In a training scenario, a compliance analyst asks why covered mortgage application data is collected. What action best follows the rule?
Correct Answer
B) Collect and report covered mortgage lending data
The Home Mortgage Disclosure Act (HMDA), governed by Regulation C (12 CFR Part 1003), mandates that covered financial institutions collect and report data on mortgage applications and originations. This requirement is not optional or conditional on other events in the loan process. Why this is correct: "Collect and report covered mortgage lending data" is the fundamental obligation under HMDA when a covered mortgage application is involved. Why the other choices are wrong: "Treat the compliance requirement as optional because closing is near" is wrong because HMDA requirements are federal law and apply regardless of the loan's stage. "Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue" is wrong because it describes ignoring various compliance problems, but the specific issue here is HMDA data collection, which must be addressed. "Ignore the issue if the borrower orally agrees to continue" is wrong because HMDA is a regulatory reporting duty to the government, not a matter for borrower consent. Exam tip: HMDA is about data for regulators and the public. Borrower agreement does not waive the lender's duty to collect and report.
Why This Is the Correct Answer
The correct response is "Collect and report covered mortgage lending data". HMDA is a data collection and reporting framework for covered mortgage lending activity.
Why the Other Options Are Wrong
Option A: Treat the compliance requirement as optional because closing is near.
Treat the compliance requirement as optional because closing is near. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option C: Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue.
Continue processing without correcting the disclosure, licensing, compensation, or consumer-protection issue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Option D: Ignore the issue if the borrower orally agrees to continue.
Ignore the issue if the borrower orally agrees to continue. is not correct because the governing rule requires the compliant answer shown in the explanation.
Memory Technique
HMDA questions usually ask about collecting, reporting, and disclosing loan data.
Exam Tip
HMDA questions usually ask about collecting, reporting, and disclosing loan data.
Common Mistakes to Avoid
- -HMDA is not limited to closed loans or credit-score analysis.
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