By Lynn Woosley, CRCM

As we enter the fourth quarter, it is time to prepare for Home Mortgage Disclosure Act (HMDA) and Community Reinvestment Act (CRA) filing season. As institutions begin to scrub and prepare their data, it is a suitable time to review common HMDA and CRA data errors and discuss best practices for HMDA and CRA data management.

The table below lists several common issues found in HMDA and CRA data. The CRA data issues can be subdivided into errors related to Small Loans to Businesses and Farms (CRA SLBF) and errors related to Community Development Loans (CRA CDL). Asurity Advisors used public data provided by banking regulators[i] and issues identified while completing data scrubs in preparing this summary.

Reportable Universe

One of the hardest data issues to identify and correct is an error related to the reportable universe of loans or applications, especially when the error is omitting reportable lending activity. Examples of this type of error include failure to include reportable applications or loans on the HMDA Loan Application Register (HMDA LAR) or the CRA Loan Register (CRA LR), as well as including loans or applications that should not be reported. Getting the reportable universe of lending activity right is difficult because reportable loans and applications may be generated in multiple business units of a lender. Further complicating matters, those business units may have different lending systems, procedures, and nomenclatures.

In HMDA-reportable lending, confusing the definitions of “dwelling” under Regulations C and Z often causes errors in determining which applications should be reported on the HMDA LAR. Another common mistake is failing to distinguish between “prequalifications,” which are not reportable, and “preapprovals,” which are. Lenders sometimes omit reporting repurchased loans, especially if the lender does not regularly purchase or repurchase loans. Additionally, agricultural purpose loans are not reportable on the HMDA LAR, even if the collateral includes a homestead.

Loans for business or commercial purposes are trickier. The HMDA: Getting It Right Guide[ii] reminds lenders not all business purpose loans are reportable, stating,  “A closed-end mortgage loan or an open-end line of credit that is or will be made primarily for business or commercial purposes, unless it is a home improvement loan, a home purchase loan, or a refinancing.” However, this does not exclude all business purpose loans. The Official Interpretations of Regulation C provide several examples of reportable and excluded commercial-purpose transactions secured by a dwelling.[iii]

For CRA SLBF, the reportable originations can be identified through a combination of loan size, transaction type, and Call Report codes. However, to ensure accuracy, banks should periodically evaluate the mapping of products to Call Report codes.

The identification of community development loans can be particularly problematic, as it relies on lenders in commercial and non-profit lending business units to accurately assess whether a loan has a community development purpose. Given the greater expertise needed to consistently qualify loans as having a community development purpose, many institutions find a reliable approach is to build a broad potential CDL universe for additional review by the CRA or community development team for qualification purposes. An effective approach might include the following steps:

First, identify candidate transactions from systems containing commercial, commercial real estate (CRE), nonprofit, agricultural, public finance, small business (both SBA and other small business), specialty, and affordable housing lending. Ensure your candidate population includes all potential CDL that the bank originated or purchased, even if the borrower repaid the loan during the same calendar year.

The potential CDL pool should include originations, participations, and purchased loans. Some loan types that often have a CD purpose are loans related to Low-Income Housing Tax Credit (LIHTC) or other affordable housing programs, New Markets Tax Credit (NMTC), Community Development Financial Institutions (CDFIs), Community Development Corporations (CDCs), Opportunity Zones, and government redevelopment projects. Additionally, the bank should evaluate loans in distressed or underserved nonmetropolitan communities, designated disaster areas, and low- or moderate-income communities for a CD purpose. At this point, it is best to cast a wide net so as not to omit potential CDL.

From the candidate population, remove loans that the bank will report on the CRA LR as CRA SLBF or on the HMDA LAR, except for multifamily affordable housing. Affordable multifamily housing loans are the only loan type the lender can “double count” under the current CRA regulations. The bank can report these loans on the HMDA LAR and as CDL. From the remaining pool of loans, evaluate the loan purpose to determine if there is a community development purpose, as discussed later in this article.

Address and Geocoding

Errors in addresses and geocoding are common across HMDA and CRA data. There are several components of these errors. First, the CFPB instructs lenders to report “NA” for address under certain circumstances.[iv] Using partial addresses in these cases will result in errors. In other instances, typographical errors in addresses are the root cause. Additionally, there are occasions when results from geocoders used by HMDA or CRA filing software or manual geocoding are inconsistent with results from the FFIEC geocoding system. Mistakes in transferring addresses and geocoding results to submission files may also create errors.

In addition, for CRA filings, banks sometimes are inconsistent in their choices of address. CRA allows banks to use either the headquarters address or the location where the borrower will use the loan proceeds as the borrower’s address. However, sometimes lenders erroneously use a mailing address or other address that is not either of the permitted addresses. If geocoding or addresses are inaccurate, or if there are errors in assessment area delineations, banks may assign CRA-reportable loans to the wrong assessment area.

To prevent address and geocoding errors, ensure staff understand the address requirements for the loan type the bank is reporting. Other effective controls include using the edit check processes in the filing systems, comparing the institution’s geocoding results to the FFIEC geocoding results, and establishing appropriate policies and procedures governing determination of reportable address.

Loan Amount

Loan amount is another field with common errors in both HMDA and CRA data. Examination teams routinely review loan amounts and other key fields during examinations and regulatory publications have cited loan amount as a field with often triggering a sufficiently high error rate to require HMDA resubmission. On the CRA LR, banks report incorrect loan amounts when they report current balances, commitment amounts, purchased balances, or similar amounts instead of the amount at origination. For HMDA and CRA, incorrect mapping from source fields to the reporting file may create loan amount errors.

In addition, unclear or inaccurate procedures for treatment of renewals, refinancing, and participations may affect CRA reporting. When loan amounts are incorrect in CRA micro data, or when the bank has errors in its logic for classifying loan size, there may be downstream errors in reported loan amount classifications, which is another reportable field for CRA SLBF.

Action Taken

In HMDA-reportable data, common errors related to loan action or action taken involve errors in reporting withdrawn applications. Applications should only be reported as withdrawn if the applicant expressly withdraws the application prior to the lender making a credit decision.

Other HMDA Errors

Regulatory reports have identified other fields where HMDA errors are common. Some of these include ULI, application date, loan purpose, income, and DTI.  Regulation C states that the ULI “must not include any information that could be used to directly identify the applicant or borrower. . .”[v] Examiners have identified ULIs containing partial borrower names.[vi]

Examiners also identified errors in application dates. The Federal Reserve noted these errors occurred because bank “staff failed to use the regulation’s definition of application to determine the date that must be reported.” [vii]  The Federal Reserve also noted that confusing prequalifications and preapprovals, as discussed above, contributed to errors in application dates.

Examiners with both the Federal Reserve[viii] and the FDIC[ix] cited lenders for mistakes in reporting HMDA purpose. In particular, institutions erred by reporting loans as having a home improvement purpose when the loans had purposes of both refinance and home improvement. The Official Interpretations of Regulation C require loans whose purposes include refinance (or cash-out refinance) and home improvement to be reported with the appropriate refinance purpose code.[x] Differences in loan purposes under TRID and HMDA may contribute to these errors. Other errors involved inconsistent application of lender or investor policy in distinguishing between refinance and cash-out refinance purposes.

The FDIC[xi] and Federal Reserve[xii]  both reported elevated levels of errors in reporting gross income, with the Federal Reserve specifying some types of gross income errors. These include reporting income for covered loans to bank employees, as well as reporting an income amount other than the income used in making the credit decision. The latter error often results from a failure to update LAR data for the results of income verification or income exclusions. When incorrect income is reported, DTI is often also inaccurate.

Gross Annual Revenue

For CRA SLBF, banks often report incorrect values for the gross annual revenue (GAR) indicators, often because the bank recorded GAR incorrectly. Several factors contribute to these errors. At times, banks include individual borrower income in the GAR total. Other causes include using the wrong source field for revenue, reporting net or adjusted revenue instead of GAR, or including guarantor revenue. When lending to startups, banks sometimes report projected rather than actual start-up revenue.

Community Development Purpose

During data validation examinations and CRA performance evaluations, CD purpose receives significant attention. An acceptable CD purpose is a component of the evaluation of CDL, qualified investments, and community development services.

CD purposes include affordable housing for LMI individuals, economic development, provision of community services to LMI individuals, and revitalization or stabilization of specific geographies (including disaster relief in designated disaster areas). It is important that banks not use “location in an LMI census tract” or “the borrower is a nonprofit, CDFI, etc.” as a proxy for CD purpose. Instead, the bank should document the use of loan proceeds and determine whether that use furthers a community development purpose.

When evaluating loans to establish whether they have a CD purpose, pay close attention to the Interagency Questions and Answers Regarding Community Reinvestment (Interagency Q&As).[xiii]  The Interagency Q&A provide helpful interpretive guidance and examples of CD purposes. Another best practice is to collect required documentation to support community development purpose and service of LMI communities at the time the bank originates or purchases the loan, rather than trying to reconstruct needed documentation after the fact.

Sound Controls

To ensure accurate reporting of required data under HMDA and CRA, institutions must establish robust governance and control environments including sound policies and procedures, role-specific training, accurate data lineage and mapping processes, adequate change management, and substantive vendor oversight. Monitoring, testing, and audit must be commensurate with data volume and lender complexity. For all issues and errors identified, the lender should determine root causes and take appropriate action to remediate findings. Failure to do so will result in repeated errors and poorer performance.

References

[i] See, for example, https://www.consumercomplianceoutlook.org/articles/2025/first-issue-2025/common-community-reinvestment-act-regulation-bb-data-collection-and-reporting-violations-in-the-frs#ref3, https://www.consumercomplianceoutlook.org/articles/2025/first-issue-2025/top-federal-reserve-system-compliance-violations-in-2024-home-mortgage-disclosure-act, and https://www.fdic.gov/bank-examinations/summer-2025.pdf.

[ii] https://www.ffiec.gov/sites/default/files/data/hmda/2024Guide.pdf

[iii] https://www.ecfr.gov/on/2020-01-01/title-12/chapter-X/part-1003#Supplement-I-to-Part-1003 at Comments 3(c)(10)-3 and -4.

[iv] https://www.ecfr.gov/on/2020-01-01/title-12/chapter-X/part-1003#Supplement-I-to-Part-1003 at Comments 4(a)(9)(i)(3)and 4(a)(9)(ii).

[v] https://www.ecfr.gov/current/title-12/chapter-X/part-1003/section-1003.4 at 12 CFR §1003.4(a)(1)(i)(B)(3)

[vi] https://www.consumercomplianceoutlook.org/articles/2025/first-issue-2025/top-federal-reserve-system-compliance-violations-in-2024-home-mortgage-disclosure-act

[vii] https://www.consumercomplianceoutlook.org/articles/2025/first-issue-2025/top-federal-reserve-system-compliance-violations-in-2024-home-mortgage-disclosure-act

[viii] https://www.consumercomplianceoutlook.org/articles/2025/first-issue-2025/top-federal-reserve-system-compliance-violations-in-2024-home-mortgage-disclosure-act

[ix] https://www.fdic.gov/bank-examinations/fdic-consumer-compliance-supervisory-highlights-spring-2026.pdf

[x] https://www.ecfr.gov/on/2020-01-01/title-12/chapter-X/part-1003#Supplement-I-to-Part-1003 at Comment 1003.4(a)(3)-3.

[xi] https://www.fdic.gov/bank-examinations/fdic-consumer-compliance-supervisory-highlights-spring-2026.pdf

[xii] https://www.consumercomplianceoutlook.org/articles/2025/first-issue-2025/top-federal-reserve-system-compliance-violations-in-2024-home-mortgage-disclosure-act

[xiii] https://www.govinfo.gov/content/pkg/FR-2016-07-25/pdf/2016-16693.pdf