It’s that time of year when HMDA LARs are being scrubbed, double-checked and submitted to regulators. Once you submit the data the agencies begin their quality checks, which often result in Macro and Micro Quality Edits that need your attention. Below are agency-provided answers to some of the most common questions about macro quality edits, reasons for providing detailed explana¬tions on the Macro Quality Edit Report, and examples of acceptable macro edit responses.
What is a Macro Quality Edit?
While the more common micro quality edits focus specifically on each institution’s individual loan records, macro quality edits look at the overall trends in an institution’s report. Some macro quality edits compare the current year’s data to the previous year’s reported data. Institutions need to provide a detailed response to any macro edit they receive indicating that their data is either correct as reported or needs to be resubmitted.
Why is it necessary to explain a Macro Quality Edit in detail?
HMDA Operations staff require detailed explanations for macro quality edits to ensure that the macro quality edit has been fully ana¬lyzed by the compliance officer, and that any detected mistakes are corrected. Furthermore, an edit report cannot be marked complete without a full explanation for all macro quality edits.
Macro Quality Edits and Responses:
Example 1
Q061 THE NUMBER OF LOANS WHERE PROPERTY TYPE = 1, LIEN STATUS = 1, ACTION TAKEN TYPE = 1 AND RATE SPREAD > 5% AND NOT = NA IS > 1% OF THE TOTAL NUMBER OF ORIGI¬NATED LOANS; VERIFY
[Editor’s Translation: Originated conventional first lien loans where rate spread exceeds 5% and is not listed as N/A exceed 1% of the total number of originated loans.]
Acceptable Response
All loans in question for this loan product reflect our policies associ¬ated with the collateral. We had a very small number of loans this year, and they all happened to reflect this trend.
Example 2
Q015 MULTIFAMILY LOAN APPLICATIONS >= 10% OF TOTAL LOAN APPLICATIONS AND/0R >= 10% OF THE TOTAL DOLLAR AMOUNT OF THE LOAN APPLICATIONS; VERIFY
[Editor’s Translation: The number of applications for multifamily loans is ≥ 10% of total loan applications and/or the dollar amount of applications for multifamily loans is ≥ 10% of the total dollar amount of loan applications.]
Acceptable Response
All loans in question are multifamily loans. Our bank does pri¬marily commercial lending. All loans and corresponding dollar amounts have been verified.
Unacceptable Responses:
• No corrections needed.
• Loans are reported correctly.
• No errors.
Failure to provide an acceptable response to an inquiry regarding a macro quality edit is not a violation. But regulators will continue to push until an acceptable response is provided. Getting it right the first time is the most efficient use of your time.
