A borrower-facing employee is unsure what to do when a compliance analyst asks why covered mortgage application data is collected. What is the correct response?
Correct Answer
A) Collect and report covered mortgage lending data
Under the Home Mortgage Disclosure Act (HMDA) and Regulation C, the collection and reporting of covered mortgage loan data is a mandatory step for covered institutions. An employee's uncertainty does not change this legal requirement. Why this is correct: "Collect and report covered mortgage lending data" is the correct procedural step mandated by HMDA. Why the other choices are wrong: "Use prior consumer complaint approval as a substitute for the current HMDA data collection and reporting requirement" is wrong because resolving a past complaint does not satisfy the specific, current HMDA data duty. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because HMDA requires annual reporting, not just responsive action. "Rely on oral agreement when the rule requires documented compliance" is wrong because HMDA reporting requires documented data, not oral understandings. Exam tip: HMDA is about hard data. When in doubt, the rule is clear: collect and report the required data points.
Why This Is the Correct Answer
The correct response is "Collect and report covered mortgage lending data" because Lines 76-82; 12 CFR Part 1003 summary.
Why the Other Options Are Wrong
Option B: Use prior consumer complaint approval as a substitute for the current HMDA data collection and reporting requirement.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
Option C: Wait until a regulator asks for the file before applying the federal requirement.
Wait until a regulator asks for the file before applying the federal requirement. is not correct because it does not apply the rule tested by this file scenario.
Option D: Rely on oral agreement when the rule requires documented compliance.
Rely on oral agreement when the rule requires documented compliance. is not correct because it does not apply the rule tested by this file scenario.
Memory Technique
HMDA reporting: identify the rule being tested, then choose the action that documents or applies that rule before the file moves forward.
Exam Tip
Match the file facts to HMDA reporting; do not choose an exception or shortcut that skips the required rule.
Common Mistakes to Avoid
- -Choosing an internal exception instead of the governing rule
- -Treating preliminary or informal facts as a substitute for required documentation
- -Answering from a familiar but unrelated mortgage topic
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