Sound practices for effective HMDA compliance

Last week, the Federal Reserve System published the latest edition of the Consumer Compliance Outlook. This issue includes an article entitled HMDA Data Collection and Reporting: Keys to an Effective Program, which outlines, among other things, a few best practices for creating and maintaining an effective HMDA compliance program. The NAFCU compliance team has published plenty of blog posts about HMDA explaining threshold updates and data collection requirements, but today’s blog will focus on some of the suggested practices that may strengthen a credit union’s HMDA compliance program. These have been identified in the article as “sound practices” and include ensuring accurate data collection, tools, training, data verification, and data reporting.

Ensuring Accurate Data Collection. Credit unions are encouraged to make proactive decisions about how data will be collected and to use written procedures to communicate these decisions to staff. In certain situations, HMDA and Reg C allow a credit union to choose how some reportable information is collected. For example, section 1003.4 allows the credit union to report the “application date” using either the date the application was received by the credit union or the date on the application. In these types of scenarios, a credit union is expected to have a procedure of using one method consistently. Other situations a credit union should consider include using the date on an adverse action notice as opposed to the date a credit decision is made, and determining which credit bureau score to report if more than one was used in making a credit decision.

Credit unions may also consider centralizing HMDA collection activities, so that employees know where to take applicable data and related questions as they arise. A HMDA expert on staff may be able to assist other individuals and ensure all data is collected consistently and accurately.

 

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