Managing Director
The
Legal Entity Identifier (“LEI”) is a unique 20-character code that identifies
distinct legal entities which engage in financial transactions. The LEI is a
global standard, designed to be non-proprietary data that is freely accessible
to all. Many financial institutions have not obtained a Legal Entity Identifier
(LEI).
A financial institution must provide with the
following information in its HMDA submission on or after January 1, 2018:
i. Its name;
ii. The calendar year the data submission covers pursuant to paragraph
(a)(1)(i) of this section or calendar quarter and year the data submission
covers pursuant to paragraph (a)(1)(ii) of this section;
iii. The name and contact information of a person who may be contacted
with questions about the institution's submission;
iv. Its appropriate Federal agency;
v. The total number of entries contained in the submission;
vi. Its Federal Taxpayer Identification number; and
vii. Its Legal Entity
Identifier (LEI) as described in § 1003.4(a)(1)(i)(A)
[Emphasis added. See 5(a)(3)(vii)—Legal Entity
Identifier (LEI)]
For
purposes of the submission requirement, “appropriate Federal agency” means the
appropriate agency for the financial institution as determined pursuant to §
304(h)(2) of the Home Mortgage Disclosure Act [12 U.S.C. 2803(h)(2)] or a
financial institution subject to the Consumer Financial Protection Bureau's (“Bureau”)
supervisory authority under § 1025(a) of the Consumer Financial Protection Act
of 2010 [12 U.S.C. 5515(a)].
If
your financial institution needs an LEI, the GMEI Utility is endorsed by the Global LEI Foundation and also has a search function. There are some frequently asked questions on their website and we
provide below a few highlights derived from that resource.
- Who
can register the financial institution? You must currently be an employee of
the financial institution you are registering and also authorized by the
financial institution to register for an LEI. Alternatively, financial
institutions may use a third party through an assisted registration process.
The person registering the financial institution will need a user account,
which may be created here.
- What
information is needed to register? The basic information listed in the ISO 17422, such as the financial institution’s legal name, registered
address, headquarters address, legal form, and so forth.
- What
is the cost? The GMEI Utility charges $200 for each registration request plus a
$19 surcharge. To maintain and keep the LEI registration active, the fee for
each registration is $100 plus a $19 surcharge. For more information, visit the
FAQs specific to payment.
Once
payment is processed, the GMEI will validate the financial institution using
public sources. Once this process is complete, it takes about three business
days for an LEI to be issued in the GMEI database. Overall, the GMEI Utility’s
FAQs state that most requests are “cleared” within three to five business days.
It is advisable to review the CFPB’s HMDA implementation webpage for more information.
Frequently Asked Questions
Q: Why do we need an LEI?
A: The Bureau has taken the position
that an LEI could improve the ability to identify a financial institution
reporting data and correlate it to its corporate configuration. In addition,
the Bureau has stated that “facilitating identification of a financial
institution's corporate family could help data users identify possible
discriminatory lending patterns and assist in identifying market activity and
risks by related companies.” By facilitating identification, this requirement
apparently is also meant to help data users identify whether financial
institutions are serving the housing needs of their communities. [§
1003.5(a)(3)]
Q: Should we be getting our LEI as
soon as possible? Can we get an LEI before we have to start using it, or do we
have to use it as soon as we obtain it?
A: We recommend that you obtain your
LEI by the first or second quarter of 2017. There is no reason to delay. We
don’t anticipate the price to change. However, you must have an LEI for all
loans submitted for HMDA on or after January 1, 2018.
Q: Do you anticipate the Uniform Loan
Identifier ("ULI") to be calculated by Loan Origination Systems?
A: We do anticipate that many LOSs
will offer to provide this number. However, it is very possible that they may
leave this to the vendor collecting your HMDA data. Some concern has been
raised about commercial or consumer systems needing such a programming
solution. It is our understanding that the Bureau is evaluating this
requirement with respect to a compliance effective date for calculating and
verifying the ULI and ensuring it has not been previously used.
Q: Where would we find the LEI and ULI
numbers you spoke of? Do we get it from the Nationwide Mortgage Licensing
System & Registry or some other website?
A: As indicated above, the LEI is
available at https://www.gmeiutility.org/ and the ULI may
be determined by you, possibly in conjunction with your loan origination
system.
The Bureau considered the Nationwide
Mortgage Licensing System & Registry identifier to be an appropriate
alternative to the LEI. In the proposal stage of the rule, there were some
concerns voiced about the cost to obtain an LEI, mostly citing the cost
associated with obtaining an LEI and the availability of alternative
identifiers. But, because the LEI system is predicated on a “cost recovery
model,” it was believed that the cost associated with obtaining an LEI could
decrease as the LEI identifier is used more widely. So, despite the cost, the
Bureau concluded that the benefit of all HMDA reporters using an LEI would
justify the associated cost.
Q: What about assigning an LEI to
commercial reportable loans that are not processed through our LOS?
A: Some commercial or consumer loan
origination products may add this functionality. However, for financial
institutions that may on-board certain loans with document programs and Excel
spreadsheets, some HMDA collection services seem to be considering whether they
can add this ability. The Bureau has indicated it will be offering an
integration tool. This is not needed until January 1, 2018, so it appears to
not yet be a high priority for the Bureau.
Q: If we purchase loans, which entity
reports the ULI, the new entity or the one for the company we purchased the
loans from?
A: The institution that is selling the
loan to you has the responsibility to provide the ULI for all loans sold or purchased
on or after January 1, 2018. However, that company may not have originated the
loan. There may be situations in the early part of this process where your
institution may have to assign a ULI to a loan funded prior to January 1, 2018.
However, for loans originally funded on or after January 1, 2018 you should
insist on a valid ULI from the entity selling the loan.
Q: We report HMDA quarterly. When we
purchase loans from other financial institutions, do we have to put in their ULI
number when doing our quarterly HMDA filing?
A: You must use the ULI assigned to
the loan that the other financial institution originated. The ULI will contain
the other company’s LEI. In some cases, you may be buying loans from entities
that did not originate the loans (i.e., you may buy a loan from an entity who
bought the loan from another entity who originated it). Some loans may end up
with Action Code 6 (viz., loan purchased by the institution) multiple times
during the life cycle of a particular loan. Others may only be sold once. Portfolio
loans may not be sold at all.
Q: We have separate business lines
that use very different underwriting guidelines. Can a financial institution
register for an LEI for each business unit and submit a Loan Application
Register (“LAR”) for each?
A: For each LAR, you will need an LEI.
The LEI is issued to a financial institution and that financial institution
should use its LEI for the LAR submission.
Q: Will we need to obtain an LEI for
each of our DBAs or will it be the parent company's LEI that all DBAs under us
will use?
A: You will need to provide one LEI
for each legal entity involved in the origination of loans or that is subject
to HMDA reporting (i.e., a “financial institution” as defined in the new rule).
However, your question refers to “DBAs” on the one hand and then “Parent
Company” on the other. Are the DBAs part of a single company? Are there other
subsidiaries that already have different Respondent IDs? The answers to these
questions matter. We suggest you start your analysis with any company that
today has an NMLSR ID. Then you might expand to any company that purchases
loans.
That said, the Bureau has determined
that requiring the parent company of a financial institution to obtain an LEI
would not be appropriate. Requiring the parent company to obtain an LEI
specifically for HMDA purposes, except if the parent company is also a HMDA
reporter, and requiring the financial institution to submit its parent
company's LEI with its HMDA data submission, would be an unnecessary additional
burden because once the LEI is fully implemented, information regarding the parent
company is expected to become available. Thus, the Bureau’s position seems to
be that the benefit of requiring parent information does not justify the burden,
since information about the parent company most likely will be available
through an alternative source. Accordingly, the Bureau does not require a
financial institution to identify its parent company.
Q: What is the Reporter’s
Identification Number?
A: Regulation C currently requires
financial institutions to provide a Reporter's Identification Number (“HMDA RID”)
in their transmittal sheet and LAR. The HMDA RID consists of an entity
identifier specified by the financial institution's appropriate Federal agency
combined with a code that designates the agency. Each Federal agency chooses
the entity identifier that its supervised financial institutions would use in
reporting their HMDA data. Currently, the Research Statistics Supervision and
Discount (RSSD) number is used by institutions supervised by the Federal
Reserve Board (FRB) and depository institutions supervised by the Bureau; the
Federal Tax Identification number is used by non-depository institutions
supervised by agencies other than the FRB; the charter number is used by
depository institutions supervised by the National Credit Union Administration
(NCUA) and the Office of the Comptroller of the Currency (OCC); and, the
certificate number is used by depository institutions supervised by the FDIC.
Q: Where can I find more information
about LEI and HMDA?
A:
The Bureau moved HMDA filing instructions to 5(a)(2) in proposed Appendix A and
incorporated it into § 1003.5(a)(3) because of the removal of Appendix A from
the Final Rule. Pursuant to its authority under section HMDA 305(a), the Bureau
also added certain information related to the data submission that is currently
provided on an institution's transmittal sheet, as illustrated in Appendix A of
§ 1003.5(a)(3). There may be other relevant requirements set forth in certain
Federal Register issuances from time to time.
