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©2014 FIS and/or its subsidiaries. All Rights Reserved. Home Mortgage Disclosure Act (HMDA) 1
©2014 FIS and/or its subsidiaries. All Rights Reserved.
Home Mortgage Disclosure Act (HMDA)
1
Home Mortgage Disclosure Act (HMDA)
• Purpose:
– Detect illegal discrimination
– Detect predatory lending
• Who is required to report? Depository institutions
– Banks, savings associations and credit unions
• Office in Metropolitan Statistical Area; and
• Total assets of $44 million as of Close of Business December 31, 2015; and
• Originated at least one home purchase loan (excluding temporary financing such as a construction loan) or refinancing of a home purchase loan secured by a first lien on a one- to-four-family dwelling
• Requires:
– Collection and Reporting of Government Monitoring Information
– Loan Application Register (“HMDA LAR”)
• Coverage:
Consumer and business purpose applications for and purchases of:
– Home purchase loans
– Certain home improvement loans
– Refinancing
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12 CFR 1003
HMDA - Exceptions to Reporting and Optional Reporting
• Exceptions to HMDA reporting requirements
– Broker Rule
• Submit application to secondary market
– Do not report if secondary market approves
– Report if you deny for any reason
– Report if you made the credit decision
– Loan modifications*
– Temporary financing
Optional Reporting Home Equity Lines of Credit
– Use Regulation Z definition
– Revolving credit
– Consumer purpose
– Secured by borrower’s residence
• Optional reporting but…
– Be consistent!
• Report all HELOCs or none
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*Loan Mods are historically are not reportable transactions. However, Federal Reserve-supervised institutions are expected to report loan modifications, per an article published by the Federal Reserve in the Second Quarter 2011 Compliance Outlook publication, where the Fed had reversed this position.
See http://www.consumercomplianceoutlook.org/
12 CFR 1003
HMDA - Exceptions to Reporting and Optional Reporting
• Exemptions
– Loans for purposes other than purchase, refinance or home improvement even if secured by real estate
– Loans made in fiduciary capacity
– Loans on unimproved land
– Construction loans, Bridge loans
– Purchase of an interest in a pool of loans
– Purchase solely of the right to service loans
Data Collection Fields
2016/2017:
1. Application or Loan Number
2. Date Application Received
3. Type of Loan
4. Property Type
5. Purpose of Loan
6. Occupancy
7. Loan Amount
8. Request for Preapproval
9. Type of Action Taken
10. Date of Action Taken
11. MSA/MD #, State Code, County Code, Census Tract Number
12. Ethnicity, Race, Sex of Applicant(s)
13. Income of the Applicant(s)
14. Type of Purchase (if sold)
15. Reasons for Denial (optional)
16. Rate Spread
17. HOEPA Status
18. Lien Status
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Application or Loan Information
• Application Defined –generally tracks Regulation B’s Definition:
“Application means an oral or written request for an extension of credit that is made in accordance with procedures used by a creditor for the type of credit requested. The term application does not include the use of an account or line of credit to obtain an amount of credit that is within a previously established credit limit.”
However , HMDA does not include a prequalification request – No address/real estate – no application under HMDA.
Prequalification. A prequalification request is a request by a prospective loan applicant (other than a request for preapproval) for a preliminary determination on whether the prospective applicant would likely qualify for credit under an institution's standards, or for a determination on the amount of credit for which the prospective applicant would likely qualify. Regulation C does not require an institution to report prequalification requests on the HMDA/LAR, even though these requests may constitute applications under Regulation B for purposes of adverse action notices.
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Application or Loan Information
• Application number or Loan Number
– Unique to that record
• Date Application Received – enter the date the application was received or the date on the application form. Be consistent.
• Type of Loan or Application- Indicate if the loan is Conventional, FHA- insured, VA-guaranteed, or FSA/RHS – guaranteed.
– FHA - Federal Housing Administration
– VA - Veterans Administration
– FSA - Farm Service Agency
– RHS - Rural Housing Service
• Property Type – indicate what type of property secures the loan: 1 to 4 family dwelling, Manufactured Housing, Multifamily Dwelling.
– Condominiums or cooperative units that are individually owned will be coded 1 to 4 family.
– If you can’t tell whether the property is manufactured housing related – code it as 1 to 4 family dwelling.
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Application or Loan Information
Manufactured Housing
•Lenders must identify applications for loans to purchase manufactured homes
•Use HUD standard: ready for occupancy at factory (can include modular homes)
•Make reasonable efforts
•Report 1- to 4-family when unable to determine through reasonable efforts
Application or Loan Information
• Loan Purpose
– Home purchase loans: any loan secured by and made for the purpose of purchasing a dwelling
– Certain home improvement loans: any loan where the funds are to be used in part for repairing, rehabilitating, remodeling, or improving a dwelling or real property.
– Refinancing: any dwelling secured loan that replaces and satisfies another dwelling secured loan by the same borrower.
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Home Purchase Loans – Secured by any dwelling,
not necessarily the dwelling being purchased
– Funds used to purchase a dwelling/lien status is irrelevant
• Example: Loan to buy rental property secured by personal residence
Home Improvement Loans – Loan is considered for home
improvement if any portion of proceeds is for home improvement
– Only report home improvement loans that are dwelling-secured or
– If not dwelling-secured, that you classify as home improvement for internal purposes
– Improve dwelling or land where dwelling is, for example swimming pools, patios, driveways
Refinancing – Dwelling-secured loan to the
same borrower completely paid off by another dwelling-secured loan
– Irrelevant - Loan purpose of original loan/purpose of additional money/lien status
– Do not report as a refinancing any loan where the bank was unconditionally obligated to refinance – loan terms.
12 CFR 1003
Application or Loan Information
• What is a dwelling?
– Residential structure
• Does not have to be attached to real property
– Mobile home o.k. (if certain requirements are met)
• Not limited to 1-4 family
– Multi-unit apartment building qualify
• Located in United States of America, District of Columbia or Puerto Rico
– Non-state territories do not apply i.e. Guam, U.S. Virgin Islands
• What is not a dwelling?
– Recreational vehicles
– Boats
– Other types of mobile structures
• Whether or not “permanently” located
– Temporary residences
• Rooming houses, dormitories
• Timeshares
• Nursing homes, extended care facilities
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12 CFR 1003
Application or Loan Information
• Mixed use properties
– 50% rule
• Reporting loans with different properties
– Home purchase or refinance of home purchase loan
• Report property taken as collateral
• If more than one taken as collateral, report property being purchased
• If more than one property is collateral and being purchased, two options:
– Pick one property and report it
– Allocate loan between properties and report multiple entries
– Home improvement or refinance of home improvement loan
• Report property being improved
• If more than one, use two options above
• Do not report property taken as collateral (if any)
• Farm Loans
– A loan to purchase property used primarily for
agricultural purposes is not a home purchase loan even
if the property includes a dwelling.
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12 CFR 1003
Application or Loan Information
• Occupancy
– Owner-Occupied as a principal dwelling. For purchased loans, use this designation unless loans documents clearly indicate otherwise.
– Not owner-occupied as a principal dwelling. This is used for vacation homes as well as rental properties.
– Not Applicable –Use if multifamily dwelling (if property is not located within an MSA or is located in a MSA or MD in which your bank has neither a home office or branch you may choose to use NA or the other two designations as applicable)
• Loan Amount
Enter the amount of the loan or application rounded to the nearest thousand. Always show the amount in Thousands. Never report anything under $500. For Example, Loan amount $167,300 should be entered as 167. If $167,500 then 168.
– Originated loans – enter the entire amount of the loan or line of credit amount.
– Non-originated loans – enter the amount for which the applicant applied.
– Purchased Loans - enter the unpaid principal balance of loan at time of purchase.
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Application or Loan Information • Requests for Preapprovals for Home Purchase loan requests
To be a covered preapproval program, the written commitment issued under the program must result from a full review of the creditworthiness of the applicant, including such verification of income, resources and other matters as is typically done by the institution as part of its normal credit evaluation program. In addition to conditions involving the identification of a suitable property and verification that no material change has occurred in the applicant's financial condition or creditworthiness, the written commitment may be subject only to other conditions (unrelated to the financial condition or creditworthiness of the applicant) that the lender ordinarily attaches to a traditional home mortgage application approval. These conditions are limited to conditions such as requiring an acceptable title insurance binder or a certificate indicating clear termite inspection, and, in the case where the applicant plans to use the proceeds from the sale of the applicant's present home to purchase a new home, a settlement statement showing adequate proceeds from the sale of the present home.
• Record whether or not the application was reviewed under an preapproval program via “Preapproval Requested” or Preapproval Not Requested”. If the bank has no such program or it is not a home purchase loan request, then indicate Not Applicable.
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Action Taken • Type of Action
– Loan Originated
– Application Approved but not accepted – use only if application has been approved but the applicant fails to respond to your notification of approval or your commitment letter within the specified time. DO NOT USE IF ONLY AN LOAN ESTIMATE HAS BEEN ISSUED AND YOU DON’T HEAR FROM THE APPLICANT.
– Application Denied
– Application Withdrawn – only use when it is expressly withdrawn BEFORE a credit decision is made. Do not use for Preapprovals. Withdrawn preapproval requests are not HMDA reportable.
– File Closed for Incompleteness – use if you sent a notice of incompleteness to the applicant and the applicant did not respond.
– Loan Purchased By Your Institution
– Preapproval Request Denied
– Preapproval Request Approved But Not Accepted
Counteroffers will only be originated or denied.
• Date of Action Taken
– Originated loans : date of settlement or loan closing – same as note date.
– Non-originated application: for denied or closed for incompleteness use the date of final action or when the notice was sent to the applicant. For withdrawn – use the date the applicant notified the bank.
– For Approved not accepted – the bank may use either the date the customer was notified of approval, the deadline for accepting the offer, or the date the file was closed. Be consistent.
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Property Location
• MSA/MD number, state code, and county code.
– Report the five-digit metropolitan statistical area (MSA) number or, if available, the five-digit metropolitan division (MD) number; the two-digit code for the state; and the three-digit code for the county. Enter those codes for any loan or loan application on property located in an MSA where you have a home or branch office.
– If the property is located outside the MSAs where you have a home or branch office (or outside any MSA) and you are not required to report data under the Community Reinvestment Act (CRA), you may enter the applicable codes or you may enter “NA” in every column.
– These codes may be found in Appendix F of the HMDA Getting it Right Guide.
• Census Tract
– Use the numbers assigned in the 2010 census. The FFIEC will use 2010 demographic data in preparing tables of the data submitted by reporting institutions. Record each census tract number, showing any decimal points precisely as shown on Census Bureau documents. Add leading and trailing zeros to fill out the column, even though the number is not shown with leading or trailing zeros on the Census documents.
– You may enter “NA” for the census tract number if the property is located in a county with a population of 30,000 or less as of the 2010 census, even if the population later exceeded 30,000 (but you must enter the MSA number, state code, and county code). As of the 2000 census, every area of the country is in a census tract
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Property Location
• Under CRA Rules, institutions not defined as “small” must report the property location in all cases, even for properties located outside those MSAs in which they have a physical home office or branch office.
• Exception: Property in a county with a population of 30,000 or less in the 2010 census. The institution may indicate either “NA” or the census tract number at its option.
• Geocoding Tool
Go to: www. ffiec.gov
Select : Geocoding/Mapping System
Enter Year of request
Enter Address
• MSA/MD Code
– 12060
• State Code
– 13
• County Code
– 089
• Tract Code
– 0218.09
• MSA/MD Name
– ATLANTA-SANDY SPRINGS-ROSWELL, GA
• State Name
– GEORGIA
• County Name
– DEKALB COUNT
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Applicant Information • Government Monitoring Information
• Ethnicity
– Hispanic
– Not-Hispanic
• Race
– American Indian or Alaska Native
– Asian
– Black or African American
– Native Hawaiian or Other Pacific Islander
– White
• Sex
– Male
– Female
• Income
– Enter the gross annual income that the bank relied on in making the credit decision rounded up to the nearest thousand and shown in thousands.
Applicant Information • Use “Not Applicable if the applicant or
co-applicant is not a natural person or when the information is unavailable because the loan has been purchased by your institution.
• If there is more than one co-applicant, provide the information only for the 1st co-applicant on the application. If there are no co-applicants – use the code for “no co-applicant”.
• Use ”Information not provided by applicant in mail, internet, or telephone applications” for Ethnicity, Race, and Sex data are not provided by applicant when application is not taken face to face.
• You must report ALL racial designations that the customer selects.
• Enter “NA” for income when it is a loan on multifamily dwellings or if no income information was relied on in making the credit decision as well as when the applicant or co-applicant is not a natural person.
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Applicant Information - Government Monitoring Information
1. Provide form to applicant, who provides info
2. If applicant declines, note on application
3. Cannot report anything based on later visual observation
1. Applicant completes information
2. Report what the applicant writes
3. If applicant declines to give information, loan officer reports on visual observation or surname
In Person Internet / Mail
1. Request information orally (read script)
2. If applicant declines, note on application
3. Cannot report anything based on person’s voice or later visual observation
Phone
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12 CFR 1003
Applicant Information - OMB Guidelines for Definitions of Ethnicity and Race
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Ethnicity is based on the following categorization:
Hispanic or Latino: A person of Cuban, Mexican, Puerto Rican, South or Central
American, or other Spanish culture or origin, regardless of race. The term
"Spanish origin" can be used in addition to "Hispanic or Latino."
Applicant Information - OMB Guidelines for Definitions of Ethnicity and Race
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Race is based in the following five categorizations:
American Indian or Alaskan Native: A person having origins in any of the original
peoples of North and South America (including Central America), and who
maintains tribal affiliation or community attachment.
Asian: A person having origins in any of the original peoples of the Far East,
Southeast Asia, or the Indian subcontinent, including, for example, Cambodia,
China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand,
and Vietnam.
Applicant Information OMB Guidelines for Definitions of Ethnicity and Race
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Black or African American: A person having origins in any of the black racial groups
of Africa. Terms such as "Haitian" or "Negro" can be used in addition to "Black or
African American."
Native Hawaiian or Other Pacific Islander: A person having origins in any of the
original peoples of Hawaii, Guam, Samoa, or other Pacific Islands.
White: A person having origins in any of the original peoples of Europe, the Middle
East, or North Africa.
Sale of Loan
• Indicate whether a loan that your institution originated or purchased was then sold to a secondary market entity within the same calendar year.
– Loan was not originated or was not sold in calendar year covered by register
– Fannie Mae
– Ginnie Mae
– Freddie Mac
– Farmer Mac
– Private Securitization
– Commercial Bank, Savings Bank or Savings Association
– Life Insurance Company, Credit Union, Mortgage Bank, or Finance Company
– Affiliate Institution
– Other type of Purchaser
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Reasons for Denial
• You may report up to 3 reasons for denial using these general categories:
– Debt to Income Ratio
– Employment History
– Credit History
– Collateral
– Insufficient Cash (down-payment, closing costs)
– Unverifiable Information
– Credit Application Incomplete
– Mortgage Insurance denied
– Other
Do not use these if the loan is not a denial, if the application was withdrawn, or closed for incompleteness.
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Loan Pricing and Lien Status • Loan Pricing
– Rate Spread: for Originated home purchase, refinances, dwelling secured home improvement loans report the spread between the APR and the Average Prime Offer Rate (APOR) if the spread is equal to 1.5% on 1st lien loans and 3.5% on subordinate lien loans. Us the APOR in effect on the date the interest rate was set.
– www.ffiec.gov/hmda go to “Rate Spread Calculator”
– Use “NA” if the loan is not subject to Reg. Z, a non-dwelling secured home improvement loan, is a loan the bank purchased, o was not and origination, or the rate spread was less than the 1.5% and 3.5% measure.
– Enter the rate spread to 2 decimal places and use leading zeros.
• Date The Interest Rate was Set
– If the interest rate is set by a lock-in agreement, used the date of the lock in agreement.
– If the rate is re-set after a lock-in agreement is executed, then use the date the rate is re-set for the final time before closing.
– If there is no lock-in agreement, then the date is the date that the institution sets the rate for the final time before closing.
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Loan Price and Lien Status
• HOEPA Status
– 1- Loan is HOEPA loan
– 2 All other loans.
• Lien Status
– Report as first lien, subordinate lien, or unsecured
– Report for all loans or applications
– Use best information readily available at time of final action
– Use “NA” for loans that the bank purchases
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HMDA Loan Application Register • HMDA reportable institutions must maintain a Loan Application Register (LAR) on a
calendar-year basis. This is information is reported on a loan-by-loan, application-by-application basis.
• HMDA reportable institutions must record transactions on the LAR within 30 calendar days after the end of the calendar quarter in which final action on the transaction takes place.
• The HMDA LAR must be sent to the FFIEC in an electronic format annually by March 1 following the calendar year of data.
• A transmittal sheet that indicates the name, email address, and telephone number of a person at the institution who can answer questions about the LAR and a record count of the total number of line entries on that submission must accompany your LAR submission.
• Data must be edited by software supplied by the FFIEC (or private software providers) prior to submission. All edits must be cleared.
• An institution is expected to submit valid and accurate HMDA data that have been checked using edits approved for the particular calendar year. If an institution is to resubmit its data, it should send a complete resubmission; it should not send partial resubmissions.
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HMDA Loan Application Register
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HMDA Loan Application Register
• Modified LAR
– Institutions must make their LAR data— modified to protect privacy interests of applicants and borrowers—available to the public upon request in electronic or printed form.
– These fields should be deleted from the LAR before the disclosures are made public:
• The application or loan number
• The date the application was received
• The date the action was taken
– The modified LAR must be made available no later than March 31 for requests made on or before March 1 and within 30 days for requests made after March 1.
– The modified LAR must be available for 3 years.
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©2014 FIS and/or its subsidiaries. All Rights Reserved.
Dodd-Frank Act Changes to Data Collection Under HMDA/Regulation C
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Institutions covered effective January 1, 2017
• December 31, 2016 Assets in excess of the threshold published by the Bureau. Currently $44 million.
• December 31, 2016 had a home or branch office in an MSA
• Originated at least 1 home purchase loan or refinancing of a home purchase loan secured by a 1st lien on a 1-4 family dwelling in 2016.
• Is federally insured or regulated; the mortgage loan was insured, guaranteed or supplemented by a federal agency; or the mortgage loan was intended by the institution for resale to Fannie Mae or Freddie Mac.
• The institution originated at least 25 home purchase loans including refinancings or home purchase loans (that are not excluded) in both 2015 and 2016.
ALL of these conditions must be met in order for your bank to be HMDA reportable.
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Institutions covered effective January 1, 2018
• December 31, 2017 Assets in excess of the threshold published by the Bureau. Currently $44 million.
• December 31, 2017 had a home or branch office in an MSA
• Originated at least 1 home purchase loan or refinancing of a home purchase loan secured by a 1st lien on a 1-4 family dwelling in 2017.
• Is federally insured or regulated; the mortgage loan was insured, guaranteed or supplemented by a federal agency; or the mortgage loan was intended by the institution for resale to Fannie Mae or Freddie Mac.
• The institution originated at least 25 home purchase loans including refinancings or home purchase loans (that are not excluded) in both 2016 and 2017.
• The institution originated at least 100 Open-end lines of credit in both 2016 and 2017.
ALL of these conditions must be met in order for your bank to be HMDA reportable.
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• Dwelling Secured Loans / Applications
Closed End
Open End Line of Credit
Reverse Mortgage
Commercial Loans and Lines of Credit
CONTINUED EXCLUSION for Temporary Financing.
• This is a significant change! As proposed, HMDA is no longer PURPOSE driven, but COLLATERAL driven.
• Revision to the definition of “dwelling.”
• Practical Impact: You will have more reportable loan applications. Also, Unsecured loans for Home Improvement are no longer reportable.
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Covered Loan beginning January 1, 2018
GMI Collection Beginning January 1, 2018
• Ethnicity
– Hispanic or Latino
• Mexican
• Puerto Rican
• Cuban
• Other Hispanic or Latino ________________
– Not Hispanic or Latino
• Must report ALL selections
• Race
– Asian
• Asian Indian
• Chinese
• Filipino
• Japanese
• Korean
• Vietnamese
• Other Asian ___________________
– Native Hawaiian or Other Pacific Islander
• Native Hawaiian
• Guamanian or Chamorro
• Samoan
• Other Pacific Islander_________________
• Must report ALL selections
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Data Collection Comparison Chart
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Current Action under DFA Effective 2018 Description
Bank # from Call Report modified Legal Entity Identifier Identifier issued to the financial institution (FI) by a utility endorsed by the Global LEI Foundation or LEI Regulatory
Oversight Committee
Application or Loan Number modified Universal Loan Identifier Identifier assigned to identify and retrieve a loan or application that contains the FI’s LEI, an internally
generated sequence of characters, and a check digit
Date Application Received Existing Application Date no change
Type of Loan Existing Loan Type no change
Property Type Modified Construction Method Whether the dwelling is site-built or a manufactured
home
Purpose of Loan Modified Loan Purpose
Purchase: Open or closed end credit used for home purchase/subordinate lien loans used for down-payment
or purchase of different home. Home Improvement: Open-end or Closed end used for home improvement. Refinancing: Closed -end or Open-end credit where the
new dwelling -secured debt obligation satisfies and replaces and existing dwelling-secured debt obligation by the same borrower. Cash-Out refinancing is new purpose
as is OTHER. Other is to be used if the purpose is not Purchase, Improvement, refinancing, or cash-out
refinancing.
Occupancy Modified Occupancy Type Whether the property will be used as a principal
residence, second residence, or investment property.
ECOA/HMDA Dodd-Frank Changes
• Initiatives to Promote and Improve Operational Efficiency in HMDA Compliance
• New online data tool to facilitate easier access to publicly-available data
– http://www.consumerfinance.gov/hmda/explore
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Questions?
Exercise Completion
Louvera Walden, CRCM
