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HMDA Review

icon-regulatory-exam-preparationThe accuracy of a lender’s Home Mortgage Disclosure Act (HMDA) data is a critical component of an effective Fair and Responsible Lending Program.  The Consumer Financial Protection Bureau and prudential regulators view the accuracy of HMDA data as an important element in consumer protection and enforcement activities.

Implementing effective internal controls to ensure the accuracy of HMDA data is an on-going and often complex process.  HMDA compliance management systems should incorporate several key factors:

  • Board and management oversight
  • Policies and procedures
  • Training and education
  • Data management process
  • Independent pre-submission review

Consideration must be given to both errors and omissions – is HMDA data accurate and complete?  The process for identifying gaps in data capture, processing, and reporting should include the following controls:

  • Review of regulatory interpretations
  • Map of data / document source for all HMDA fields
  • Reconciliation of all applications
  • Systemic testing of HMDA data to other information
  • Validation of geocoding results
  • Corrective action plan for identified deficiencies

Submission of inaccurate HMDA data creates substantial financial and examination risk.  Civil money penalties over the past couple of years have ranged from $2,500 to $425,000.  Fair lending examinations have been delayed due to flawed results based on inaccurate or incomplete data.   Resubmissions resulting from regulatory examinations can cover multiple years at significant financial costs.

CrossCheck’s experienced compliance experts will review the existing HMDA compliance management system to determine its adequacy based on the scope, complexity, and size of the company.   Data integrity testing will include single and multi-system validation routines, as well as manual file reviews. CrossCheck will work with client management and compliance teams to identify enhancements to existing processes to ensure the accuracy and completeness of HMDA data.

Prior to the start of any engagement, CrossCheck consultants will submit an information request which will include policies, procedures, and data requirements. We will conduct interviews with key personnel as well as systemic testing to ensure we have sufficient information to assess the institutions HMDA Compliance Management System and make any appropriate recommendations for improvement.

Additional consulting services can be provided as needed to enhance procedures and policies, assist with remediation efforts for any specific data integrity issues identified and provide training and information about existing and changing compliance requirements, etc.

 

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