It seems that many financial institutions received an email from HMDAHelp at the CFPB entitled: HMDA Data Outreach: Review Data for Invalid Entries in the Street Address Field.
the email is confusing to say the least. Financial Institutions are encouraged to analyze the street address fields of their LARS for years 2020, 2021 & 2022. The email states that resubmission of data will not change the timeliness status of the original filing. The email says that U.S. Postal Service Publication 28, Sub-Sections 231–239, can be used as a guide for formatting the street address to help improve geocoding accuracy. The email also states that including address components that are not included in the list (Primary Address Number, Predirectional, Street Name, Prefix, Suffix, Postdirectional, Secondary Address Identifier, such as apartment, Secondary Address, such as apartment number) may indicate an invalid Street Address. Maybe I am misreading this but, it seems that they are not wanting any special characters in the street address field, period.
I guess I have two questions: Does the act of resubmitting HMDA data have the potential to affect the overall HMDA rating? Also, if there are special characters in the street address field but it can be proven that the geocoding is still correct ….. in the end – isn’t that what is important -the geocoding should be correct? I know every institution needs to make the best decision they can on this.
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Having not had the opportunity to read/receive the letter the best I can offer is my opinion based off the questions you posed.
1. Does the act of resubmitting HMDA data have the potential to affect the overall HMDA rating? – Based on what you stated, it would seem you would have more of an issue if you did not make a good faith effort to review your data as requested to ensure the accuracy of the address field. If the CFPB has stated this will not affect the “timeliness” of the original filing it would seem that this is a wide spread issue and they are concerned about the accuracy of the HMDA data for those three years. Recognizing this data is Geocoded and used for fair lending analysis your FI could run a bigger risk for disparities and redlining if the data is inaccurate. You could also run the risk that if you don’t test for accuracy that your data could have issues that would be identified in your next exam and trigger a possible refile which at that time could end up causing a CMP. I would recommend that you make a good faith effort by testing your data using the testing guidelines established in HMDA and based off the result of a random sampling test that will aide you in determining if you need to continue scrubbing the data or if you have a good feeling about the accuracy.
2. When reviewing the last four years (most recent being 2023) of HMDA FIGs the address fields have always shown that you would not use any special characters like a period, so I’m assuming they are keeping inline with those requirements. But to your point I would agree that your FI would need to determine the best means to validate for Geocoding. I would however, keep in mind what the CFPB has documented in their FIG requirements what/how they want the data reported for HMDA.
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