Complying Electronically: Bethpage FCU Automates to Meet New HMDA Rules

BETHPAGE, N.Y. – Maria Tullo now relies on software instead of paper pushing to make sure Bethpage Federal Credit Union is following federal regulations covering home mortgage lending. Tullo is assistant manager of mortgage originations for the $1.7 billion CU on Long Island and is using the HMDA RELIEF system from QuestSoft of Laguna Hills, Calif., to make sure Bethpage is following the rules and regulations set by the Home Mortgage Disclosure Act and Community Reinvestment Act. A number of changes in the law took effect on Jan. 1, which despite a drop in mortgage originations expected this year, still would have accounted for substantial staff time to document compliance if the CU’s reports were still being compiled manually, Tullo says. “I was concerned about the 2004 changes in HMDA, but now I have my new software installed and I’m in the process of preparing my first- and second-quarter reports for this year,” she says. “All I do is compile a report in a CSV format and e-mail it to QuestSoft. “That way all the requirements are met, the HOEPA, the lien status and the yield spread, and QuestSoft calculates that for us. And it’s turned around for us in 24 to 48 hours,” Tullo says. QuestSoft has 109 credit unions on its client roster of 1,100 and imports data from more than 40 different loan-origination software (LOS) platforms, which company President Leonard Ryan says is the company’s biggest technical challenge. “The integrity of data entry varies among credit unions and software products,” he says. “However, once a credit union uses HMDA RELIEF for the first time, they can quickly identify these errors and go back to the source to make corrections in their operations. “We usually don’t get customer support calls after the completion of the first import.” The company also had to change its software to accommodate a large number of changes in the HMDA forms this year, Ryan says. Affecting credit unions and others the most, he says, seems to be the addition of a new ethnicity field, the expansion of race fields to allow multiple selections and the new rate spread calculation requirement. “We also have noticed a trend among regulators and states toward more fair lending analysis, so we added these fields as well,” he says. Ryan says the typical credit union spends about $700 a year to subscribe to QuestSoft’s services, although about 20 of them need to license additional states, which can raise the price. He also maintains that the “return on investment dramatically increases as your loan volume increases. A small credit union funding 300 loans might end up saving about 10 to 15 hours submitting HMDA reports and fixing possible errors. “However, a 2,000-record credit union would save about 12 to 20 days of work for the same financial investment.” At Bethpage, Tullo says, “I can’t place a number, but rather than dedicating more than one person to HMDA reporting, by using QuestSoft a single person can perform this function with minimal impact to their everyday responsibilities.” And while she expects volume this year to be down from last year, when the 120,000-member CU reported more than 5,500 mortgage loans, “the reporting maintenance still has to be done, whether it’s 500 loans, 1,000 loans or 5,000 loans.” -