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#1632590 - 11/28/11 04:38 PM Need an effective HMDA process
AuditorK Offline
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Current process - Loan officers fill out a "HMDA data collection worksheet" for those loans they determine to be HMDA reportable. A person in Loan Administration reviews all loan files and for those with a completed HMDA worksheet, enters the data onto the LAR.

Problems encountered - We have loans that should be HMDA reportable, that do not make it to the LAR. This is because the loan officers don't always catch all the reportable loans. We also have some loans entered to the LAR, and they are not HMDA reportable. Again, this goes back to the loan officer's incorrect interpretation. We also have data errors on the LAR - input errors and also errors because the loan officers fill out the worksheet incorrectly compared to the actual loan file.

Any suggestions?

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#1632594 - 11/28/11 04:43 PM Re: Need an effective HMDA process AuditorK
Kathleen O. Blanchard Offline

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First - Loan Administration should also review for loans that should have had a HMDA worksheet and do not and for loans that are not reportable but were captured. Otherwise there is a huge hole in the process as you have realized! If not Loan Administration someone in the lending area should be responsible for this important internal control.

The person entering the data into the system that is used to create the LAR should be checking against actual data - and not the loan officer's interpretation of that data - to make sure the bank is reporting correctly. Alternatively, institute a second review that does go back to actual data to make any needed corrections.

HMDA can't be done correctly without adequate secondary checks and balances.
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#1632612 - 11/28/11 05:18 PM Re: Need an effective HMDA process Kathleen O. Blanchard
Adam Witmer Offline
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I agree with KB. The most critical element you need to implement is an effective control to review these entries for accuracy(data integrety) and to search for missing loans (omissions). Both a data integrety review and an omission review should be implemented in your process.

I have seen many banks try to implement this but still fail. Those banks that do HMDA well have one person responsible for the review process; the less hands in the pot the better. That person typically looks at loan origianation reports for each month to identify omissions and reviews all entries for accuracy. Issues are sent back to the officer/imputers to correct. Also, the Banks that do HMDA well typically conduct quarterly audits on top of the review process (conducted by someone seperate from the review process).

You will have to find a process that fits your organization. Ideally, the process will implement both a control (review) and a test (audit) of LAR accuracy (data integrety) and LAR completeness (omissions).
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#1632664 - 11/28/11 06:32 PM Re: Need an effective HMDA process Adam Witmer
AuditorK Offline
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Is that "HMDA worksheet" that the loan officers complete even worthwhile then if the data input person should be entering the info from the actual file? Maybe it just adds another step that doesn't add value to the process?
Last edited by AuditorK; 11/28/11 06:36 PM.
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#1632667 - 11/28/11 06:38 PM Re: Need an effective HMDA process AuditorK
Kathleen O. Blanchard Offline

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It depends upon what other info is on that form. I have seen forms that have a decision tree that walks a lender through the process - but another set of eyes on "not applicable" decisions is still of great value.
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#1632748 - 11/28/11 08:36 PM Re: Need an effective HMDA process Kathleen O. Blanchard
Truffle Royale Offline

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I don't like worksheets. You're just adding on more places to make errors transfering the info from the application to the worksheet to the LAR....

We work directly off the original application.
Data is checked at the time the closing package is prepared.
The LAR is scrubbed using excel pivot tables.
By the time I hit the button I'm 99.9% sure it's perfect.

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#1632781 - 11/28/11 09:22 PM Re: Need an effective HMDA process Truffle Royale
Marnie Offline
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Truffle, would you elaborate on "LAR is scrubbed using excel pivot tables"? This implies you are creating a spreadsheet from your data, rather than using a worksheet? Or are you downloading the FFIEC report to an excel format? Being unfamiliar with pivot tables, can you just summarize how they assist in the scrubbing process? We currently use a HMDA worksheet, which is completed using the application and closing docs. Trying to improve/fine tune our process.

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#1632782 - 11/28/11 09:24 PM Re: Need an effective HMDA process Marnie
#Just Jay Offline
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Out of curiosity, how many lines do you normally report annually for your LAR?
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#1632793 - 11/28/11 09:40 PM Re: Need an effective HMDA process #Just Jay
Kathleen O. Blanchard Offline

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This is the key to that process along with a review for anomalies via pivot tables:

"Data is checked at the time the closing package is prepared".
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#1632796 - 11/28/11 09:52 PM Re: Need an effective HMDA process Kathleen O. Blanchard
Kathleen O. Blanchard Offline

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Banks that have problems often are making different types of loans with HMDA loans coming from commercial, consumer and residential. That is where you have to make sure all applicable loans are captured, not just check those that were identified by staff. You need to make all were identified...including those that were declined, etc and never got to the "input" stage.

In a residential area with origination software that captures all of that data, your issue is data integrity and generally not missing applications.
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#1632886 - 11/29/11 02:15 PM Re: Need an effective HMDA process Kathleen O. Blanchard
RR Becca Offline
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RR Becca
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out of the frying pan...
Small shop here, and I just came to this bank in late May. I have made a few small changes to the process in the name of efficiency, but it is largely still a by-hand undertaking simply because we lack the technological tools to automate it further at this time. For right now (and accuracy IS slowly improving since I've put this process in place):

1. Processors complete the HMDA form/worksheet and send it to imaging/filing with the loan.
2. Loan clerks assemble and scan the HMDA "package" to the loan record, then notify me once a week of all the HDMA loans scanned that week. The HMDA package is simply the form plus copies of any documents needed to verify the information being reported.
3. I review and verify the information in the HMDA packages, sending any necessary corrections back to the processors.
4. I key in all data to the FFIEC software after it has been verified.
5. I pull a report of all new loans booked each month with residential collateral codes and check it against the LAR to catch any that may have been missed.


I will also be performing a 100% scrub of the LAR before submitting it. It's too easy to make simple typo mistakes when keying this stuff in, plus I have not yet reviewed any of the entries that were made before I took over the reporting.
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#1633414 - 11/30/11 01:40 PM Re: Need an effective HMDA process RR Becca
AuditorK Offline
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RR Becca,

This is pretty similar to how I envision changing our process. We certainly need more controls that we currently have. I want to leave some of the responsibility on the loan officers (i.e. - completing the worksheet) and then there would be one other individual to (1) review the worksheets and verify data, (2) review new loan reports to capture those missed, (3) enter the verified data to the FFIEC software. This last step may be assigned to another individual - not sure yet.

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#1633419 - 11/30/11 01:47 PM Re: Need an effective HMDA process AuditorK
RR Becca Offline
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RR Becca
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out of the frying pan...
I wish there was a way to separate the keying in and scrubbing functions better here, but with only 500-700 lines on the LAR per year it really isn't practical to spend the effort training someone else. Yet. smirk
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#1633425 - 11/30/11 01:57 PM Re: Need an effective HMDA process AuditorK
Kathleen O. Blanchard Offline

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Originally Posted By: AuditorK
RR Becca,

This is pretty similar to how I envision changing our process. We certainly need more controls that we currently have. I want to leave some of the responsibility on the loan officers (i.e. - completing the worksheet) and then there would be one other individual to (1) review the worksheets and verify data, (2) review new loan reports to capture those missed, (3) enter the verified data to the FFIEC software. This last step may be assigned to another individual - not sure yet.

Don't forget to also review (especially any generated in a manual process - no origination system that captures everything) denials, withdrawns, closed for incompleteness, etc. Any that did not result in an origination.
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#1633428 - 11/30/11 02:03 PM Re: Need an effective HMDA process Kathleen O. Blanchard
Skittles Offline
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Here we have someone in loan operations review all originated loans for HMDA purposes. She completes the form and forwards it on to someone else for input. I am to see all denied/withdrawn/closed for incompleteness files and review for HMDA purposes <along with Reg B>. The same individual inputs onto the FFIEC software <we have less than 500 lines per year>. Quarterly I review the HMDA additions for the previous quarter and then again before submission. Not perfect, but works fairly well.
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#1633436 - 11/30/11 02:08 PM Re: Need an effective HMDA process Skittles
RR Becca Offline
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RR Becca
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out of the frying pan...
I would love to go to a system more like Skittles, but our loan operations aren't centralized. What I've got is about the best I can do for now as long as the branches are all doing their own work.
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#1635249 - 12/05/11 04:02 PM Re: Need an effective HMDA process Marnie
Truffle Royale Offline

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Originally Posted By: Marnie
Truffle, would you elaborate on "LAR is scrubbed using excel pivot tables"? This implies you are creating a spreadsheet from your data, rather than using a worksheet? Or are you downloading the FFIEC report to an excel format? Being unfamiliar with pivot tables, can you just summarize how they assist in the scrubbing process? We currently use a HMDA worksheet, which is completed using the application and closing docs. Trying to improve/fine tune our process.

Marnie, sorry I didn't see this sooner. Been really busy around here. wink

Everyone knows I'm a huge advocate of pivot tables. read this
This thread had a lot of good info too.
Feel free to pm me if you want pivoting help.

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