Simplified HMDA Data When Applicant Declines to Report GMI
We in the regulation, I mean mortgage, business are all learning about the new HMDA requirements. One particular issue that arises is collecting the more complicated set of Gov't Monitoring Information (GMI) data, especially when it's based only on visual observation.
I'm guessing this will be a big training topic this year. So let's break it down!
"Disaggregated" Data
Soon HMDA will require us to collect "disaggregated" demographic information. According to the dictionary, that just means we're taking this information (race and ethnicity) and breaking them down into more specific subcategories. So we report the category for "Native Hawaiian" but then also report a subcategory such as "Guamanian" or "Samoan."
A picture of the new 1003 addendum (available here) might explain better:
Guessing Game When Applicant Declines to Self-Report?
So the question that arises is what happens when the applicant declines to provide this new demographic information. Are originators expected to become experts in demographic differences? Could you (assuming you're a well-traveled professional with high cultural sensitivity) accurately fill in the particular tribe that a native american applicant belongs to?
Well the good news here is that when the lender has to fill in the demographic information (i.e. when the applicant declines to self-report), we do not have to try and guess at the disaggregated subcategories--we only need to report the main categories.
These main categories are ...
For Ethnicity:
Hispanic or Latino
Not Hispanic or Latino
For Race:
American Indian or Alaska Native
Asian
Black or African American
Native Hawaiian or Other Pacific Islander
White
So the good news here is that you won't need to devote time to training originators on the difference between these ethnic and racial subcategories.
Other Scenarios to Cover in Training
Developing a training on this demographic data topic? Well prepare for all the different scenarios that can arise. Here are several that come to mind and enough information to get you started:
1) Borrower reports more than one ethnicity or race
Don't correct the borrower, just report what they have provided. There are some nuances here, such as when the borrower selects more than 5 races. See Appendix B #9 for more info.
2) Borrower applies by mail, online, or by phone, and fails to provide demographic information but also fails to check box "I do not wish to provide this information."
If you meet the borrower in person to complete the application, you must ask for the demographic information. If they decline, then you report that they declined and leave the disaggregated subcategories blank. But if you do not hold an in person meeting until after the application process, then you are actually not required to collect their demographic data at all. Let's see how this plays out in practice! Appendix B #12
3) Borrower provides incomplete demographic information
Generally, you report whatever they provided.
4) Borrower provides demographic information but also selects "I do not wish to provide this information"
Except for in-person applications, you will still report the data provided. Appendix B #13.
In Other News
Ever wondered about that relatively new Truth in Lending Rule that requires appraiser compensation be "customary and reasonable"? (See 1026.32(f)) Well, you probably already saw it, but there was a Louisiana enforcement action on this topic back in 2015, where an appraisal mgmt company got into trouble with this rule. The actual order is here, but less informative than the article linked above.
Ever have "one of those days"? Well I think that applies to the U.K. soccer fans who caused $40,000 in damages to their rival's bus, only to realize afterwards that their own team had rented the bus from the rival.
On My Mind ...
Need to improve your working relationship with a peer? Putting aside any issue of blame, if you see a colleague as competitive, a loner, if you think they withhold information, can have a chilling effect at your ability to work together. (If Paul Bates and I keep competing over blog page views, I might need to take a dose of my own medicine here). Now, some people are better at manipulating appearances (both managing up and down), but it's hard to bamboozle a peer -- the only way to win over a peer is to actually be a good partner.
The instructional book "For Your Improvement: A Guide for Development and Coaching" provides some explanations for how a peer relationship can deteriorate, and some ideas for improving them. Here are some of my favorite tips (paraphrased):
Getting competitive? Know the difference between healthy and unhealthy competition.
Is a peer out of line? Avoid telling others all about it if a peer doesn't play fair.
Confused by the behavior of your peers? Try to understand what they really want. What is getting in the way of their cooperation?
Making the wrong impression? Pay attention to how your personal style is perceived.
"The path to greatness is along with others."
- Baltasar Gracian
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