Technological advancements are helping to simplify the way credit unions comply with fair lending laws.
“Pentagon Federal Credit Union is too large of an institution to worry about manual HMDA submission processes or inefficient customer support teams,” said Peggy Lawlor, senior mortgage services reporting analyst for PenFed, in a release about its use of HMDA RELIEF software.
HMDA RELIEF has provided the $15.8 billion PenFed in Alexandria, Va., with “summary performance reports and rate spread analysis reports by race, ethnicity and gender. Fair lending fields are also collected and available for analysis, which are especially important with upcoming CFPB rules,” said a press release about a case study of the software conducted with PenFed.
“HMDA RELIEF and my QuestSoft customer service representative have me sitting pretty come March 1 each year,” said Lawlor, referring to PenFed’s HMDA deadline.
Without the kind of technology offered by HMDA RELIEF, Lawlor said she would not be able to compile HMDA reports and other fair lending requests due to the size of PenFed, which currently serves 1.2 million members.
“It makes all aspects of the fair lending process so much easier and the staff at QuestSoft is always up on the latest changes to all of the mortgage regulations, and is always one step ahead as far as implementing changes to the software ahead of FFIEC deadlines for the various changes,” Lawlor told Credit Union Times.
Fair Lending Risk Check, a Web-based platform owned by the regulatory compliance company TRUPOINT Partners, is another technology currently used by almost 20 credit unions.
“We hear every day that financial institutions are simply overwhelmed and they don’t know where to turn,” Trey Sullivan, president/CEO of TRUPOINT Partners told Credit Union Times.
The HMDA requires lenders to ask for race, ethnicity and gender. After a credit union gathers this information, TRUPOINT’s Fair Lending Check examines and aggregates the data, said Sullivan.
“Our fair lending analysis platform allows credit unions to perform statistical and comparative analysis of their loan portfolio in seconds. Our system automatically aggregates the control group (white non-Hispanic men) and compares them to all other borrower types,” Sullivan said.
“With the push of button they can determine their Denial Disparity Index (DDI), Origination Disparity Index (ODI), Fallout Disparity Index (FDI) and Product and Price Disparity Index (PDI). These are key indicators used by the regulators to determine if a lender is treating similarly situated borrowers the same,” Sullivan added.
Fair Lending Risk Check can also be used for consumer loans.
“We have developed a series of algorithms that append the gender and ethnicity to each consumer loan. We then analyze the loan data based and review rates, product types and fees based on both gender and ethnicity. This is the same process that the regulators take manually when conducting a comprehensive audit,” said Sullivan.
Fair Lending Risk Check also claims to improve a financial institution’s knowledge and its management of compliance in addition to lowering risk. Additional features including “activity logs, task lists, document management, and comprehensive reporting all serve to simplify Fair Lending compliance,” according to TRUPOINT.