# Demystifying HMDA: What Credit Unions Need to Know
In the latest episode of "With Flying Colors," host Mark Treichel sits down with Joe Goldberg, a retired NCUA consumer compliance expert, to unravel the complexities of the Home Mortgage Disclosure Act (HMDA). This blog post summarizes key insights from their discussion, providing credit union professionals with a comprehensive overview of HMDA and its implications.
## What is HMDA?
The Home Mortgage Disclosure Act, enacted in 1975, is a federal law requiring financial institutions to maintain and annually disclose data about home purchases, home improvement, and refinancing applications. While some may view HMDA as a bureaucratic burden, Joe Goldberg emphasizes its noble purpose:
> "HMDA was created to try and ensure that mortgage credit is offered and extended to everybody based on mortgage-related criteria."
HMDA data plays a crucial role in identifying potential discriminatory lending patterns and ensuring fair access to home financing.
## Who Needs to Comply with HMDA?
Not all credit unions are required to collect and report HMDA data. For 2022, a credit union must meet all four of the following criteria:
1. Asset Size Threshold: Total assets exceeded $50 million as of December 31, 2021.
2. Location Test: Had a home or branch office in a metropolitan statistical area in 2021.
3. Loan Activity Test: Originated at least one home purchase loan or refinanced a home purchase loan secured by a first lien on a 1-4 unit dwelling during 2021.
4. Loan Volume Threshold: Originated at least 100 covered closed-end mortgage loans or 200 covered open-end lines of credit in each of the two preceding calendar years (2020 and 2021).
## What Data Must Be Collected?
HMDA requires the collection of 48 data points, some of which have multiple fields. These include:
- Loan type and purpose
- Loan amount
- Action taken on the application
- Property address
- Rate spread
- Demographic information (ethnicity, race, sex, age)
- Applicant's income and credit score
## Reporting and Deadlines
Credit unions must record HMDA data in a Loan Application Register (LAR) and update it within 30 days of each calendar quarter. The annual submission deadline is March 1st of the following year. Goldberg stresses the importance of timely filing:
> "Even if you're late, file the data. Late filing is a violation of HMDA, but not filing is a far more serious violation."
## Partial Exemptions
Some credit unions may qualify for partial exemptions, reducing their reporting requirements from 48 to 22 data points. These exemptions apply to institutions that originated fewer than 500 covered closed-end mortgages or open-end lines of credit in each of the two preceding calendar years.
## Utilizing HMDA Data
Beyond compliance, HMDA data can be a valuable tool for credit unions. It allows institutions to:
1. Assess how well they're serving their members and communities
2. Identify areas for improvement in their fair lending programs
3. Compare performance with similarly sized institutions in their geographic area
## Resources for HMDA Compliance
To ensure accurate HMDA compliance, credit unions can leverage several resources:
1. NCUA Regulatory Alerts: Issued annually, these provide detailed information on reporting requirements.
2. FFIEC Website (www.ffiec.gov): Offers numerous HMDA references, including the comprehensive "Getting It Right Guide."
3. Consumer Financial Protection Bureau Website (consumerfinance.gov): Provides additional compliance resources.
4. Lending Patterns software by Compliance Tech: Used by NCUA, this tool can help credit unions analyze their HMDA data.
## Conclusion
While HMDA compliance may seem daunting, understanding its purpose and requirements is crucial for credit unions. As Goldberg notes:
> "HMDA goes back to 1975, which is when it was enacted. And so, as a result of that, we actually have mortgage data, good mortgage data, going back for over 45 years."
This wealth of data serves not only to prevent discrimination in lending but also to help credit unions better serve their members and communities. By staying informed and utilizing available resources, credit unions can turn HMDA compliance from a chore into a valuable tool for improvement and fair lending practices.
For more insights on navigating NCUA regulations, don't forget to subscribe to the "With Flying Colors" podcast!
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