#1652195 - 01/18/12 05:52 PM
HMDA Reporting Past Errors
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Anonymous
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So, after having a meeting yesterday to discuss our commercial loans applicability to HMDA reporting, it was discovered that our HMDA reporting has been handled very incorrectly for years.
Essentially, our first mortgage department is fine, but our consumer loan side has only been reporting home improvement loans. This means that none of the reportable 2nds have been reported, ever as far as we can tell.
This is my first year dealing with the HMDA process, so I'm glad I haven't missed this problem, but it's now mine to fix. My question is how to even approach correcting this! Based on the ammended report guidance, I can only correct back to 2010 at this point, but I know that 2011 will be reported incorrectly too if not adjusted in time.
I know that the correct thing to do is to get the corrections filed and face any resulting penalties, but have a feeling that others may want to let it slide and hope it's never caught. I have a feeling that when we do 2012 reporting and our # of loans reported more than doubles, a big red flag will go off somewhere. How this has never been noticed in an exam/audit before, I do not know.
Anyone had to deal with a large-scale resubmission before that has any recommendations? I'm guessing that for 2010 alone I've got at least 400 loans that will need to be reported...not looking forward to this one!
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#1657023 - 01/27/12 03:02 PM
Re: HMDA Reporting Past Errors
Anonymous
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Anonymous
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Update: Management decided that going back to 2010 would open us up to problems and they'd rather take the chance than wave the red flag for all to see. I'm concerned that suddenly reporting twice as many loans in 2011 as we did in the previous years, with a much different composition of loan types will wave this flag quite prominently if anyone happens to look. We did have a spike in our 2nd mortgage lending, nearly double the previous year, so 2010 (assuming similar proportions as 2011) had about 80 reportable loans while 2011 had 175ish. Without knowing how closely things are looked at from one year to another, I don't know if this will be considered significant, but I fully documented my findings and opinions as well as the management decision. I'm through entering the approved 2011 loans, now I get to start on all the canceled and denied ones! This has been a phenomenal week.
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#1657520 - 01/27/12 10:59 PM
Re: HMDA Reporting Past Errors
Anonymous
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Anonymous
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As evidenced by the blatant disregard for the HMDA process in its entirety, they just don't seem to understand what they are dealing with. All involved parties have been employed here a minimum of 15 years and were in the same positions they currently are when the last major changes of the reg would have occurred. How it could have gone so wrong is beyond me.
After sifting through all the denied/canceled/withdrawn today, my numbers indicate that based on our documentation, we approved 83%+ of our applications for reportable loans. I can only assume that this is nowhere near correct and that many files that were outright denied never became official files or were entered into the software to begin with. I guarantee each of our loan officers denied more than 2-3 of these loans over the course of the year!
Everything can be blamed on ignorance of the reg, up until now, but this decision is the first evidence of outright negligence I've seen from management thus far. I think their biggest concern was that even filing a correction could get us slapped with penalties, but I tried to explain that the severity of such an action would be inconsequential if compared to what would happen if we waited for someone to discover this. We had external auditors in this week, and I badly wanted to consult with them, but wasn't prepared to overstep my chain of command to do so. Our IA was involved in the discovery of this, and the meeting with senior management and I was really expecting a more assertive response from her, but didn't really get any support at all.
I'm glad that we have things sorted out so we are operating properly in the future, but I'm going to be very nervous in July when our regulator visit is scheduled.
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#1657540 - 01/28/12 01:32 AM
Re: HMDA Reporting Past Errors
Anonymous
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Power Poster
Joined: Jun 2003
Posts: 7,659
Florida
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I, like most everyone else do not agree with your management's decision - they will have to face the consequences. If a regulator does consider this an error, it will not only be HMDA, but will smack of ECOA and Fair Lending violations. For Fair Lending, 1 violation is a referral to HUD, 2 or more (and it sounds like the bank has the "or more") is pattern or practice, and a referral to the Department of Justice.
Trust me, your examiners are angels compared to the DOJ. They will make your board and management's life miserable. The bank will have to do it's own work to find out just how much the fines in the C&D will be.
Unfortunately, because of management's directives, you cannot do anything. If you could, and with management's backing, try to determine the extent. If the bank routinely pulls credit reports, match credit reports billings to applications and decisions, taking into account annual renewals going through the commercial department. For each report there should be an application of some type.
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.
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