HMDA is a regulation that leaves very little room for error and the potential consequences are great. No one wants to scrub data and refile a HMDA LAR. When it comes to your HMDA data, it’s best to aim for perfection. This might include implementing some checks and balances along the way, such as periodically reviewing your data to ensure its accuracy. Some data fields are more challenging than others. Knowing some common tripwires can help you know where to direct your time and effort.
One area we still see financial institutions have issues with is reporting the Loan Purpose, specifically when it comes to the “Other” category. HMDA applies to dwelling-secured applications where the loan purpose is or will be to purchase, refinance, improve a dwelling or “Other”. We like to refer to “Other” as “consumer home equity”. Why? Because “Other” is the only option that depends on whether an application is primarily for consumer purposes vs. business purposes. In other words, the “Other” purpose is only used for a consumer-purpose, dwelling-secured application that is otherwise not to purchase, refinance or improve a dwelling. You do not report business-purpose, home equity applications for HMDA, but there is a catch you need to be aware of.
David explains more in the video.
Published
2024/04/22