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Question: Does a mortgage lender need to monitor their employees to ensure accurate HMDA data collection and reporting of demographic information (race, ethnicity, and sex)?

Answer:

Yes. Federal regulators stress the importance of collecting accurate data to help detect and prevent mortgage lending discrimination. Often mortgage lenders rely upon their employees to collect demographic information and other HMDA data.

In 2023, the CFPB fined a lender in the millions of dollars because its loan officers failed to ask mortgage applicants certain demographic questions and, instead, falsely reported that the loan applicants chose not to provide the information. The CFPB indicated that the lender had a responsibility to oversee its loan officers in the collection of this data in order to prevent inaccurate and false reports.

Lenders consistently struggle with HMDA data errors, particularly with regard to demographic information. Lenders must train their loan officers on the questions they must ask when taking an application. Such training should be ongoing. Mortgage lenders should also ensure that their online application systems properly request and record demographic information.

In addition to overseeing and training loan officers, mortgage lenders must review and audit their HMDA data regularly to ensure accuracy. High percentages of “I do not wish to provide this information” from a particular loan officer when reviewing demographic information should trigger further investigation.

Appendix B to Part 1003 – Form and Instructions for Data Collection on Ethnicity, Race, and Sex is a useful tool for lenders. It provides a sample data collection form and explains how to report demographic information based on the applicant’s responses and method of application.