39 Years of HMDA/CRA Compliance Leadership

1987–1989: The Beginning

RATA Associates, LLC was founded in 1987 by John Woloshen, RATA’s current CEO, with the primary goal of providing the financial services industry with a cost-effective PC based software and outsourcing geocoding service solution specifically designed to reduce the time, cost, and compliance burdens associated with regulatory compliance data collection and electronic reporting requirements.

Prior to 1990, only Thrift institutions had formal HMDA Loan Application Register (LAR) maintenance and annual data submission requirements to their supervisory agencies, which were the 12 regional Federal Home Loan Banks (FHLBs).

RATA’s first-generation software applications were designed for Home Mortgage Disclosure Act (HMDA) compliance, giving Thrift institutions tools to convert loan application data housed on mainframe computers to a format compatible with RATA’s desktop system, export address data to RATA for geocoding, apply the returned geocoding results, prepare and edit-check all of the LAR data, and electronically submit it in the format required by the FHLBs. RATA’s export features also let users update their mainframe systems with the corrected data and geocoding values in place.

Over a three-year period prior to 1990, RATA’s founder worked closely and interactively with FHLBs in New York, Boston and Pittsburgh, and the main office in Washington, DC, to develop software that would let Thrift institutions of every size economically collect, edit-check, geocode and electronically submit their LAR data and three additional complex loan-related reports.

By early 1989, RATA had three Thrift institutions using and beta testing the software — and it performed flawlessly at all three: Northeast Savings, CT (assets $7B), Home Unity Savings, PA (assets $700M), and Ambler Savings, PA (assets $70M).

The software was about to be purchased on a sole-source contract basis by the FHLBs for use at all Thrift institutions nationwide — about 4,500 institutions at the time. The S&L crisis of 1989 prevented that from happening. The FHLBs lost their regulatory powers, and the federal Office of Thrift Supervision (OTS) was created as the new supervisory agency for all Thrift institutions.

1990–1994: HMDA Expands to the Whole Industry

On January 1, 1990, HMDA was expanded to include nearly all financial institutions and mortgage companies — about 14,000 institutions in total. RATA quickly added the varied data formats needed for electronic submission to each of the six supervisory agencies now involved in the data collection process: OTS, FRB, FDIC, NCUA, OCC and HUD. At the start there were four different submission formats, since the regulatory agencies had not coordinated their requirements at all; none were even set up to accept electronic submissions.

Sadly, the government could not consider contracting to use RATA, since there were no specifications available beyond what RATA had already developed with the FHLBs — a very frustrating position for a company positioned to save the government and reporting institutions many millions of dollars annually.

The entire financial industry was suddenly faced — with just one month’s notice — with difficult new data collection, geocoding and submission problems under strict regulatory requirements, and potential financial penalties for failing to submit 100% accurate data on time each year. Institutions were also required to make their current-year YTD data available to the public within 30 days of any request.

Nearly all of the 50 or so Loan Origination System (LOS) vendors in use at the time promised HMDA compliance solutions to their customers. Without exception, every one fell short. Four different government agencies separately attempted hastily contrived Data Entry Systems (DES’s), none of which used compatible formats. The system that eventually emerged, the current FFIEC DES, has numerous shortcomings and was never intended for use at larger institutions — where it was assumed by Geary Cunningham and others at the FRB that HMDA Management Systems from RATA and a handful of new companies would be used instead.

After roughly two years of LOS vendors failing to deliver, the industry embraced RATA’s HMDA software and Compliance-grade geocoding. RATA had effectively created a new software niche in the financial industry.

RATA’s customer base quickly grew into the hundreds of institutions, across both compliance software and outsourced geocoding services.

The near-perfect results RATA customers consistently achieved each year established RATA as experts in interpreting the regulations and implementing software for often very complex regulatory compliance requirements.

1995–2003: CRA, and a Decade of Keeping Pace

The 1990s brought more demanding reporting requirements for every HMDA reporting institution. RATA kept pace, updating its software annually to match the modified HMDA and CRA reporting requirements and fine-tuning its proprietary geocoding processes as new technology became available.

In 1995, when formal CRA data collection, geocoding and reporting requirements were enacted for nearly all banks and thrift institutions, RATA added full-featured automated processing and electronic CRA reporting capabilities in time for the first required submission the following year. Every RATA customer achieved 100% accurate and complete CRA submissions in that first year, exactly as they had already been doing with HMDA — and this remains true for RATA Comply Suite users today.

2004–2014: The Move to .NET, and the Modern Comply Suite

The new millennium brought another new direction for RATA. Between 2004 and 2014, RATA invested about $7.5 million to migrate 15 years of HMDA and CRA compliance and software knowledge to Microsoft’s .NET platform on the latest SQL database technology. Beyond the functionality already present in RATA’s earlier DOS software, many new features were built into the Comply Suite, including Peer-2-Peer analysis, mapping capabilities, and two levels of Fair Lending compliance and analysis.

With regard to Fair Lending, the Comply Standard Fair Lending component is easy to use even for people with limited knowledge of the underlying statistical methods, producing scorecards that highlight potential risk areas and allowing comparative file reviews. The optional Advanced Fair Lending component adds regression and other advanced statistical analysis on top of every Standard feature.

2014 to Today: ZOOM, and Continued Investment in Geocoding

RATA’s ZOOM Geocoder lets a user visually geocode any address and see the results on an interactive map with census tract overlays. RATA continues to build on its geocoding foundation, using a multi-source, multi-stage outsourcing process that delivers accuracy no single-source in-house product can match, with turnaround times equal to or better than in-house geocoding software. Considering all costs and the quality of the results, RATA’s GeoPlus service remains the best geocoding value available to the industry.

The RATA Comply Suite scales to fit any financial institution’s HMDA/CRA compliance reporting and Fair Lending analysis needs, regardless of size or lending volume, because RATA prices every product and service on a flexible lending-volume basis. Small business lending brought the next reporting regime, and the same data-collection work now extends to Section 1071.