The Federal Housing Finance Agency has directed Fannie and Freddie to develop a Uniform Mortgage Data Program of which the Uniform Closing Dataset (UCD) is one component. The goal is to better support the CFPB's new Closing Disclosure. The UCD will contain the data in extensible markup language (XML) format along with a portable document format (PDF) image of the Closing Disclosure. Fannie Mae and Freddie Mac will accept voluntary submissions no later than Q4 2016 with mandatory delivery no sooner than Q2 2017.

Here are two compliance risks and strategies to avoid them when implementing and testing your UCD conversion.

1. If you use a different document vendor than loan origination software vendor, the data on your PDF image may not exactly match the data in your XML file. This is similar to the age old problem of different loan origination and document vendors calculating annual percentage rates with different code, leaving the data submitted to examiners from the loan origination system slightly different than the forms they find in the files. Though both may be within tolerance, any differences may give pause to secondary market investors, examiners, and the courts, if challenged. Test more than just APR, any values that are calculated could have different results.

   You must work with your vendors to correct discrepancies. Alternatively, you can search for vendors that avoid conflict by either: 1) allowing the loan origination software to pass the calculated fields to the document service to include in the document; 2) allowing the document service to pass the calculated value back to the loan origination software to include in the XML; or 3) by having both the loan origination system and the document service calling the same calculation code.

2. If you simply change fee names to match the UCD descriptions, you may create compliance problems on loans in your pipeline because Reg. Z requires the fee descriptions and order of fees on the Closing Disclosure to be consistent with descriptions on the Loan Estimate. See comment 38(h)(4)-1. A change in the fee name to conform to the UCD could cause a compliance violation if the changed description first appears on the Closing Disclosure. Because fees are listed alphabetically, if the new fee description changes the first letter the order in which the fees are displayed will likely change.

To address this, test your loan origination software and introduce new fee descriptions for new applications rather than changing existing descriptions. Then retire the old descriptions after running a report showing no active loans with Loan Estimates containing the old fee descriptions. Finally, consider any mapping of fees to your accounting systems during this transition.