October 2016 - Changing of the Guard

TheMReport — News and strategies for the evolving mortgage marketplace.

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30 | TH E M R EP O RT FEATURE inevitable learning curve. Before HMDA goes into effect, make a plan to prepare and set expectations accordingly. An easy place to begin can be with the clear benefit, the information that is reported and collected. It is used in important and impactful ways, allowing government funding to be utilized in a way that ultimately benefits consumer communities. Enforcement of antidiscrimination laws is one of the main goals of HMDA. Regulators, researchers, and consumer advocates can use the data provided to identify any pattern of discrimination. Believe it or not, current statistics can be shocking. With the avail - ability of new data, regulators can examine whether banks and lenders are objectively serving their communities without discrimi- nating according to race, ethnicity, or other prohibited bases. Additionally, governments and public agencies use the data collected to allocate housing and community development investments. For instance, Flint, Michigan has used data disclosed in compliance with HMDA to identify neighborhoods to target for a blight eradication program. In a constantly evolving industry such as the mortgage space, professionals at all levels can acknowledge that before benefits can be realized, there are often obstacles to overcome. For example, with HMDA—and this has been the case even before these new updates—lenders are liable for the accuracy of their data. This underscores why it is so important to put appropriate procedures and validations in place to ensure that the data is categorized and reported correctly. While this can be costly and time-consuming, it may be a critical component of a lender's compliance management system. An equally large challenge must also be navigated: consumer privacy, one of the main concerns surrounding the new data elements in HMDA. At this time, it appears that the CFPB will provide a website platform for lenders to upload HMDA data files; however, there could be privacy risks regarding where files will be downloaded and stored. As more data is being shared on a larger scale, cybersecurity will certainly be needed to help facilitate the safe sharing of information that can ultimately improve the way the housing industry operates. Casting Your Eyes to the Horizon T here is still much to learn about the HMDA updates as well as the timeframe various updates will be implemented. Once

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