You’ve probably read a thing or two about the Payday Lending Rule over the past couple of years. There are actually two different parts to this Rule: 1) The Ability to Repay/underwriting requirements; and, 2) The Payment requirements. Recently, concerns from various groups have been raised that may have led you to believe that the “Ability to Repay” part had been removed from the Rule. Not so fast, at least at this point!
While the rule technically went into effect on January 16, 2018, the mandatory compliance date is actually set for August 19, 2019. In February, however, the CFPB issued two separate proposals. The first was to delay the “Ability to Repay” requirements until November and the second was to remove the “Ability to Repay” requirements from the Rule altogether. Again, these are just proposals at this point! There is also a court-ordered stay currently in effect that could impact the August 19th mandatory compliance date for both the Ability to Repay and Payment requirements, as compliance won’t be required until the stay is lifted. Great news, right? Again, not so fast! While this stay is currently in effect, meaning you won’t be required to comply with the Rule until the stay is lifted, the CFPB could ask for the stay to be lifted at any time.
So, what does all this mean? Well, since we can’t predict with any certainty when the stay will be lifted or whether the August 19th mandatory compliance date will change, you need to be ready to go on this one! Of course, the first step is to determine whether you make loans covered by the Rule. If you do, then you need to know what to do. We can help with both!
Be sure to join us on April 23, 2019, for “Who’s Covered? The New Payday Loan Rules”. This 30-minute flash webinar will help you determine if you are covered by the payday lending rule. If you find you are subject to the Rule, you won’t want to miss “Payday Loan Requirements” on April 30, 2019, where we will spend two hours covering the ins and outs of the new Rule.
HMDA Data Regulatory and Reporting Reference Chart REVISED for 2019
You may have seen that the CFPB updated its HMDA Data Regulatory and Reporting Reference Chart for 2019. Changes and additions were made to reflect the updated reporting codes for the Credit Score models and Automated Underwriting System (AUS) results. Additional clarifying information was provided on those fields and a few others as well, such as:
Report “Credit Score is not a number” (Code 7777) if your inquiry results in, for example, a “Meets Threshold” score. You should not use Code 7777 if a credit score just cannot be determined.
Some of the credit scoring models may be referred to under different names. For example, Equifax Beacon 5.0 (Code 1) may also be known as FICO Score 5.
If you use Freddie Mac and receive more than one result on the Feedback Certificate, report the Risk Class result.
The HMDA Platform can accept up to 15 decimal places for both the Combined Loan-to-Value and Debt-to-Income ratios.
A negative Debt-to-Income ratio can be reported.
In light of these revisions, we’ve also made some updates to our HMDA Data Guide. Version 3.1 is now available in our Free Lending Tools.
You undoubtedly realize that Fair Lending has been a hot topic for a number of years and that doesn’t seem to be changing anytime soon. That’s one reason that it’s important to note that the CFPB recently released its annual Fair Lending Report. Remember as well that we still have that Small Business Data Collection rulemaking looming. The Bureau hasn’t, as they make mention of it in the report – although they do seemingly continue to kick that can down the road.
In the report, the CFPB gives us some of the most frequently cited Regulation B and ECOA violations, such as Discrimination; Improperly asking or failure to ask for government monitoring information; improperly requiring spousal signatures; not providing an adverse action notice within 30 days or not providing all the required information within the notice; failing to maintain records of applications and any associated action taken notices; and failure to provide appraisal reports when required.
Hopefully, you can take this list of frequently cited violations and not only take comfort in the fact that others are facing challenges here but use it as a bit of a checklist as being some areas you may want to check into, to see how you’re doing. Especially if you have an exam coming up, the sooner, the better.
There’s a reason that these items are frequently missed – they’re not easy. The first step of course to getting something right is understanding what you have to do. To help you there, we have several webinars that will help you make sure you’re on the right track. We’re excited to bring you topics such as documenting joint intent and All About Fair Lending to not only help you know what to look for but also help you share the message with others. Remember, access to the recording of the webinar, as well as our written responses to all questions received, is included in your purchase price. We hope you’ll join us soon.
With a new year, of course, comes many revised compliance thresholds. One of those is the annual adjustment to the points and fees thresholds, used as part of the criteria to determine whether a loan is a “Qualified Mortgage”.
As a result, we’ve updated our Repayment Ability Risk & Requirements Matrix to Version 4.4 for use in 2019. It’s now available on our website as a free download.
Back in October, we alerted you to the fact that the CFPB had released a new Filing Instructions Guide (FIG) for HMDA data collected in 2019. As a result, we’ve updated our HMDA Data Guide. Version 3.0 is available now in our free lending tools. Please note that these additions will not impact the data you collected in 2018. Rather, they apply to HMDA data collected in 2019, that will be submitted in 2020.
So, what changed?
Codes 18 – 24 were added to the list of options when reporting the results from an Automated Underwriting System (AUS):
20. Accept/Unable to Determine
21. Refer with Caution/Eligible
22. Refer with Caution/Ineligible
23. Refer/Unable to Determine
24. Refer with Caution/Unable to Determine
The FIG does tell us that added codes 18 and 19 correspond to results frequently returned by FHA Total Scorecard. Any of the added codes may also commonly be reported by the Guaranteed Underwriting System (GUS). The FIG also clarifies that while it specifies certain codes as being commonly seen with certain underwriting systems, you should ultimately report the result you receive. For example, the FIG says that the GUS commonly gives results that correspond to codes 3, 4, 10, 15, 18 – 24. However, that doesn’t mean that those are the only results that can be reported for that system.
The names of the Credit Scoring models were also revised for Codes #3 and #4 (e.g. FICO Risk Score Classic 04 is now TransUnion FICO Risk Score Classic 04).
While the changes aren’t necessarily major changes, it’s still important you are aware of them. Let’s be honest, there are few regulations that cause more headaches and confusion than HMDA! If you’re looking for HMDA training, visit our store to register for HMDA: Are You Ready to Submit Your 2018 Data? coming on January 10th and HMDA Transaction Coverage on January 22nd.