Filing the HMDA LAR annually often seems like a Rite of Passage. Most filers vacillate between dread and certitude in their evaluation of the data integrity, let alone enduring the stress of submitting the report by the deadline. The acronyms HMDA LAR refer (of course) to the Loan Application Register (LAR) of the Home Mortgage Disclosure Act (HMDA or “Act”) and its implementing Regulation C (“Regulation”). By the way, the HMDA acronym is pronounced “hummda” – not “himmda”. Each year about this time, we get a lot of calls for HMDA support, especially in LAR preparation and filing. In the last few years, changes in filing requirements seem to have pushed filers to the point of reaching for the bottle (of Maalox). But the filing requirements are not that complicated, though they are now more involved in obtaining data and include partial exemptions (more on that later).
If you don’t think HMDA data is all that important except to the PhD’s at the Federal Reserve, you should spend some time with financial institutions who have undergone fair lending examinations. One of the first data sets a regulator asks for in a fair lending audit happens to be the HMDA LAR. The data is used to help identify possibly discriminatory lending patterns, and compliance with the Equal Credit Opportunity Act, the Fair Housing Act, and the Community Reinvestment Act. Inaccurate HMDA data can make it difficult for the public and regulators to discover and stop discrimination in home mortgage lending or for public officials and lenders to tell whether a community’s credit needs are being met. Yet I was told by a senior executive that there is nothing to be concerned about these days, given that under the current Administration there has been a reduction of regulatory enforcement. The same person told me that regulators have been advised to go easy on examinees. So, that means you can get away with lowering the compliance bar. After all, less enforcement means less worries, right? Wrong!