How to Prepare for an HMDA Audit


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HMDA audits are required by the Federal Housing Administration (FHA). During this process, the auditor collects expanded data points to support reporting requirements. The results of this process are presented in an HMDA audit worksheet. Users can edit the data and clear the conditions in minutes. In addition, the tool helps verify loan quality by comparing the loan attributes to the vendor's data. During the review process, the examiner reviews the data and prepares the DID report.


The HMDA audit is designed to evaluate the internal system of the institution. In addition, it also assesses the amount of risk associated with the fair lending program. The risks associated with the program are determined based on the volume of lending, types of products offered, and policies, as well as the number of complaints, received. The data collected is used to develop an appropriate audit program, depending on the risk level. The HMDA audit is usually carried out once a year or semi-annually.


Once the data is scrubbed, it's time to submit it to the FHA. To meet the March 1 deadline, many lenders start this process early in the year. Others, larger lenders, such as those with 60,000 or more covered loans, will do so quarterly. For HMDA audits, the lender's risk assessment, volume of recent errors, and residential real estate loan products are the primary determinants of HMDA compliance.


If a lender doesn't clean its data, the agency will make changes. The examiners may ask the organization to change certain practices. A credit union should follow all HMDA requirements. Depending on the complexity of its systems, a quarterly review of HMDA data is the best approach. The review is a necessary first step in preparing for HMDA audits. However, it is important to remember that an HMDA audit is a significant task for any financial institution.


The HMDA data should be reviewed quarterly. Ideally, the data should be accurate. The HMDA data must accurately reflect the loan file. A thorough audit will include identifying the causes of defaults. An HMDA inspection may include an in-depth review of the entire loan portfolio. A successful HMDA review will also look at how the organization implements the HMDA program. To ensure compliance, a firm should have the proper IT infrastructure and data integrity.


A good HMDA audit should be conducted by an independent, qualified professional. A certified professional can conduct the audit. Moreover, the HMDA data is required by the FHA and the CFPB. The CFPB has an online platform that requires all HMDA data. This platform allows a lender to save time and money while submitting a complete HMDA report. But it isn't sufficient. To meet HMDA standards, it must undergo a thorough data HMDA Scrubs.


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