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5 Tips for Successfully Navigating the New 2018 HMDA Regulations

5 min read
Nov 6, 2017

The word on every compliance officer's lips these days is "HMDA."  Here are 5 tips to help you prepare to navigate the challenges of the upcoming HMDA compliance changes.

As we enter the last two months of 2017, and prepare for the new HMDA Final Rule to take effect on January 1, the pressure is mounting. Collecting all of the new HMDA Plus data fields, ensuring accuracy, and analyzing for risk with the new Final HMDA Rule requirements will be a challenge for even the most prepared compliance professionals.

With that in mind, here are 5 best practice tips for successfully navigating the challenges of the 2018 HMDA Final Rule.

Each of these tips are designed to help you - and your entire team - successfully implement the new HMDA regulations required by the CFPB's HMDA update. If you're looking for specifics on what these changes actually include, make sure to get this updated Guide to 2018 HMDA Changes.

1. Be Patient with Yourself and Your Team

Implementing the HMDA changes will be difficult, so be patient with yourself and your team. From the most senior Board member to the newest hire, it will be imperative that everyone is involved in implementing the new HMDA requirements. That means that patience will be key.

The person leading HMDA compliance efforts will have a unique set of responsibilities. This person will be the voice of the new regulatory requirements and implications within your organization. The rest of the organization will rely on this person to keep everything on track, educate the organization, ensure compliance, and report to senior leadership. In addition, this person is likely to be one of the only people in the organization to understand the complexity of the challenge. Likewise, the rest of the organization will have a different set of goals and responsibilities.

It may seem like the HMDA requirements and the business goals are at odds. Patience will be important in order to ensure success, collaboration, and mutual understanding.


Guide to 2018 HMDA Changes

Get this free guidebook to the CFPB's HMDA Final Rule to learn more about the regulatory requirements, and what it means for your institution! 

This free compliance resource was updated Nov. 1, 2018.

2. Open Lines of Communication

It will be important to communicate with your institution’s leadership about potential resource needs and upcoming challenges. In addition, your team members may have questions about HMDA changes. Open lines of communication now so that your colleagues feel comfortable reaching out with questions.


This is an important part of having a strong culture of compliance, and will continue to add value in the months and years to come. There will be a lot to learn about how the regulators will use the new HMDA data, and what it will mean for your risk. By starting the conversation now with openness (and patience), you'll be in a better position to have additional, more detailed conversations in the future.

This emphasis on communicating extends to your vendors. Reach out to your LOS and any other Fair Lending-related service providers to make sure that they’re ready.

To our Ntransmittal customers: we're ready. Soon, we will be able to show you what these new data fields might mean for you. Please reach out to your Ncontracts Customer Success Manager with any specific questions.

3. Implement Intelligently

Make sure to document changes, and work to implement HMDA compliance changes in an easy-to-understand and sustainable way. The most important processes are the ones that your team actually uses. The last thing you want during this education and implementation phase is to create confusion that will result in subjectivity and multiple unique processes that throw your existing controls into disarray.

Consider your institution’s complexity as you roll out changes to any policies, procedures and processes. Depending on your structure, you might start with specific lines of business, departments, or data fields. As you find systems and processes that work, you can leverage those learnings in future implementation.

4. Prioritize Proactively

Focus on priorities. Just as with risk management, or tackling any complicated problem, start with the top priorities, and then work throughout the rest of your action items. Depending on your organization and your risk profile, those priorities will be different. For many institutions, data collection and submission will be major priorities.

The first few months of 2018 will be essential for testing your data collection process for the new HMDA data fields. During this time, you’ll be focused on ensuring that new data fields are being collected and recorded accurately. This will mean keeping a close eye on every step of the lending process to ensure all the new data fields are being recorded, and more importantly, that they’re being recorded accurately.

In addition, you’ll also be reworking your data analysis process to ensure that you’re keeping an eye on your risk. With all of the new data fields, the story your data tells will be more detailed. Your risk exposure will likely also change.

5. Encourage Realism

compliance-officer-hmda-preparation.jpegThere will plenty of changes even after January 1, and so it will be important to build some flexibility in, even just mentally. Expect the situation to evolve  some, and encourage realism with your team and leadership. 

If you’re concerned about your ability to be prepared for the HMDA changes, you’re not alone. The CFPB’s Final HMDA Rule includes a “good faith” provision. The CFPB is expecting all institutions to make a “good faith” effort to collect, scrub, and report all data fully within 30 days of the end of each calendar quarter.

If you do, and some of your data is inaccurate or incomplete, the Bureau will not consider it a violation of HMDA or Reg. C as long as you correct or complete the data prior to your annual submission in 2019.

Ncontracts Viewpoint: We will be working to help our customers and friends in the industry to prepare for the new HMDA guidelines, and ensure that you're ready and able to manage your risks in 2018 and beyond.

We want to leave you with one more thought: with this expanded HMDA data, Fair Lending analysis and risk exposure is likely to change. We anticipate that disparities will be easier to identify, and potentially more complex to explain. We recommend that you plan to incorporate analysis into your Fair Lending risk management as early as possible, and more frequently if your risks appear elevated. If you are not using a HMDA software to analyze your data, or you aren't happy with the software you do have, time is of the essence to find a solution - and a supportive company - that you do love.


Related: What Is A Compliance Management System And Why Your FI Needs One

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