How Correct Must the HMDA LAR Be?

HMDA errors continue to come in at high rates. Although the regulatory agencies have not yet developed a specific standard for acceptable errors or an error rate that would trigger penalties, examiners do have some rules of thumb. Examiners would first look at the overall error rate, and then look at the errors in critical data fields.

One rule of thumb holds that an overall error rate of 10% or higher would at a minimum require refiling. However, a tolerance for critical fields would be closer to 5%. Because the reality of HMDA is that most fields are critical, banks should make an effort to keep their error rate well below 5%.

Copyright © 1996 Compliance Action. Originally appeared in Compliance Action, Vol. 1, No. 8, 5/96