The title of FFlEC's new manual for HMDA/LAR records says it all: A Guide to HMDA Reporting: Getting It Right.
Getting it right is precisely what regulators mean.
Steve Cross, OCC deputy comptroller for compliance management, said in Banking Bulletin BB 93-39 that his agency wants banks to make extensive use of the Federal Financial Institutions Examination Council's new reporting guidelines for the Home Mortgage Disclosure Act/Loan Application Register.
If banks don't start getting it right, more severe enforcement actions are sure to follow, especially for grossly Incomplete and late HMDA/LAR reports. At least that's what several banking agency officials are saying privately.
But regulators hope that banks will use the FFIEC guide to improve their reporting and reduce the need for stiff enforcement action.
As one OCC official said, "They [banks] need to pay attention to this FFlEC's guidelines]."
Other banking agency officials agreed, saying regulators want the FFIEC guide to be followed carefully.
Officially, Cross said the OCC encourages bank officers "to become familiar with this guide and to ensure it is used by your institution."
The manual is a direct response to regulators, complaint that banks have been turning in incomplete, misleading data.
With this new manual, banking agency officials said banks have no excuse for turning in inaccurate, untimely information.
They added that the banks are expected to adopt promptly any elements of the guidelines covering HMDA/LAR reporting requirements with which the institutions are not in compliance.
The manual contains a comprehensive overview for management and a detailed section to assist bank personnel charged with preparing HMDA/LAR reports.
The guidelines also give details on the requirements for making loan application register data available to the public upon request. They also contain useful checklists for persons completing the HMDA/LAR, as well as for the certifying officer.
One of the most useful checklists provided by FFIEC deals with streamlining the reporting process. The list is geared to getting banks to adopt practices that will help them establish more efficient data collection routines and systems, thus providing regulators with more accurate reporting.
Because Reg C implementing HMDA requires a register form of reporting (LAR), banks are encouraged to collect this data and to maintain the LAR on an ongoing basis, rather than wait until reporting time to aggregate the information.
If a bank uses an outside vendor to Identify property locations, it is urged to consider having the geocoding completed periodically rather than at year-end.
Banks that deal with a large volume of loans and applications should consider keeping separate registers for home mortgage and home improvement loans.
Institutions are further encouraged to develop or acquire a computer program with an edit check function to maintain accurate and up-to-date records.
Each regulatory agency has published technical specifications for automated submission of data on both diskettes and magnetic tape. If a bank opts for submitting this way, it must first make sure it meets the specifications of the agency to which it must report.
According to FFIEC, in many cases banks may be able to wait until the loan transaction is completed to determine the census tract number. They must keep in mind, however, that census tract numbers are also required for loan applications that are denied and withdrawn.
Finally, regulators may require a bank to maintain its LAR on an ongoing basis, so banks need to have systems in place in order to do this.