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How HMDA Data Makes Your Company a Target For Fair Lending Exams!

By September 5, 2014January 17th, 2016Fair Lending Regulation, HMDA

Ballard and Spahr sent out a legal briefing on the Redlining case in New York that I posted earlier this week.

This is a clear example of how inadequate data (HMDA) may cause your company litigation issues in Fair Lending. How much will this ultimately cost Evans Bank? Well they have set aside a million dollars for defense, but I suspect much more will be needed. Why? Inadequate data sets and data organization on their part, may not be enough to defend them against the HMDA data sets.

I’ve spent this week reading the HMDA proposal and breaking it down. Yes, the data will be expanding, so one may logically conclude that this will assist you. It will not, and I will share with you next week where the danger lies in the new data sets.

What will likely protect your company and what is protecting many of our clients in fair lending exams is the real time fair lending approach (not after the loan closes, but at lock in) and the organization, notation and archiving of relevant data for exam recall. This is compliance management systems 101. If you don’t have one that seems effective to an examiner, you have issues; it’s that simple.

I received an email yesterday from one of our first real time fair lending clients. The company he worked for was one of the first Fair Lending Cases after the start of the CFPB. $4 Million in Fines and $1 Million in consulting fees was not fun to deal with. Thanks to him and others, we were able to find out what needed to be done to develop an effective Compliance Management System for Pricing Disparity and Pricing Exceptions. In his email he said “I really don’t understand why more people don’t use the system”.

He is convinced it is the best money his company has ever spent and here is why.

If you were at the client conference you heard him share his testimonial about his experience at his new company. Demonstration of this Compliance Management System of Real Time fair lending satisfied his examiner within 15 minutes. Not days, weeks or months, 15 minutes!

Another Client of ours who is in the middle of an exam that was supposed to take 8 weeks for Fair Lending was told that it will likely end a couple of weeks early. Why? Strong compliance management and real time fair lending review at time of lock in.

Solutions exist to make your life easier. It is my hope that you will choose that path. If you have questions please contact me or your account manager and I will walk you through it.

To read the legal briefing, Click Here!

Tammy Butler, Master CMB

Author Tammy Butler, Master CMB

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