An application on a property the applicant intends to rent out is excluded because "HMDA is about home buyers". What does the reviewer need to confirm before the file leaves the register?
Correct Answer
C) 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, record, and report data about mortgage applications and loans. The first step in compliance is correctly applying Regulation C's coverage rules (based on institution type, loan type, and location) to determine if a specific loan or application is reportable. Why the other choices are wrong: "Use an internal exception instead of the required federal disclosure or timing rule" is wrong because HMDA reporting is a federal mandate; internal exceptions are not valid substitutes. "Resolve the HMDA Data Collection issue with the loan estimate exception that does not fit the facts" is wrong because the Loan Estimate is a TILA-RESPA Integrated Disclosure requirement, which is a separate rule from HMDA data collection. "Rely on oral agreement when the rule requires documented compliance" is wrong because HMDA data must be collected and reported in a standardized, documented format. Exam tip: HMDA compliance starts with coverage. Always check if the institution, loan, and property are covered under Regulation C before proceeding with data collection.
Why This Is the Correct Answer
The correct response is "Use Regulation C coverage rules before excluding the file" 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: Resolve the HMDA Data Collection issue with the loan estimate exception that does not fit the facts.
This distractor shifts the issue to a different trigger, product, or timing rule instead of applying the rule tested in the stem.
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
More Federal Laws Questions
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