It is not a secret that many financial institutions have continuously been affected by HMDA non-compliance issues. This is mainly because of a number of issues. HMDA data is very important especially for ensuring a fair and responsible risk management system when lending money. This importance has made it necessary for this act to require at least 90% accuracy and in some cases, it is higher than this. The origin of risk is a well-studied phenomenon and many factors affect it. New loan programs, staff changes, and changes in the reporting software are among the few things that can affect the accuracy of HMDA data reports. Find out more about HDMA reports in this article.
Non-compliance with HMDA usually attracts civil money penalties. This enforcement ensures that the accuracy of the HMDA data collected is not compromised. Finding guidance when looking for the best practices involved in HMDA data collection and reporting is a sure way of getting around common challenges. HMDA data is used in fair lending examinations and many other performance evaluations.
When the HMDA data produced is inaccurate, this might lead to mandated HMDA scrubs. This can be very costly and also time-consuming. Finding the best services even at this stage is very important if you are to gain and maintain HMDA compliance. There has been a general shift towards better and sophisticated methods of data analysis and testing. This is done through the examination process significantly reducing the errors that may be present in the report. There has been an increase in civil money penalties issued for the failure of compliance to HMDA accuracy levels in recent years. This means that every financial institution should take necessary measures to ensure all their staff is regularly trained on the best ways of collecting and reporting HMDA data.
It is important to note that the goal of regulators is not only directed at enforcement. The drive for more accurate financial reports ensures that the public is informed well enough to make better financial decisions. Internal controls are among the best ways of improving HMDA compliance. An effective HMDA compliance management system will ensure that the key factors affecting the accuracy of the data are properly investigated. This means that data quality should improve from collection to submission of HMDA reports.
Continuously reviewing training will provide your team with the necessary material to improve HMDA compliance. The focus of the training you do should also include internal policies, accountability, and understanding systems. Financial institutions should keep up with the technology invented to assist HMDA data management and ensuring HMDA compliance. Add on to your knowledge about this topic, by visiting this link: https://en.wikipedia.org/wiki/Home_Mortgage_Disclosure_Act.
