An MLO is reviewing procedures for a case where a compliance analyst asks why covered mortgage application data is collected. What is the proper handling?
Correct Answer
C) Collect and report covered mortgage lending data
Why this is correct: HMDA (Home Mortgage Disclosure Act, Regulation C) requires covered institutions to collect and report specific data on covered mortgage loan applications and originations. The proper handling when asked why this data is collected is to execute this mandatory step: collect and report covered mortgage lending data. Why the other choices are wrong: "Use a generic national checklist instead of the requirement in this staff training note" is wrong because while checklists are tools, they must accurately reflect the specific HMDA requirement, not replace it. "Document that licensing and NMLS authority was reviewed, but take no required corrective action" is wrong because documenting a review of other issues does not fulfill the HMDA data collection duty. "Use an informal exception and leave the required record unchanged" is wrong because there is no "informal exception" to HMDA; the data must be collected and reported. Exam tip: HMDA is a specific data reporting rule. Checklists are aids, but the law itself is the requirement.
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: Use a generic national checklist instead of the requirement in this staff training note.
Use a generic national checklist instead of the requirement in this staff training note. is not correct because it bypasses the rule supported by the explanation.
Option B: Document that licensing and NMLS authority was reviewed, but take no required corrective action.
Document that licensing and NMLS authority was reviewed, but take no required corrective action. is not correct because it bypasses the rule supported by the explanation.
Option D: Use an informal exception and leave the required record unchanged.
Use an informal exception and leave the required record unchanged. is not correct because it bypasses the rule supported by 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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