Topic: Home Mortgage Disclosure Act of 1975 (HMDA)
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We are a two-bank holding company, and we are considering a merger that would change our CRA classification from a small bank to an intermediate small bank. Our total assets would remain under $500 million after the merger. Are there any other regulatory implications besides CRA classification that we should be aware of? We use the FFIEC 051 for our Call Report, and the merger will not result in us crossing the $1 billion asset threshold. Both banks are HMDA reporters, and all of our customer forms and agreements are already identical.
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We are not aware of any other regulatory impact that might result from increasing your bank’s asset size to a level that remains under $500 million. As you noted, your bank will continue to use the FFIEC 051 Call Report for banks with domestic offices only and total assets less than $1 billion. Your bank…
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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?
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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…
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On a residential mortgage loan application, does the loan officer have to sign the application? We are not a HMDA reporting institution.
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No, we do not believe that loan originators are required to sign loan applications. Regulation Z requires the disclosure of a loan originator’s name and NMLS identifier on credit applications and other documents related to residential mortgage loans, but it does not require the loan originator’s signature. However, secondary market investors may impose their own…
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We understand that when a loan is subject to Regulation Z’s ability to repay requirements, Regulation C requires us to report either the total loan costs or the total points and fees for HMDA purposes. If we report the total loan costs, how do we report the total points and fees? Do we report “0” or “NA” or leave it blank?
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In our view, if you determine under Regulation C that you should report the total loan costs for a particular loan, then you should enter “Not Applicable” or “NA” for the total points and fees. The FFIEC Guide to HMDA Reporting indicates that when the ability-to-repay requirements apply and closing disclosures were provided — in…
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We have a business purpose loan that we are going to refinance, with cash out to improve the business (a restaurant). The collateral for the existing loan and the refinance is an assignment of beneficial interest in a land trust, which contains two restaurants and a single-family dwelling. Is this reportable under the Home Mortgage Disclosure Act (HMDA) in 2018?
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Yes, we believe that this dwelling-secured loan is reportable under the new HMDA rules that became effective in 2018. We believe that a loan secured by an assignment of a beneficial interest in a land trust should be treated as secured by a dwelling, provided that the land trust holds a dwelling. Under the new…
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We made a loan to a business entity to purchase a 35-unit apartment complex. The loan is secured by all 35 units. The loan is a covered purchase loan under the 2017 HMDA Final rule. Do we report this as secured by 1 unit or 35 units? Also, should we report the interest rate, combined loan-to-value (CLTV) ratio, and property value for this loan?
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For loans secured by multi-unit dwellings, the 2017 HMDA Final Rule and its Official Interpretations provide that lenders should report the total number of individual dwelling units securing the loan, which in this case would be 35. The 2017 HMDA Final Rule also requires lenders to report the value of the property and the…
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Some of our home mortgage customers “refinance” their loans and use some of the proceeds to improve their current residence or purchase a different property. Our loan document specifically states that the transaction “does not satisfy and release” the original loan note. Are these transactions reportable under HMDA?
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No, we do not believe that these transactions are reportable under the Home Mortgage Disclosure Act (HMDA) and Regulation C, because they are not “extensions of credit.” The HMDA and Regulation C require your bank to report closed-end and open-end extensions of credit. The official interpretations in Regulation C clarify that a modification, renewal, extension,…
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In our view, the 2015 HMDA Final Rule excludes potential asset annuitization and depletion from income reporting. Does that mean that asset annuitization and depletion also should not be used for debt-to-income ratio reporting?
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No, we believe that calculations of the potential annuitization or depletion of an applicant’s assets may be included in debt-to-income HMDA reporting, pursuant to the 2017 HMDA Final Rule that was published in September 2017. We agree that the official comments to Regulation C require reporting institutions to exclude the potential annuitization or depletion of…