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HMDA-LAR: Systemic Errors

Michael G. Barone
Jun 12, 2014

Question: I have recently become aware that a Home Mortgage Disclosure Act Loan Application Register (HMDA-LAR) we previously filed for 2013 contained systemic errors. Am I required to correct and resubmit the HMDA-LAR? Answer: It depends on the number of errors contained in the previously filed HMDA-LAR. The Consumer Financial Protection Bureau (CFPB) has set forth specific HMDA Resubmission Guidelines in its Examination Procedures of October 2013. You can find a complete copy of these guidelines here.  Institutions reporting fewer than 100,000 loans or applications on their HMDA-LAR are required to correct and resubmit HMDA data when 10 percent or more of the HMDA-LAR entries are inaccurate. Institutions reporting 100,000 or more loans or applications on their HMDA-LAR are required to correct and resubmit HMDA data when four percent or more of the HMDA-LAR entries are inaccurate.  This begs the question of how an institution would know what percentage of its entries are inaccurate unless it scrubbed 100 percent of the loan files and compared the data to the HMDA-LAR entries!  For this reason the CFPB suggests an institution review a sample size, on a consistent basis, to ensure that systemic problems are detected and addressed. The CFPB Examination Procedures indicate that the Bureau’s examiners will randomly select up to seventy-nine loans to review for institutions with 100,000 or fewer loans or applications on their HMDA-LAR. If the loans are reviewed and eight are identified as HMDA-LAR entries with errors, the CFPB will require a complete resubmission of the HMDA-LAR following a scrub of 100 percent loan files referenced on HMDA-LAR.   It is suggested that institutions do whatever is necessary to ensure the accuracy of their HMDA-LAR, as the CFPB has imposed civil monetary penalties upon institutions for failing to have accurate HMDA data; such fines ranging from $1,500 to $425,000. Michael G. Barone is director of legal and regulatory compliance at Lenders Compliance Group. He may be reached by e-mail at mbarone@lenderscompliancegroup.com.
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