United States

CFPB issues a bulletin on HMDA data accuracy and compliance


In early October, the Consumer Financial Protection Bureau (CFPB) provided guidance on lender compliance with the Home Mortgage Disclosure Act (HMDA). The guidance reinforced the importance of HMDA data as part of the agency’s consumer protection mission, while recognizing that variances in lender size, scope and mission call for local calibration of compliance systems.

As a broad framework, the agency said effective HMDA compliance management systems typically have:

  • Comprehensive policies, procedures and internal controls to comply with the provisions of both HMDA and Regulation C
  • Comprehensive and regular pre-submission HMDA audits
  • Reviews of any regulatory changes that may have occurred since prior examinations
  • Reporting systems appropriate to an institution’s lending volume
  • One or more individuals with responsibility for HMDA data entry, updates and general oversight
  • Appropriate training to ensure personnel understand HMDA and Regulation C standards and reporting requirements
  • Effective corrective action to any previously identified deficiencies.

In addition, the bulletin discussed factors that the CFPB may consider when evaluating a public enforcement action. The key factors include the size of an institution’s HMDA Loan Application Register (LAR) and error rate, whether the institution self-identifies and corrects HMDA errors outside of an examination, and whether the institution has made progress in correcting high HMDA LAR error rates discovered in previous examinations. In any public enforcement action, the CFPB said it may seek civil money penalties or other corrective action it deems appropriate to specific cases. 

The bulletin lays out the CFPB’s resubmission schedule as follows, “…institutions reporting fewer than 100,000 HMDA LAR entries should correct and resubmit HMDA data when 10 percent or more of a sample of HMDA LAR entries contains errors. In certain cases, sample error rates below 10 percent — or below 5 percent in an individual data field — may call for resubmission if the errors prevent an accurate analysis of the institution’s lending.”

The bulletin with complete details including the CFPB’s HMDA resubmission schedule and guidelines for data integrity reviews commencing on or after Jan. 18, 2014, are available at http://files.consumerfinance.gov/f/201310_cfpb_hmda_compliance-bulletin_fair-lending.pdf