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#226154 - 08/11/04 03:00 PM HMDA question
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If a broker makes a HMDA error and the loan has already funded, how can I (the compliance officer) fix the problem before it gets reported?
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#226155 - 08/11/04 03:13 PM Re: HMDA question
Dan Persfull Offline
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What type of error?

Data is not "reported" until your LAR is submitted to the FFIEC. Any errors discovered can be corrected on the LAR.
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#226156 - 08/11/04 03:24 PM Re: HMDA question
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For example, a broker marked that the bwrs did not wish to furnish any information and then went on to mark them down as female and male on a telephone application. How can I correct this if the reporting agencies will be looking at the original application?
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#226157 - 08/11/04 03:30 PM Re: HMDA question
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Which is the error? Did he mark the "I do not wish" box in error, or did he mark the GMI in error?

Don't lose a lot sleep over this. Document the error, counsel the broker and document that fact and report the correct information on the LAR.
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#226158 - 08/11/04 03:37 PM Re: HMDA question
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The problem is that I am not sure which is the error so I do not know how to correct the LAR. And this is just one of a few hundred errors that I have found. (I just came to this company and have a lot of clean-up work to do!). Another issue I have come across are applications in which the broker simply did not do any reporting at all! No race, ethnicity, sex or method of app. What would you recommend in cases such as those?

By the way, thanks for taking your time with my barrage of questions. I really do appreciate it!
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#226159 - 08/11/04 03:52 PM Re: HMDA question
Truffle Royale Offline

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Oh, dear, do I feel your pain! I came into a real mess here 18 months ago. Hang in there!

In your citied case above, the error is that he reported gender on a telephone application. Just mark it na on HMDA and make sure your file is documented that this was a phone application. You don't mark race or gender on phone or internet or mail apps.

As far as not getting the info on the apps, I made a zillion calls to LOs to get the information. I'd pile up a bunch from the same officer and call them and politely but firmly inform them that this information is required on face to face applications and so, please tell me what it is. I'd fill it in on the original application in red ink and document that I got it in a phone conversation with the LO on _____ date. This was sufficient for my examiners when they were here both times. (yep, I've had two FRS exams since I started!)

Oh, added bonus to calling the LOs, they quickly get the message that if they don't do it right the first time, I'll be calling them. I've had to make barely a handfull of calls this year!

Feel free to pm me if you ever need to commisserate!

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#226160 - 08/11/04 04:05 PM Re: HMDA question
Dan Persfull Offline
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Quote:

What would you recommend in cases such as those?




Do as we do, don't deal with brokers.

Unfortunately I don't have a solid answer for you, short of contacting the brokers which I know is probably not feasible in your situation.

I would think about putting together a HMDA requirement document that outlines what you expect to be done for collecting GMI and sending to your brokers, and then make sure your people are also aware what is expected from brokered applications.

For telephone applications, I would take the stance that the information was not provided, for face to face (that you can identify) I would assume "visual observation".

This is a tough situation, especially since you say you are dealing with hundreds. I would also recommend contacting your Regulator and discussing the problem and ask for their recommendation. Just be prepared to have to do some file searches.

Good Luck.
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#226161 - 08/11/04 04:10 PM Re: HMDA question
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Thank you for your help. I really appreciate it. I will take your recommendation in putting together some HMDA guidelines for our list of brokers. And I guess the NCUA and I are going to be getting REALLY friendly in the next few weeks!
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#226162 - 08/12/04 03:34 PM Re: HMDA question
hmdagal Offline
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Quote:

For example, a broker marked that the bwrs did not wish to furnish any information and then went on to mark them down as female and male on a telephone application. How can I correct this if the reporting agencies will be looking at the original application?



How do you know that the applicant didn't provide the broker with their sex, and just didn't want to provide the ethnicity and race? I would report the monitoring information as provided on the application.

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#226163 - 08/12/04 04:03 PM Re: HMDA question
Truffle Royale Offline

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Quote:

Quote:

For example, a broker marked that the bwrs did not wish to furnish any information and then went on to mark them down as female and male on a telephone application. How can I correct this if the reporting agencies will be looking at the original application?



How do you know that the applicant didn't provide the broker with their sex, and just didn't want to provide the ethnicity and race? I would report the monitoring information as provided on the application.



We had NA/male on our last LAR and the FRS counted that as an error. If it's over the phone and the borrower doesn't wish to give the information, the LO can't mark male based on the tone of voice. We were told we'd have to have specific documentation in the file from the LO to support that they told him their sex but refused to provide the race info.

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#226164 - 08/12/04 04:51 PM Re: HMDA question
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My point is, especially when an application is taken by a broker (who is not a bank employee), that you don't know that the borrower did not provide the information. The following is taken from the FAQ's on the FFIEC website:

Collection of partial information. When collecting government monitoring information (ethnicity, race, sex), must a lender permit an applicant to choose to fill in only one or two, rather than all three, of the fields?

Answer: Yes. For example, a Web-based application should not compel the applicant to choose between making selections in each of the three fields and declining to make any selections whatsoever. Unless the applicant clearly indicates the applicant declines to supply any information, the applicant must be given the opportunity to supply any part of the information the applicant chooses.


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Reporting of partial information. If an applicant chooses to make selections in one or two, but not all three, fields (ethnicity, race, sex), must the lender report the partial information?

Answer: Yes. For example, if, on an application submitted by mail, an applicant marks a box indicating the applicant does "not wish to furnish" government monitoring information but supplies some or all of the information, the lender must report the information supplied.

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#226165 - 08/12/04 05:05 PM Re: HMDA question
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I agree with your post in regards to internet or mail applications. The necessary documentation is in the file as long as the application is properly marked as mail or internet.

The problem is that the LO in question marked the sex on a phone application. Examiners will require further documentation to the file to verify that the LO was indeed told the sex and did not base the marking on the voice alone.

We are not a front line bank either. We underwrite and purchase loans from community banks. According to our examiners, it is our responsibility as the HMDA reporter to make sure we have the necessary documentation to back up our LAR.

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#226166 - 08/12/04 06:58 PM Re: HMDA question
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I guess we'll have to agree to disagree on this one. I've never had an examiner ask for further documentation of information gathered on a telephone application, but if yours does, you probably need to provide it.

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#226167 - 08/13/04 06:24 PM Re: HMDA question
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Quote:

Examiners will require further documentation to the file to verify that the LO was indeed told the sex and did not base the marking on the voice alone.



I would challenge the examiner on that. If race, sex, and ethnicity are all checked on a telephone application, who's to say the loan officer didn't check all of those based on voice. The examiner should then require additional documentation for all telephone apps, no matter what information is checked. But there's no requirement to do that, so I would require the examiner to show me in the regulation where it says you have to.
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#226168 - 08/16/04 03:49 PM Re: HMDA question
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Quote:

If race, sex, and ethnicity are all checked on a telephone application, who's to say the loan officer didn't check all of those based on voice.



I should think the LO would really be going out on a limb to base ethnicity and race on a voice but you're right, who's to know.

My reply was based on the original poster's statement that the borrowers had indicated they did not wish to provide the information and then the LO went ahead and marked gender. In this SPECIFIC situation, we've had examiners ask us what proof we had that the borrowers refused ethnicity and race but specified gender.

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#226169 - 08/16/04 04:04 PM Re: HMDA question
Dan Persfull Offline
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Quote:

In this SPECIFIC situation, we've had examiners ask us what proof we had that the borrowers refused ethnicity and race but specified gender.



What proof does the examiner have they didn't?

The proof, IMO, would be your telephone application procedures. We do not take applications by phone but, just in case, I did adopt a telephone script that was posted to the threads and made a minor alteration. After reading the required "telephone disclosure" the lenders are to ask the following questions.

We are required by the regulations to ascertain your Ethnicity. Do you wish to furnish this information? Yes No

We are required by the regulations to ascertain your Race. Do you wish to furnish this information? Yes No

We are required by the regulations to ascertain your Sex. Do you wish to furnish this information? Yes No
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#226170 - 08/16/04 04:13 PM Re: HMDA question
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Unfortunately, the trick is to get the Sales Personnel to follow the script and still take down the provided information. I have found several instances here where there is simply nothing marked (from both in-house sales and brokers). In trying to get the Sale I am finding that corners are being cut. Obviously this is where management needs to step in and lay down the law but in many cases the damage is already done and now the repair work begins. Can you suggest a good training tool that I can send to Sales that will encourage them to take proper applications as well as convey the importance of HMDA?

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#226171 - 08/16/04 04:27 PM Re: HMDA question
Dan Persfull Offline
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Quote:

Can you suggest a good training tool that I can send to Sales that will encourage them to take proper applications as well as convey the importance of HMDA?




Unfortunately no. But in my training I make sure everyone, especially Sr. Mgmt., is aware of the expense of having to do "file scrubs" and give them examples of recent CMPs imposed.

In my HMDA file reviews I document any errors found. The error, frequency of that error, and the LO's name is sent to the EVP and SLO. This now plays a role in their performance reviews.

We do not deal with brokers, but I would suggest a check sheet outlining what you expect and taking a "hard" stance they adhere to that check sheet.
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#226172 - 08/16/04 05:34 PM Re: HMDA question
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Quote:

We do not deal with brokers, but I would suggest a check sheet outlining what you expect and taking a "hard" stance they adhere to that check sheet.


I think hmdagal had it right when she said for broker applications you mark down whatever is on the application. We get a lot of apps from brokers, and I don't see any need to make sure they are following the correct procedures when it comes to collecting GMI. The broker may have taken the application by phone, but when the app gets sent to us, it's considered an app received by mail, and we report whatever is marked on the application. I'm not going to spend time worrying about whether the broker marked the sex based on voice or not. Now if the broker worked for us exclusively, I would worry about it, but they don't. If we get an application that says the borrower is female, we report the borrower as female. As hmdagal also pointed out, how do you know the borrower DIDN'T tell the broker their sex? So I would report whatever is on the broker app instead of trying to second guess what the correct answer is.
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#226173 - 08/16/04 05:49 PM Re: HMDA question
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My experience here is all what y'all are calling broker applications. We get the apps in from the LOs at the outlying community banks and then we underwrite, etc. Maybe that's why my examiners are riding hard on documentation for us.

If your institution's broker files make up just a portion of your LAR, then the chances that an examiner will even pull a telephone interview file are greatly diminished.

I agree that training and periodic reminder bulletins help keep everyone on track about the importance of HMDA and the role the LOs play in the reporting process.

Other than that, we're probably just debating something that's going to be very examiner specific. But that's what posting on a thread and sharing our experiences is all about, right?

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#226174 - 08/16/04 05:55 PM Re: HMDA question
Dan Persfull Offline
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Lee, I don't disagree with you and Hmdagal, but my "check sheet" response was based on the following comment from the post.

I have found several instances here where there is simply nothing marked (from both in-house sales and brokers).
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#226175 - 08/16/04 06:32 PM Re: HMDA question
hmdagal Offline
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If an application is taken by an in-house loan officer, we follow-up with them to make sure the monitoring information has been requested, and document the file accordingly. However, if the application is taken by a broker, we generally receive it via fax, and treat it as such.

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#226176 - 08/16/04 09:27 PM Re: HMDA question
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Dan, I see where you are coming from, and I agree with you when it comes to in-house staff. If they're not checking anything it's a definite problem that needs to be addressed. But I was speaking from a broker application perspective only. If we get a broker application with nothing at all marked on it we treat it as information not provided in a mail application.
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#226177 - 08/16/04 09:50 PM Re: HMDA question
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Lee S - But what if the broker marks that the app was taken face-to-face? You would leave it the way it is and mark it as a mail app? I thought reporting was supposed to come from the borrower's initial application, not just the way the app was received by the lender. Please help as I am still new at the whole compliance thing.

I used to think I knew what I was doing until I took this job!

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#226178 - 08/17/04 09:27 PM Re: HMDA question
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I don't see that it makes any difference to us how the broker received the application. If the broker marks face to face and we were to treat it as a face to face app, then we would have to indicate the GMI based on visual observation if nothing was marked. But there was no visual observation on our part because we received the app through the mail (or by fax). So we report the GMI based on how we received the application, not on how the broker may have received it.

Keep in mind that my rationale is based on the fact that the broker is not our agent and is not working for us exclusively. If the broker was acting as our agent, then an app taken face to face by the broker would be considered a face to face app for us as well IMO.
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