. Clicking the button populates Exempt to data entry fields and 1111. Partially Exempt to fields with a dropdown list. (Refer to the Updates to HMDA Fields section below for additional details about the new field options.) When you click the Apply Partial Exemption button, partially exempt fields with Lock icons are no longer editable unless you click the Lock icon to update the field.
When the Apply Partial Exemption button is clicked, the Reason for Denial (field ID HMDA.X21) and Property State (field ID HMDA.X90) fields are not marked as exempt by default because these fields might be required by your regulator (FDIC or OCC). The Initially Payable to Your Institution dropdown list (field ID HMDA.X43) is also not populated with the 1111. Partially Exempt option due to variations in the way different companies do business. These fields can be populated by using a business rule based on your company’s policy or can be populated manually.
Because lenders can report some or all of the fields covered by partial exemption, you have the option to exempt a subset of the allowable fields. The recommended best practice for this scenario is to create a Field Trigger business rule that populates the exemption status for specified fields based on the HMDA reporting year and any additional considerations required by your company. If your company is no longer exempt from HMDA reporting in a later year, the business rule can be disabled. Work with your company’s Compliance department to determine the conditions to use in business rules that apply the exemption status to the selected fields. Ellie Mae Professional Services is also available to assist in creating business rules designed for your company’s needs.
Clearing the Loan is Partially Exempt checkbox after clicking the Apply Partial Exemption button does not reset the exemption selections in the affected HMDA fields because those values are not retained. These fields and any linked fields must be manually updated by clicking the gold Lock icons and making the appropriate changes.
The Apply Partial Exemption function is also available for use with Encompass APIs or the Encompass SDK if the Use Non Universal Loan Identifier (NULI) for Loans Reported as Partially Exempt Loans checkbox has been selected in the HMDA Profiles setting (refer to the HMDA Profiles Setting Option for Using Non Universal Loan Identifier for Partially Exempt Loans section below). To calculate and apply the exempt values, check/set the value in the SDK for field HMDA.X113 as shown in the sample code below:
//create a new loan with firstname & last name
string LoanGuid = "{e96050d4-5a62-49c2-9917-e667cfb1594d}";
private static Loan loan = session.Loans.Open(LoanGuid);
loan.Fields["HMDA.X113"].Value = “Y”;
loan.ExecuteCalculation(CalculationTriggerOptions.RECALCULATEHMDA);
New Recalculate HMDA Button
A new Recalculate HMDA button (field ID BUTTON_RECALCULATEHMDA) has been added to the tabs for 2018 HMDA Originated/Adverse Action Loans, 2018 HMDA Purchased Loans, and Repurchased Loans on the HMDA Information input form.
This button is not directly related to partial exemptions, but it enables an Encompass user to apply the HMDA Profile Name selected on the HMDA Information input form and retrigger the HMDA calculations based on the HMDA profile and the HMDA Action Taken (field ID 1393).
Administrators can use a Persona Access to Fields business rule to enable or disable user access to the button.
The Recalculate HMDA function is also available for use with Encompass APIs or the Encompass SDK. To trigger/simulate the functionality of the Recalculate HMDA button for batch loans, check/set the value in the SDK for field HMDA.X113 and call the RECALCULATEHMDA function as shown in the sample code below:
//create a new loan with firstname & last name
string LoanGuid = "{e96050d4-5a62-49c2-9917-e667cfb1594d}";
private static Loan loan = session.Loans.Open(LoanGuid);
loan.Fields["HMDA.X113"].Value = “Y”;
loan.ExecuteCalculation(CalculationTriggerOptions.RECALCULATEHMDA);
Updates to HMDA Fields
Updates have been made to fields on the HMDA Information input form to enable lenders to indicate which fields are exempt from HMDA reporting. The updates fall into three categories:
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dropdown Lists – The options available on the dropdown lists for some HMDA fields have been updated to include a new 1111 Partially Exempt option.
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Data Entry Fields – The allowable entries for some data fields have been updated to enable string entries (text characters) so that lenders can enter Exempt as an option for the field.
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New Fields – Some existing HMDA fields have been replaced with new fields on the HMDA Information input form to enable lenders to indicate that the field data is exempt from HMDA reporting. The new fields have been assigned new field IDs. The existing fields are retained on other Encompass forms so they can continue to be used for non-reporting purposes.
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Lock Icons Added to Specific HMDA Field – New Lock icons have been added to HMDA fields when the logic for calculating the field value results in NA being populate to the field.
The following fields are eligible for exemption under the new HMDA FIG guidelines:
dropdown Lists
A new 1111 Partially Exempt option has been added to the following 16 dropdown lists:
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Credit Score for Decision Making for the borrower and co-borrower (field IDs HMDA.X116 and HMDA.X118)
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Reasons for Denial (field ID HMDA.X21)
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Balloon Payment (field ID HMDA.X114)
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Interest Only (field ID HMDA.X109)
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Negative Amortization (field ID HMDA.X115)
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Other Non-Amortization (field ID HMDA.X38)
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Manufactured Secured Property Type (field ID HMDA.X39)
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Manufactured Home Land Property Interest (field ID HMDA.X40)
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Submission of Application (field ID HMDA.X42)
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Initially Payable to Your Institution (field ID HMDA.X43)
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Reverse Mortgage (field ID HMDA.X56)
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Open End Line of Credit (field ID HMDA.X57)
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Business or Commercial Purpose (field ID HMDA.X58)
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AUS #1 and AUS Recommendation #1 (field IDs HMDA.X44 and HMDA.X50)
Data Entry Fields
The following 18 fields now allow string entries to enable a value of Exempt to be populated when applicable. Because populating a string value other than Exempt will result in a HMDA reporting error, the recommended best practice is to use business rules to populate the field as appropriate.
Property State (field ID HMDA.X90) cannot be populated as Exempt.
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Rate Spread (field ID HMDA.X15)
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Total Loan Costs or Points and Fees (field ID HMDA.X77, HMDA.X78)
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Origination Charges (field ID HMDA.X79)
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Discount Points (field ID HMDA.X35)
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Lender Credits (field ID HMDA.X80)
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Interest Rate (field ID HMDA.X81)
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Prepayment Penalty Term (field ID HMDA.X82)
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Debt to Income Ratio (field ID HMDA.X36)
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Combined Loan to Value Ratio (field ID HMDA.X37)
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Loan Term (field ID HMDA.X83)
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Introductory Rate Period (field ID HMDA.X84)
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Property Value (field ID HMDA.X85)
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Multifamily Affordable Units (field ID HMDA.X41)
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Mortgage Loan Originator Identifier (field ID HMDA.X86)
New Fields
The following seven new fields are reportable in the Encompass Reporting Database and have been included in the HMDA required fields that an Encompass administrator is prompted to add when opening the Encompass Reporting Database. These seven new fields have been created for HMDA reporting purposes and replace existing loan fields on the HMDA Information input form. The existing fields are retained on other Encompass forms so they can continue to be used for non-HMDA reporting purposes.
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Balloon Payment (field ID HMDA.X114)
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Negative Amortization (field ID HMDA.X115)
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Credit Score for Decision Making for the borrower (field ID HMDA.X116)
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Credit Score for Decision Making for the co-borrower (field ID HMDA.X118)
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Credit Score Model for the borrower (field ID HMDA.X117)
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Credit Score Model for the co-borrower (field IDs HMDA.X119)
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Interest Only (field ID HMDA.X120)
For loans created prior to the Encompass 18.4 December Service Pack release, data from the following fields is copied to the new HMDA fields: Balloon Payment (field ID 1659 copied to field ID HMDA.X114), Negative Amortization (field ID NEWHUD.X6 copied to field ID HMDA.X115), Credit Score for Decision Making for the borrower and co-borrower (field IDs 4174 and 4177 copied to field IDs HMDA.X116 and HMDA.X118), Credit Score Model for the borrower and co-borrower (field IDs 4175 and 4178 copied to field IDs HMDA.X117 and HMDA.X119), and Interest Only (field ID HMDA.X109 copied to field ID HMDA.X120). Click the Lock icon to edit a field.
Lock Icons Added to Specific HMDA Fields
Lock icons have been added to the following HMDA fields when the logic for calculating the field value results in NA being populate to a field. This enables Encompass users to click the Lock icon to override the calculated value.
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Reasons for Denial (field ID HMDA.X21)
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Other Non-Amortization (field ID HMDA.X38)
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Manufactured Secured Property Type (field ID HMDA.X39)
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Manufactured Home Land Property Interest (field ID HMDA.X40)
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Submission of Application (field ID HMDA.X42)
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AUS #1 (field ID HMDA.X44)
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AUS #1 Recommendation (field ID HMDA.X50)
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Business or Commercial Purpose (field ID HMDA.X115)
HMDA Profiles Setting Option for Using Non Universal Loan Identifier for Partially Exempt Loans
A new Use Non Universal Loan Identifier (NULI) for Loans Reported as Partially Exempt checkbox has been added to the Respondent Information section of the HMDA Profiles Setting (Encompass > Settings > Loan Setup > HMDA Profiles).
When this checkbox is selected and the new Loan is Partially Exempt checkbox is selected on the HMDA Information input form for a loan file, the loan number for the loan is populated in the ULI field (field ID HMDA.X28) and the Universal Loan ID label for the field changes to Non Universal Loan ID. The loan number continues to be used for the ULI even when additional actions in the loan result in a recalculation of the ULI field.
CBIZ-19769