The public’s interpretation of HMDA data depends on lenders’ consistent application of Reg C, and failure to comply with Reg C could bring stiff penalties from regulatory agencies. ComplianceTech is looking out for HMDA filers in their efforts to ensure perfect HMDA submissions.
The challenge that you face is two-fold: one is to pass the HMDA validity edit checks, and beyond that, to avoid the reporting pitfalls that are not captured by the edit checks. See a list of examples below.
ComplianceTech provides tools to run the HMDA edit checks which include methods for identifying numeric outliers that fall outside user-specified standard ranges. ComplianceTech also produces reports that can help users find these pitfalls by summarizing data. Our resources will help you avoid common pitfalls and coding mistakes. For your peace of mind, reach out to the ComplianceTech team of experts before you submit it to the CFPB on March 1st and verify that the fields are coded correctly. If you need help with this process, please reach out to our support team at firstname.lastname@example.org.
|Issues we’ve seen in the data; in some cases, there may be a reasonable justification|
|1. Zero loan amounts (Filing Instruction Guide field 10)|
|2. There are zero approved not accepted applications (FIG field 11; action taken code 2). The Official Interpretation contains examples for each action taken.|
|3. Decisioned applications (action taken codes 1, 3, 7, or 8) with no credit score (FIG fields 62 and 63). In other words, 8888 or 9999 in the primary applicant and co-applicant credit score fields.|
|4. Zero DTI ratios (FIG field 80).|
|5. Income (FIG field 57) “NA” on decisioned applications|
|6. “NA” CLTV (FIG field 81) on denied loans (action taken code 3 or 7)|
|7. Lender credits (FIG field 77): many “NA” values on closed loans? True zeroes should be entered as blank.|
|8. Loan term (FIG field 82): “NA” term on action taken 3-5|
|9. “NA” county codes and census tract code (FIG fields 17 and 18, respectively) on originated and denied applications (action taken code 1 and 3)|
|10. The free-form denial reason field (FIG field 72) indicates “withdrawn” by applicant but the action taken code is 3.|
|11. Income (FIG field 57) reported monthly rather than annually.|
|12. Discount points (FIG field 76) has no blanks… only non-zero numeric values and “NA”.|
|13. HMDA spread (FIG field 59) values are very high because the lender reported APR rather than spread over the APOR.|