HMDA (Reg C) Flashcards
What is the MOST appropriate next step to take when the compliance professional is made aware of gaps in the bank’s HMDA (Regulation C) processes?
A. Report the gaps to Executive Management
B. Revise the bank’s HMDA training materials and policies
C. Post an updated resume on an online banking compliance job board
D. Determine the precise scope of the problem by doing preliminary investigations
D. Determine the precise scope of the problem by doing preliminary investigations
It is difficult to remediate gaps in compliance programs if the precise scope of the problem is unknown. This would be best accomplished by performing investigations into the extent of the problem. Reporting gaps to Executive Management without knowing the scope of the problems would be unwise at best. The same goes for revising materials and policies – what would those revisions state? They may be incomplete or inaccurate without knowing the full scope of the problem. And just because there are issues, there is no reason to post your resume!
A data integrity review for CRA and HMDA data submissions should include which of the following?
A. Analysis of loans made by geography
B. Analysis of applications by race, sex, and income
C. Verification of key data field accuracy
D. Verification that loan denials were denied in accordance with bank loan policy
C. Verification of key data field accuracy
Data integrity reviews involve exactly what the name suggests: the integrity (accuracy and reliability) of the data submitted under HMDA and CRA. Thus, verification of key data fields is essential in such an effort. Analyses of loans by geography and applications by race, sex, and income are both useful in fair lending-style analyses, but not for data integrity reviews. And while verifications that denials were performed according to bank policy are useful, it is also not an element of a data integrity review.
After a review of the bank’s Home Mortgage Disclosure Act (HMDA) procedures, which finding is MOST important to discuss with business leadership?
A. The bank is reporting all commercial-purpose applications secured by dwellings
B. “N/A” is reported under income for an application where the applicant is a corporation
C. The bank is not reporting applications for loans secured by farmland
D. The bank is not reporting applications for loans that are temporary in nature
A. The bank is reporting all commercial-purpose applications secured by dwellings
If a bank is reporting all commercial applications secured by dwellings, it would be reporting applications not mandated by HMDA. The regulation requires reporting of only commercial-purpose home purchase, home improvement, and refinancing applications. The other choices are accurate statements of HMDA’s requirements, so it would not be necessary to discuss them with management.
By policy, a bank does not collect income information on employee loan applications. When completing the HMDA LAR’s income field, the bank must record:
A. The zero dollar amount
B. The income information, regardless of its policy
C. The income information, but may use codes to protect the employee’s identity
D. NA for Not Applicable
D. NA for Not Applicable
According to HMDA guidelines covering how various fields should be populated, NA should be recorded for income on an employee loan application for obvious privacy reasons. The information should not be recorded at all.
Which of the following is MOST concerning when reviewing annual Home Mortgage Disclosure Act (Regulation C) submission reports and exception files?
A. Demographic information is reported in all Internet applications, even when the applicant refuses to provide it
B. Demographic information is reported in all applications received in-person, even when the applicant refuses to provide it
C. The bank reports commercial home purchase loan applications
D. When a counteroffer is accepted, the bank reports an origination for the amount of the loan, not the amount originally refused by the bank
A. Demographic information is reported in all Internet applications, even when the applicant refuses to provide it
Demographic information is not required in all Internet applications; the bank should not guess at the information when applicants refuse to provide it, as they cannot observe the applicant. Therefore, this would be concerning. The other choices are accurate statements of HMDA’s requirements, so they would not be concerning if observed during a review.
When preparing an action plan to validate the types of applications that should be included in HMDA reporting, which of the following is MOST important to include?
A. Consumer-purpose unsecured home improvement loans
B. Consumer-purpose dwelling-secured loans that modify existing loans to provide new money utilized to improve the borrower’s principal dwelling
C. Commercial-purpose loans to purchase warehouses, secured by multi-unit apartment buildings
D. Commercial-purpose lines of credit utilized to improve multi-unit apartment buildings, secured by the apartment buildings
D. Commercial-purpose lines of credit utilized to improve multi-unit apartment buildings, secured by the apartment buildings
HMDA coverage includes any consumer-purpose, dwelling-secured loan or line of credit. If the primary purpose of the loan or line is a commercial purpose, only home purchase, home improvement, and refinancing purposes are reportable. Thus, a commercial-purpose line of credit to improve the dwelling, secured by the dwelling, would be reportable. A commercial-purpose loan to purchase a warehouse, even though secured by a dwelling, would not be reportable since it is not a home purchase, home improvement, or refinancing. Unsecured loans or lines of any type are not reportable. There must be an “obligation” to be reportable; thus, a modification would not be reportable since there is no new obligation.
When evaluating a bank’s Home Mortgage Disclosure Act (Regulation C) platform, which of the following would be a concern?
A. Whether the data is complete and accurate
B. Whether the unique identifier is sequential
C. Whether the system includes unsecured loans
D. Whether the information is maintained for seven years
A. Whether the data is complete and accurate
Data integrity of a bank’s HMDA data is critically important, both for HMDA purposes as well as for fair lending analysis purposes. Whether the bank’s data is complete and accurate would surely be a concern. None of the other choices identifies a concerning factor under HMDA.
A bank originated 650 closed-end mortgages within the last calendar year. As the compliance professional, what is the BEST process to implement to comply with regulatory reporting requirements?
A. Perform one annual review of all HMDA-reportable records to validate data accuracy before submission of the Loan Application Register (LAR)
B. Perform periodic reviews of all HMDA-reportable records to validate data accuracy before submission of the Loan Application Register (LAR)
C. Submit the Loan Application Register (LAR) with the data as collected and recorded by the loan originators
D. It is not necessary to complete periodic reviews of all HMDA-reportable records, as the bank did not reach the required reportable threshold
B. Perform periodic reviews of all HMDA-reportable records to validate data accuracy before submission of the Loan Application Register (LAR)
HMDA requires that if the bank originated at least 100 closed-end dwelling secured loans, it must report the applications as part of their LAR. The bank did exceed this threshold. HMDA-reporting institutions are required to perform periodic reviews of their HMDA data to validate accuracy before submitting the data by March 1 of the following calendar year. These reviews are necessary and required.
On February 8, you assume responsibility as the compliance officer of a HMDA-reporting bank. Prior to March 1, you should:
A. Conduct a fair lending review.
B. Conduct a comparative file analysis of loans with rate spreads greater than 3%.
C. Ensure that the data to be submitted is accurate.
D. Compare the prior year’s HMDA results with the current year’s results.
C. Ensure that the data to be submitted is accurate.
Which of the following is MOST concerning when reviewing quarterly Home Mortgage Disclosure Act (Regulation C) reports?
A. Bulk purchases are included in the report
B. The quarterly error rate is consistent with prior quarters
C. Commercial loans are excluded from the report
D. Preapprovals are included if part of a formal program
C. Commercial loans are excluded from the report
If a bank acquires loans in bulk from another bank (for example, from the receiver for a failed institution) but no merger or acquisition of the institution/branch is involved, the institution reports the loans as purchased loans.
Commercial dwelling-secured applications are HMDA-reportable. Preapproved loans are also reportable if part of a formal program.
A consistent quarterly error rate isn’t ideal (unless that rate is extremely low or zero), but it is not as concerning as neglecting a HMDA-reportable category of loans (and applications).
What is a refinanced loan as defined by HMDA?
A. Any dwelling-secured consumer loan that replaces and satisfies another dwelling-secured loan.
B. Any dwelling-secured loan that replaces and satisfies another dwelling-secured home improvement loan.
C. Any dwelling-secured loan that replaces and satisfies another dwelling-secured loan. The purpose of the original loan is irrelevant.
D. Any dwelling-secured loan that replaces and satisfies another dwelling-secured home purchase loan.
C. Any dwelling-secured loan that replaces and satisfies another dwelling-secured loan. The purpose of the original loan is irrelevant.
Must HELOCs be reported for HMDA purposes?
HELOCs may be reported at the institution’s option if they are made for the purpose of home purchase or improvement – but report only the portion of the loan that represents the covered purpose.
True/False: Applications for preapprovals for home purchase loans that are denied or result in origination should not be reported.
False. They must be reported.
May HMDA data may be collected on separate registers for different branches or loan types?
Yes
HMDA data must be submitted to the supervisory agency in one complete package with what?
A. Supporting data
B. Board of director approval
C. Chief Lending Officer contact information
D. Officer certification of accuracy
D. Officer certification of accuracy
True/False: National banks and savings institutions have the option of reporting the reason for denial on the HMDA LAR.
False. They must report this. It’s optional for all other financial institutions.
Several types of loan-related data appear in the following list. Which type of data is NOT required to be reported under HMDA?
A. Data on multifamily housing
B. Data on unsecured home improvement loans
C. Data on refinancings of home purchase loans
D. Data on loans to purchase unimproved residential lots
D. Data on loans to purchase residential lots
Loans on unimproved land are not covered by the regulation. Unsecured home improvement loans may be reported if the institution classifies them as home improvement loans. If they are not classified as home improvement loans, they do not have to be reported.
The following statements make assertions about the collection and reporting of data on race, ethnicity, sex and income. Which statement is false?
A. It must be requested on all HMDA-reportable applications received in person from natural persons.
B. It must be requested only for the loans where the application is taken in person.
C. It must be reported unless the loan was purchased
D. It must be requested verbally on telephone applications.
B. It must be requested only for the loans where the application is taken in person.
The info on race, ethnicity, sex and income must be requested on all HMDA-related applications, even those received by telephone, mail or Internet. It does not have to be reported if the borrower fails to supply the information in an application that is not taken in a face-to-face interview. The institution does not have to report this information on purchased loans.
First National is subject to HMDA. On which of these loans does First National have to report the interest rate spread on its HMDA LAR?
A. A loan to remodel a 60-unit apartment complex.
B. A loan to renovate a rental property
C. An unsecured loan to purchase an investment property
D. A home improvement loan secured by a principal dwelling
D. A home improvement loan secured by a principal dwelling
The interest rate spread is only reported on loans subject to TILA.
By what date must financial institutions submit their loan application registers to their federal supervisory agency?
A. March 31 of the year following the calendar year for which the data were compiled.
B. March 1 of the year following the calendar year for which the data were compiled.
C. February 1 of the year following the calendar year for which the data were compiled.
D. April 1 of the year following the calendar year for which the data were compiled.
B. March 1 of the year following the calendar year for which the data were compiled.
If First National is subject to HMDA, which of the following loans would First National report on its LAR?
A. A refinancing of the balance of a home purchase loan made 5 years earlier, if both loans will be secured by dwellings.
B. A loan made to a couple, secured by their home, to pay for their children’s education.
C. A bridge loan made to a newly transferred executive of a local company
D. A loan made to construct a principal dwelling.
A. A refinancing of the balance of a home purchase loan made 5 years earlier, if both loans will be secured by dwellings.
Refinancings of home purchase loans when both loans are secured by dwellings are covered by the regulation. New loans made for purposes other than home improvement, home purchase and refinancings are not covered even if they are secured by real estate. Temporary loans, such as bridge loans and construction loans, are not covered.
When must a bank provide its mortgage loan disclosure statement?
A. Only when requested by its federal supervisory agency
B. At any time when requested by a member of the public
C. For 30 days following receipt of a request from its supervisory agency
D. On an ongoing basis, by posting it in the lobby of each branch.
B. At any time when requested by a member of the public
The mortgage loan disclosure statement must be made available to the public no later than 3 days after its receipt from the FFIEC, and the statement must be available for 5 years. The bank must post a notice of the public’s right to see the statement in the lobby of each office located within a MA.
My lazy dog sits, farts, yawns.
Mortgage / loan / disclosure /statement / five / years.
What information must be on the LAR for home loans on property located within the bank’s metropolitan area?
A. The county, census tract, and metropolitan area of the property
B. The address, census tract, and metropolitan area of the property
C. The county, address, and FMV of the property
D. The name, address and metropolitan area of the applicant.
A. The county, census tract, and metropolitan area of the property
How must most banks submit LAR to their federal supervisory agencies?
A. In machine-readable format
B. On the standard LAR form
C. In 3 copies with the required transmittal
D. In a separate package for each branch loan application
A. In machine-readable format
Banks with more than 25 LAR entries are required to submit electronically. Otherwise, two hard copies must be sent with the transmittal letter.
Which of the following is required to be reported on ABC Bank’s HMDA LAR?
A. An application from Mr. Welch for a preapproval of a home purchase loan application that is approved by ABC in writing but not accepted by Mr. Welch
B. An application from Ms. Ensley for a preapproval of a temporary construction loan that is denied by ABC
C. An application from Mr. and Mrs. Rawlings for a preapproval of a home purchase loan application that is denied by ABC
D. An application from Ms. Connor for a HELOAN to be used to consolidate credit cards.
C. An application from Mr. and Mrs. Rawlings for a preapproval of a home purchase loan application that is denied by ABC
Applications for preapprovals for home purchase loans must be reported if they are denied or if the loans are granted. Applications for preapprovals that are approved but not accepted are reportable at the institution’s discretion. Applications for nonreportable loans (the interim construction loan in (b) and the HELOAN for a non-HMDA purpose) are never reported.
John and Elise Fernandez apply to ABC Bank for a loan to purchase a manufactured home. ABC Bank is a community bank with approximately $100 million in assets and the home would be located outside of the bank’s metropolitan area. Mr. and Mrs. Fernandez complete an in-person application for a mobile home that is denied by the bank due to insufficient income. Which piece of information on the Fernandez application is ABC Bank NOT required to report on its HMDA LAR?
A. The ethnicity of the applicants
B. The race of the applicants
C. The purpose of the loan application
D. The metropolitan area where the home will be located.
D. The metropolitan area where the home will be located.
Because ABC does not have an office in the metropolitan area where the property is located, it does not have to report the property information on its LAR. It may do so at its option. All other info is required.
Which of the following loans or applications is EXCLUDED from HMDA reporting?
A. Residential loans purchased on the secondary market
B. Loans secured by real estate that are made for purposes other than home purchase, improvement or refinancing
C. Loans on residential property in a flood zone when proof of flood insurance is not provided
D. Applications for refinancing when there is no increase in principal.
B. Loans secured by real estate that are made for purposes other than home purchase, improvement or refinancing.
Only the types of loans mentioned in the “loans covered” and “compilation of loan data” sections are included in the coverage of HMDA - home purchase, home improvement or refinancing. Loans made for other purposes are not reportable.
For HMDA purposes, the term “dwelling” does NOT include which of the following?
A. Timeshares
B. Single family dwellings
C. Individual condos
D. Mobile homes not attached to real property
A. Timeshares
Of the following, which is the most likely to be a violation of Regulation C?
A. The MSA number, instead of the MSA name, is used for each loan and application
B. The “reasons for denial” column is blank
C. Race, national origin, and gender information are not included for purchase loans
D. The gender of the applicant is designated by the letters M or F
D. The gender of the applicant is designated by the letters M or F
Codes must be used to indicate sex of the applicant - not the letters “M” and “F”
An individual borrowed $1000 to remodel her mobile home. She lives in the mobile home that is not anchored to the ground. The loan will be secured by the mobile home, but the borrower does not own the lot on which it is parked. For HMDA purposes, this loan is considered to be which of the following types of loans?
A. Consumer RV
B. Home equity
C. Home improvement
D. Second mortgage
C. Home improvement
