Mastering HMDA: What Successful FI’s Do Right

For financial institutions, navigating HMDA compliance can be complex, with detailed requirements that, if done wrong, pose a significant risk for violations. However, in our many years of serving clients through HMDA reviews, training, and support, we’ve observed that our most successful clients consistently implement practices that not only ensure compliance but also streamline their operations.

So, what are these leading institutions doing to set themselves apart? They tend to take a multi-faceted approach that emphasizes strong oversight, robust processes, continuous training, and effective technology. Consider these sound HMDA practices:

1. Board and Senior Management Oversight

Successful institutions recognize HMDA’s increased risk and the top leaders continuously provide the necessary resources to the teams below.

2. Comprehensive Policies and Procedures

They use detailed policies and procedures for consistent, repeatable HMDA processes, minimizing errors and standardizing processes.

3. Targeted Training Programs

They provide regular, role-specific training, including difficult scenarios, helping staff confidently handle HMDA complexities through continuous learning.

4. Utilizing Effective Tools

Staff are equipped with flowcharts, worksheets, job aids, and essential guides like "A Guide to HMDA: Getting It Right!" to empower the team.

5. Robust Monitoring Systems

These institutions take a proactive risk management approach, ensuring HMDA risk monitoring is in line with institutional risk, and assign a designated expert to identify potential issues before they become significant problems.

6. Data Verification through Internal Controls

They ensure accuracy through a robust verification process made up of internal and external sources, to review source documents to ensure data integrity.

7. Automation and System Integration

Successful institutions understand how their core systems interface with HMDA software, leveraging technology and optimizing data flow and accuracy.

By adopting these practices, financial institutions can master HMDA, reducing risk and improving efficiency. If you are interested in learning more about how to properly integrate some of these practices to your current process, or would like to learn more about how SCA’s HMDA experts can assist you, contact our Director, Bill Dolan at wdolan@scapartnering.com or by phone at (617) 694-2617.