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Home Mortgage Disclosure Act (HMDA) Basics With Expert Joe Goldberg

Since the Home Mortgage Disclosure Act changes every year, you need to refresh your knowledge about it annually. Mark Treichel delves into HMDA with expert Joe Goldberg. Together, they talk about the fundamentals of this act, why the government implements it, and why it must not be seen simply as a financial burden. Joe breaks down the criteria to meet and data points to collect to become eligible this 2022. He also discusses HMDA exemptions that would impact credit unions and the other agencies this act is being shared to by the authorities.


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Home Mortgage Disclosure Act (HMDA) Basics With Expert Joe Goldberg

I'm thrilled to be joined by Joe Goldberg. Joe, how are you doing?

I'm doing well, Mark. Thank you for having me.

For those people who may have missed your first episode, could you give us a little bit of a bio on yourself, if you will, on what you've done in the financial industry?

I retired this past December 31st, 2021, from NCUA after eight years doing consumer compliance work that includes Fair Lending and Home Mortgage Disclosure Act, which we're going to talk about. I've been a lawyer for many years. I've taught consumer law. I've done a variety of things in the legal field, including financial regulation.

I'm thrilled to have you as a guest, and as you mentioned, we're going to talk about the Home Mortgage Disclosure Act, also known as HMDA. To start us off, can you give us a little bit of basic background on HMDA?

My intent is to cover the basics and provide an overview of the law. HMDA is a very highly detailed area. I'm going to talk about resources that you can use to jump into some of those details if your credit union is required to comply with HMDA. Let's start off with what is HMDA? A lot of people would say, "HMDA is a pain in the rear end," or, "It's something that the government created because they think credit unions have nothing better to do with their time." After overseeing the NCUA’s HMDA program, I get that. Even criteria that are covered by HMDA changes year to year. It's difficult in that respect, but it does have a noble purpose.

When I talk about consumer laws, I like to start with why they were created. For HMDA, Congress made that very easy because it put that right in the law itself. Here's what HMDA says about itself. First, the findings of Congress. It's a quote from the law itself, "The Congress finds that some depository institutions have sometimes contributed to the decline of certain geographic areas by their failure pursuant to their chartering responsibilities to provide adequate home financing to qualified applicants on reasonable terms and conditions."

It goes on into the actual purpose of HMDA and that is this, "The purpose of this law is to provide the citizens and officials of the United States with sufficient information to enable them to determine whether depository institutions are filling their obligations to serve the housing needs of the communities and neighborhoods in which they are located. To assist public officials in their determination of the distribution of public sector investments in a manner designed to improve the private investment environment."

That tells you why HMDA was created. It has to do with the housing issues that still are prevalent in our country now, but it's to help offset some of those problems. HMDA goes back to 1975, which is when it was enacted. As a result of that, we have good mortgage data going back for over 45 years. How does this work? What's it intended to do?

If the NCUA has a Fair Lending Guide on its website that's available to the public, it has a good description of HMDA. It says that "HMDA was implemented by Regulation C. It requires financial institutions, including credit unions, to compile and disclose data about home purchase loans, home improvement loans, and refinancings that they originate or purchase, or for which they receive applications."

If the errors exceed a certain threshold, the NCUA will require the credit union to not only correct the errors but also to resubmit the data. It's not an area where civil penalties are contemplated.

The purpose, according to the manual is, "To provide the public with data that can be used to help determine whether credit unions are serving the housing needs of their communities. To assist public officials in distributing public-sector investments. To attract private investment to areas where it's needed." Maybe, the most important is "To assist in identifying possible discriminatory lending patterns and enforcing compliance with anti-discrimination statutes." That's the general background on HMDA and we should take a look now at what it covers, who has to collect and file HMDA data, what data must be collected and filed, and how and when it's supposed to be filed.

Some of the questions you posed that we needed to ask. Who is it, credit union-wise, that must report and collect HMDA data in 2022? Make it into a two-part. Who's covered in 2022 and how did the changes work?

Let's start with the criteria for 2022. These are four criteria, all of which a credit union must meet in order to be required to file. If you do 1 of the 4 or 3 of the 4, you have to meet all 4 of these requirements. The first one is what's referred to as an asset size threshold, which changes annually. For 2022, a credit union meets the asset-size threshold if the total assets as of December 31st, 2021, exceeded $50 million. That's the first thing.

If you're under $50 million, close the book, go home, you don't have to worry about it, but if you are over $50 million in assets, you'd look to the second criterion called the location test. That is that the credit union also 2021 or as of the end of the year in 2021 had a home or branch office in a metropolitan statistical area. That includes a branch office or any location where accounts are established, where loans are made, but ATMs are not included.

I'm going to point you some of the resources to tell you how to determine if the credit union is in a metropolitan statistical area. The credit union meets these first two criteria. You move on to the third prong of this, which is the loan activity test. If the credit union originated at least one home purchase loan or refinanced a home purchase loan secured by a first lien on a 1 to 4-unit dwelling during 2021, excluding temporary financing like a construction loan, that doesn't count.

If you meet all three of those requirements, the last one is the loan volume threshold. If the credit union originated at least 100 covered closed-end mortgage loans in each of the two proceeding calendar years, and those would be 2020 and 2021, or at least 200 covered open-end lines of credit that are home equity loans, again in each of the two proceeding calendar years. If you meet all four of those criteria, you are required to collect and submit HMDA data for 2022.

I have a relationship with a CUSO that helps generate loans. However, as part of that, the credit union gives the CUSO their matrix on how they're going to decide the credit decision and it fits the credit union's policy. Under that scenario, the credit union would submit it because they're making the credit decision. That's interesting. I didn't realize that.

There are some niceties to that, such as if the credit union does give up its right to refuse. It may be relying on the CUSO. It's not an easy thing to characterize because, again, you have to look at a lot of little details to make sure you're in compliance.

It comes down to that important legal word, "It depends." It depends on the facts of each situation. Got it. That's helpful too.

WFC 16 | Home Mortgage Disclosure Act
Home Mortgage Disclosure Act: If the credit union originated fewer than 500 covered closed-end mortgages, and each of the two proceeding calendar years, it is only asked to report the 22 data points for closed-end transactions.

What is the data that the credit unions need to collect if they are required to? It's data that comes from applications and consummated loans. It's data that includes demographic information about applicants and details about the loans themselves. I'm not going to get into what they are, but there are 48 data points that must be collected. Since nothing is easy, some of those data points have multiple data fields within them too.

Some of the things covered or must be collected are loan type, loan purpose, loan amount, action taken on the application, property address, rate spread, other items, including ethnicity, race, sex, age, income, and other items credit score. Some of this demographic data is collected via the Universal Residential Loan Application which is widely used in the mortgage industry, especially by lenders who sell their mortgage loans. Fannie and Freddie use those applications. Generally speaking, they're used by most lenders.

You mentioned all these different items and data sets that must be collected. Are there any exemptions that would either limit the items that need to be collected or any exemptions that would impact credit unions in any particular way other than that?

Since this is HMDA, the answer is yes. There are some exemptions and they're important to know. There are two separate partial exemptions. They relieve some HMDA filers from having to submit all 48 data points. Generally, they're only required to submit 22 of them if they are subject to the partial exemption and not the other 26 data points.

The first partial exemption is for closed-end transactions only. If the credit union originated fewer than 500 covered closed-end mortgages in each of the two proceeding calendar years, it only has to report the 22 data points for closed-end transactions. That doesn't affect reporting for the open-end transactions.

However, there is a separate partial exemption for open-end transactions. It's basically the same as the partial exemption for closed-end transactions where the standards of the same. If the credit union originated less than 500 open-end transactions that are subject to HMDA, the reporting for the open-end transactions is only for the 22 data points. That does not affect the reporting for the closed-end transactions. They are separate exemptions, even though the standards reach is the same.

If the credit union is required to collect and report HMDA data, it must record it in what's called a Loan Application Register or LAR. There is a requirement that the financial institution is subject to HMDA update LAR within 30 days of the end of each calendar quarter. For example, for this year, we're coming on very soon the LAR must contain all the transaction data for January, February, and March of 2022.

Except for some very large institutions, there might be a couple of credit unions that fall in that category. That data is only collected in the LAR up is being updated in its internal. It's not being reported until the reporting date of March 1, 2023, but there is a requirement that every quarter LAR be updated. The database to which the data is submitted will accept HMDA LARs if they are kept in a format that's compatible with the database. Compiling on a quarterly basis is a help because it makes it much easier to report the annual data when that annual data is due.

It's like reconciling your bank account once a month or once a year.

HMDA ensures that mortgage credit is offered and extended to everybody. This prevents discrimination and redlining. It benefits the members and the economy as a whole.

I want to reiterate that the actual submission is on March 1st following in the year following the calendar year that the data is collected in.

For March of 2022, they would have collected for 2021.

The data that's being collected now in 2022 will be reported in 2023. Technically, the data is submitted to the financial regulator. For all federally insured credit unions, including state charters that are federally insured, that data is being submitted to NCUA. However, it is submitted to a database that is maintained by the CFPB, and you can submit it through the FFIEC's website, FFIEC is a Federal Financial Institutions Examination Council, but technically the date is being submitted to the regulators. For credit union is being submitted to the NCUA. The CFPB takes the data and provides it to each of the federal regulators.

Once each of the federal regulators gets it and it's been reported, what do they do with it? NCUA and the CFPB have it. They share it with a couple of other agencies like HUD and DOJ. Could you explain that now that it is in the domain of these federal agencies, what happens with it?

This credit union data includes all the data that is submitted. Some of that data has some identifiers in it, so that it's non-public data to protect the privacy of the individuals whose transactions are being reported, but NCUA will get the data. The agency uses it and develops its Fair Lending program. It's different ways that we'll look at the data to look for compliance, for the industry as a whole, but also then to look for specific credit unions to see if there are some outliers in the data that raise a question.

Not necessarily a red flag, but a question. There's a perfectly reasonable explanation for it. It's not a violation, but sometimes it can become a red flag that there might be some issue with the quality of the data. The data is available to the public. Although the data points with identifier information are not available to the public for privacy purposes, as I said.

They call that PII, Personally Identifiable Information that's stripped out in the public versions.

In addition to the individual regulators getting the data for their regulated institutions. HUD gets the HMDA the data to use for its programs. CFPB can look at it for national trends. Every year, CFPB we'll release the results of its analysis of all the data and compare it to previous years.

If you were running a credit union or suggesting to a credit union how they could use their HMDA data either as it relates to their institution and/or in comparison to, for example, that CFPB report where they're showing the trends that happened last year, what would you recommend a credit union does with their own HMDA data?

WFC 16 | Home Mortgage Disclosure Act
Home Mortgage Disclosure Act: HMDA data is being kept in a format compatible with the database. It's like reconciling your bank account once a month or year.

The data is very useful for an individual institution. It can look at it to see how well it is serving its members and the community. It can lead to ways to improve the Fair Lending program. The credit union can compare how it is performing, within the similarly sized institutions in this geographic area, whether they be credit unions, banks, or non-depository lenders. Depending on the size of the mortgage lending operation, it might even be worthwhile for the credit union to consider getting software that does more sophisticated analyses of the data.

There are a number of different programs out there. For everybody's information, the NCUA uses a program called LendingPatterns. It's sold by a company called ComplianceTech. I'm not necessarily recommending that or advocating for it, but the benefit of using that it's the same software that your regulator is using. In theory, you should be getting the same results when you do any analysis using that program.

Our readers will appreciate that you pointed that resource out. The fact that NCUA utilizes them would have to be viewed in my mind as a positive because it's almost a running head start. Again, that's not an endorsement either, but there's some value to that. The government loves their deadlines so that people put their information in on time. If a credit union were to miss a filing deadline, what would happen?

The first thing is that it should do whatever it can to get the information filed because late filing is a violation of HMDA and not filing the violation of HMDA. However, not filing is a far more serious violation than late filing. The best thing to do is file it. The NCUA will contact those who filed late each year and recommend that they make efforts not to do that in subsequent years. Generally speaking, the NCUA will wait for several violations before taking any action, but the bottom line is even if you're late, file the data.

As you mentioned, NCUA can assess civil money penalties. They use that very carefully before they consider whether you have to be a multiple-time late person or a late credit union. Civil money penalty is not something NCUA throws around willy-nilly, but it is there to ensure bad actors do comply with the law. We've mentioned some resources. Are there any other resources that you want to highlight or any that you would like to re-highlight here?

The first thing is I direct everybody to the NCUA Regulatory Alerts. I hope everybody gets those and sent to them as their issued, but every year, the NCUA issues regulatory alerts on HMDA near the beginning of the year. I believe this 2022 went out the first week of February. One, it reminds credit unions who are subject to HMDA to report the previous year's data. This year would have talked about 2021 data.

The other provides the standards and requirements for collecting and reporting 2022 data. They get both ends of the spectrum with those regulatory alerts. They provide more detailed information than I've discussed. They also have links to some of the important references. I did mention the FFIEC's website, that's It has a number of HMDA references and has a breakdown by year if there are any issues with previous years, but the most important resource on that website is what's called the Getting It Right Guide. Some people refer to it by its acronym, which is GIRG.

The Getting It Right Guide is almost one-stop shopping because it goes over pretty much every detail on HMDA that you can imagine. It has charts on who is required to comply, what data is being collected, and what data is subject to the partial exemptions we discussed and doesn't have to be submitted. It does have a lot of individual resources within it. Finally, the Consumer Financial Protection Bureau's website is If you can find the compliance resources there, there is one for HMDA and it also has a lot of different resources.

Before we wrap up here, are there any sanitized examples of situations that you recall from your time in charge of this program where you saw that a credit union failed to do what it needed to do and how that might've impacted the credit union relative to their examination and/or the steps that that credit union had to take to get back within the confines the law? Anything jump into your head?

WFC 16 | Home Mortgage Disclosure Act
Home Mortgage Disclosure Act: Penalties are not something NCUA throws around willy-nilly. But it is there to ensure bad actors comply with the law.

Oftentimes, the data in LAR is not accurate, so what gets submitted to the website is inaccurate. There are standards established by NCUA. There's a threshold. A few minor errors, pretty much nothing happens, we request that the credit unions fix the errors internally, but if the errors exceed a certain threshold, the NCUA will require the credit union to not only correct the errors but to resubmit the data. It's not an area where civil money penalties are contemplated as long as the credit union does comply with the requirement to resubmit the data.

On occasion, there are instances where the data indicates a lack of compliance with some Fair Lending laws, which can be the basis for the NCUA putting a credit union on those lists for a Fair Lending exam or if it's discovered during a Fair Lending exam, they can require the credit union to change its policies and procedures so that it is complying with the Equal Credit Opportunity Act or some other Fair Lending law.

In those scenarios, the credit union could receive a document resolution or an examiner finding requiring action on their part and that would be in discussions with the people who are the Fair Lending examiners that you use to supervise. Do I have that right?

That's correct. The Fair Lending program uses the same type of standards and tools that are used for the standard exams by the regional offices.

Joe, any final thoughts on this topic before we wrap up for the day?

It's important for credit unions to understand even though complying with HMDA can be a chore. There is a valid reason for collecting the HMDA data. That is to try and ensure that mortgage credit is offered and extended to everybody based on mortgage-related criteria to prevent discrimination and to help prevent redlining. If you approach complying with HMDA from that angle, you can see why it has to be done. It's a benefit for the members and to the economy as a whole.

Joe, I want to thank you for your time. To the readers, I want to thank you for your time and for reading. Hopefully, we'll see you next time.

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