EstatePass

SAFE MLO test · Most missed · Episode 7

The Phone Application

Free to watch2:02

Chapters

  1. The question
  2. The rule
  3. The answers
  4. Recap

In short

Giving ethnicity, race and sex is voluntary. If someone applies in person and declines, the lender records the information from visual observation or surname. On a telephone, mail or internet application there is nothing to observe, so the lender reports that the applicant did not provide it. It may not guess from a name or voice, treat the file as incomplete, or leave the fields blank.

  • Answering the demographic questions is voluntary for the applicant.
  • In person, including a video call: if she declines, record from observation or surname.
  • Phone, mail or online: report not provided. Never guess, never leave it blank.

Transcript

The question

In our practice data, 21 of 26 people missed this question. Most of them picked the same wrong answer. Here is why it looks right, and why it is not. A borrower applies by telephone and declines to give her ethnicity, race and sex. The file is otherwise complete, and the loan is covered by HMDA. How should the lender record the information she would not give? Pause. Which answer would you pick? Hold that thought. First, the rule that decides it.

The rule

HMDA asks every applicant for ethnicity, race and sex. Answering is voluntary. If someone applies in person and declines, the lender fills it in from visual observation or surname. On the phone, by mail or online, there is nothing to observe. So the lender reports that the applicant did not provide it.

The answers

Now the answers. A: guess from her name and voice. That is the in-person rule, stretched to a phone call. Out. B: return the application as incomplete. She is allowed to say no, so declining cannot make the file incomplete. Out. D: leave the fields blank. HMDA has a code for exactly this case. A blank is not a valid answer. Out. That leaves C: report that the information was not provided in a telephone application.

Recap

In person, observe. By phone, mail or online, report not provided. Next: who owns my loan? Subscribe so you catch it.

Sources

  • 12 CFR 1003.4(a)(10)(i)
  • Appendix B to 12 CFR Part 1003
  • EstatePass question bank: mlo-national-fed-hmda-collect-01

Independent study material. EstatePass is not affiliated with NMLS or CSBS, and nothing here is legal advice. Any lenders and borrowers in our episodes are fictional.