Yes, we believe that an application for an assumption that has been denied or withdrawn may be HMDA reportable if it meets Regulation C’s criteria for HMDA-reportable applications.

Regulation C requires financial institutions to report data regarding applications for covered loans. It defines “application” as “an oral or written request for a covered loan” and “assumption” as “a transaction in which an institution enters into a written agreement accepting a new borrower in place of an existing borrower as the obligor on an existing debt obligation.”

Regulation C’s Official Interpretations state that an assumption is considered a home purchase loan “when an institution enters into a written agreement accepting a new borrower as the obligor on an existing obligation to finance the new borrower’s purchase of the dwelling securing the existing obligation, if the resulting obligation is a closed-end mortgage loan or an open-end line of credit.”

The Official Interpretations previously stated that if “a transaction does not involve a written agreement between a new borrower and the institution, it is not an assumption for HMDA purposes and is not reported.” However, we do not believe this comment was intended to exclude applications for assumptions from HMDA reporting, as no applications would be reportable under HMDA if a written agreement was required. Further, when Regulation C was amended in 2015, the CFPB removed that sentence from Regulation C’s Official Interpretations.

Consequently, we believe an application for an assumption that does not result in a written agreement may be HMDA reportable, provided that it meets the rest of Regulation C’s criteria for HMDA-reportable applications.

For resources related to our guidance, please see:

• Regulation C, 12 CFR 1003.4(a) (“A financial institution shall collect data regarding applications for covered loans that it receives, covered loans that it originates, and covered loans that it purchases for each calendar year.”)

• Regulation C, 12 CFR 1003.2(b)(1) (“Application means an oral or written request for a covered loan that is made in accordance with procedures used by a financial institution for the type of credit requested.”)

• Regulation C, 12 CFR 1003.2(e) (“Covered loan means a closed-end mortgage loan or an open-end line of credit that is not an excluded transaction under § 1003.3(c).”)

• Regulation C, 12 CFR 1003.2(d) (“Closed-end mortgage loan means an extension of credit that is secured by a lien on a dwelling and that is not an open-end line of credit under paragraph (o) of this section.”)

• Regulation C, Official Interpretations, Paragraph 2(d), Comment 2 (“In general, extension of credit under § 1003.2(d) refers to the granting of credit only pursuant to a new debt obligation. Thus, except as described in comments 2(d)-2.i and .ii, if a transaction modifies, renews, extends, or amends the terms of an existing debt obligation, but the existing debt obligation is not satisfied and replaced, the transaction is not a closed-end mortgage loan under § 1003.2(d) because there has been no new extension of credit.”)

• Regulation C, Official Interpretations, Paragraph 2(d), Comment 2.i (“For purposes of Regulation C, an assumption is a transaction in which an institution enters into a written agreement accepting a new borrower in place of an existing borrower as the obligor on an existing debt obligation. . . . Under § 1003.2(d), assumptions are extensions of credit even if the new borrower merely assumes the existing debt obligation and no new debt obligation is created.”)

• Regulation C, Official Interpretations, Paragraph 2(j), Comment 5 (“Under § 1003.2(j), an assumption is a home purchase loan when an institution enters into a written agreement accepting a new borrower as the obligor on an existing obligation to finance the new borrower’s purchase of the dwelling securing the existing obligation, if the resulting obligation is a closed-end mortgage loan or an open-end line of credit.”)

• Home Mortgage Disclosure Rule (Regulation C), 76 Fed. Reg. 78465, 78479 (December 19, 2011) (“An assumption occurs when an institution enters into a written agreement accepting a new borrower as the obligor on an existing obligation. An institution reports an assumption (or an application for an assumption) as a home purchase loan in the amount of the outstanding principal. If a transaction does not involve a written agreement between a new borrower and the institution, it is not an assumption for HMDA purposes and is not reported.”)

• Home Mortgage Disclosure (Regulation C), 80 Fed. Reg. 66127, 66141 (“The final rule adds new comment 2(d)-2.i to address Regulation C’s coverage of assumptions. Under existing comment 1(c)-9, assumptions are reportable transactions. Existing comment 1(c)-9 provides that assumptions occur when an institution enters into a written agreement accepting a new borrower as the obligor on an existing obligation. Existing comment 1(c)-9 also provides that assumptions are reportable as home purchase loans. The Bureau proposed to move existing comment 1(c)-9 to the commentary to the definition of home purchase loan, and the Bureau is finalizing that comment, with certain modifications, as comment 2(j)-5.”)

• Home Mortgage Disclosure (Regulation C), 80 Fed. Reg. 66127, 66141 (“Consistent with the final rule’s continued coverage of assumptions, the Bureau is adding comment 2(d)-2.i to the definition of closed-end mortgage loan to clarify that an assumption is an ‘extension of credit’ under Regulation C even though the new borrower assumes an existing debt obligation. When the Board first clarified Regulation C’s application to assumptions, it stated that, when an institution expressly agrees in writing with a new party to accept that party as the obligor on an existing home purchase loan, the transaction should be treated as a new home purchase loan. The Bureau agrees and final comment 2(d)-2.i thus provides that assumptions are considered ‘extensions of credit’” even if the new borrower assumes an existing debt obligation.”)