Every day there are loan decisions being made by someone who is not an underwriter. Processors and originators handle the unclosed loans with good intentions to clean out the pipeline or respond to a customer or realtor request. The individual looks at the scenario and forms his/her own opinion on what happened, puts notes in the LOS, and generates an adverse action notice.
Processors and originators become so personally involved they may accidentally interpret any loan scenario as withdrawn, when it should be a denial. The end result for the company is an incorrect Action Taken recorded on a highly monitored federally regulated report.
In a review of current Indecomm clients the Action Taken and the Action Taken Date on the HMDA and NMLS reports showed the highest error rates compared to other more automated data. These fields are dependent upon one person having all the facts, and all the facts lining up with the documents in the file.
Understanding a loan’s final Action Taken for HMDA reporting requires consistent and specific decisions for every circumstance. There are bright lines that must be followed and applied to daily procedures. For example, the definition for ‘Approved But Not Accepted’, does not permit conditions as simple as “verify source of funds for the $1,500 deposit”. However, the LOS most likely has a loan approval date entered and therefore will populate the HMDA report with an inaccurate Action Taken and Action Taken Date. Any missing documentation required for an underwriting decision, no matter how minor it may seem, is not an approval for HMDA reporting purposes.
This is just one example of why lenders need to leverage resources with technology and subject matter experts to scrub their 2015 and 2016 HMDA reports. Our teams can handle any size review, including mega companies reporting thousands of loans. We find all the flaws and help you correct them. It is critical to clean out the closet before the 2017 HMDA monster arrives!