Topic: Home Mortgage Disclosure Act of 1975 (HMDA)
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We serve as a correspondent bank for other local community banks on home mortgage loans. Those banks accept loan applications in their names and forward the applications to us to review. For each application that we receive from them, we pull credit reports, run the application through our underwriting systems, and provide a list of conditions that must be met for us to purchase the loan. The other bank closes the loan in its name, initially funds the loan, and then sells the loan to our bank. Under the new Home Mortgage Disclosures Act (HMDA) final rule that takes effect this year, should we report these applications as submitted to our institution? Should we report these loans as initially payable to our institution?
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Based on the facts provided, we believe you should indicate that the applications are not submitted directly to your institution. For “origination” loans, the 2015 HMDA Final Rule requires you to report whether the application was submitted directly to your bank (identified in new data field number 93). The Official Interpretations explain that a financial…
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If we accept a home mortgage loan application via email, should we treat the application as received by mail or internet under Regulation C?
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We believe that you should treat an application received by email as received by mail, unless the email application includes a video component. With respect to reporting an applicant’s ethnicity, race, and sex, Appendix B to Regulation C states that “if you accept an application through electronic media without a video component (for example,…
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We purchase loans from third-party correspondent banks. These banks receive and complete residential mortgage loan applications and send them to us for review. We make the credit decision and then purchase the loans. In the past, we have reported these loans as “originated” under the Home Mortgage Disclosures Act (HMDA). Does that change under the new HMDA final rule that took effect this year? Do we report that these applications were submitted directly to our bank?
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We believe that your bank should continue to report such loans as “originated” under the 2015 HMDA Final Rule that took effect January 1, 2018. The 2015 HMDA Final Rule added new Official Interpretations to clarify a bank’s reporting responsibilities in transactions involving more than one financial institution: “[T]he financial institution that made the…
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We have reported Home Mortgage Disclosure Act (HMDA) data in the past, but we now qualify for an exemption from HMDA reporting due to our low loan volume. Because we are no longer a HMDA reporter, are we required to display or make available any HMDA notices? If so, are we required to include the CFPB’s suggested verbiage in our HMDA lobby notices?
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Yes, we recommend that your bank continue to display and make HMDA notices available, as described below. We contacted the CFPB to clarify the signage responsibilities for a bank like yours (one that reported HMDA data in the past but is not currently a HMDA reporter). The CFPB representative’s informal guidance to us was…
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We are a HMDA reporter but have not reported open lines of credit in the past, and we are exempt from reporting in 2018 (we do not meet the 500 loan threshold for open-end lines of credit). Under Regulation B, can we collect government monitoring information (GMI) for open-end home purchase loans and refinances?
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Yes, Regulation B permits (and actually requires) lenders to collect an applicant’s GMI — ethnicity, race, sex, age, and marital status — open-end home purchase loans or refinancings, provided that they are to be secured by the applicant’s principal residence. In general, Regulation B prohibits lenders from collecting certain personal information from applicants, including ethnicity,…
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We have a commercial loan for which we required a dwelling as additional collateral. We did not report the loan on our HMDA loan application register (LAR) because the loan purpose was not to purchase or improve the dwelling. If we refinance this loan and again require the dwelling as additional collateral, is the loan reportable under HMDA as a refinance?
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Yes, this loan would be reportable as a refinancing under Regulation C. Under the current version of Regulation C, a refinance is reportable under the Home Mortgage Disclosure Act (HMDA) if both the existing and new obligation are secured by liens on a dwelling. As stated in FFIEC Guidance, “[t]he purpose of the loan being…
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Do the TILA-RESPA Integrated Disclosure (TRID) rules require disclosures for a consumer-purpose, construction-only loan to build a home from the ground up, where the borrower will obtain permanent financing at a later date? What if we extend the maturity date for this loan without extending new money or changing any other terms? Also, would this loan be reportable under the Home Mortgage Disclosure Act (HMDA)? Would the extension be HMDA reportable?
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TILA-RESPA Integrated Disclosure (TRID) Requirements Yes, the TRID disclosures are required for closed-end, consumer-purpose construction loans secured by real property. However, whether they would be required when you extend the term of an existing loan depends on the language you use in the extension agreement. TRID disclosures are required for existing loans only when they…
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Should we report a withdrawn Construction to Permanent loan on our HMDA LAR? The borrowers were planning to do major construction on their existing home.
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Yes, you should report the withdrawn loan application on your HMDA loan application register (LAR). Regulation C requires financial institutions to report data on combined construction/permanent loans. This requirement will not change when the HMDA changes go into effect on January 1, 2018; the current guidance on reporting construction/permanent loans will be incorporated into the…
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We have a customer who received a quitclaim deed for a dwelling from a relative, who had a mortgage loan secured by the dwelling from another bank. After recording his quitclaim deed, the customer obtained a mortgage loan from our bank. He stated that he plans to use the proceeds of his loan to pay off his relative’s existing mortgage. Would this be considered a purchase, refinance, or not reportable under the Home Mortgage Disclosure Act (HMDA)?
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In our view, the loan is not HMDA reportable. From what you have told us, the loan does not fit into any of three HMDA reporting categories — for home purchase loans, home improvement loans or refinancings — and consequently, we do not believe that the HMDA requires you to report this loan. The HMDA…
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We made a business purpose loan secured by a commercial property that was guaranteed by the business owners, a husband and wife. We charged off the loan three years ago. The guarantors recently agreed to begin making payments on the loan and granted us a mortgage on their home. The original business loan is still on our bank’s books (with a zero balance) for tracking purposes only. Is this loan reportable under the Home Mortgage Disclosure Act (HMDA)?
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The HMDA requires lenders to report home purchase loans, home improvement loans, and refinancings. A home purchase loan is “secured by and made for the purpose of purchasing a dwelling.” A home improvement loan is “for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property…