HOW TO AVOID COMMON LENDING VIOLATIONS



HMDA (Home Mortgage Disclosure Act)What to Know Now & What’s on the Horizon?December 16, 2015ToolkitTABLE OF CONTENTS TOC \h \z \t "Chaptertitle,2,Chapter,1,Subchaptertitle,3" CFPB FACT SHEET FOR HMDA CHANGES PAGEREF _Toc437590418 \h 3CFPB HMDA VISUALIZATION TOOL PAGEREF _Toc437590419 \h 7LINKS TO CHECKLISTS PAGEREF _Toc437590420 \h 8REGULATION C (HMDA) DATA COLLECTION FORM PAGEREF _Toc437590421 \h 9LOAN APPLICATION CODE SHEET PAGEREF _Toc437590422 \h 11FDIC HMDA VALIDATION PROCEDURES PAGEREF _Toc437590423 \h 12FREQUENTLY ASKED QUESTIONS (FAQS) FROM PAGEREF _Toc437590424 \h 14COMPLIANCE RESOURCES PAGEREF _Toc437590425 \h 24HMDA QUESTIONS AND QUICK REFERENCES PAGEREF _Toc437590426 \h 25USING THE GETTING IT RIGHT GUIDE PAGEREF _Toc437590427 \h 26FFIEC HMDA- WHAT’S NEW ? PAGEREF _Toc437590428 \h 27FFIEC NEW GEOCODING SYSTEM PAGEREF _Toc437590429 \h 29HMDA TEMPORARY FINANCING PAGEREF _Toc437590430 \h 30HMDA TEMPORARY FINANCING FLOWCHART PAGEREF _Toc437590431 \h 33REAL ESTATE LOAN MATRIX PAGEREF _Toc437590432 \h 34MATRIX FOR APPLICATIONS TAKEN ON OR AFTER 8/1/15 PAGEREF _Toc437590433 \h 37CFPB FACT SHEET FOR HMDA CHANGESCFPB HMDA VISUALIZATION TOOLLink: CFPB released various tools on September 18, 2013 and said the tools will “provide consumers with easier access to public mortgage data collected under the Home Mortgage Disclosure Act. The new tools will help maximize the impact of this tremendous public dataset by providing a user-friendly tool to enable consumers to explore mortgage application and loan data at a local level. You’ll be able to explore the data using interactive maps and charts. Using the tool, you can see nationwide summaries or choose interactive features that allow you to isolate the data for any metropolitan area. You can easily explore millions of data points with these graphs and charts. The image below is an example of a map generated by the tool. The map shows that loan volumes were up in 2012 in most counties throughout the U.S. We’re committed to enhancing the functionality of the tool and will continue to release enhanced features over time.”LINKS TO CHECKLISTSThere are several helpful checklists available as a free download from this website: individual checklists are not provided in this supplement because of format issues. Go directly to the website to download HMDA Bank Loan Checklists (Version 1.2)You will find these checklists in WORD; they can be modified for your use:PURCHASE/CONSTRUCTION (Fixed Rate/HMDA)Refinance (Fixed Rate/HMDA, includes “refinanced” home equity loans)HOME IMPROVEMENT/HOME EQUITY (Fixed Rate/HMDA)PURCHASE/CONSTRUCTION (Adjustable Rate Mortgage/HMDA)Refinance (Adjustable Rate/HMDA, includes “refinanced” home equity loans) HOME IMPROVEMENT/HOME EQUITY (Adjustable Rate Mortgage/HMDA) HOME EQUITY LINE OF CREDIT (HMDA) AGRICULTURAL/COMMERCIAL REAL ESTATE LOAN (HMDA)REGULATION C (HMDA) DATA COLLECTION FORM You may list questions regarding the ethnicity, race, and sex of the applicant on your loan application form, or on a separate form that refers to the application. (See the sample form below for model language.) II. ProceduresA. You must ask the applicant for this information (but you cannot require the applicant to provide it) whether the application is taken in person, by mail or telephone, or on the Internet. For applications taken by telephone, the information in the collection form must be stated orally by the lender, except for that information which pertains uniquely to applications taken in writing.B. Inform the applicant that the federal government requests this information in order to monitor compliance with federal statutes that prohibit lenders from discriminating against applicants on these bases. Inform the applicant that if the information is not provided where the application is taken in person, you are required to note the data on the basis of visual observation or surname.C. You must offer the applicant the option of selecting one or more racial designations.D. If the applicant chooses not to provide the information for an application taken in person, note this fact on the form and then note the applicant's ethnicity, race, and sex on the basis of visual observation and surname, to the extent possible.E. If the applicant declines to answer these questions or fails to provide the information on an application taken by mail or telephone or on the Internet, the data need not be provided. In such a case, indicate that the application was received by mail, telephone, or Internet, if it is not otherwise evident on the face of the application. The form on the next page is found in the “Getting It Right Guide”, this is the link to the Guide: APPLICATION CODE SHEET GO TO APPENDIX A of the “GETTING IT RIGHT GUIDE” to print a copy the code sheet and instructions to complete the Loan Application Register.LINK: HMDA VALIDATION PROCEDURESThis is the link: FREQUENTLY ASKED QUESTIONS (FAQS) FROM This is a link: TypeModular homes. Is a modular home a manufactured home for purposes of Regulation C?Answer: For Regulation C reporting, a manufactured home is one that meets the HUD code, 12 CFR 203.2(i). The official staff commentary indicates that modular homes that are ready for occupancy when they leave the factory and meet all of the HUD code standards are included in the definition of "manufactured home". 203.2(i)-1. The comment, and a prior FAQ on this site, have raised questions about whether a modular home should be reported as a manufactured home or as a one- to four-family dwelling. Until the Board provides further guidance regarding modular homes, lenders may, at their option, report a modular home as either a one- to four-family dwelling or as a manufactured home. Conditional approvals---customary loan-commitment or loan-closing conditions. The commentary indicates that an institution reports a "denial" if an institution approves a loan subject to underwriting conditions (other than customary loan-commitment or loan-closing conditions) and the applicant does not meet them. See comment 4(a)(8)-4. What are customary loan-commitment or loan-closing conditions?Answer: Customary loan-commitment or loan-closing conditions include clear-title requirements, acceptable property survey, acceptable title insurance binder, clear termite inspection, and, where the applicant plans to use the proceeds from the sale of one home to purchase another, a settlement statement showing adequate proceeds from the sale. See comments 2(b)-3 and 4(a)(8)-4. An applicant's failure to meet one of those conditions, or an analogous condition, causes the application to be coded "approved but not accepted." Customary loan-commitment and loan-closing conditions do not include (1) conditions that constitute a counter-offer, such as a demand for a higher down-payment; (2) underwriting conditions concerning the borrower's creditworthiness, including satisfactory debt-to-income and loan-to-value ratios; or (3) verification or confirmation, in whatever form the lender ordinarily requires, that the borrower meets underwriting conditions concerning borrower creditworthiness.Conditional approvals---failure to satisfy creditworthiness conditions. How should a lender code "action taken" where the borrower does not satisfy conditions concerning creditworthiness?Answer: If a credit decision has not been made and the borrower has expressly withdrawn, use the code for "application withdrawn." That code is not otherwise available. See Appendix A, I.B.1.d. If the condition involves submitting additional information about creditworthiness the lender needs to make a credit decision and the applicant has not responded to a request for the additional information in the time allowed, use the code for "file closed for incompleteness." See Appendix A, I.B.1.e. If the borrower has supplied the information the lender requires for a credit decision and the lender denies the application or extends a counter-offer that the borrower does not accept, use the code for "application denied." If the borrower has satisfied the underwriting conditions of the lender and the lender agrees to extend credit but the loan is not consummated, then use the code for "application approved but not accepted."For example, if approval is conditioned on a satisfactory appraisal and, despite notice of the need for an appraisal, the applicant declines to obtain an appraisal or does not respond to the lender's notice, then the application should be coded "file closed for incompleteness." If, on the other hand, the applicant obtains an appraisal but the appraisal does not support the assumed loan-to-value ratio and the lender is therefore not willing to extend the loan amount sought, then the lender must use the code for "application denied."Loan PurposeRefinancing --- coverage vs. reporting. Why are there two definitions of "refinancing," one for "coverage" and one for "reporting"?Answer: A lender uses the reporting definition, 203.2(k)(2), to determine whether to report a particular application, origination, or purchase as a "refinancing" in the loan purpose field; a lender uses the coverage definition, 203.2(k)(1), to determine whether the institution has sufficient home purchase loan activity, including refinancings of home purchase loans, for the institution to be covered by HMDA.. See 203.2(e)(1)(iii), 203.2(e)(2)(i) and (iii). The coverage definition is not relevant to determining whether to report a particular transaction as a refinancing. Refinancing --- loan purpose. If an obligation satisfies and replaces another obligation, is the purpose of the replaced obligation relevant to whether the new obligation is a reportable "refinancing" under Regulation C?Answer: No. The new definition of a reportable refinancing looks only to whether (1) an obligation satisfies and replaces another obligation and (2) each obligation is secured by a dwelling. See 203.2(k)(2). Thus, for example, a satisfaction and replacement of a loan made for a business purpose is a reportable refinancing if both the new loan and the replaced loan are secured by a dwelling. Refinancing --- line of credit. If a dwelling-secured line of credit satisfies and replaces another dwelling-secured obligation, is the line required to be reported as a "refinancing"?Answer: No. A dwelling-secured line of credit that satisfies and replaces another dwelling-secured obligation is not required to be reported as a "refinancing," regardless of whether the line is for consumer or business purposes.Refinancing --- guaranty secured by dwelling. If an obligation secured by a dwelling is satisfied and replaced by an obligation in which a guaranty of the credit obligation is secured by a dwelling but the new credit obligation is not secured by a dwelling, is the transaction reportable under HMDA?Answer: No, a transaction is not reportable as a home purchase loan or refinancing unless the credit obligation, itself, is secured by a dwelling. See 203.2(h), 203.2(k)(2). An obligation not secured by a dwelling is reportable as a home improvement loan only if classified by the lender as a home improvement loan. See 203.2(g)(2).Refinancing --- satisfaction of lien. Is the satisfaction of a lien (mortgage) relevant to determining whether an obligation is a reportable refinancing?Answer: No, the satisfaction of a lien is neither necessary nor sufficient to create a reportable refinancing. The credit obligation must be satisfied and replaced; it is not relevant whether the lien is satisfied and replaced. See 203.2(k)(2)Refinancing --- cash out for home improvement. How should a lender code a dwelling-secured loan when the borrower uses the funds both to pay off an existing dwelling-secured loan and to make improvements to a dwelling?Answer: A dwelling-secured loan that meets the definitions of both "home improvement loan" and "refinancing" should be coded as a "home improvement loan."See comment 203.2(g)-5. The lender must code the loan as a "home improvement loan" even if the lender does not classify it in the lender's own records as a "home improvement loan." See 203.2(g)(1).MECAs. Should MECAs (Modification, Extension and Consolidation Agreements) be reported under HMDA as refinancings?Answer: No. The rule is unchanged: MECAs are not reportable as refinancings under Regulation C. See 67 Fed. Reg. 7221, 7227 (Feb. 15, 2002). The applicable comment was inadvertently omitted when the Commentary was revised in 2002; the comment will be restored when the Commentary is next revised.Temporary Financing. When is a loan "temporary financing" such that it is exempt from reporting?Answer: The regulation lists as examples of temporary financing construction loans and bridge loans. See 203.4(d)(3). Construction and bridge loans are illustrative, not exclusive, examples of temporary financing. The examples indicate that financing is temporary if it is designed to be replaced by permanent financing of a much longer term. A loan is not temporary financing merely because its term is short. For example, a lender may make a loan with a 1-year term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. Such a loan must be reported as a home purchase loan. See 203.2(h). Reverse Mortgage---reporting. Does a lender have to report information on applications and loans involving reverse mortgages?Answer: Reverse mortgages are subject to the general rule that lenders must report applications or loans that meet the definition of a home purchase loan, home improvement loan, or refinancing (see 12 C.F.R. § 203.2(g)-(h), (k)). Note, however, that reporting is optional if the reverse mortgage (in addition to qualifying as a home purchase loan, home improvement loan, or refinancing) is also a home equity line of credit (HELOC). See 12 C.F.R. § 203.4(c)(3). The official staff commentary to Regulation C states that a lender who opts to report a HELOC should report in the loan amount field only the portion of the line intended for home improvement or home purchase. See comment 4(a)(7)-3. PreapprovalsProgram---In general. An element of the definition of "preapproval request" is the existence of a "program." How is it determined whether a program exists?Answer: A preapproval program exists when the procedures established and used by the lender match those specified in 203.2(b)(2). A program, regardless of its name, is not a "preapproval program" for purposes of HMDA if the program does not meet the specifications in the regulation. By the same token, a program may be a preapproval program for purposes of HMDA even though it is not so named. The question is whether the lender regularly uses the procedures specified in the regulation. If a lender has not established procedures like those specified in the regulation, but considers requests for preapproval on an ad hoc basis, those requests need not be treated as requests for preapproval under HMDA. Failure to establish and consistently follow uniform procedures, however, may raise fair-lending and safety-and-soundness issues.Program---Commitment letter issued on request. If a lender issues a commitment letter only at the applicant's request, does the lender have a preapproval program?Answer: If a lender will as a general matter issue written commitments under the terms and procedures described in 203.2(b)(2), then the lender has a preapproval program regardless whether the lender gives a written commitment to all applicants who qualify for preapproval or only to those qualifying applicants who specifically ask for a commitment in writing.Preapproval request approved and accepted, but loan not originated. How should a lender report a preapproval request it has approved where the borrower subsequently identified a property to the lender but a loan was not originated?Answer: When a borrower who has received a written commitment in response to a preapproval request identifies a property to the lender but the loan fails to originate, in the "type of action" field the lender must record the reason for the failure of the loan to originate --- whether the reason is that the application was later withdrawn, was denied at a later stage, was determined later to be incomplete, or was approved but not accepted. Neither code '7' ("preapproval request denied") nor code '8' ("preapproval request approved but not accepted") should be used, as the application has passed the preapproval stage. In the "request for preapproval" field, code '1' (preapproval was requested) must be used. See Appendix A, I.A.8. & I.B.1. For example: (1) an applicant submits a request for approval, (2) the request is granted in the form of a written commitment containing only the conditions specified in the regulation, (3) the applicant identifies a property, (4) the appraisal is less than the borrower anticipated and the lender is not willing to lend the amount stated in the commitment letter, and (5) the lender counteroffers with a lower loan amount but the borrower does not accept. In these circumstances, the lender would use code '3' in the "type of action" field ("application denied by financial institution") and code '1' in the "request for preapproval" field ("preapproval was requested"). Preapproval request approved but no property identified. How should a lender report a preapproval request it approved if the borrower did not later identify a property to the lender?Answer: Reporting of the transaction is optional. If the transaction is reported, the lender uses code '8' ("preapproval request approved but not accepted") under "type of action" and code '1' ("preapproval was requested") under "request for preapproval." See Appendix A, I.A.8. & I.B.1. Loan amount---preapproval request denied. What loan amount should be entered if a preapproval request is denied?Answer: If the applicant requested approval for a specific loan amount, enter that amount. If the applicant did not request approval for a specific amount, enter '1' (for $1,000).Loan amount---preapproval request approved but not accepted. What loan amount should be entered if a preapproval request is approved but not accepted and the lender opts to report the transaction?Answer: If the applicant requested approval for a specific loan amount, enter that amount unless the lender approved the applicant for a higher amount, in which case, enter that higher amount. If the applicant did not request approval for a specific loan amount, enter the amount stated on the commitment letter.Sex, Race & Ethnicity --- GeneralHispanic ethnicity. If an applicant self-identifies as "Hispanic or Latino" under the category of "Ethnicity," what options under "Race" are available?Answer: The applicant should be asked to identify a race or races from among the five choices available. See question below on Definitions of races and Hispanic ethnicity. If a lender is face-to-face with an applicant who (1) has self-identified as "Hispanic or Latino" (or whom the lender has identified as of that ethnicity because the applicant has declined to self-identify) and (2) has not identified a race, the lender must identify whatever race or races the lender believes apply, based on surname and visual observation. In those circumstances, the lender may not indicate "NA" in the race field. "NA" is used in the race field only if (1) the applicant is not a natural person, (2) the HMDA reporter has purchased, not originated, the loan, or (3) an application taken in 2003 reached final action in 2004 (see comment 203.4(a)(iv)(B)(3)). Definitions of races and Hispanic ethnicity. Where can one find definitions of the five races and Hispanic ethnicity?Answer: The Office of Management and Budget has adopted definitions of the five races and Hispanic ethnicity. They can be found at . OMB's definitions may be offered to the applicant as an aid, but the choice of how to self-identify is entirely the applicant's.Telephone applicant declines to provide race, ethnicity or sex. If an applicant declines to provide the race, ethnicity, or sex in an application taken entirely by mail, Internet, or telephone, should the lender attempt to identify the missing information --- for example, based on the applicant's voice or surname?Answer: No. If an application is taken entirely by mail, Internet, or telephone, and the applicant declines to provide information on ethnicity, race, or sex, the lender must use the code for "information not provided by applicant in mail, Internet, or telephone application." Collection of partial information. When collecting government monitoring information (ethnicity, race, sex), must a lender permit an applicant to choose to fill in only one or two, rather than all three, of the fields?Answer: Yes. A lender must permit an applicant to choose to fill in only one or two of the three fields. For example, a Web-based application should not compel the applicant to choose between making selections in each of the three fields and declining to make any selections whatsoever. Unless the applicant clearly indicates the applicant declines to supply any information, the applicant must be given the opportunity to supply any part of the information the applicant chooses.Reporting of partial information. If an applicant chooses to make selections in one or two, but not all three, fields (ethnicity, race, sex), must the lender report the partial information?Answer: Yes. A lender must report whatever information the applicant supplies, whether partial or complete. For example, if, on an application submitted by mail, an applicant marks a box indicating the applicant does "not wish to furnish" government monitoring information but supplies some or all of the information, the lender must report the information supplied.Three do-not-wish-to-furnish boxes. The sample data collection form in Appendix B contains, for each applicant, one box for the applicant to indicate "I do not wish to furnish this information." In place of one box for all three fields (ethnicity, race, sex), may a lender place a do-not-wish-to-furnish box in each of the three fields?Answer: Yes. A lender may place a box indicating "I do not wish to furnish this information" under each of the three field titles (ethnicity, race, sex) instead of a do-not-wish-to-furnish box that applies to all three fields as a group. Similarly, in a telephone application a lender may wait to read the do-not-wish-to-furnish option until the lender has reviewed the selections in each field, or the lender may decline altogether to state that option expressly so long as (a) the applicant is clearly informed that providing the information, though encouraged, is not required, and (b) if the applicant declines to provide any part of the information, the lender so indicates.Rate spreadRequired use of Board-published Treasury security yields. May a lender use Treasury yields other than those in the Board's table, "Treasury Securities of Comparable Maturity under Regulation C"? Answer: No. A lender may not use Treasury yields other than those stated in the Board's table. See Appendix A, I.G.1.a. The table and a rate spread calculator can be found at ratespread/default.aspx. To find the yield in the table, identify the relevant date in the left-hand column (the 15th-of-the-month before the date the rate was set for the final time) and travel across the row to the yield corresponding to the term of the loan.Assumptions --- rate spread not reported. Must lenders report the rate spread for assumptions that are reportable under HMDA?Answer: No. HELOCs --- rate spread not reported. If a lender opts to report information on HELOCs, must it report the rate spread?Answer: No. Correspondent and broker loans --- rate set date. What date is the rate considered to be "set" when a lender originates a loan through a correspondent or broker?Answer: The last date the lender set the rate with the correspondent or broker, not the date the broker or correspondent set the borrower's rate.Balloon loans --- rate spread. If the amortization period of a loan is longer than the term of the loan - i.e., because the loan has a balloon feature - should the lender use the term or the amortization period in selecting a comparable Treasury yield?Answer: The term must be used. See 203.4(a)(12) (referring to "comparable periods of maturity"). For example, in the case of a five-year loan that has a balloon payment because the payments are amortized over 30 years, the term of five years must be used.Reverse Mortgages --- rate spread. If a lender reports an application or loan for a reverse mortgage, does the lender have to report a rate spread?Answer: Yes, unless the reverse mortgage is a HELOC, for which lenders are not required to report rate spread. See HELOCs—rate spread not reported.Transition to average prime offer rates --- rate spread. How are the rate spread FAQs affected by the Board’s final rule published on October 24, 2008, 73 FR 63329?Answer: The final rule is effective October 1, 2009. For loans with applications dated on or after that date, the new rules apply. This change affects two of the rate spread FAQs: “Required use of Board-published Treasury security yields” and “Balloon loans --- rate spread.” In the former case, average prime offer rates replace Treasury security yields as benchmarks under the new rate spread determination rules. Use of the Board’s average prime offer rates tables, however, is not mandatory for loans subject to the new rules. Lenders may use the methodology published with the tables to determine average prime offer rates. In the latter case, the FAQ remains valid under the new rules for fixed-rate loans. For variable-rate loans subject to the new rules, however, the applicable average prime offer rate is based on the loan’s initial, fixed-rate period, regardless of whether the loan has a balloon feature.Mortgage banks. What is a "mortgage bank" for purposes of code '7'?Answer: A "mortgage bank," often referred to as a mortgage company, means, for these purposes, a non-depository institution that purchases mortgage loans and typically originates such loans. A "mortgage bank" might be an affiliate or a subsidiary of a bank or thrift holding company or it might be an independent mortgage company. In either case, use code '7' - unless the purchaser is an affiliate of the seller, itself, in which case use code '8'. Subsidiaries of depository institutions. How should a sale to a subsidiary of a depository institution be coded?Answer: Use code '6' if the subsidiary is, itself, a depository institution (a commercial bank, savings bank, or savings association). If the subsidiary is not a depository institution, such as a mortgage company or finance company, use code '7'. If the subsidiary is an institution of a type other than the types identified in codes '6' and '7', however, use code '9.' Notwithstanding the foregoing, if the subsidiary is an affiliate of the seller, itself, then use code '8'. Bank or thrift holding companies. How should a sale to a bank or thrift holding company be coded?Answer: For a sale to a bank or thrift holding company (rather than to one of its subsidiaries), use code '9' -- unless the holding company is an affiliate of the seller, in which case use code '8'.HOEPA StatusReverse Mortgages --- HOEPA Status - 05/04/2007Reverse Mortgages --- HOEPA Status. If a lender reports an application or loan for a reverse mortgage, should a lender report HOEPA status?Answer: Reverse mortgages are not subject to the Home Ownership and Equity Protection Act of 1994 (HOEPA).? See 15 U.S.C. § 1602(aa)(1). Therefore, a lender should enter the code for “not applicable” for HOEPA PLIANCE RESOURCESSource: Consumer ComplianceFederal Reserve's Consumer Compliance Handbook (Updated December 2010) (2.27 MB, 605 pages)Manual used to conduct compliance examinations of state member banksFederal Reserve Board's Regulations Compilation of the Board's regulationsFederal Reserve Board's Consumer Affairs Letters Letters provide guidance on policy and procedural matters related to Federal Reserve System's consumer compliance supervisory responsibilitiesResourceDescriptionHome Mortgage Disclosure Act (HMDA) — Regulation CRegulation C Regulation implements the Home Mortgage Disclosure Act; describes a bank's obligation for recording and compiling HMDA loan data Official Staff Commentary Regulation C The Federal Reserve's official staff interpretations of Regulation CNOTE: There is also a Compliance Guide on the Fed websiteHome Mortgage Disclosure Act Text of HMDA, 12 U.S.C. §§2801-2811 (U.S. Government Printing Office)FFIEC HMDA Resource Page Collection of HMDA resourcesHMDA Getting It Right Guide to recording and reporting HMDA dataFFIEC Geo-Coding Page Web-based geo-coding systemFFIEC Rate Spread Calculator Online calculator to determine if a loan must be reported as a rate-spread loanHMDA QUESTIONS AND QUICK REFERENCESSource: Reference HMDAHELP@ – E-mail is the preferred method of correspondence with HMDA Operations staff to resolve issues about HMDA.HMDASUB@ – This address is used for submitting the HMDA Internet e-mail submissions only.? No other correspondence should be sent to this address.? During January through May, the busiest part of a year for HMDA data collection and processing, HMDAHELP@ experiences an increased volume of inquiries. Please understand the response time could exceed 2 business days.We highly recommend you utilize the resources listed below prior to your "help" inquiry to assist with HMDA processing and reporting questions.A Guide to HMDA Reporting: Getting It Right! To SEARCH the Guide, choose Search from the title bar or Ctrl F. Type in the key word or phrase and choose Search.HMDA Frequently Asked Questions Select the appropriate link. To SEARCH the FAQs, choose Ctrl F. Type in the key word or phrase and the first instance of the search criteria will be highlighted. Choose Find Next to go to each occurrence of the search criteria.Rate Spread Calculator The rate spread calculator should be used to calculate the rate spread. Do not use this calculator to calculate the HOEPA status.FFIEC Geocoding System Use the FFIEC geocoder to obtain property location information (MSA/MD, State, County, Census Tract) for a specific street address.FFIEC Data Entry Software Utilize the free data entry software for collecting, editing and reporting HMDA data. The software provides an encrypted Export feature for secure data submission to HMDASUB@.Data Processing Timeline The data processing timeline provides important dates and deadlines related to HMDA processing.USING THE GETTING IT RIGHT GUIDEThe 2015 version of the HMDA GETTING IT RIGHT GUIDE can be found on the FFIEC website. This is the link: Any questions or requests for additional information should be directed to: Assistance Line: (202) 452-2016; Internet E-Mail Address: hmdahelp@ SUGGESTIONS: Print the GUIDE and highlight sections that contain common problems or helpful guidance. The GUIDE is 119 pages. Appendix A has instructions for completing the LAR. Appendix D has the official staff commentary to HMDA and can be very helpful to understand the reporting requirements.SAVE a copy of the PDF on the computers of HMDA review employees. Use the “FIND” function of Adobe to search for key words to locate ALL the references to a given topic like “applicant” or “purpose code”, etc. Keep copies of any E-mail responses to inquiries received from the HMDA Help Desk and/or your regulator.Sign-up for the E-Mail Alerts; this is on the HMDA Main PageRead the “What’s New?” section; the “new” items are sent via e-mail alerts.FFIEC HMDA- WHAT’S NEW ?This is a link to the HMDA “Main” page on the FFIEC website; there is a prompt to sign-up for E-Mail Alerts! is “What’s New?”Major changes or additions to HMDA for 2015 (most recent first):?November 13, 2015--?2016 Edits?and?2016 File Specifications?are now available.October 16, 2015--?The CFPB publishes the final rule to Regulation C, which implements HMDA.?The new rule makes changes to covered institutions and transactions. The new rule also changes the information institutions collect and report about mortgage loans and applications. Read more about the?final rule and its?implementation.September 22, 2015--?Press Release?announces the availability of?2014 HMDA?data.August 27, 2015-- Changes to Counties and Census Tracts for 2013, 2014, and 2015. In the past 12 months, the Census published changes to counties and census tracts. The FFIEC previously posted information related to these changes, but recent questions have come up about FFIEC implementation of these changes. Links to information about changes in geographies can be found in the?2010 Census Information.August 27, 2015-- Reminder: FFIEC Statement on Implementing?American Community Survey Data.July 30, 2015-- The Consumer Financial Protection Bureau (CFPB) published revisions to the Home Ownership and Equity Protection Act (HOEPA) Rule that expanded HOEPA coverage. The 2014 Aggregate and Disclosure Reports will be updated to reflect these new?HOEPA?rules and data collection. Please refer to the document,?Table Revisions, for a detailed discussion of related tables and revised computations. Refer to the document,?Table Layouts, for the revised layout of related tables 3-2, 11-1 through 11-4, B and BW.July 29, 2015-- The United States Office of Management and Budget (OMB) delineates metropolitan and micropolitan statistical areas according to published standards that are applied to Census Bureau data. Resuming with calendar year (CY) 2014 HMDA data,?the Census Bureau data will include principal city. The CY 2014 Aggregate and Disclosure Reports will be updated to reflect principal city information. Please refer to the document,?Table Revisions, for a detailed discussion of the related table, Table 10. Refer to the document,?Table Layout, for the layout of Table 10.July 24, 2015--The?2015 HMDA Data Entry Software Release 2?is now available.July 1, 2015--The?2015 Census Data Products?have been released.--The?2015 Geocoding System?has been updated with the 2015 Census demographic data based on the 2006 - 2010 five year estimate American Community Survey (ACS).February 18, 2015--The?2015 CRA/HMDA Reporter Newsletter?is now available. It includes helpful information on collecting accurate HMDA and CRA data. In addition, guidance is given on successfully completing your data submission.February 9, 2015--The?2015 FFIEC Geocoding System?has been updated with the 2015 Census boundary definitions. Corresponding Census data will be included upon release by the?U.S. Census Bureau.FFIEC NEW GEOCODING SYSTEMLink: AddressAddressMSA/MD CodeState CodeCounty CodeTract CodeMSA/MD NameState NameCounty NameUser Select Tract Geocoding System The FFIEC Geocoding/Mapping System (System) helps financial institutions meet their legal requirement to report information on mortgage, business, and farm loan applications. Geocoding refers to the Metropolitan Statistical Area/Metropolitan Division (MSA/MD), State, County, Census Tract combination (address information) that must be provided for each reported loan application and the System allows institutions to enter a street address to determine the corresponding geocode. The System also provides Census demographic information about a particular census tract, including income, population, and housing data. Please select the appropriate activity year for the address being geocoded. The tract definitions for 2012, 2013, and 2014 data are based on the 2010 Census. It is critical that the correct activity year is selected when using the FFIEC Geocoding System.See link to CENSUS UPDATESHMDA TEMPORARY FINANCINGHMDA and “Temporary Financing”The debate over the Home Mortgage Disclosure Act’s (HMDA) “temporary financing” definition has been growing for quite some time. To understand the exemption, let’s first look at Regulation C, specifically, §203.4(d)(3):“Excluded data. A financial institution shall not report:(3) Temporary financing (such as bridge or construction loans)”The problem is that Regulation C never defines “temporary financing”, “bridge loan” or “construction loan”. The Federal Financial Institutions Examination Council (FFIEC) released a memorandum on December 5, 2005, and provided guidance on “temporary financing” in a frequently asked questions section. That guidance states:“Temporary Financing. When is a loan "temporary financing" such that it is exempt from reporting?Answer: The regulation lists as examples of temporary financing construction loans and bridge loans. See 203.4(d)(3). Construction and bridge loans are illustrative, not exclusive, examples of temporary financing. The examples indicate that financing is temporary if it is designed to be replaced by permanent financing of a much longer term. A loan is not temporary financing merely because its term is short. For example, a lender may make a loan with a 1-year term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. Such a loan must be reported as a home purchase loan. See 203.2(h)”Construction and Bridge Loans“The regulation lists as examples of temporary financing construction loans and bridge loans. See 203.4(d)(3).”Regulation C makes it clear in §203.4(d)(3) that construction loans and bridge loans are not to be reported. Unfortunately, these terms are not defined. A construction loan is fairly self explanatory; however, be careful not to confuse construction loans with home improvement loans. If a home is already built, the additional work on the property is considered improvements. You can only erect (construct) a home once. From there you are improving the dwelling.While the term “bridge loan” is not defined, it is generally understood as the interim financing between the purchasing of one property and the selling of another. Section 203.4(d)(3) and this part of the Q&A make it clear that construction and bridge loans are not be reported.Examples of Temporary Financing“Construction and bridge loans are illustrative, not exclusive, examples of temporary financing.”The Federal Reserve (who authored Regulation C prior to the CFPB and wrote the HMDA Q&A at the FFIEC website) makes it clear they want to allow room for interpretation in HMDA. The Federal Reserve Board (FRB) purposely allows financial institutions to interpret these rules, within the boundaries provided, as long as the institution applies them consistently. This sentence in the Q&A allows a broader sense of interpretation for possible future loan products and scenarios created by lending institutions.Two Phase FinancingThe examples indicate that financing is temporary if it is designed to be replaced by permanent financing of a much longer term.This statement is the one that has caused the most confusion. Normally, temporary financing is replaced by permanent financing. The typical bridge loan will not be fully repaid by the sale of the old home. The temporary loan will be replaced by permanent financing of a much longer term when the old home is sold. Likewise, most construction loans are replaced by a permanent loan. It is the permanent financing from these scenarios that is reported for HMDA. The general rule is, banks should not double report a borrower’s transactions.But what if the bridge loan will not be replaced with permanent financing? For instance, assume your borrower bought a home in California for $40,000 back in 1970. Today the home is worth $500,000. Now this person wants to purchase a home in the Midwest for $250,000 but needs bridge financing until their California home sells. There is enough equity to pay off the temporary financed amount once the sale is complete. No permanent financing is intended.When some read the FFIEC Q&A, they believe it says to report the bridge loan described above because it is not “designed to be replaced by permanent financing”. However, this understanding is incorrect as Regulation C clearly states “A financial institution shall not report: Temporary financing (such as bridge or construction loans).” The Q&A may appear to be inconsistent with the regulation; however, the Q&A (or for that matter any guidance: commentary, staff interpretation, etc.) can never contradict the law or regulation. Further guidance is used to fill in the blanks and answer questions, not contradict what has been stated by the law. Therefore, reporting a bridge or construction loan because it is not followed by permanent financing is not accurate.So what does this sentence in the Q&A mean? We believe it provides guidance to those situations where you don’t have a bridge or construction loan, yet you’re not sure if it is temporary or short term. In fact, more clarification is provided in the next few sentences of the Q&A.Short Term vs. Temporary Financing“A loan is not temporary financing merely because its term is short. For example, a lender may make a loan with a 1-year term to enable an investor to purchase a home, renovate it, and re-sell it before the term expires. Such a loan must be reported as a home purchase loan.”Some banks have declared all loans of less than a certain term (for instance 1 year or 2 years) as temporary financing. This has never been the intent of HMDA and the Q&A puts this misunderstanding to rest. A short term loan is still reported, if its purpose is to purchase, improve or refinance a dwelling.A good example of a reportable, short term loan is home improvement financing for 1 year. If the loan is repaid over 12 monthly installments, this loan is not temporary and should be reported.Another example of short term financing are “splash and dash” or rehabilitation loans. This where an investor will purchase a home and then renovate it to resell for a profit. At the time of application, the purpose of the “splash and dash” was to purchase the investment property; therefore, making it HMDA reportable (as a “purchase”). The fact that the owner plans to renovate by gutting the inside and installing additional amenities does not exempt this transaction from being reported and classified as a construction loan. Remember, you can only construct a home once, from there you are improving the dwelling.SummaryOur interpretation of “temporary financing” leads us to the following conclusion: when you have a bridge loan or construction loan, it should never be reported. To say it another way, if a loan is not a construction loan and not a bridge loan and it is not replaced by another loan, it should be reported. Below you will find a flow chart to help you better understand temporary financing as it applies to HMDA.HMDA TEMPORARY FINANCING FLOWCHART3429003756660Report on the HMDA LAR00Report on the HMDA LARIs the loan a bridge or construction loan?Don’t report on HMDA LARYESNOWill it be replaced by long term financing?YESDon’t report the temporary loan on HMDA LARNOIs the loan a bridge or construction loan?Don’t report on HMDA LARYESNOWill it be replaced by long term financing?YESDon’t report the temporary loan on HMDA LARNOREAL ESTATE LOAN MATRIXLINK TO MATRIX: GO DIRECTLY TO THE WEBSITE TO DOWNLOAD THE MATRIX.THIS WILL ALLOW OPTIONS TO FORMAT. YOU CAN USE ADOBE FEATURES TO CREATE A LARGER IMAGE THAT IS EASIER TO READ NOTE: This is version 9.3; this version should replace any prior versions; it was updated on June 20, 2014 with some minor changes. The changes included clarification about the HPML appraisal requirements. MATRIX FOR APPLICATIONS TAKEN ON OR AFTER 8/1/15 The Real Estate Matrix was created by Bankers Compliance Consulting in Nebraska. The author wishes to acknowledge and thank Bankers Compliance Consulting for providing this information and other valuable tools to the financial services industry. The basic format is available in a free download from their website at: PLEASE GO DIRECTLY TO THE WEBSITE TO DOWNLOAD THE MATRIX.THIS WILL ALLOW OPTIONS TO FORMAT. YOU CAN USE ADOBE FEATURES TO CREATE A LARGER IMAGE THAT IS EASIER TO READ NOTE: This is a draft version 10.0; this version should replace any prior versions; it was created September 1, 2014 with major changes because of the Integrated Disclosure coverage changes. Monitor the website for corrected versions!!Note the expanded time table on the last pageNOTES: ................
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