ORLANDO The Consumer Financial Protection Bureau gave lenders a sneak peek at technology it's developing to eliminate the tedious back-and-forth process for checking and submitting Home Mortgage Disclosure Act data.
The Web-based tool, still in preliminary development stages, will analyze HMDA files prior to formal submission so lenders can identify and correct errors faster. Lenders have traditionally submitted HMDA files to the Federal Reserve Board and received feedback on potential errors, before resubmitting edit reports on their files, a process that can happen multiple times in the course of providing a single year's worth of data.
"We think there's a great opportunity for burden reduction," Michael Byrne, the CFPB's HMDA operations lead, said during the Mortgage Bankers Association's annual technology conference, ongoing this week in Orlando.
The Dodd-Frank Act transferred HMDA oversight from the Federal Reserve to the CFPB, with a mandate to expand and modernize HMDA data collection. The data validation tech is part of a broader effort that includes the future addition of new data points, including a unique loan identifier.
CFPB officials showed screenshots of a prototype of the new software during the conference. While that version was built to accommodate the current .dat file format, "that's not indicating some preference in the future" for HMDA submissions, said Ren Essene, a CFPB program manager.
The Web tool is being developed using open-source software code, which presents an opportunity for loan origination system vendors to integrate it into their own technology. That will be important for making it easier for lenders to correct errors in their internal systems of record and HMDA submission files.
"We don't want to create a duplicate system of record for you," Byrne said, adding that the technology's purpose is to serve as a file submission system.
An important consideration in developing this tool is the speed at which it can validate data. Initially, it took hours for the prototype to process data checks on a file, but the CFPB has improved the performance to the point where a file with data on 20,000 loans can takes about 90 seconds, Byrne said, adding that 98% of HMDA filers submit fewer than 50,000 loans.