The Home Mortgage Disclosure Act (HMDA) requires covered lenders to collect, record, and report data on mortgage applications, including borrower demographics, loan terms, and property information. MLOs do not file HMDA directly, but errors in application data directly affect the accuracy of the Loan Application Register (LAR).
What Triggers HMDA Reporting
- ✦All closed-end mortgage loans secured by a dwelling, regardless of property type.
- ✦Applications that were approved, denied, withdrawn, or resulted in an incomplete file.
- ✦HELOCs if the lender made 100 or more such transactions in the prior two years.
- ✦Commercial loans secured by a dwelling may trigger HMDA depending on the institution's home loan volume.
Key Data Points MLOs Affect
Race, ethnicity, and sex are collected via the URLA; borrowers can decline to provide this information, but the URLA must offer the question. Loan purpose must be coded correctly based on the actual transaction: purchase, refinance, home improvement, or other. Action taken and its date must reflect the actual disposition: approved, originated, denied, withdrawn, or incomplete file.
Common HMDA Errors
- ✦Using the mailing address instead of the property address for property location.
- ✦Coding a cash-out refinance as rate-and-term.
- ✦Omitting preapprovals that were requested and denied.
- ✦HMDA data is public and analyzed by regulators and fair-lending researchers; systematic inaccuracy in a lender's LAR can trigger fair lending examinations.
Aria can explain HMDA data requirements by field, clarify common coding errors, and walk through the difference between a reportable and non-reportable transaction. Ask at vicariointel.com.
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