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Do You Have Your LEI for Your ULIs under HMDA
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Entities required to report loan data under HMDA must do so under two separate identifying references. These are:
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The Legal Entity Identifier (LEI) being an identifier assigned to a lending institution, and
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The Universal Loan Identifier (ULI) being the reference assigned by the reporting institution to an individual loan originated or purchased on which they report HMDA data.
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First let's take a quick look at the LEI. The LEI is a unique, 20-digit alphanumeric identifier issued by a utility endorsed by the LEI Regulatory Oversight Committee, or endorsed or otherwise governed by the Global LEI Foundation or a successor organization. A number that financial institutions required to report under HMDA should already have.
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If for some reason you do not have an LEI, there is still time, but you shouldn't wait. This is the identifier under which a financial institution must report their HMDA data. In addition, this reference ID should be programmed into your systems not only to identify you as the reporting entity, but also to be used in the creation of the ULI for each loan reported. We'll talk about that a little later.
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If you have your LEI, congrats, you're all set. If not, you can go to LEI Help for information about obtaining this identifier. Here you'll find LOUs (Local Operating Units) that can assist you in getting your reference. As usual, there is a small fee to do so.
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Let's move on to the bigger challenge, the ULI, or Universal Loan Identifier. The ULI is an alphanumeric identifier assigned to each loan for which data must be reported under HMDA. This is the identifier that will stay with the loan throughout its lifecycle. Only one ULI can be assigned to each loan.
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Here's where the LEI comes in again. The loan's ULI must begin with the financial institution's LEI. That is then followed by the lender's assigned internal loan number, which is then followed by a two character check digit (shouldn't that be check digits?).
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The two-character check digit is used to validate the ULI. It is calculated using the ISO/IES/7064, MOD 97-10 as it appears on the International Standards ISO/IEC 7064:2003, which is published by the International Organization for Standards (ISO). For more information on the two-character check digit, including the methodology for generating a check digit, see Appendix C to the 2015 HMDA Rule.
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Determining the final ULI, including the check digit, is a complex process and one that needs to be automated. If you haven't begun work on programming this calculation you had better get cracking.
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Here are the steps you'll need to follow:
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Convert the LEI and the lender assigned loan number into all numeric characters using the table provided by ISO.
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Add two zeros at the end after the conversion to all numbers.
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Apply the mathematical function mod=(n,97), where 'n' is the final number obtained in step 2, and 97 is the divisor; OR, divide the number determined in Step 2 by 97; truncate the result to 3 digits and then multiply that by .97. Round your answer to the nearest whole number.
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Subtract the result in Step 3 from 98. If your result is 1 digit you need at add a leading zero.
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Your 2 digits from step 4 are now your final check digits.
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Adding this number at the end of the LEI plus the lender assigned loan number will provide you with the final ULI.
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This is the identifier that you must use to report the HMDA data for the loan in question.
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Simple 'eh?
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By the way, the ULI cannot include any information that may be used in some way to identify the applicant(s) or borrower(s), such as their social security number, name or date of birth.
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A few more things to keep in mind about the ULI;
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Do not use the same ULI to identify multiple transactions with the same applicant(s).
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Assign a new URLI when refinancing a prior loan made to the same applicant.
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A Lender purchasing a loan must use the same ULI assigned by the originating lender.
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So there you have it. You need your LEI to create your ULIs so you can accurately report all your new HMDA data to the CFPB – and you know how they are sticklers for accuracy. If you're planning on manually gathering your HMDA data, or simply relying on your LOS, you may be in for some problems. Just as the use of technology will streamline your ULI determinations, it can also do the same for data collection and reporting.
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Extract the important HMDA loan data directly from the source, the loan documents, for comparison against your LOS BEFORE preparing your reports for the CFPB. This will quickly and efficiently identify missing and inaccurate information that can be researched and corrected before submitting your data. You detect and correct any errors, not CFPB.
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If you have this technology, you're ahead of the game. If you don't, you'll need to either build or contract with a vendor to do so. Loanlogics can help. We have the knowledge, systems and expertise to give your HMDA audits and reporting speed, scalability and transparency.
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Don't let the CFPB catch you with "bad data" because you haven't implemented adequate controls and automation. That could cost you some real MONEY.
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About the Author — Michael L. Vitali - SVP/Chief Compliance Officer
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Mike Vitali presently serves as the Senior Vice President and Chief Compliance Officer of LoanLogics, monitoring regulatory developments and their practical implications for the mortgage lending industry. His duties include the research, interpretation and analyzing of existing and proposed legislation related to the industry to recommend policy and/or procedure changes to maintain continued quality and compliance with all applicable laws, rules and regulations, investor requirements, and standard mortgage practices. In his more than 40 years in the mortgage industry, in senior level management, he has gained experience in all areas of mortgage lending, risk management and compliance.
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Mike is a past President of the MBA of Greater Philadelphia, is a charter member and was the second Chairman of the MBA of Pennsylvania, and a past board member and Legislative Chair of both associations. He is a recipient of the 1998 Mortgage Banker of the Year Award from the MBA of Greater Philadelphia, and the 2003 Chairman's Award from the MBA of PA, and currently serves on several compliance related task forces for MBA.
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