A $75,000 home equity line of credit secured by the borrower’s residence is excluded from the register, because the team has always treated HMDA as a closed-end matter. What is the correct approach?

Correct Answer

A) Use Regulation C coverage rules before excluding the file

Why this is correct: The Home Mortgage Disclosure Act (HMDA), implemented by Regulation C, requires covered financial institutions to collect, report, and publicly disclose data about mortgage applications and loans. The first step in determining if an action is HMDA-reportable is to apply Regulation C's coverage rules, which specify the types of institutions, loans, and applications that are covered. The correct action is to use these rules to decide if the file should be included or excluded from HMDA reporting. Why the other choices are wrong: "Apply the government-loan eligibility timing rule even though the file is testing HMDA Fair Lending Analysis" is wrong because HMDA coverage is determined by Regulation C's specific criteria, not by rules for government loan programs like FHA or VA. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because HMDA data must be collected and reported annually; it is not a reactive process. "Rely on oral agreement when the rule requires documented compliance" is wrong because HMDA requires systematic data collection based on written applications and records. Exam tip: HMDA coverage depends on the institution's asset size, loan activity, and location, as well as the loan purpose (home purchase, refinance, home improvement). Always check the current Regulation C thresholds.