Reported Income – Credit Decision vs Calculation Discrepancy

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    From a HMDA perspective…our Audit Department has approached us (Compliance) concerning some underwritten income miscalculations on a few applications (rounding, multiplication, transposition errors, etc.), and they believe these should be HMDA “findings”. However, our stance is that these are not “HMDA” findings as HMDA regulation prescribes that we report the income that was actually used in the credit decision, not what should/could have been used. We have also told them we would not want to misrepresent what actually went down to make the decision as it could adversely impact any analysis utilizing the HMDA LAR, including that which was involved in making their current discovery. Are these HMDA findings? What are your thoughts on the situation? Note it was determined that the correct income amounts would NOT have changed the decision.


    I’m of the opinion that you should follow what is written in the institution’s policy/procedures. I would also agree that you need to record the figure that was determined for the credit decision regardless of the errors, if your LAR hasn’t been filed. For any errors on prior year’s data or if a business decision is made to not update the corrected amount, you need to document those files with the reasoning for the difference. I would also recommend that you have documented training with the underwriters. Their miscalculations could provide risk to the institution not only for HMDA, but ATR, UDA(A)P and Fair Lending.

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