Agency Guidelines on HMDA Data Testing Fall Harder on Smaller Lenders

The federal banking agencies issued guidelines for how examiners will test the accuracy of data collected and reported by financial institutions under the Home Mortgage Disclosure Act.

Despite coming after concerns expressed by ABA and others about the burdens imposed by unreasonable error tolerances that require a bank to resubmit its HMDA data — in light of the vastly expanded data fields that must be reported beginning in March 2019 — the new guidelines are expected to have the opposite result, creating disproportionate expectations for smaller volume lenders. For example, an examiner will review 30 loan files of a bank that only makes 50 mortgage loans but only 159 files for a bank that originates 100,000 loans. Moreover, a small number of errors in any given data field will trigger review and resubmission.

In comments filed to the proposed guidelines, ABA called for more reasonable tolerances. The association intends to ask the congressional banking committees to review the new guidelines and consider whether the level of perfection required will undermine the ability of banks to serve their customers. 

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