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HMDA Reporting - Brokered Loans on LAR

Question: 
I attended a seminar last week and I discovered that our bank, ​which I thought was approving and selling loans, was actually acting as a broker. Upon speaking to the primary loan officer for these loans I found out that we do not do any of the underwriting for these loans, nor do we make the credit decision. The purchaser is putting these loans on their LAR (as they should), but so have we. I have been working here nearly a year now and just found that information out and I am upset with myself for not knowing this information before now. I looked at our LAR from last year and see that nearly half of the loans on the LAR should not have been reported as they were these brokered loans. It is the same story as far back as 2014. Do we need to go back and re-submit the LAR(s) or can we proceed as normal? Are we looking at penalties? I am really shocked at this news. After several exams and outside audits, this was never discovered until now. I would really appreciate any tips you can offer.
Answer: 

Answer by David Dickinson:

First, good catch. Better to get it stopped now than have it come up in an exam. Obviously remove all of the 2017 entries that are being reported by the purchaser.

Going bak to previous (already filed) LARs is a risk decision.
You could not resubmit and take the risk of it being detected. Depending on when your next exam is, and assuming it is detected, they examiners might make you resubmit. If you haven't had to resubmit before, I doubt you're looking at penalties either way (resubmitting now or waiting - if it's detected).

You could call your local field office and ask for their opinion, but they you'll have to do what they say. Again, it's all a risk decision.

Answer: 

Answer by Andy Zavoina:

I agree that you correct what you have now so 2017 is correct, and you ask your field office. They may say the count is low and insignificant. They may also say, complete the corrections and keep that on file, plus share it with them so they can use the correct data when they examine you for fair lending and CRA as well as HMDA.

I have been in a discussion where the examiners wanted the corrected data but it wasn't worth a resubmission and certainly not worth reproducing all the tables again.

I believe what you do not want is an examiner finding the problem and that being the first they hear of it when the bank has known about the issue.

First published on 09/03/2017

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