Picture this:

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It’s January 2nd, and you’re starting to work on your HMDA report due on March 1st. The pressure to get it right is already on. Over the next two months, you’ll spend your time digging through multiple sources of application submission, credit underwriting data, and loan-level mortgage information to painstakingly enter data into thousands of lines in a spreadsheet—manually. And if the HMDA report gets rejected, you have no idea where the errors are. Back to the thousands of line entries you go.

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The preparation for March 1st is well-known for being an important, but also very time-consuming, process throughout all kinds of lending organizations. But it doesn’t have to feel like such an uphill battle. Coviance simplifies the compliance process through real-time reporting and loan-level validation with our HMDA Compliance Validation Tool. Coviance’s proprietary HMDA solution is the only software that validates at a loan-level and proactively adjusts to reflect any field changes or CFPB requirements.  

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What is HMDA?

In 1975, Congress enacted HMDA, or the Home Mortgage Disclosure Act, to require certain financial institutions to collect, report, and disclose information about their mortgage lending activity. While there have been slight adjustments over time, the biggest change happened after the Great Recession in 2007-2008. The financial crisis had many causes, including predatory mortgage lending. Financial institutions were offering loans that initially seemed very favorable, but eventually would fluctuate to the point where the borrower simply couldn’t afford payments.

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Following the recession in 2011, the Dodd-Frank Wall Street Reform and Consumer Protection Act transferred authority of HMDA rule-writing to the Consumer Financial Protection Bureau (CFPB). The CFPB is an independent agency of the US government that protects American consumers from unfair, deceptive, or abusive practices in the consumer financial marketplace. Today, CFPB manages HMDA by watching metrics and reports to identify possible discriminatory lending patterns. As indicated by the CFPB: 

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“The Home Mortgage Disclosure Act (HMDA) requires many financial institutions to maintain, report, and publicly disclose loan-level information about mortgages. These data help show whether lenders are serving the housing needs of their communities; they give public officials information that helps them make decisions and policies; and they shed light on lending patterns that could be discriminatory. The public data are modified to protect applicant and borrower privacy”.

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The CFPB requires that any entity that lends a certain amount has to collect and report specific information about mortgage loan applications (both approved and denied) and their originations. Lending institutions have to report loan applications and approvals around different variables, such as property type and loan purpose, as well as borrower demographics such as sex, race, and ethnicity. By monitoring for unfair treatment, CFPB protects consumers—but inaccurate submissions could create a logistical nightmare for lending institutions. At best you might be spending countless hours manually working on and fixing submissions. At worst, you could get fined hundreds of thousands of dollars.

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Coviance’s HMDA Compliance Validation Tool: Hit Deadlines with Ease

Lending institutions from banks to credit unions to mortgage companies must spend significant resources on HMDA reporting, and recent years have been especially challenging. New regulations from CFPB dropped the threshold for closed-end mortgage loans from 100 to a mere 25—or if an entity originated at least 200 open-end mortgage lines of credit in each of the last two calendar years. Companies that have never had to file a HMDA report before may feel like they’re scrambling for information to accurately report HMDA.

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Whether you’ve had to prepare a HMDA report in the past or you’re brand new to it, Coviance makes the job easier and automatic. It empowers credit unions, banks, and mortgage lenders alike to hit deadlines through real-time reporting, compliance simplification, and loan-level validation. The HMDA Compliance Validation Tool actively incorporates the latest changes from CFPB for HMDA submissions. Our HMDA solution is the only one that validates HMDA at the file level, saving you hours—if not days or weeks—to collect and submit data. And the platform automatically updates to reflect the current HMDA requirements.

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Within the Coviance platform, simply:

1. Select the year you’re reporting on and verify the loan data within Coviance
2. HMDA data populates. Review and edit/add any field. 
3. Run a validation test to find any errors. Coviance will tell you exactly where errors are and where you’re missing data.

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We’re changing the game for reporting by removing manual processes and automating data reporting. And, you don’t have to wait until January 2nd to begin aggregating the data. By tackling HMDA reporting on a quarterly or monthly basis, you can pinpoint errors and find gaps as they come up instead of at the finish line. Not only that, but Coviance’s customer success team will remind and help you aggregate data throughout the year.

To see the HMDA Compliance Validation Tool in action, reach out to your sales representative or schedule a demo.