We believe that your holding company is responsible for reporting the loan originations under HMDA, unless it is acting as your agent in making the credit decision (which does not appear to be the case here).

Only one financial institution reports the origination of a covered loan. When multiple entities are involved in the origination of a covered loan, the CFPB has stated that “the institution that makes the credit decision approving the application before loan closing or account opening is responsible for reporting the origination of the covered loan. It is not relevant whether the loan closed in the reporting financial institution’s name.” Therefore, although your bank will close the loans, the holding company is responsible for reporting the originations because it will make the credit decisions.

However your holding company’s credit decisions will be treated as your credit decisions if it is acting as your agent, which is determined under state law. Under Illinois law, a principal-agent relationship exists where the principal has the right to control the manner and method in which the agent performs its work.

In this case, your holding company will make credit decisions based on its own criteria, which indicates that you do not have the right to control the manner and method in which your holding company makes credit decisions. Consequently, it is unlikely that your holding company would be viewed as an agent for your bank. But because we do not have enough facts to determine whether any agency relationship exists here, you may wish to consult with bank counsel in order to evaluate whether your holding company will be acting as your agent in making credit decisions on loan applications.

For resources related to our guidance, please see:

• CFPB, HMDA Small Entity Compliance Guide (March 2018), page 35 (“Only one Financial Institution reports the origination of a Covered Loan. If more than one institution is involved in the origination of a Covered Loan, the institution that makes the credit decision approving the Application before loan closing or account opening is responsible for reporting the origination of the Covered Loan. It is not relevant whether the loan closed in the reporting Financial Institution’s name.”)

• Official Comments, Regulation C, 12 CFR 1003, Paragraph 1(c), Comment 6 (“Credit decision of agent is decision of principal. If an institution approves loans through the actions of an agent, the institution must report the action taken on the application (loan originated, approved but not accepted, or denied, for example). State law determines whether one party is the agent of another.”)

• Lang v. Silva, 715 N.E.2d 708, 716–17 (Ill. App. 1st Dist. 1999) (“A principal-agent relationship is said to exist where the principal has the right to control the manner and method in which the agent performs his work and the agent has the ability to subject the principal to personal liability.”)