During intake, a compliance analyst asks why covered mortgage application data is collected. What is the best compliant response?
Correct Answer
C) Collect and report covered mortgage lending data
Why this is correct: HMDA (Regulation C, 12 CFR Part 1003) is designed to collect and report data on covered mortgage lending activity. This data helps monitor fair lending practices and identify potential discriminatory patterns. Why the other choices are wrong: "Document that licensing and NMLS authority was reviewed, but take no required corrective action" is wrong because HMDA requires active data collection and reporting, not just a review of authority. "Use an informal exception and leave the required record unchanged" is wrong because HMDA has formal requirements; informal exceptions are not permitted. "Let production goals override the required verification, disclosure, license, or record step" is wrong because production pressure cannot justify skipping HMDA data collection, which is a legal mandate. Exam tip: HMDA is about data for fair lending analysis. Remember its purpose: collection and reporting, not just internal recordkeeping.
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: 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 B: 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.
Option D: Let production goals override the required verification, disclosure, license, or record step.
Let production goals override the required verification, disclosure, license, or record step. 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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