The Home Mortgage Disclosure Act (HMDA) continues to generate challenges for financial institutions and mortgage lenders year after year. The accuracy and completeness of HMDA data is critical to fair and responsible lending risk management, as well as lending distribution analysis for both Fair Lending and Community Reinvestment Act (CRA) compliance. Further, new HMDA data collection requirements have been proposed. Although the final scope and details, along with an implementation date, are still unknown, what is certain is that the extent and breadth of additional data collection fields required will be significant. The existing challenges to banks and mortgage lenders will be compounded.
ADI’s team of compliance consultants delivers comprehensive solutions to support your institution’s HMDA compliance needs. Whether you are preparing for an upcoming submission or require an ongoing program to monitor your LAR’s data quality and completeness, ADI will implement a customized approach to achieve your HMDA compliance objectives.
Data Quality In Your LAR Cannot Be Understated
Incorrect data can cause a cascade of negative effects that hit your institution’s bottom line: low productivity of compliance staff, high resubmission or program correction costs, damaging press, and civil money penalties.
HMDA affects Fair Lending compliance for all lenders and CRA compliance for banks. Poor data quality leads to problems in both CRA and Fair Lending examinations that could have been avoided if the proper HMDA compliance framework were firmly in place. HMDA data integrity is an essential component of effective compliance management for these programs, and monitoring and mitigating compliance risk for these areas are significantly undermined by poor data quality in a lender’s LAR. ADI provides differing levels of data quality assistance, depending on your circumstance. These include:
ADI provides differing levels of data quality assistance, depending on your circumstance. These include:
- Presubmission Reviews – ADI can conduct an independent review of your planned HMDA submission, on a quarterly, semi-annual, or annual basis. These reviews will become a regular part of your compliance management program.
- Scrubs – ADI can assist in conducting a full scrub of your LAR, in a joint effort with your staff or independently. This effort may be the result of an ordered resubmission or because you have identified specific problems or areas of concern with your LAR .
- Omissions Reviews – ADI can help ensure that your LAR is complete by reviewing files to determine whether they are reportable.
HMDA Compliance Framework Is Where Examiners Look First
The most important HMDA compliance capability is a solid Compliance Management System. It ensures that a lender has reduced the need for remedial steps because LAR data is being collected and managed appropriately from the outset. Examiners look first to determine whether institutions have the compliance framework in place to promote accurate collection and reporting of HMDA data. ADI can help assess your current HMDA compliance management system or design a system from the ground up. From there, we work with you to implement a plan that will grow with your institution, maintain relevance, and adapt to new regulations and reporting requirements.
ADI will address the key elements of a strong HMDA compliance system, including:
- Policies, procedures, and internal controls to ensure ongoing compliance with the HMDA collection and reporting requirements;
- Pre-submission HMDA audits/scrubs, as appropriate for the size and complexity of your institution;
- Incorporation of any relevant regulatory changes;
- Reporting systems scaled to the volume of the institution’s lending operations;
- Designated responsibility for oversight, data entry, and data updates, including the timely and accurate reporting of the institution’s data;
- Employee training on HMDA regulations, policy and procedures;
- Corrective action in response to identified deficiencies; and
- Board and management oversight, as appropriate.