Big Picture
The Home Mortgage Disclosure Act (HMDA) is a federal law that requires financial institutions to collect and report on their mortgage lending activity in an effort to monitor fair lending practices in the mortgage market. Annual HMDA filing is challenging for all institutions, but it can be especially difficult for those with limited volumes of HMDA-reportable loans. Regulatory requirements, however, do not account for this operational hurdle and all
organizations that are deemed HMDA reporters are held to the same data quality requirements. With error thresholds that only go as high as ten percent for file errors and five percent for specific field errors, small filers have little room for error.
Client Scenario
Manually reviewing loan application data to identify potential reporting errors and ensure data quality can be a time-consuming and resource-intensive process. This is true for all institutions and can be even more difficult for small-volume lenders who just meet the HMDA threshold for reporting. A community bank, with a limited volume of HMDA-reportable loans on their Loan Application Register (“LAR”), engaged Asurity Advisors to review a random sample of 50 commercial and consumer HMDA-reportable loans and 42 mortgage HMDA- reportable loans to help the financial institution ensure that the data for submission was accurate.
Asurity Solutions
Asurity Advisors leveraged their in-depth knowledge of HMDA and reviewed each file and all HMDA-reportable fields that would be included on the Loan Application Register. Based on the review, Asurity Advisors provided the client with a detailed report outlining discrepancies or areas requiring correction with clear instructions for addressing identified issues, ensuring accurate HMDA reporting. In addition, Asurity Advisors developed and delivered a high-level conceptual training program highlighting the importance of HMDA and in-depth HMDA compliance training program outlining important data fields and industry standards to the client’s employees. The training was designed to be relevant to senior management, compliance, and operational personnel. Ultimately, Asurity Advisors significantly reduced the time and resources required for HMDA data review for the financial institution and delivered valuable training to its employees, thus providing efficiency and effectiveness surrounding the HMDA submission process.