September 5, 2017 8:46 am

By Gina Ellis, CRCM

The Federal Financial Examination Council (FFIEC) announced the issuance of Home Mortgage Disclosure Act (HMDA) Examiner Transaction Testing Guidelines to support the evaluation of financial institutions’ compliance with HMDA’s new requirements. Beginning January 1, 2018, the testing procedures described in the guidance will be used by the regulatory agencies to validate the accuracy of HMDA data collected during 2018 and reported in 2019. The guidelines also outline the circumstances where examiners may require institutions to correct and resubmit HMDA data.

The guidelines indicate tolerance allowances are established for certain data fields that will not be counted as errors. Those tolerance allowances are as follows:

  • 3 calendar days or less in the date the application was received and the date shown on the application form;
  • $1,000 or less in the amount of the covered loan or the requested amount;
  • 3 calendar days or less in the date of action taken, unless data for the wrong calendar year is reported; and
  • Rounding errors in reporting the dollar amount, rounded to the nearest thousand, of the gross annual income relied on in making the credit decision or processing the application.

The guidelines also explain that the term “data field” generally refers to individual HMDA Filing Instructions Guide (FIG) fields, each identified by a distinct Data Field Number and Data Field Name. However, information reported for the ethnicity or race of an applicant/borrower and co-applicant/co-borrower will be considered a single data field consisting of the relevant group of FIG fields.

Details of the transaction testing sample sizes and thresholds and specific examples are included in the guidelines found here: https://s3.amazonaws.com/files.consumerfinance.gov/f/documents/201708_cfpb_ffiec-hmda-examiner-transaction-testing-guidelines.pdf

As a result of these new guidelines, we recommend banks revise their HMDA compliance monitoring procedures to ensure sufficient transaction testing is performed prior to regulatory examination and annual HMDA data submission. This may include more frequent transaction testing, performed at least quarterly and prior to final data submission.

Our compliance consultants are gearing up for the HMDA changes and are here to assist you with additional audits, monitoring and guidance. If your institution needs help, contact us at www.americanbanksystems.com or call (405) 607-7000.