Return to CA Letter 06-3 PROVISIONAL HMDA DATA SAMPLING PROCEDURES

I. Changes to Sample Size Using the sample sizes outlined in CA 04-4 as a starting point, samples should be reviewed and possibly increased to ensure that loan applications originated by the bank (HMDA action code 1) comprise at least 50 percent of the items in the sample. If the original randomly selected sample includes less than 50 percent of applications originated by the bank, continue randomly selecting applications with action code 1 until the number of originations reaches at least 50 percent of the original number of items in the sample. For example: HMDA universe: 100 Sample size using CA 04-04 guidelines 39 Random sample selected: Action Code 1 (Originations) 11 (28 percent) Action Code 2 (Approved not accepted) 4 Action Code 3 (Denied) 7 Action Code 4 (Withdrawn) 4 Action Code 5 (Incomplete) 2 Action Code 6 (Purchased) 5 Action Code 7 (Preapproval Denied) 4 Action Code 8 (Preapproval Not Accepted) 2 Additional originations required for sample: 9 Revised sample size: 48 II. Samples for HOEPA Loan Originations

These procedures also establish additional sampling requirements to review HMDA LARs for loans that are subject to HOEPA. This sampling method is designed to determine if the bank’s procedures for calculating APR spreads and identifying HOEPA loans are accurate and to ensure that those reported as HOEPA loans, as well as those that are not, have been identified correctly. If the random sample selected for HMDA data verification, as outlined in Section I, does not include enough loans to fulfill the sampling requirements described below, a targeted sample of loans should be selected to meet the minimum requirements. The loan sample developed for these purposes should only be reviewed to determine if the rate spread has been accurately computed and the HOEPA status correctly reported. For banks that originate less than 10 percent of their applications with APRs above the established thresholds set by HOEPA, a sample size of six loans each of first and subordinate lien loan originations should be reviewed, if possible, for a total of 12 loans (see section 226.32 of Regulation Z for a discussion of the appropriate thresholds). If possible, the sample should include three high cost non-HOEPA loans with APRs within one point below the HOEPA trigger and three HOEPA loans with APRs within one point above the HOEPA trigger for both first and subordinate liens. If the bank does not have enough loans within the one point margin above or below the HOEPA trigger to fulfill the sample requirements, loans with APRs beyond the onepoint margin should be selected to achieve the requisite 12. This methodology has been selected because looking at close cases is most likely to reveal whether the creditor is correctly

designating HOEPA loans. For both first and subordinate liens, if the bank originated fewer than 3 high cost non-HOEPA loans with APRs below the HOEPA threshold or fewer than 3 loans with APRs above the HOEPA threshold, 100 percent of the loans in that category should be reviewed. If the bank originates more than 10 percent of its loans with APRs above the HOEPA thresholds, a minimum sample of 10 loans each of first and subordinate lien loan originations should be reviewed, if possible, for a total of 20 loans. If possible, the sample should include five high cost non-HOEPA loans with APRs within one point below the HOEPA trigger and five HOEPA loans with APRs within one point above the HOEPA trigger for both first and subordinate liens. If the bank does not have enough loans within the one point margin above or below the HOEPA trigger to fulfill the sample requirements, loans with APRs beyond the onepoint margin should be selected. For both first and subordinate liens, if the bank originated fewer than 5 high cost non-HOEPA loans with APRs below the HOEPA thresholds or fewer than 5 loans with APRs above the HOEPA threshold (but nonetheless meets the 10 percent criterion), 100 percent of the loans in that category should be reviewed.

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HMDA Sampling Schedule
Column A HMDA Universe Column B Column C Column D Column E Minimum Number of Files with Column F Column G Column H Column I

Minimum Additional Additional Total Number of Random Number of File Review Loans Sample** Files with Originated Errors*throughStop Errors*throughAdditional by the Bank Sampling & File Review Apply Required Resubmission (Go to Column G) Standards Column A Column B Column C Column D Column E Column F Column G Column H Column I HMDA Minimum Additional G Additional H Total Maximum Minimum Column E Column A Initial File Column B Minimum C Column D Column Column F Column Column Column I Universe A Review Column B Number of C ofColumn D Minimum E Minimum Additional File ReviewG blank (for HMDA Random I Number of Column F Number Number of Column Number of HMDA Initial File Total Minimum Maximum Additional Column Column Column Column H Column 1 through 11 Review All File HMDA Sample** blank (for HMDA with Universe Loans Files C Files Number of FilesNumber File Review Loans Universe A Review(for B Number of with Column D with Column E Minimum of F Random Number of HMDA Initial Additional Total Minimum Additional Column Column Minimum Number of Column Maximum Column Column G Column H Column I Universe HMDA Originated Files with Errors*Number ofwith through Stop Review(for Loans of Universe 1 through 11) Originated Errors* Minimum of Additional HMDA Errors* through Additional 12through20 12 (for File Loans Files Files with Universe A Review File F Random Number Review All Number of C Column D Minimum E Number of Number H HMDA Initial Total Minimum Maximum Additional Sample** Column Column G Column Column I 1 throughColumn B Originated Errors* -File ReviewColumnwithErrors* through Stop (for Originated 1 through(for HMDA the Bank HMDA Stop & Column byColumn Files with the Universe Universe All 11) Errors*SamplingAdditional Review byLoans of throughNumber of 2 1through30 13 11) Review All HMDA blank (forRandom Loans of Number of Files Files with Universe A Review File F Number HMDA Initial File B Bank Sampling blank (for D Number of Apply Additional Number Total Minimum C Column HMDAColumn E Minimum12 through G Universe H Maximum Minimum Additional Sample** Column Column Column Stop Required File Review Column Column 20) by the Bank Column Column I HMDA 12 through 20) Originated Errors* Universe Sampling & by the All (for Errors* Universe Errors* Additional Review 3 1through50 15 (for File Sample** Files Loans with Files with throughNumber of 13 Universe A ReviewHMDA 6 (for HMDA FilesColumn Column G) blank (for HMDAColumn F Stop HMDA Loans File Additional Originated Random Number Number Resubmission through (for Number of HMDA Initial Total Minimum Number ofto D Requiredof withMinimum21 through G 1 through 11) (for HMDA 20) Maximum Minimum E Additional Universe Column Column B Bank the of C Column Sampling Column Column H Apply Column 30) Review All Stop (Go Sampling & Universe by the Bank 12 through by Universe with File with withErrors* through Stop HMDA OriginatedColumn I HMDA Review Universe 28 (for Originated Errors* -of Errors* of through AdditionalFile 12 (for 5 1through70 17 (for File HMDA Minimum Sample** Files Loans Loans of C Column D (Go toColumn E Files Files Column Universe A Review Review Random Number through 11) UniverseMinimum G) Minimum of F Number Number StandardsNumber Column G Number H 21 Column I HMDA Initial Additional Universe of(for HMDA 30) Total Maximum Additionalthrough 1 Column Column B Universe Column Sampling Column Column Resubmission Universe by the Bank Bank HMDA 0 (for HMDA File Review RequiredthroughErrors* through Stop Apply31 31 through 50) 6 (for the Stop with Sampling &through 50) Review All by Universe 29 (for HMDA Originated Universe Originated Errors* -of 7 1through90 18 (for File Files Loans 11) FilesColumn 1Errors* of withStandards of 20 G 12Column H Files Column E Minimum Column with Universe ReviewHMDA Number of C (for HMDAD (Go toColumnG)(forAdditionalFile F (for HMDA Loans Review Random (for Number Number Number 20) 1 through 1 11) HMDA HMDA HMDA Initial through HMDA Sample** Total Maximum Required blank Resubmission Additional Universe of 31 Column 50) Universe Column A Column B Minimum Column Number Column 0 7 (for HMDA Universe throughMinimum 7 Bank (for Sampling Bank the Apply51 through 70) by theAdditionalthrough I HMDA 51 through 70) Originated Stop with & Review by Universe 38 (for Errors* -of20) File Review withErrors* through Stop HMDA Originated Universe Errors* of through2 Samplingof Universe 21 through of AdditionalFile 11 (for 9 1through110 28 (for File Files Loans Loans FilesColumn 1 (forColumn Files HMDA with Universe ReviewHMDA Number of 20)Maximum D Universe UniverseResubmission F Random Number Number 12 through Number 12 through C (for HMDA (Go to Column G) E Standards Column G (for HMDA Additional Number H 51 Column 70) 30) through I HMDA Initial Total Minimum Additional Sample** Universe Column A Column B Minimum Column Stop Column Column 8 (for the 6 (for Sampling Bank HMDA UniverseRequired Files withMinimum71 through 90) by the Bank Apply & 71 through 90) Originated 0 Samplingof 18 (for HMDA Universe by File ReviewthroughAdditionalFile Universe Number ofHMDA Universe Universe Originated 39 (for HMDA Errors* Errors* of 1 12 through Errors* throughUniversethrough Stop 11) 111through130 29 (for File HMDA Number of 30)Maximum 30) through 2 of20)HMDA HMDA Additional through 50) Universe 1 G) Loans Loans Files with Files with Universe Review Review Random Number 21 through 21 through (Go to Column Number HMDA Initial Minimum Total I Minimum C (for HMDAD Number (for E 2 (for Column F Minimum AdditionalColumn 90) Universe Universe Standards Column 110) 31Column H HMDASample** Column A Column Bank HMDA Sampling Column Universe Resubmission 10 (for Apply 91 through BOriginated 0 Column Required Files Universe Stop Samplingofthrough G byColumn Errors* -of Universe throughUniverse 91File 20 (for Universe 110)9 (forthe of 50) through 50) File Review with12Number 20) Universe by the Bank 71 through HMDA Originated 47 (for Errors* Additional & Review through 131through140 29 (for File Loans Files Files with Universe ReviewHMDA Number Number 31 Column 1 21 through 30)HMDA HMDA F Number (for 31 through C (forwith D through 2 ofG) E Errors* through Stop HMDA Loans 3 (for Column Additional Number of 91 through 110) HMDA Initial Minimum Total Minimum Maximum (Go to Column Minimum Additional Sample** Universe Standards Column G 51Column HHMDA Random Column A Column BBank HMDA Universe Column HMDA Required 50) 9 byColumn 0 Resubmission Universe by the Bank 6 (for Sampling Apply &through 130) through 70) 111 through 130) (forthe 111 Stop with Sampling30) 27 (for File Review withUniversethrough Stop HMDA Universe Column I HMDA Universe 49 (for through Originated Universe through Errors* (for Additional 141through170 29 (for File Loans Loans Universe ReviewHMDAOriginated 70)Maximum 70) through Files E 21Number of F Number of C (for HMDAD Number ofG) HMDA HMDA Additional Number of Number 51 through 1 Files with 51(for HMDAFilesColumn Universe 3 throughErrors* File Review 71Column HHMDA Sample** through Errors* -of 31Minimum 3 (for Column HMDA Initial Minimum Column G Total Minimum Additional through I through 90) Column 130) Universe (Go to Column Standards through 140) by the Bank 111 Random Column A Column Bank Column Universe Column Universe Resubmission Universe 9 (for Sampling Required 70) Apply & 131 through B14Loans 131 Universe Stop with Sampling50) 27 (for Universe 140) by the of 1 through 90) File Review withErrors* through Stop HMDA Originated 56 (for HMDA Errors* Errors* (for through Additional through 171through190 30 (for File Sample** Loans FilesColumn Universe 3 through31Number File Review 91 Column of Files with Universe ReviewHMDAOriginated 90)Maximum D through Files E Universe of F Number Number -of 51Number ofG) HMDA HMDA Additional Number 110) Column I 2 Minimum 71 through Universe 4 (for Column HMDA Initial Minimum Column G Minimum Additional Random Column A Column BUniverse Column Universe 1 15 (for HMDA71 HMDA (Go to Column Resubmission Universe by the (for HMDATotal HMDA Sampling Bank the Required Files withStandards 70) 29 (for HMDA 10Bank 131 through 140) Apply &through 170) through H 141 through 170) byColumn C (forwith 141 Stop Sampling Universe 57 (for Originated Universe Errors* through Stop Errors* -of 71Number 90) Errors* of through through51Number of Review AdditionalFile through 191through270 30 (for File HMDAOriginated110) through 110)File Review HMDA HMDA Additional Number of Loans Files Files with Universe Universe Review Random Number (for Column HMDA Initial Minimum Column Minimum Maximum 2 through Minimum Additional Sample** through 130) Universe Universe (Go to Column Column A Column B91Loans of 91 Column Universe 4 (for E 4 Sampling &through G 111Column H HMDATotal I 1 15 through (for HMDANumber Resubmission Universe by the Bank 141 through HMDA 14 (for Sampling Bank the Apply 171 through 190) byColumn C (forwith D File Column G)withStandards 90) F Stop HMDA Universe Column 170) 171 38 (for 190) Stop HMDA Required Files Review Universe 59 (for Originated Universe Errors* File Review Errors* -of 91Number through71Number of Additional Number of Errors* (for through Additional through 271through380 30 (for File Sample** Loans Loans of C through 130)Files with G) HMDA HMDA F FilesColumn Universe of Universe ReviewHMDAOriginated 130)(for HMDAD through 4110) E Universethrough Number 2 Minimum 111 through 111 5 (for Column HMDA Initial Minimum Column G Total Minimum Maximum (Go to Column Additional Random through 140) Column BUniverse Column 1101 1 15 (for HMDANumber Resubmission Stop 14 (for Sampling Bank the Required Files withStandards 110) Universe131Column H HMDAUniverse Apply &through 270) by the Bank 171 Column 190) 191 through 270) byColumn Universe191 38 (for HMDA Universe through I HMDA Stop with Sampling File Review Universe Originated 68 (for Errors* of 111 throughof HMDA HMDA Review Errors* throughErrors* through AdditionalFile through 381through750 31 (for File HMDAOriginated 140) through 140)Files with130) 91Number of Additional Number of Loans Loans Files Universe Universe Universe Review Random Number Number G) 131 through 131 HMDA 2 through 5 (for 5 (for Initial errors inNumber of (Key fields identified by the Federal Reserve Board are: 141 through 170)purpose; property type; Minimum Minimum Maximum (Go to Column Minimum Additional Sample** Universe 15 (forFields Universe Resubmission Universeloan the Bank 191 Total HMDA * Files with one or 271 through 380) by the more Key 15 (for HMDAUniverse Sampling Bank HMDA1 (for Required Files withStandards &through 380) by type; loan through 270) Apply 130) Stop 271 Stop with Samplingof 48 (for HMDA Universe File Review Universe Originated 69 (for Errors* Errors* throughUniversethrough through(for Additional 751through1100 31 (for HMDAOriginated 170) through 170)Files with140) 111 throughFile Review 171 through of Loans Loans of Errors* of 131to Column G) HMDA HMDA Files Universe 5 of Review Random Number Number Number Number Number 190) through 141 through Universe for2preapproval; application date and action date; 19 (for HMDASample** 6 (for Universe Universe 1 request Required owner occupancy; loan amount; 750) by taken type;(for HMDA (GoErrors* throughStandards &through 750) by MSA; state; county; census tract; 15 (for HMDA141 Resubmission Sampling Apply 381 through action the 381 47 the Bank 271 Universe Stop with Sampling File Review Universe 79 (for Originated 190) through 190)Files with170) Errors* through Stop HMDA Originated through 380) Additional 32 (for HMDABank Sample** Loans Loans Files Universe Files HMDA HMDA Universe Universe 2 through of G) 5 171 HMDA 141 through(forwith131 rate spread; (for 191 through 270) through HMDA 171 through Errors*; -income;to Columnpurchaser; through 140) HOEPA status; and lien status). 750) 6 (for Universe (Go type Universe ethnicty, race, and sex ofthrough 1100)(for HMDAUniverse 1 (for 15by the Resubmission Stop 19 (for HMDA79 (for HMDA Sampling Bank Required throughStandards & Universe by the Bank 381 Universe Apply through 1100) 751 the applicant and co-applicant 751 Stop Sampling 170) File Review Universe Originated Errors* through Originated 270) through 270)Errors* (for HMDA through Errors* Additional 171 through 190) 141 HMDA Universe 6 G) Universe 191 through 191 HMDA 2 through 6 (for 271 through 380) through 1100) Universe (Go to Column Standards Universe 1 (for 16 (for HMDAUniverse Resubmission 24 (for 751 HMDAUniverse Sampling Bank Required 1101 through up) by the 1101 Stop Sampling File Review 191 through(for HMDA through& through up) by the Bank 171 Apply 190) Universe 6 G) Universe 271 through 380) to Column270)originated by the bank is not found in 750)original sample. 2 through loans through 1 7 (for HMDA 381 through the Universe the minimum number of ** The total random sample could 271larger if 380)(for HMDA (Go be (for HMDAUniverse Standards Universe 16 Resubmission 1101 through up) 24 (for HMDA Sampling Bank Required Apply through Universe 7 (for HMDA HMDA Universe 2 through 381 through 750)(for HMDA 271to Column380) 191 through 270) 7 (for 751 through 1100) Universe Universe (Go G) Standards Universe 1 16 (for HMDA381 through 750) Resubmission 381 Universe 7 750) 271 HMDA Universe 2 through 751 751 through 1100) through 1100)through(for HMDA through 380) 8 (for 1101 through up) Universe Universe Standards 751 through 1100) 381 through 750) Universe Universe 1101 1101 through up) through up) 8 (for HMDA 1101 through up) 751 through 1100) Universe 1101 through up)

Initial File Review

Minimum Number of Loans Originated by the Bank

Maximum Number of Files with Errors* Stop Sampling