Home Mortgage Disclosure Act (HMDA) Documentation

If you are an HMDA Bank, you are fully aware of how the CFPB’s 2018 HMDA Rule shook things up! It comes as no surprise, then, that HMDA data collection and reporting errors are one of the most common findings we see in our bank reviews

HMDA: Common Mistakes

From a loan officer’s perspective, it is important to ensure the scenario at the time of application is well-documented.

Remember, HMDA is an application regulation. While most loan officers are pretty comfortable with collecting Demographic Information and completing the form, there are still quite a few areas that could be documented at the time of the application that would make the review and reporting process much easier.

While some things may seem perfectly obvious and may not warrant writing them down, these can become sticking points later in the year. For example, consider a mixed-use property that has both commercial and residential space. The determination of whether the primary purpose of the mixed-use property is a dwelling or not may be obvious to the lender now, but trying to recall the reasons behind that thought process or determination may be a lot more difficult many months later. Remember, you have flexibility under Section 1003.2(f) when making a reasonable determination of whether you have a dwelling or not when it comes to mixed-use properties. It can be very helpful if that determination is made early and documented clearly!

Clear documentation of the specific application scenario, the type of loan that was applied for, and/or the reasons for the action taken can cut out a whole lot of guesswork down the road.


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