An operations lead is reviewing HMDA demographic and fair-lending data quality before submission. What should the file reflect?
Correct Answer
D) Collect and report covered HMDA application data
Why this is correct: The Home Mortgage Disclosure Act (HMDA) requires covered financial institutions to systematically collect and report specific data points for covered mortgage loan applications to promote transparency and fair lending. The correct action, "Collect and report covered HMDA application data," is the core duty under the rule. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because HMDA has no provision for internal exceptions to its mandatory reporting. "Wait until a regulator asks for the file before applying the federal requirement" is wrong because HMDA reporting is an annual obligation, not triggered by a regulatory request. "Rely on oral agreement when the rule requires documented compliance" is wrong because HMDA data collection and reporting must be documented and verifiable. Exam tip: Remember HMDA's purpose is data collection for analysis; the fundamental requirement is to gather and report the specified data for covered loans.
Why This Is the Correct Answer
The correct response is "Collect and report covered HMDA application data" because Covered institutions collect and report HMDA data for covered mortgage applications and loans.
Why the Other Options Are Wrong
Option A: Use an internal exception instead of the required federal disclosure or timing rule.
Use an internal exception instead of the required federal disclosure or timing rule. is not correct because it does not apply the rule tested by this file scenario.
Option B: 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 C: 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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