Topic: Home Mortgage Disclosure Act of 1975 (HMDA)
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Does the Home Mortgage Disclosure Act (HMDA) require us to report an application for an assumption that does not result in a written agreement because it has been denied or withdrawn? Regulation C’s Staff Commentary states that if a transaction does not involve a written agreement between a borrower and the institution, it is not an assumption for HMDA purposes and is not reported.
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Yes, we believe that an application for an assumption that has been denied or withdrawn may be HMDA reportable if it meets Regulation C’s criteria for HMDA-reportable applications.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…
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Are there any best practices related to renewing loans that have matured? Do these practices differ if the loan has 1–4 family real estate attached? Also, are there any best practices related to backdating an application date so that it matches the loan maturity date?
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We are not aware of any guidance related to best practices for renewing loans that have matured or backdating an application so that it matches the loan’s maturity date. However, when renewing a loan, you should be aware of how Regulations Z and C distinguish between renewals and refinancings. For consumer credit transactions secured by…
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A borrower obtained a closed-end line of credit from us secured by a manufactured home community. The borrower intends to use the line of credit to purchase manufactured homes and place them in empty lots in the manufactured home community securing the line of credit. If the borrower is unable to sell the manufactured homes outright, they will obtain a closed-end loan from us secured by the manufactured home, and their line of credit will be paid down in an amount proportional to the closed-end loan. Would the line of credit be exempt from HMDA reporting as temporary financing? Also, if the borrower pays off the line of credit with a new line of credit secured by the same manufactured home community, would this be HMDA reportable?
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We believe that the line of credit is HMDA reportable, as the temporary financing exception would not apply to the loan you described. Additionally, we believe your new line of credit would be a HMDA reportable “refinancing.” Business or Commercial Purpose Exception Regulation C states that a closed-end mortgage loan or an open-end line of…
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We originate business loans secured by manufactured home communities, including both the land and the sites for the manufactured homes. There are at least five sites in each of these manufactured home communities, and in some cases, we also take the manufactured homes in the communities as collateral. To comply with the Home Mortgage Disclosure Act (HMDA), how should we report the “Manufactured Home Secured Property Type” and “Manufactured Home Land Property Interest” for these loans? We have been reporting “not applicable” for both fields but are unsure whether this is correct.
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We believe reporting “not applicable” for these two fields is correct if the manufactured home communities contain five or more sites. The CFPB’s official interpretations for Regulation C (which implements HMDA) state that for both of the reporting requirements referenced in your question — “Manufactured Home Secured Property Type” and “Manufactured Home Land Property Interest”…
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Are you aware of a form or worksheet that includes all the Home Mortgage Disclosure Act (HMDA) data that must be collected for commercial loans?
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The IBA offers the attached HMDA Data Collection Worksheet on its HMDA Topic Page that goes over data that must be collected for HMDA reporting. Note that this chart is based off of the CFPB’s most recent HMDA Data reference chart, rather than Regulation C itself. The CFPB also offers other HMDA data reference charts…
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Approximately two months ago, our commercial loan department made a construction loan to an individual borrower for the purpose of combining two condominium units (one of which the borrower currently resides in) and paying off the mortgage on the borrower’s unit. The construction loan has a nine-month term, payments are interest-only, and the loan will be paid off with a new residential mortgage loan. We treated the loan as a commercial loan and did not provide TILA/RESPA Integrated Disclosures (TRID) to the borrower. The borrower was charged the typical commercial loan fees, including a documentation fee and an origination fee. Can this problem be fixed, and do we owe the borrower restitution? Also, are we correct that this construction loan is not HMDA-reportable because it is temporary?
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We do not believe you can cure your bank’s failure to deliver the TRID disclosures; however, you may wish to reimburse your customer for the undisclosed closing fees charged in connection with the loan (here, because the borrower received no disclosures, this approach would require a refund of all closing fees, including the documentation and…
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For HMDA purposes, our understanding is that if a new debt obligation satisfies and replaces two or more existing obligations, the new obligation is a refinancing. However, must the new debt obligation be secured by the same property as the existing obligations?
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No, a new debt obligation is not required to be secured by the same property that secures the existing obligations it is satisfying and replacing to be considered a refinancing under Regulation C — provided that both the existing and new obligations are dwelling-secured. Under Regulation C, a “refinancing” means “a closed-end mortgage loan or…
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If a customer applies for a loan at our bank but does not qualify for any of the loan products we offer, we may refer the customer to a separate mortgage provider (not affiliated with our bank) that offers certain products that we do not, such as VA and FHA loans. When this occurs, should we send the customer a counteroffer or an adverse action notice? Also, should we include these applications on our Home Mortgage Disclosure Act loan application register (HMDA LAR)?
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If your bank receives a completed loan application and makes a determination that the applicant does not qualify for any of the loan products your bank offers, you should send the applicant an adverse action notice. Additionally, if your bank is a HMDA reporter, you should report the application on the HMDA LAR, provided the…
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Our commercial loan department has opted to provide adverse action notices to customers who withdraw their applications even though it is not required under Regulation B. The reason given for the denial in such notices is “file withdrawn,” regardless of whether a credit decision had been made at the time of the withdrawal. Is this appropriate? For our internal recordkeeping and training purposes, we use a loan documentation worksheet that includes certain fields relevant to HMDA reporting which distinguish between an application that is withdrawn prior to a credit decision and an application that is “approved, not accepted.”
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We believe your bank may continue to provide voluntary adverse action notices with the notation “file withdrawn” to applicants whose loan applications are withdrawn at any point during the credit decision process. You are correct that Regulation B does not require a lender to send an adverse action notice when an application is withdrawn, regardless…