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Loans guaranteed by the Illinois Housing Development Authority (IHDA) are exempt from Regulation Z’s ability-to-repay (ATR) rules. As such, the new HMDA rules indicate that the Total Loan Costs and Total Points and Fees fields should be listed as “N/A.” What about the Origination Charges, Discount Points, and Lender Credit fields? Should these fields also be listed as “N/A” based on the loan’s exemption from the ATR rules? – IBA Compliance Connection

IBA Compliance Connection

Your go to source for compliance!

Loans guaranteed by the Illinois Housing Development Authority (IHDA) are exempt from Regulation Z’s ability-to-repay (ATR) rules. As such, the new HMDA rules indicate that the Total Loan Costs and Total Points and Fees fields should be listed as “N/A.” What about the Origination Charges, Discount Points, and Lender Credit fields? Should these fields also be listed as “N/A” based on the loan’s exemption from the ATR rules?

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No, we do not believe the HMDA data fields for Origination Charges, Discount Points, and Lender Credits for IHDA loans should be designated as “N/A” by virtue of the loan’s exemption from Regulation Z’s ATR requirements. Under Regulation C, the HMDA data fields for Origination Charges, Discount Points, and Lender Credits should be filled in for all loans subject to Regulation Z’s Closing Disclosure Requirements.

For resources related to our guidance, please see:

  • Regulation C, 12 CFR 1003.4(a)(18) Origination Charges (“For covered loans subject to the disclosure requirements in Regulation Z, 12 CFR 1026.19(f), the total of all itemized amounts that are designated borrower-paid at or before closing, as disclosed pursuant to Regulation Z, 12 CFR 1026.38(f)(1).”)
  • Regulation C, 12 CFR 1003.4(a)(19) Discount Points (“For covered loans subject to the disclosure requirements in Regulation Z, 12 CFR 1026.19(f), the points paid to the creditor to reduce the interest rate, expressed in dollars, as described in Regulation Z, 12 CFR 1026.37(f)(1)(i), and disclosed pursuant to Regulation Z, 12 CFR 1026.38(f)(1).”)
  • Regulation C, 12 CFR 1003.4(a)(20) Lender Credits (“For covered loans subject to the disclosure requirements in Regulation Z, 12 CFR 1026.19(f), the amount of lender credits, as disclosed pursuant to Regulation Z, 12 CFR 1026.38(h)(3).”)
  • Official Interpretations, Regulation C, 12 CFR 1003, Paragraph 4(a)(20), Comment 1 (“Section 1003.4(a)(20) does not require financial institutions to report lender credits for applications, or for transactions not subject to Regulation Z, 12 CFR 1026.19(f), such as open-end lines of credit, reverse mortgages, or loans or lines of credit made primarily for business or commercial purposes. In these cases, a financial institution complies with § 1003.4(a)(20) by reporting that the requirement is not applicable to the transaction.”)