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#2100436 - 09/26/16 08:15 PM HMDA HELP
Anonymous
Unregistered

I am new to this institution and discovered that no one has been doing HMDA edit checks on a regular basis. Needless to say I now have over 500 pages of errors to be corrected - just thru September. My question is related to the loan officer's lack on inputting information into our LOS system. There are multiple, multiple files missing income, property addresses (even on refi of primary residences, interest rates, etc). I am suspicious that previous HMDA information was incorrectly reported (the person who previously handled HMDA passed away). He had his own "interpretation" of what was to be reported (thought it wasn't a loan application until it was submitted to processing.

So I need some direction on which loans have to be reported if there is missing information and if it needs to be corrected how would we go about obtaining for example borrower income information from consumers back in January? Can we just enter 0 as the income or should be enter 1?

Any help will be greatly appreciated and keep me from opening the bottle of tequila cleverly disguised on my desk.
THanks

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#2100445 - 09/26/16 08:45 PM Re: HMDA HELP Anonymous
HMDA is my life Offline
Member
Joined: Oct 2015
Posts: 55
Well...what a conundrum!!!! First if the loan purpose is to purchase a dwelling and is secured by a dwelling, if the loan purpose is to refinance a dwelling secured loan with a new dwelling secured loan to the same borrower, and if any of the proceeds are used for home improvements (as defined or classified at you FI) the loan is reportable and there can be no missing information. This is going to be a tedious project. The hardest 3 things will be determing the loan purpose,collecting GMI, and assessing the application received date. Everything else that is to be reported should be in the file as a matter of business.

Let's hope that a lender would have collected income and approved/denied an application using that as part of the decision. You cannot simply enter NA for income just because you don't have it. It's needs to be documented that it was not collected or used in the credit decision if you report NA.

This is going to be a learning experience not only for you but hopefully for your FIs lenders as well. I know our FI does a monthly scrub on HMDA just for this reason. We scrub the file even if it does not have an validity edits.

Good Luck!!!

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#2100447 - 09/26/16 08:47 PM Re: HMDA HELP Anonymous
Amandak Offline
Member
Joined: Jul 2013
Posts: 80
Wisconsin
Yikes you have a mess.

My opinion is get everything straightened out for this year first. Figure out which loans have missing data and which loans are missing altogether. Then present that report to who ever you report to and say these need to be corrected. Hopefully it will fall back on the lenders to get the information.

Then I would complete and audit of the prior two years if possible. (I know not like you don't have enough to do already.) Based on your finds I would then contact your regulatory and explain that you have self identified x amount of errors and ask what they would like you to do.

We had a similar situation a few years ago and the FDIC had us go back two years and resubmit. Your regulatory may say differently.

Good luck

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#2100453 - 09/26/16 09:16 PM Re: HMDA HELP Anonymous
Anonymous
Unregistered

Thanks all - I'm trying to figure out the best way to even begin to straighten out this mess. I'm still not sure what to do when there was no income information entered into the system - I can't make the LO's call up a borrower and ask at this late juncture. At my previous company this is why we did HMDA edit checks monthly, quarterly and at year end - And yes - the LO's got a "come to Jesus Compliance talk about it today" That's the bright spot.

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#2100490 - 09/27/16 01:07 AM Re: HMDA HELP Anonymous
Rocky P Offline
Power Poster
Joined: Jun 2003
Posts: 7,460
Florida
Best thing, be sure of what you are doing.

Form a task force - it's not your job to be compliant, it is everyone's. See https://www.bankersonline.com/penalty/penalty-type/fair-lendingcra - (these are CRA/fair lending penalties, but guess where they git the information from?) Come up with polcies, procedures, validation, and common understandings of terms and documents where the figures come from.

If you are unsure of where to go, get a consultant in to help start the process. (Usually management will listen much better to a consultant, even if they say the identical thing as the employee.) Make sure the LO's feel the pain - have them start collecting/filling in the missing links. Some cases, it is input into the system for underwriting purposes, and you may not asked the right persons..
_________________________
Integrity. With it, nothing else matters. Without it, nothing else matters.

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#2100542 - 09/27/16 03:45 PM Re: HMDA HELP Anonymous
Anonymous
Unregistered

Not Original Anon:

How does the bank comply with the ATR requirements if it doesn't document income for consumer mortgages?

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#2100573 - 09/27/16 04:55 PM Re: HMDA HELP Anonymous
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,360
We don't rely on LOs inputting information.
We rely on completed applications/1003 forms.
1003 forms are a requirement for all FNMA loans and most of the others too.
I suggest you start there with trying to find the information you need to complete the LAR.
If your LOs aren't using 1003s, maybe it's time that becomes a requirement.

My next suggestion is to make HMDA EVERYBODY's job.
By that I mean every person who touches the file should do a quick review that the HMDA data is there and tracking forward.

As for the past two year review, I wouldn't worry about that until you get through this year and get a firm footing going forward. Especially with the huge changes coming in just over a year, you're going to have your hands full enough.

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#2100581 - 09/27/16 05:22 PM Re: HMDA HELP Anonymous
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
The above is all well and good if you are a consumer-based lender. If you are dealing with commercial HMDA deals, 1003's or any form of 'complete applications' are fairly non-existent.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

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#2100601 - 09/27/16 06:06 PM Re: HMDA HELP Anonymous
Anonymous
Unregistered

Non Original Anon:

But doesn't anyone review these commercial loans to see that were properly underwritten? Examiners or loan auditors? I assume the LO relied on income information of some sort to determine if the applicant could repay the loan. Shouldn't the LO be able to say what income they relied upon?

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#2100675 - 09/27/16 08:59 PM Re: HMDA HELP Anonymous
hmdagal Offline
Power Poster
hmdagal
Joined: Dec 2002
Posts: 3,824
Is it possible that the former HMDA person was correct? Do the LOs at the OPs bank enter inquiries into their LOS? Maybe they don't have an application until the deal is submitted to processing. I would start by reviewing application procedures.

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#2100677 - 09/27/16 09:03 PM Re: HMDA HELP hmdagal
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
Originally Posted By hmdagal
Is it possible that the former HMDA person was correct? Do the LOs at the OPs bank enter inquiries into their LOS? Maybe they don't have an application until the deal is submitted to processing. I would start by reviewing application procedures.


Totallly agree with hmdagal! Determine the process first, then assess if it is compliant, then measure against that.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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