For Lydia M. Vazquez, a guilty pleasure is doing regressionanalysis, and as the Fair Lending compliance officer at her creditunion, her opportunities for statistical operations have blossomedwith expanded reporting requirements for the Home MortgageDisclosure Act.

Vazquez is assistant vice president of residential lendingoperations at Leominster Credit Union in Leominster, Mass.

Leominster ($642 million in assets, 53,037 members) serves alow- to moderate-income area in central Massachusetts with a longhistory of manufacturing. In the 1800s it was known as “Comb City”because it dominated in hair comb production. In the 1930s,Tupperware was born there. In recent decades, the area has becomemore diverse with a greater population of Hispanics and Asians.

Vazquez joined Leominster in 2013 as its Fair Lending complianceofficer, an area she's been working in for 20 years. Besideskeeping up with regulatory minutiae, she has become something of adatabase wizard.

“They laugh at me here, because I get so excited about data,”she said. “But the data tells me a lot, even finding a loan thatwas in the process for too long. The data speaks to me. To me it'sfun.”

Her job is getting more fun, but it's the type of fun creditunion executives and their trade groups criticize as anotheronerous regulatory burden.

More credit unions will have to report data to comply with theHome Mortgage Disclosure Act. The data points will become morenumerous. And, for some, the reporting will come every threemonths, instead of annually.

Credit unions and other financial institutions must startcapturing the new data by Jan. 1, 2018 and start reporting it by2019.

HMDA was enacted in 1975 to prevent racial discrimination inlending. It has its roots in the Civil Rights movement andopposition to “redlining” practices that effectively choked offcredit to African Americans and black neighborhoods.

The new rules were issued last September, and credit unions arenow working on making changes so they will be able to comply. TheCFPB, which is administering the rules for credit unions, has saidit is developing a new HMDA collection system designed to reduceburdens in the submission process and ensure high data qualitystandards.

“We knew it was coming,” Vazquez said. “Most places are alreadycollecting the data, but now you'll have to start reporting it.It's going to be burdensome for the smaller credit unions. It wouldbe nice if they would give the smaller institutions a little bitmore of a break.”

The rule applies to almost all credit unions that originatefirst lien mortgages or home equity lines of credit.

The rule also expands the coverage of HMDA reporting. Previouslythe rule applied only to lenders of closed-end mortgages. Now italso applies to those issuing more than 100 home equity lines ofcredit per year.

Some credit unions organize their HELOC business under consumerlending, which will complicate their compliance by requiring themto create dual systems.

“Mandating the HELOCs adds compliance costs, training issues,”Vazquez said. “Some of the systems that we have may not be able tosupport collecting that data. You're looking at systemmodifications.”

Leominster uses software called Fair Lending Wiz, which itlicenses from Wolters Kluwer Financial Services.

“It's very expensive,” she said. “A lot of the smaller creditunions don't have the resources and expertise to proactively doFair Lending analysis.”

By doing Fair Lending analysis on a regular basis, if the datawere to show a high mortgage rejection rate for a particular group,the credit union can go back to study the issue in more detail todetermine if it indicates the credit union should consider afirst-time homebuyer program.

“It does help you to look at your portfolio to see where you'remissing business opportunities as well,” she said.

Under the new rules, Vazquez and other Fair Lending disclosureofficers will have to look at new factors, including age and moredetailed classifications for race and ethnicity.

Race and ethnicity categories have been expanded so they matchthose set by the White House Office of Management and Budget forthe 2010 Census.

Currently, credit unions and other lenders report whetherapplicants' ethnicities are Hispanic or non-Hispanic. Now they willbe asked whether the applicant was Cuban, Mexican, Puerto Rican,South or Central American, or of other Spanish culture ororigin.

Among races, Asian has been disaggregated so that applicantsshould be identified as Asian Indian, Chinese, Filipino, Japanese,Korean, Vietnamese or Other Asian.

The Native Hawaiian and Other Pacific Islander race has beendisaggregated into four categories: Native Hawaiian, Guamanian orChamorro, Samoan or Other Pacific Islander.

The other race categories are: White, Black or African American,American Indian or Alaska Native and Some Other Race.

A new Uniform Residential Loan Application has already beenredesigned to plug in the new data points.

If lenders don't have their back-end systems ready for the newloan tracking process by 2018, they will have to use specialaddendum forms. Fannie Mae and Freddie Mac use different decisionengines, so credit unions will have to design two types ofaddendums.

Credit unions will also have to redesign their user interfaces –both those for internal use and those for customers andbrokers.

Credit unions have joined with banks and other lenders to pushback against HMDA rules, which it considers another onerousregulatory expansion – a theme that resonates with the new Trumpadministration.

Is there any upside? The member organizations say no.

“It's pretty much pure regulatory burden,” AlexanderMonterrubio, NAFCU's director of regulatory affairs, said. “We'vegenerally seen a lot of credit unions add staff as a result of theHMDA rule. It's definitely an area credit unions have had to spendmore money on.”

While the new HMDA requirements will add more data, it willstill only allow regulators to flag financial institutions thatwarrant further examination for discriminatory lending. But it'snot enough data to make that determination.

“It doesn't reflect how we're operating,” Andrew T. Price,CUNA's senior director of advocacy and counsel, said.

Price said the disclosures could attract opportunistic classaction suits based on incomplete data. For example, lawyers mightfish for credit unions that under-serve one group when anotherreason not included in the data, such of field of membership, wouldshow a claim to be groundless.

However, that defense might only emerge in discovery, after thecredit union has piled up heavy legal fees. In those situations,credit unions would have to weigh the costs and benefits ofdefending or settling. “You see a lot of cases that are frivolous,”Price said.

Trial lawyers aren't the only ones sifting through HMDAdata.

Last November, the U.S. Supreme Court heard arguments on a casethat could determine whether cities can sue banks under the FairHousing Act for predatory lending that indirectly hurt the citiesthrough foreclosures.

The case stemmed from a discriminatory mortgage lendingpractices suit brought by Miami against Bank of America and WellsFargo in the wake of a wave of foreclosures after the 2008financial crisis.

The case hinges on standing, which often requires showingeconomic harm. Robert S. Peck, a lawyer for the city, tried to tellthe court how Miami suffered economic harm.

“The banks' practice of providing minority borrowers with moreexpensive and riskier loans than they qualified for, or thatnonminority borrowers received, actually frustrated andcounteracted the city's efforts on fair housing,” Peck said.

Price and Monterrubio also noted the demands are not coming in avacuum.

For example, credit unions are gearing up for new standards oncredit cards required under the Military Lending Act. On Feb. 16,CUNA asked the Defense Department to provide more clarificationabout credit card provisions of MLA rules scheduled to take effectOct. 3.

CUNA said it expects to complete a survey of members by March 31that it “expects will demonstrate the adverse impact the regulationis having on some service members. Specifically, the extent towhich credit unions have had to discontinue certain productsdirectly covered under the MLA regulation.”