Which of the following representations on the HMDA loan application register is a violation of Regulation C?
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A. B. C. D.D
The Home Mortgage Disclosure Act (HMDA) is a federal law that requires financial institutions to maintain and disclose data about home mortgage loans. The HMDA Loan Application Register (LAR) is a record of loan applications received by a financial institution and contains information such as the applicant's race, ethnicity, gender, income, loan amount, etc.
Regulation C implements the requirements of the HMDA and sets standards for the collection, reporting, and disclosure of data. Violations of Regulation C can result in penalties and fines.
Let's review the four options provided and determine which one represents a violation of Regulation C:
A. The MSA number, instead of the MSA name, is used for each loan and application This is not a violation of Regulation C. The Metropolitan Statistical Area (MSA) number is an acceptable way to identify the geographic location of the property securing the loan. However, financial institutions must also maintain a list of the MSA names associated with the MSA numbers used in the LAR.
B. The "reasons for denial" column is blank This is a violation of Regulation C. Financial institutions are required to provide a reason for denial for each loan application that is denied. The reason for denial must be selected from a list of specific reasons provided in Regulation C.
C. Race, national origin, and gender information are not included for purchased loans This is not a violation of Regulation C. The HMDA requires financial institutions to report data on loans that they originate or purchase that are secured by a first lien on a one-to-four family dwelling. If a financial institution purchases a loan that meets these criteria, they must report the required data. However, if the purchased loan is not secured by a first lien on a one-to-four family dwelling, or if the loan was not originated or purchased in the current reporting year, then the financial institution is not required to report the loan data.
D. The gender of the applicant is designated by the letters M or F This is not a violation of Regulation C. The HMDA requires financial institutions to collect and report the gender of the applicant. The applicant's gender may be designated by the letters M or F, or by another method that is consistent with the institution's internal policies and procedures.
In summary, the only option that represents a violation of Regulation C is B - if the "reasons for denial" column is blank.