2/26/2020 - By Jennifer Paradise, CRCM
By now HMDA-reporting institutions are in one of two camps - the HMDA-LAR is already scrubbed and ready for submission or the HMDA-LAR is being scrubbed and with any luck, it will contain no errors and it will be ready just in time for the March 1st deadline.
Either way, here are a few common errors we have identified in our reviews that may be beneficial to you during the scrubbing process:
Reporting Cash-out Refinancingrather thanRefinancing for the Loan Purpose
The correct selection will depend on your institution's underwriting process (which should be in written procedures). See Comment 4(a)(3)-2
Reporting Withdrawn rather than Approved Not Accepted
Withdrawn should be used when the applicant expressly requests to withdraw the application before a credit decision to deny the application OR before a credit decision to approve the application OR before the file is closed for incompleteness. SeeComment4(a)(8)(i)-5
- Approved but Not Accepted should be used when the institution approves the application (subject to customary commitment or closing conditions) but the applicant fails to respond within the specified time OR when all underwriting conditions have been met but the applicant expressly withdrew before the loan is consummated. SeeComment 4(a)(8)(i)-3
- Also, see Comment 4(a)(8)(i)-13
Reporting the wrong score (or not reporting one at all for loans approved but not accepted)
The credit score that was relied on in making the credit decision is what should be reported, so (for example) if you obtain a tri-merge but use only the middle score. If the file is approved but not accepted and a score was used in the decision, that score must be reported. Report "NA" if 1) the application was withdrawn before a credit decision was made, or 2) if the file was closed for incompleteness, or 3) the applicant(s) are not-natural persons, or 4) the loan was purchased by the institution, or 5) no score was relied on, or 6) the institution is claiming partial exemption. SeeComment 4(a)(15)
Reporting the total number of units for a loan secured by a multifamily property rather than only the income-restricted units
If the loan is or was to be secured by multifamily property, report the number of individual dwelling units related to the property that are income-restricted pursuant to Federal, State, or local affordable housing programs. SeeComment 4(a)(32)-1
Reporting Reasons for Denial when not required to do so
Financial institutions regulated by the OCC are required to report reasons for denial pursuant to 12 CFR 27.3(a)(1)(i), 12 CFR 128.6. Also, institutions that were regulated by the Office of Thrift Supervision and were transferred to the FDIC are required to report reasons for denial pursuant to 12 CFR 390.147, even if a partial exemption applies. However, an institution can voluntarily report reasons for the denial.
Important HMDA Resources
- Home Mortgage Disclosure Act FAQs
- HMDA Small Entity Compliance Guide
- Regulatory Overview and Reference Chart
- Includes when and how to report that HMDA data is Exempt or as “not applicable"
About the Author | Jennifer Paradise, CRCM
Jennifer is a consultant in the Financial Institution Advisory Group at Saltmarsh, Cleaveland & Gund and has been serving the financial institutions industry since 1990. Her experience includes regulatory compliance, operations management, sales management, investment advisor, lending, marketing and training. Jennifer is primarily involved in performing fair lending reviews (including risk assessments and data analysis), loan operations internal audit, loan compliance reviews, and other consulting services for our financial institution clients.
Related Posts
- Safeguarding Against ACH Fraud: Ten Essential Steps for Financial Institutions and Businesses
- ICYMI: An Important Reminder About the CRA Public File, and More
- Understanding ACH Risk Assessments: A Crucial Requirement of the Nacha Rules
- Nacha's Updated Written Statement of Unauthorized Debit: Should You Update Your WSUD Forms?
- Saltmarsh Hosts 18th Annual BankTalk
- Best Practice Ideas from the Asset-Liability Management Trenches
- Managing Risk: Fraud Deterrence Is Always a Priority
- Webinar on Demand: Getting to Know FedNow, Now
- Nacha's 2023 Rules Updates: Are You Affected?
- Do I Need an ACH Audit?
- Webinar Recording: Top 8 ACH Audit Findings You Should Be Aware Of
- Think CECL Is Only for Banks? Not So Fast!
- Saltmarsh Hosts 17th Annual Community BankTalk Event
- Preparing for $500 Million in Assets
- Secure Exchange of Standardized Letters of Indemnity
- Best Practice Suggestions for Back-Testing Asset-Liability Management (ALM) Models for Accuracy
- Words to Live By
- Webinar Materials: The New ACH Rules on Micro-Entries
- Nacha Micro Entry-Rule
- Elder Financial Exploitation by the Numbers
- CECL: What About Credit Losses on Debt Securities?
- Supplementing Data Security Requirements Rule Phase 2
- Webinar Materials: ODFIs - How Do You Keep Your ACH Clients Informed?
- Webinar Materials: CFO Symposium Update
- View All Articles
