HMDA-LAR: Systemic Errors

QUESTION
I have recently become aware that a HMDA-LAR we previously filed for 2013 contained systemic errors. Am I required to correct and resubmit the HMDA-LAR?

ANSWER
It depends on the number of errors contained in the previously filed HMDA-LAR. The CFPB has set forth specific HMDA Resubmission Guidelines in its Examination Procedures of October 2013.

You can find a complete copy of these guidelines at:

http://files.consumerfinance.gov/f/201310_cfpb_hmda_resubmission-guidelines_fair-lending.pdf. 

Institutions reporting fewer than 100,000 loans or applications on their HMDA-LAR are required to correct and resubmit HMDA data when 10% or more of the HMDA-LAR entries are inaccurate. Institutions reporting 100,000 or more loans or applications on their HMDA-LAR are required to correct and resubmit HMDA data when 4% or more of the HMDA-LAR entries are inaccurate. 

This begs the question of how an institution would know what percentage of its entries are inaccurate unless it scrubbed 100% of the loan files and compared the data to the HMDA-LAR entries!  For this reason the CFPB suggests an institution review a sample size, on a consistent basis, to ensure that systemic problems are detected and addressed.

The CFPB Examination Procedures indicate that the Bureau’s examiners will randomly select up to seventy-nine loans to review for institutions with 100,000 or fewer loans or applications on their HMDA-LAR. If the loans are reviewed and eight are identified as HMDA-LAR entries with errors, the CFPB will require a complete resubmission of the HMDA-LAR following a scrub of 100% loan files referenced on HMDA-LAR.  

It is suggested that institutions do whatever is necessary to ensure the accuracy of their HMDA-LAR, as the CFPB has imposed civil monetary penalties upon institutions for failing to have accurate HMDA data; such fines ranging from $1,500 to $425,000.

Michael Barone
Director/Legal & Regulatory Compliance
Lenders Compliance Group