HMDA Compliance

Collect and Report Loan Information

The Home Mortgage Disclosure Act (HMDA), enacted by Congress in 1975 and implemented by the Federal Reserve Board, requires lending institutions to collect and disclose information about housing-related loans and applications.

Applicability

HMDA applies to covered depository lenders—commercial banks that fund loans with deposits—and non-depository lenders—mortgage bankers that fund loans with short-term lines of credit from commercial banks. Whether a lender is covered depends generally on its asset size, location and whether it is in the business of residential mortgage lending. Any violation of the HMDA reporting requirements may subject the lender to administrative sanctions, including civil money penalties.

“HMDA alone requires the bank to complete 25 specific items on the Loan Application Register for every routine mortgage refinancing. Considering that more than 10 million mortgages were refinanced over the last three years, it is obvious that this is a huge reporting burden.” - Bradley E. Rock, Chairman of the American Bankers Association, in a statement before the United States Senate

Mortgage and Lending Impact

The regulation requires companies to gather and report information regarding loan applications, originations and loan purchases not only for home loans but also for home improvement and refinancing loans. Lenders are asked to submit a standard report electronically, preferably via email and in an encrypted or secure file. In addition, each lender must ensure report accuracy, protect consumer privacy and disclose a report statement to the public. As a result, lenders that must comply with HMDA need technologies that help them:

• Manage information electronically to facilitate data reporting.
• Ensure records are complete and accurate.
• Disclose data in a secure, protected format.

ECM Enables HMDA Compliance

Enterprise Content Management (ECM) enables lenders to scan, index, store and manage loan-related documents electronically for both HMDA compliance and improved efficiency. Businesses of any size can use ImageSilo^®, the on-demand ECM service, and PaperVision^® Enterprise to simplify information management and disclosure. As a complete product suite, Fireproof’s ECM technology products can also integrate multiple data systems, automate document routing and store email messages for easy retrieval. By managing all documents in a single, searchable ECM system, lenders can enhance staff productivity and facilitate data reporting, while fully complying with HMDA requirements.

Electronic Information Management

HMDA requires lenders to collect and report detailed information about each application and loan, including loan type and amount, the applicant’s race, gender and income, as well as the outcome of applications. PaperFlow™ enables lenders to quickly convert paper loan applications to electronic files.

• PaperFlow scans, indexes and organizes hundreds of paper documents into a centralized ECM system.
• Unlimited scalability allows document imaging from a single location or simultaneously across branch locations.
• Unlimited index fields allow lenders to identify and search documents based on detailed information needed for HMDA reports.
• Optical character recognition translates scanned information into editable text so lenders avoid manual data entry.

Verified Record Accuracy

A company officer must certify that the HMDA report is correct before it can be submitted. Digitech Systems’ ECM technology provides easy-to-use features that can help lenders verify reports.

• Statistics identify any index fields that failed to populate properly and ensure indexing accuracy during the capture process.
• Versioning controls enable officers to roll back to previous document versions and check the accuracy of any changes.
• Auditing capabilities provide reports showing who accessed information and what was done with it.

Secure Information Disclosure

After reports are submitted, each lender receives a disclosure statement. Within three days, lenders must edit personally identifiable information from the statement and make it available to the public in both print and electronic formats. PaperVision Enterprise and ImageSilo enable lenders to easily hide personal information and simplify HMDA report distribution.

• Redaction hides sensitive applicant information to restrict users from viewing designated portions of a document and protect customer privacy.
• The PaperVision^® Distribution Assistant enables lenders to immediately send statements to an unlimited number of branch offices or recipients.
• Document grants allow the public access to specific documents for secure, yet convenient online information access.

DISCLAIMER: This document is for informational purposes only; Fireproof Records Center. is not liable for errors, omissions or inadequacies. Please consult an appropriate compliance expert to understand your needs. This information is subject to change without notice.