This blog post goes out to all the HMDA procrastinators out there. HMDA data is due in less than a week, three business days to be exact. With that being said, a few of you may be in scramble mode.
In an ideal world, you would have scrubbed and already submitted your HMDA data (and if you have already done so, congratulations—you get a gold star!). But you live in a world where you have too much to do and too little time to do it. Sprinting to the finish line is how you roll.
There are four questions HMDA filers should not be asking right now. But if they are, we have got the answers.
1. HMDA? What is that?
HMDA is short for the Home Mortgage Disclosure Act. HMDA is a federal law that requires lenders to collect and report loan-level mortgage data. This information is used by financial institutions, the government, and public interest groups to detect discriminatory lending patterns and other fair lending issues, such as if the credit needs of a community are being met.
2. When is HMDA data due?
HMDA data is due March 1 unless you are a very large institution. For larger volume reporters (60,000+), in addition to their annual data submission, they are required to submit HMDA data for each of the first three quarters of the year on a quarterly basis. For these reporters, their data must be submitted within 60 calendar days after the end of the calendar quarter except the fourth quarter.
3. My HMDA data is a mess. Do I have time to fix the errors?
Fixing HMDA errors, also known as “scrubbing,” is often a manual and time-consuming process. We have dedicated whole blog posts to the topic.
The biggest time saver available at this point is using an automated solution that will quickly and efficiently find transmittal errors. You load the data into the tool, which can pinpoint the errors. This will allow you and your team to focus on what needs to be fixed instead of manually searching through hundreds or thousands of LAR lines! That will give you more time to find the source documents in loan files to correct the errors prior to submission.
If you are in this position, do not delay any further. Find an automated solution and load your data. This is an all-hands-on-deck situation.
To point you in a good direction, the three most common errors to consider before you file are:
- Cash-out refinance
- Withdrawn loans that should have been Approved Not Accepted
- Reporting the wrong credit score
4. Does it really matter if there are errors in my HMDA data?
It sure does! As we mentioned, HMDA data is analyzed to look for home mortgage lending discrimination and credit availability. Within days of filing and within three days of FFIEC notification, your HMDA data must be disclosed publicly in your main office and in each office located in a metropolitan service area (MSA). It also goes on the CFPB website. If that data is not correct, your analysis will not be either. Bad data in equals bad data out.
The Consumer Financial Protection Bureau recently ordered a bank in Washington State to pay a $200,000 civil money penalty for failing to submit accurate HMDA data.
Related: What Went Wrong? CFPB Fines Bank $200,000 for HMDA Errors
In addition to paying fines for inaccurately reporting HMDA data, can you imagine the fair lending story they might tell about your financial institution?
As each of us knows, every mortgage lender that originated 100 or more closed-end mortgage loans in each of the two preceding calendar years needs to address HMDA compliance as part of its compliance management system (CMS). That includes having policies and procedures to ensure compliance, training staff to follow them, and having regular auditing and testing to ensure all the necessary data fields are correctly reported. Your institution should also analyze HMDA data to self-identify any potential discriminatory lending patterns so you can determine the root cause and proactively work to correct them.
Even if you have already submitted your data, if you are not feeling confident in the accuracy of your HMDA data, now is a good time to begin updating your HMDA compliance program as part of your overall CMS. The risks of failing to submit accurate data are high. Do not hope your data is accurate. Work proactively to ensure it is.
And to everyone who has made it across the HMDA finish line feeling confident, great job!
Check out our article on building your own Lending Compliance Management system.
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