ADI assists a mortgage lender with a national presence complete a full scrub of its Loan Application Register (LAR) for resubmission within a tight timeframe.

Assessing the Challenge

Given the importance of accurate data in fulfilling the purposes of the Home Mortgage Disclosure Act (HMDA), the Consumer Financial Protection Bureau (CFPB) is committed to ensuring that mortgage lenders, whether depository or non-depository institutions, develop and maintain appropriate HMDA compliance management systems. Under the HMDA Resubmission Schedule, which sets forth guidance to CFPB examination teams, institutions reporting fewer than 100,000 HMDA LAR entries should correct and resubmit HMDA data when 10 percent or more of a sample of HMDA LAR entries contains errors of if the error rate in an individual field is more than 5 percent. In certain cases, sample error rates below 10 percent — or below five percent in an individual data field — may require resubmission if the errors prevent an accurate analysis of the institution’s lending.

ADI’s client exceeded the error threshold and was ordered to resubmit its LAR within 30 days.

Designing the Approach

Our client needed timely, efficient and accurate assistance in scrubbing its LAR to meet the CFPB’s schedule and to resubmit a clean LAR. ADI reviewed several thousand entries. Our approach was to deploy a custom database system designed specifically for HMDA scrubs. At the outset, ADI imported the client’s LAR data into the database. ADI reviewers were given login names and passwords to access the client’s loan image files and origination system. Reviewers were then assigned lists of entries to review and subsequently entered the LAR field data into our database. These data were compared to the initial LAR field values and, where necessary, individual entries were reviewed again by project managers. When this review of assigned entries was complete, we provided a report to our client showing where we found inaccurate entries as well as the correct values. Further, we reviewed patterns in the errors in the original submission and recommended changes and strategies for addressing them.

Implementing the Solution

ADI’s consultants reviewed the client’s LAR data as originally submitted, as well as source documents, guides and explanations of the electronic imaging system. Our team of reviewers accessed the client’s document imaging loan origination systems remotely to review the loan files. The reviewers captured the HMDA field values found in the imaged files in our custom HMDA scrub database system. The project manager ran daily reports that returned exceptions for additional review. Hundreds of files were reviewed each day, and an ongoing and aggregate status report was delivered to the client at the close of each week.

The reports from ADI’s reviews provided the lender with a means of correcting their LAR within the designated timeframe. The findings also identified areas where compliance processes could be improved upon and contributed to a subsequent update of the organization’s HMDA Compliance Program.

April 10th, 2015|