A compliance review finds that a compliance analyst asks why covered mortgage application data is collected. What should the MLO do next?
Correct Answer
D) Collect and report covered mortgage lending data
Why this is correct: The Home Mortgage Disclosure Act (HMDA), implemented by Regulation C (12 CFR Part 1003), establishes a mandatory data collection and reporting framework for covered mortgage lending activity. The core requirement is to collect and report specified data on mortgage applications and loans. Therefore, the correct action is to "Collect and report covered mortgage lending data". Why the other choices are wrong: "Assume licensing and NMLS authority is outside compliance review because no fee has been charged yet" is wrong because HMDA data collection is a separate federal requirement, not contingent on fees or state licensing. "Close or renew first and decide later whether the rule applied" is wrong because HMDA compliance is not optional or deferrable; it is a mandatory step in the lending process. "Allow activity to continue while the applicable status problem remains unresolved" is wrong because failing to collect HMDA data as required is a compliance violation. Exam tip: Remember HMDA's purpose: to provide data to help identify potential discriminatory lending patterns and enforce fair lending laws. The rule is not optional.
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: Assume licensing and NMLS authority is outside compliance review because no fee has been charged yet.
Assume licensing and NMLS authority is outside compliance review because no fee has been charged yet. is not correct because it bypasses the rule supported by the explanation.
Option B: Close or renew first and decide later whether the rule applied.
Close or renew first and decide later whether the rule applied. is not correct because it bypasses the rule supported by the explanation.
Option C: Allow activity to continue while the applicable status problem remains unresolved.
Allow activity to continue while the applicable status problem remains unresolved. 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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