Much has happened since the beginning of 2018, especially in the world of HMDA. This is Part 3 in TCA’s series of HMDA articles. Part 1 focused on managing HMDA risk amid reporting uncertainty and Part 2 focused on HMDA reporting for purchased loans. One HMDA data collection change that has surfaced is causing headaches when doing fair lending reviews. MSA reporting is no longer required starting in 2018.
The MSA code, known as the Metropolitan Statistical Area code, is a geographical region with a high population density and close economic ties throughout the area. MSAs are defined by the Office of Management and Budget (OMB) and used by the Census Bureau and other federal government agencies for statistical purposes.
Even though the Consumer Financial Protection Bureau (CFPB) does not consider the MSA code a necessary field for HMDA data collection, many fair lending software programs are written to include the MSA code which is part of the geocoding process to assist with fair lending analysis and mapping.
TCA discussed the “death of the code” with our fair lending software vendor and also FDIC staff. Both stated that the MSA number will need to be added back into the H-LAR to enable fair lending analysis and mapping. Many software programs have the ability to generate the full geocoding number, which included the MSA; however, an additional charge may be incurred for the service. If your software does not have that feature or you do not use specialty software for HMDA data collection, you will have to resort to a manual process to obtain and enter MSA codes.
Check with your HMDA vendor to see if the MSA number can still be collected and not cause problems when submitting HMDA in 2019. If you are utilizing the CFPB reporting tool, you may consider collecting the data on another spreadsheet with the account number and the geocoding sequence codes. This can be added back to all the 2018 HMDA data to aid with any fair lending analysis or mapping reviews.
The best practice is to inquire now so you do not find yourself having to collect the data at the last minute.
If you have any questions or concerns, please contact TCA to assist with discovery or if you need a fair lending or CRA performance evaluation.
TCA discussed various HMDA topics in a September 12, 2018 webinar. Click here for recording information.