QUESTION
We know that there are civil monetary penalties and potential
administrative sanctions for HMDA violations. However, really, all violations
can’t be equal! Are all reporting errors violations?
ANSWER
Certain HMDA reporting errors are not violations of HMDA.
In particular, there are these three defenses:
1. An error in compiling or recording loan data is not a violation of HMDA
if the error was unintentional and occurred despite the maintenance of
procedures reasonably adapted to avoid such errors.
2. An incorrect entry for a census tract number is deemed a bona fide error and is not a violation
of HMDA provided the institution maintains procedures reasonably adapted to
avoid such an error.
3. If an institution makes a good faith error to record all data
concerning covered transactions fully and accurately within thirty days after
the end of each quarter, and some data are nevertheless inaccurate or incomplete,
the error or omission is not a violation of HMDA if the institution corrects or
completes the information prior to submitting the Loan Application Register
(LAR).
It is important to note that, while it is common for institutions to
use third party vendors to provide information on the property location for
HMDA reporting purposes, the institution is responsible for ensuring that the
information reported is accurate.
[12 CFR § 203.6(b); 12 CFR Part 203,
Supplement I § 203.6(b)]
Jonathan Foxx
Managing Director
Lenders Compliance Group
