Independent Banker - December 2018 - 19

of checks to confirm the integrity of the data collection
and reporting process.
Changes to institutional coverage became
effective Jan. 1, 2018. The HMDA Rule adopted
a uniform loan-volume threshold for all institutions
of at least 25 covered closed-end mortgage
loan originations, or at least 500 covered openend
lines of credit in each of the two preceding
calendar years, and the asset size, location, federally
related and loan activity tests.
The types of covered transactions were also
modified. Reporting now generally includes
closed-end mortgage loans and open-end lines
of credit secured by a dwelling. Dwelling-secured
business-purpose loans and lines of credit
are covered only if they are home purchase
loans, home improvement loans or refinancings.
Agricultural-purpose or other specifically
excluded transactions are not covered, even if
they are dwelling-secured, and home improvement
loans are covered only if they are secured
by a dwelling.
The rule brought sweeping changes to reportable
data. The Dodd-Frank Wall Street Reform
and Consumer Protection Act of 2010 (DoddFrank)
required financial institutions to report
new data points and authorized the Consumer
Financial Protection Bureau (CFPB) to require
additional information. The CFPB's final rule for
HMDA reporting included 25 new data points,
14 fields revised from prior requirements and
nine unchanged data points, bringing the total
to 48 unique data fields. Jan. 1, 2018, marked
the effective date for collection of expanded and
revised data to be reported in 2019.
Richard Tripp, compliance officer at $985 million-asset
First Volunteer Bank in Chattanooga,
Tenn., found that, even with months of planning
and preparation, some of the changes were more
difficult than expected, particularly in platform
implementation.
" We found the technical changes for most
reporting fields easy to implement, " he says.
" However, others, like debt to income and combined
loan to value, were more complex and
more difficult to implement and train. "
" With every new rule, " observes Tripp, " the
most difficult piece is applying the rules to situations
not addressed by the rule or any of its
associated guidance. Our most beneficial process
was follow-up, in-person training with our loan
officers to discuss the issues we found while monitoring
the first month of collection. "
Regulation B-Equal Credit Opportunity Act
Data Collection
In October 2017, Regulation B was amended in
regards to when and how a creditor may collect
information about the applicant's ethnicity, race
and sex. Affected creditors are primarily those
making mortgage loans subject to Regulation
B §1002.13 (collecting government monitoring
information), for purchase and refinance transactions
involving an applicant's primary residence.
The revision allows creditors to collect an applicant's
information using either the aggregate
ethnicity and race categories, or disaggregated
ethnicity and race categories and subcategories
of Appendix B to Regulation C as amended by the
2015 HMDA Final Rule.
" We introduced a new form that made the
data-collection process clearer, " says Grooms.
" We also have a centralized first-line review of
real estate loans for data collection, whether they
are HMDA-reportable or not. "
Quick stat
325
Members of
the Senate
and House of
Representatives
who voted to
approve S.2155
in 2018
BSA/AML Customer Due Diligence Rules
In May 2018, enhanced Bank Secrecy Act/antimoney
laundering (BSA/AML) rules became
effective to clarify and strengthen customer due
diligence (CDD). Financial institutions must
determine the identity of the individuals (beneficial
owners) who own or control legal entity
customers.
At First Volunteer Bank, the software vendors
provided the new due diligence questions to
account-opening programs, and the community
bank enhanced its BSA program accordingly. " We
employed controls to train, enforce and monitor
the new due diligence questions, " says Tripp. " We
provided detailed training to all account-opening
employees and sent notices to all existing business
customers. "
The Financial Crimes Enforcement Network
(FinCEN) names four core elements of CDD as a
fifth pillar to an institution's BSA/AML program:
(1) Customer identification and verification; (2)
beneficial ownership identification and verification;
(3) understanding the nature and purpose
of customer relationships to develop a customer
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Independent Banker - December 2018

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