In a mortgage origination file, a compliance analyst asks why covered mortgage application data is collected. Which action should be taken?
Correct Answer
B) Collect and report covered mortgage lending data
The Home Mortgage Disclosure Act (HMDA), implemented by Regulation C, establishes a data collection and reporting framework for covered mortgage lending. This is a standalone federal requirement. Why this is correct: "Collect and report covered mortgage lending data" is the direct action required by HMDA for covered transactions. Why the other choices are wrong: "Assume the HMDA data collection and reporting condition is met because the borrower satisfied the separate state renewal requirement" is wrong because state-level requirements are separate from federal HMDA duties; one does not satisfy the other. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because HMDA mandates proactive annual reporting. "Rely on oral agreement when the rule requires documented compliance" is wrong because HMDA reporting is based on written application data, not oral agreements. Exam tip: Never substitute compliance with one rule (state renewal) for compliance with another (HMDA). Each must be satisfied independently.
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 A: Assume the HMDA data collection and reporting condition is met because the borrower satisfied the separate state renewal 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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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?
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