Case Study | Home Mortgage Disclosure Act (HMDA)
Summary + Historical Context
The Home Mortgage Disclosure Act (HMDA), originally enacted by Congress in 1975 and implemented by
Regulation C (Reg C), requires financial institutions such as residential mortgage lenders to maintain, collect,
record, report, and disclose data about their mortgage lending activity. Previously administered by the Federal
Reserve Board, following the Dodd-Frank Wall Street Reform and Consumer Protection Act, authority over HMDA
and Reg C has been transferred to the Consumer Financial Protection Bureau (CFPB).
Per Reg C, financial institutions must report HMDA data to the CFPB, in the form of a HMDA Loan Application
Register (LAR). Institutions which accept less than 60,000 loan applications per annum file the HMDA LAR
annually; institutions which exceed 60,000 loan applications in volume, must file the HMDA LAR quarterly.
Further, financial institutions must also notify the public when this data is published. Data reported to the CFPB
includes Government Monitoring Information (GMI)—race, ethnicity, and sex—collected upon submission of a
residential mortgage loan application via the Uniform Residential Loan Application (i.e. Form 1003).
Provision of this data allows the CFPB to assess whether lenders serve the housing needs of all communities.
Specifically, the HMDA LAR provides information which may inform amendments to CFPB policy, and may also
shed light on lending patterns which may be discriminatory in nature. The HMDA LAR is scrutinized at an
extensive and detailed level by the CFPB, which conducts examinations (audits) of residential mortgage lenders
every 36-48 months.
ABC Mortgage Bank (ABC) is an early-stage digital mortgage originator engaging in direct-to-consumer (D2C)
residential mortgage lending. You have been onboarded as the first hire of ABC’s Regulatory Strategy team,
reporting directly to ABC’s General Counsel (GC) and Chief Compliance Officer (CCO).
On your first day, you are informed that you will be responsible for our ABC’s HMDA filing. ABC has never
previously submitted a HMDA filing. Further, you yourself have scant experience with both HDMA and Reg C, and
may not have previous experience leveraging the data analytics and engineering-related skills required for the
accurate and timely submission of this filing.
Visualize a scenario in which you join ABC’s Regulatory Strategy team on February 1 and are independently and
solely responsible for submitting the HMDA LAR by March 1. Assume that ABC does not have HMDA policies or
procedures (P&Ps) in place. You are ABC’s first Regulatory Strategy hire; it is your job and privilege to develop
them! These P&Ps should include, but not be limited to: record procedures, action plan, database queries (SQL),
quality control (QC) procedures, et cetera.
You alone have full responsibility for this filing, and you will be informing Executive Leadership of your decisions,
but not necessarily always asking for sign-off. Further, you alone will be held accountable for any discrepancies
and/or the late filing of ABC’s HMDA LAR. In this scenario, you may choose to collaborate with the Product, Data,
and Engineering (PDE) teams. However, you are operating in an environment in which extra-Compliance
bandwidth is limited; PDE’s familiarity with the specifics of the HMDA LAR (e.g. the 110 data fields which must be
reported to the CFPB) is scant and/or non-existent. During these twenty-eight days, you will become the HMDA
subject matter expert for ABC.
How do you proceed?
File ABC’s HMDA LAR within 28 days, meeting the March 1 deadline, without any subject matter expertise (SME)
with both Reg C, and both Python and structured query languages (SQL) used to obtain and organize the 110
data fields required by the CFPB.
Further, in developing this plan, please keep the following in mind:
● You must identify and define any assumptions you make (beyond the parameters stated in ‘The
Challenge’) to arrive at your final deliverable.
○ For example, if you identify a third-party service provider who may provide value and/or
assistance in the completion of this filing, kindly clarify the reasoning behind your selection of a
specific provider/consultant. Though you will have limited access to such vendors for this filing,
you may develop a case for their supplementary and/or advisory use in future years.
● You must be as specific as possible. This deliverable will be communicated across numerous functions.
As such, though you may decide what format to provide this deliverable in, keep in mind that you will be
communicating with stakeholders outside the Regulatory Operations domain, who may interact or operate
in different registers, or use different workflow tools.
● The CFPB’s portal does not allow you to submit the HMDA LAR using raw data; syntax and validity edits
are a gating item which will prevent you from submitting the LAR.
● Additionally, note that your action plan will evolve into a Communications Matrix which you shall present
to Executive Leadership.
○ Note: You may also be required to outline HMDA Procedures & filing logic to external
stakeholders including—but not limited to—Series C/D Investors, End Investors (i.e. loan
purchasers), or material stakeholders such as Strategic Partners with whom ABC maintains loan
fulfillment service relationships (e.g. Ally Bank Corp).
1. Develop a robust and realistic action plan for timely and accurate submission of HMDA LAR, including:
a. How you will develop technical (SQL, Python) skills in a Code Red special situation;
b. Outline of human capital and other resources needed, as well as communication flows;
c. Identify system gaps, as applicable;
d. Identify points of risk;
e. Identify technical resources and stakeholders to be involved;
i. And, break down the specific aspects of the HMDA LAR non-Compliance
stakeholders are to prepare or review for accuracy. They will assume an
exclusively supporting role, and will not be held accountable for accuracy or filing
timeliness. You will.
f. Brainstorm any other resources or assets you believe are required to ensure timely filing of the
g. Outline your Communications Plan which you will present to Executive Leadership.
i. Outline further Communication Plans which you will deliver to external stakeholders
including, but not limited to,
Brainstorm any other resources or assets you believe are required to ensure timely filing
of the HMDA LAR; and
h. Any other elements relevant to this situation.
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