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#2280304 - 01/26/23 04:33 PM Validation of Purchased Loans
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
When we purchase loans, we receive an Excel sheet with the LAR information for each loan from the seller. In addition, we receive the loan file. I just learned that we do not validate the LAR information to the file. We convert the LAR information to our template for import to CRA Wiz and that is all we do.

We have elected to NOT report GMI even if it is included in the LAR information.

I'm thinking that since we have the loan file, we should validate the information. Would like to know what others do.
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#2280319 - 01/26/23 06:55 PM Re: Validation of Purchased Loans TryingtoComply
tedster Offline
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tedster
Joined: Jul 2006
Posts: 108
Philadelphia
Generally, we report the minimum amount required for purchased loans. So, if it says NA for purchased covered loans, that is what we report, even if the information (e.g., demographic data) is available. I have a separate question about purchased loans, but will start a new thread.
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#2280323 - 01/26/23 07:14 PM Re: Validation of Purchased Loans TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
Yes, we do the same - report the minimum amount of required information. But my question was about validating the information received in the spreadsheet then send us to the loan file the seller sends us. Maybe I wasn't making myself clear.

The more I think about this, I think that we should be verifying the information in the spreadsheet they provide to the file they provide before we import the information to CRAWiz.

To put it another way - we have been accepting what the seller sends us for the LAR and importing it without verifying it. Doesn't seem right as we are going to be responsible for the data being correct.
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#2280330 - 01/26/23 08:01 PM Re: Validation of Purchased Loans TryingtoComply
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
We don't purchase loans but would you not be verifying your HMDA data in periodic scrubs?
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#2280332 - 01/26/23 08:05 PM Re: Validation of Purchased Loans TryingtoComply
tedster Offline
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tedster
Joined: Jul 2006
Posts: 108
Philadelphia
Yes, I would agree, the spreadsheet should be validated to the loan file for the minimum amount of HMDA data to be reported. We always say, what would we show an examiner if they select this loan? It seems better that actual loan documentation would substantiate the LAR better than a spreadsheet.

As for periodic scrubs, the residential division performs monthly scrubs, and the audit department performs an annual audit prior to filing.
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#2280353 - 01/26/23 09:59 PM Re: Validation of Purchased Loans TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
Thanks tedster. That's what I say. Honestly, I have no idea why we have not been doing it. We've been fortunate that nothing has ever come up about it.

Thanks also for your response Dan.
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#2281616 - 02/27/23 06:51 PM Re: Validation of Purchased Loans TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
We completed our review of 2022 purchased loans and it was painful as the seller provided all loan related documents in one pdf. This required us to search through all the pages to find what we need.

Looking for recommendations to make this better in 2023.
Last edited by TryingtoComply; 02/27/23 06:52 PM.
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#2281617 - 02/27/23 06:55 PM Re: Validation of Purchased Loans TryingtoComply
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Why did your purchase contract not require them to provide you the HMDA information electronically. All they had to do was provide you the information that they originally reported.
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#2281618 - 02/27/23 07:09 PM Re: Validation of Purchased Loans TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
Right. And they did. However, my understanding based on the above responses was that we need to validate the electronic information to the file. Is that not the case?

Finding the documents in the pdf was very time consuming.
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#2281619 - 02/27/23 07:38 PM Re: Validation of Purchased Loans TryingtoComply
rlcarey Offline
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rlcarey
Joined: Jul 2001
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Galveston, TX
Would I test them - sure - but based on the results of that test, would I do 100% - no. How many errors did you find?
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#2281621 - 02/27/23 07:51 PM Re: Validation of Purchased Loans TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
We had way too many loans to test all of them. We sampled for each lender and found no issues in our samples.

We just finished our exam with the FDIC. They tested two years of HMDA data. Six purchased loans from each year.

We did not validate 100% and I'm ok with that. Some of the pdfs were over 1,000 pages. Finding a document to validate to was like looking for a needle in a haystack.
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#2281622 - 02/27/23 07:53 PM Re: Validation of Purchased Loans TryingtoComply
rlcarey Offline
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rlcarey
Joined: Jul 2001
Posts: 83,219
Galveston, TX
Then I do not understand what you are asking other than if you are going to accept a PDF file, that it has to be indexed.
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#2281624 - 02/27/23 08:11 PM Re: Validation of Purchased Loans TryingtoComply
TryingtoComply Offline
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Joined: Apr 2013
Posts: 2,199
The West
That's it. I didn't even think of that. I haven't dealt with this before. Thanks Randy.
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