IBA Compliance Connection

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I have a HMDA reporting question for loans that are denied for non-income related reasons. Our HMDA software is producing quality and validity edits when we enter “NA” for fields that were not considered in issuing the denial. For example, if we deny an application due to the applicant’s credit score, we enter “NA” in the fields for income, property value, LTV, DTI, etc. What should the entry be for data not considered in issuing the denial?

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Our understanding is that all of the HMDA data fields mentioned in your question may be reported as “NA” because they are not considered in making a credit decision. Your software vendor may be able to shed more light on the significance of the quality and validity edits — it may be the case that your vendor simply is flagging each instance of “NA” as a quality or validity edit for your review, without necessarily implying that the use of “NA” is incorrect.

For resources related to our guidance, please see:

  • Regulation C, Official Interpretations, Paragraph 4(a)(10)(iii), Comment 5 (“Income data – credit decision not requiring consideration of income. A financial institution complies with § 1003.4(a)(10)(iii) by reporting that the requirement is not applicable if the application did not or would not have required a credit decision that considered income under the financial institution's policies and procedures. For example, if the financial institution’s policies and procedures do not consider income for a streamlined refinance program, the institution reports that the requirement is not applicable, even if the institution received income information from the applicant.”)
  • Covered loans or applications for which the credit decision did not consider, or would not have considered income, § 1003.4(a)(10)(iii); Comment 4(a)(10)(iii)-6;
  • Covered loans or applications when applicant or co-applicant is not a natural person, Comment 4(a)(10)(iii)-7;
  • Covered loan is secured by, or application is proposed to be secured by, a multifamily dwelling, Comment 4(a)(10)(iii)-8;
  • Purchased covered loans for which the financial institution chooses not to report the income, Comment 4(a)(10)(iii)-9;
  • Covered loan to, or an application from, the institution’s employees to protect their privacy, even if the institution relied on their income in making the credit decision, Comment 4(a)(10)(iii)-3.”)
  • Regulation C, Official Interpretations, Paragraph 4(a)(15), Comment 5 (“Transactions for which no credit score was relied on. If a financial institution makes a credit decision without relying on a credit score for the applicant or borrower, the financial institution complies with § 1003.4(a)(15) by reporting that the requirement is not applicable.”)
  • Regulation C, Official Interpretations, Paragraph 4(a)(23), Comment 4 (“Transactions for which no debt-to-income ratio was relied on. Section 1003.4(a)(23) does not require a financial institution to calculate the ratio of an applicant’s or borrower’s total monthly debt to total monthly income (debt-to-income ratio), nor does it require a financial institution to rely on an applicant’s or borrower’s debt-to-income ratio in making a credit decision. If a financial institution made a credit decision without relying on the applicant’s or borrower’s debt-to-income ratio, the financial institution complies with § 1003.4(a)(23) by reporting that the requirement is not applicable since no debt-to-income ratio was relied on in connection with the credit decision.”)
  • Regulation C, Official Interpretations, Paragraph 4(a)(24), Comment 4 (“Transactions for which no combined loan-to-value ratio was relied on. Section 1003.4(a)(24) does not require a financial institution to calculate the ratio of the total amount of debt secured by the property to the value of the property (combined loan-to-value ratio), nor does it require a financial institution to rely on a combined loan-to-value ratio in making a credit decision. If a financial institution makes a credit decision without relying on a combined loan-to-value ratio, the financial institution complies with § 1003.4(a)(24) by reporting that the requirement is not applicable since no combined loan-to-value ratio was relied on in making the credit decision.”)
  • Regulation C, Official Interpretations, Paragraph 4(a)(28), Comment 4 (“Transactions for which no property value was relied on. Section 1003.4(a)(28) does not require a financial institution to obtain a property valuation, nor does it require a financial institution to rely on a property value in making a credit decision. If a financial institution makes a credit decision without relying on a property value, the financial institution complies with § 1003.4(a)(28) by reporting that the requirement is not applicable since no property value was relied on in making the credit decision.”)
  • Regulation C, Official Interpretations, Paragraph 4(a)(35), Comment 4 (“Transactions for which an automated underwriting system was not used to evaluate the application. Section 1003.4(a)(35) does not require a financial institution to evaluate an application using an automated underwriting system (AUS), as defined in § 1003.4(a)(35)(ii). For example, if a financial institution only manually underwrites an application and does not use an AUS to evaluate the application, the financial institution complies with § 1003.4(a)(35) by reporting that the requirement is not applicable since an AUS was not used to evaluate the application.”)