HOME MORTGAGE DISCLOSURE ACT (HMDA) REQUIREMENTS AND RECOMMENDED PRACTICES BY FRANK ANTIGA, CPA, CBAP Risk Advisory Principal, S.R. Snodgrass PC The Home Mortgage Disclosure Act (HMDA), implemented by Regulation C, was enacted by Congress in 1975. Its primary goals are to promote transparency, determine whether financial institutions (“institution”) are meeting the housing credit needs of their communities and assist in identifying potential discriminatory lending patterns. Regulation C sets out specific requirements for the collection, recording, reporting and disclosure of mortgage lending information. The reporting requirements are incredibly detailed, and examinations allow very few errors before an institution may be required to correct and resubmit past data. HMDA violations can also lead to civil money penalties and/or consent orders from examining agencies. COVERAGE AND DATA REPORTING REQUIREMENTS Coverage is based on the prior year’s origination volumes, asset size and location of the institution’s home and retail offices. If the rule is applicable to the institution, it must collect, report and disclose detailed data about home lending activity via a Loan Application Registration (LAR). The institution must electronically submit its HMDA data to the appropriate federal agency by March 1 of the calendar year following the year for which it collected the data. The regulation generally applies to consumer-purpose, closed-end loans and open-ended lines of credit that are secured by a dwelling. There are exclusions from coverage if the dwelling type is exempted. There are extremely specific rules on whether business/agricultural transactions are reportable, and there are also certain other transaction types that are specifically excluded under the regulation. At application, HMDA requires lenders to collect certain data related to general loan information, property information, applicant information and institutional identifiers. There are numerous data points to report for each transaction. PARTIAL REPORTING EXEMPTION For partial reporting eligible institutions, reporting still may be required, but the burden of reporting all data points may be reduced via a partial exemption. The exemption is based on loan volume and a satisfactory examination history under the Community Reinvestment Act. Partial exemption applies to an eligible institution’s applications for, originations of and purchases of closed-end mortgage loans, if the institution originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years. Also, a partial exemption applies to an eligible institution’s applications for, originations of and purchases of open-ended lines of credit, if the institution originated fewer than 500 open-ended lines of credit in each of the two preceding calendar years. The partial exemption for closed-end mortgage loans and the partial exemption for open-end lines of credit operate independently of one another. Thus, in a given calendar year, an eligible institution may be able to rely on one partial exemption but not the other. If a covered loan or application is covered by a partial exemption, the institution is required to collect, record and report fewer data points than those of non-eligible institutions, which lessens the burden and decreases the risk of reporting errors. 14 The Community Banker
RkJQdWJsaXNoZXIy MTg3NDExNQ==