HMDA Application Date Consistency
This HMDA video discusses the consistency requirements of the application date field on the HMDA LAR.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to focus on the application date and consistency in the application date under the Home Mortgage Disclosure Act. This clip applies to HMDA reporters.
The rule for application date reporting says to list the date the application was received or the date shown on the application form. That's except for purchased loans, but all other loans you would list the date the application was received or the date shown on the application form. So we have two options.
The question becomes what if we have multiple dates in the file? How do we approach this?
The answer to this question is found in Comment 1 of 1003.4, which is Regulation C that implements the Home Mortgage Disclosure Act, in section (a)(1)(ii). Under this Commentary, it talks about being consistent. And the commentary says that although a financial institution need not choose the same approach for its entire HMDA submission, it should generally be consistent. It goes on to say that being consistent would be by routinely using one approach within a particular division of the institution or a particular category of loans. The commentary says that if reporting the date shown on the application form and there are multiple applications, then you are supposed to report the date shown on the first application form. So if you have multiple applications, which a lot of you do when you have secondary market loans, you list the date on the very first application if you're using the date that's on the application form.
Now, this seems pretty simple. But here, logistics is key. I have seen many times where a financial institution has multiple methods. For example, there was a community bank I worked with several years ago and they had loan files where I would literally see up to four or five different dates they could use for HMDA reporting. They had a date that was signed by the loan officer, that was one date. The first applicant would sign it a second date. The second applicant would sign it a third date. Then on the front of the form they would stamp it as received and then there would be two or three different copies of the application on file, one printed, one typed and then another one that who knows what it was.
And logistically speaking, that becomes very challenging for a HMDA reporter so the best practice and what you can do is to define what you're going to use when and you basically build an “if, then” statement which you would use in excel but an “if, then” statement for how you process and collect the application date. For example if there are multiple applications use the first. If the loan officer signed it, use that date. If he did not sign it, use the date of the first applicant or something like that. Or you could just say if there is a stamp when the application form is received, use that date. If not, use the loan officer date.
The bottom line here is that you need to define what you're going to do logistically speaking and be consistent. Well that covers our topic for today.