In light of recent news regarding Bank of America’s penalties for inaccurate reporting under the Home Mortgage Disclosure Act (HMDA), it’s evident that precise reporting and adherence to HMDA regulations are paramount. Leveraging advanced HMDA analytical software empowers lenders to take proactive steps toward compliance and avoid similar pitfalls.

The Significance of Government Monitoring Information (GMI)

HMDA compliance hinges on collecting Government Monitoring Information (GMI) from mortgage applicants. Loan officers (LOs) must ask specific demographic questions mandated by federal law. Failing to gather and report this data accurately can lead to severe penalties, as seen in the Bank of America case.

Best Practices for Monitoring and Training

  1. Benchmark Comparison: Compare your bank’s application rates with industry peers. While there’s no regulator-defined acceptable range, aiming for a rate below industry averages signals good compliance. However, significant deviations from peer rates might indicate fabricated GMI data. As a benchmark, a not-provided rate more than double or less than half of the peer rate should raise a red flag. According to LendingPatterns™, the national average for all lenders for 2022 was 13.65% (2.19 million of 16.1 million).
  2. Identifying and Addressing Skewed Data: Flag applications with high rates of missing GMI and assess if they’re linked to specific LOs. Provide targeted training to these LOs, emphasizing the critical nature of collecting GMI.
  3. Training and Standardized Script Implementation: Collaborate closely with LOs to ensure adherence to a standardized script for GMI collection. Regular training sessions and performance reviews reinforce compliance measures effectively.

Empowerment Through Software Solutions

Compliance with HMDA regulations is essential to avoid penalties and maintain integrity in mortgage lending. Our HMDA software LendingPatterns™ streamlines monitoring these key metrics effortlessly. Let us guide you through how our software simplifies compliance monitoring.

Remember, while there’s no predetermined “acceptable” range, aiming for lower information-not-provided rates compared to industry averages signifies a commitment to regulatory compliance.

By adopting these measures and utilizing the features available in LendingPatterns™, lenders can effectively manage risks and uphold the standards outlined by regulatory bodies.

Check out our blog for more insights and guidance on HMDA compliance!