Introduction



Introduction

The Home Mortgage Disclosure Act (HMDA) and its implementing regulation (Regulation C) requires the bank to record information relating to applications for home purchase loans, refinance loans, and home improvement loans on a Loan Application Register (LAR).

For banks to be applicable to HMDA in a particular year, they have to have all of the following:

• On the preceding December 31st, total assets have to exceed the coverage threshold. For 2014, the threshold is total assets of $43 million as of December 31, 2013). For 2015, the threshold is total assets of $44 million as of December 31, 2014.

• On the preceding December 31st, had a home or branch office in an MSA.

• In the preceding calendar year, originate at least one home purchase loan or refinancing of a home purchase loan secured by a first lien on a one-to-four family dwelling.

DEFINITIONS

Application: An application means an oral or written request for a home purchase loan, a home improvement loan, or a refinancing that is made in accordance with procedures used by the financial institution for the type of credit requested.

Dwelling: A dwelling is a residential structure that may or may not be attached to real property and includes both 1-4 family dwellings (including mobile homes and condominium units) and multifamily dwellings housing 5 or more families.

Home Improvement: A home improvement loan is (1) a loan secured by a lien on a dwelling that is for the purpose, in whole or part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located; and (2) a non-dwelling secured loan that is for the purpose, in whole or part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located, and that is classified by the financial institution as a home improvement loan.

Home Purchase: A home purchase loan is a loan secured by a dwelling and made for the purpose of purchasing a dwelling regardless of lien position. Home purchase loans include both a combined construction/permanent loan and a permanent mortgage loan that replaces a construction-only loan.

Manufactured Home: A manufactured home is any residential structure as defined under regulations of the Department of Housing and Urban Development establishing manufactured home construction and safety standards. This requires that the housing be essentially ready for occupancy upon leaving the factory and being transported to the building site whether secured to a permanent foundation. This includes modular and mobile homes. However, this does not include panelized and pre-cut homes or campers.

Preapproval Program: A request for a preapproval for a home purchase loan is an application as defined above if the request is reviewed under a program in which the financial institution, after comprehensive analysis of the creditworthiness of the applicant, issues a written commitment to the applicant valid for a designated period of time to extend a home purchase loan up to a specified amount. The written commitment may not be subject to conditions other than:

1. Conditions that require the identification of a suitable property;

2. Conditions that require no material change occurs in the applicant’s financial condition or creditworthiness prior to closing; and

3. Limited conditions that are not related to the financial condition or creditworthiness of the applicant that the lender ordinarily attaches to a traditional home mortgage application (such as certification of a clear termite inspection)

Refinance: A refinance loan is a new obligation that satisfies and replaces an existing obligation by the same borrower, in which: (1) For coverage purposes, the existing obligation is a home purchase (as determined by the lender, for example, by reference of available documents or as stated by the applicant), and both the existing obligation and the new obligation are secured by first liens on dwellings; and (2) For reporting purposes, both the existing obligation and the new obligation are secured by liens on dwellings. Example: A commercial loan to buy inventory which is secured by a dwelling is not HMDA reportable; however, if this loan gets refinanced and the dwelling still secures the new loan, the new loan is considered a “refinance” loan for HMDA.

Temporary Financing: Temporary financing includes construction loans, bridge loans, and any other type of temporary loan. A loan can be considered “temporary” if the expected source of repayment for that loan will be another loan which is considered the permanent financing either by the original lender or another lender at the end of the loan term. For a loan to be “temporary” financing, it must have a term of not more than two years. However, loans less than 2 years may or may not be considered temporary. It depends on the repayment source and purpose of the loan. For example, a 6-month loan made to purchase property until rates drop and the property can be refinanced into a 30-year amortizing loan at the same bank would be temporary. However, a 6-month loan made to someone to add on a deck which will be paid off in six equal monthly installments would not be considered temporary financing. The loan is not being replaced with another form of financing. The classic example of temporary financing is a home construction loan. The borrower is using the money on a temporary basis, to build the home, and then will pay the temporary construction loan off with a longer term financing.

Note: The FFIEC FAQs have stated that a loan to an investor (even if term is less than 2 years) to purchase a home, renovate it, and re-sell it before the term expires IS NOT considered temporary and should be reported as a home purchase loan on the LAR.

HMDA REPORTABLE AND NON-REPORTABLE LOANS

A financial institution shall collect data regarding applications, originations and purchases of home purchase loans, home improvement loans, and refinancings for each calendar year.

Data should be reported for all applications of these types, whether they result in origination or are approved but not accepted, denied, withdrawn by the applicant, or closed by the bank due to incompleteness.

A financial institution is required to collect data regarding requests under a preapproval program only if the preapproved request is denied or results in the origination of a home purchase loan.

Prequalifications are not reported on the HMDA LAR if no specific dwelling has been identified as the property to be purchased.

Brokered or correspondent applications are not reported on the HMDA LAR if the bank is not responsible for making the credit decision.

In addition, the applications for the following types of loans are not HMDA-reportable:

• Construction-only loans, bridge loans, or any other temporary financing;

• Loans that, although secured by a dwelling, are made for purposes other than home purchase, home improvement, or that not meet the definition of a refinance loan;

• Loans on unimproved land;

• The purchase of a pool of loans; or

• The purchase of servicing rights.

A financial institution has the option of reporting the following types of applications:

• Requests for preapprovals that are approved by the institution but not accepted by the applicant; and

• Home equity lines of credit made in whole or in part for the purpose of home improvement or home purchase.

LOAN DATA TO BE REPORTED

The bank is required to collect the following information each calendar year for all HMDA-reportable loan applications:

• An identifying number for the loan or application;

• The date the application was received;

• The type of loan or application;

• The purpose of the loan or application;

• Whether the application is a request for preapproval and whether it resulted in a denial or in an origination;

• The property type to which the loan or application relates;

• The owner-occupancy status of the property to which the loan or application relates;

• The amount of the loan or application applied for;

• The type and date of action taken;

• The location of the property to which the loan or application relates;

• The ethnicity, race, and sex of the applicant or borrower;

• The gross annual income relied upon in processing the application;

• The type of entity purchasing a loan that the institution originates or purchases and then sells within the same calendar year;

• Rate Spread if applicable*;

• HOEPA status;

• The lien status of the loan or application (first lien, subordinate lien; or not secured by a lien on a dwelling); and

• Reason(s) for denial (optional for FDIC and Federal Reserve Banks).

This information is required for all applications for which the bank makes the credit decision (including applications that are originated, approved but not accepted, denied, withdrawn, or closed due to incompleteness). If the bank is acting like a broker and it is the investor that actually reviews the loan file information and makes the credit decision, then the investor should put the application on its HMDA-LAR, not the bank.

* Regulation C was amended to conform to Regulation Z’s definition of higher-priced mortgage loans effective October 1, 2009. To calculate the rate spread for the LAR, use the appropriate calculators found on the website. A recap of which calculator to use is detailed below:

FFIEC Rate Spread Calculator

|Application Date |Calculator to Use |

|October 1, 2009 or after |New Calculator |

|Before October 1, 2009 |Old Calculator |

|Before October 1, 2009 but Action Taken (loan closed) on or |New Calculator |

|after January 1, 2010 | |

 Direct Link to OLD CALCULATOR:



Direct Link to NEW CALCULATOR:



Note: Enter “NA” in the rate spread field of the LAR if any of the following apply to the transaction:

• It is not subject to Regulation Z.

• It is not secured by a dwelling (for home improvement transactions).

• It is a purchased loan.

• It did not result in an origination.

• The differences do not exceed the thresholds on covered transactions.

GOVERNMENT MONITORING INFORMATION

Similar to Regulation B, Regulation C requires the financial institution to collect data about the ethnicity, race, and sex of the applicant except for loans that are purchased by the institution. The lender must offer the applicant the option of selecting one or more racial designations. If the applicant chooses not to provide the information during a face-to-face interview, the loan officer is required to collect the information on the basis of visual observation or surname.

Lenders are also required to ask applicants their ethnicity, race, and sex information for applications taken over the telephone, through the mail, or on the Internet. Although lenders are required to ask for the information, they cannot require the customer give them an answer as a condition of taking the application or approving the loan. Unlike the face-to-face rule, if the applicant refuses to provide ethnicity, race, and sex information, the loan officer should not make guesses as to the applicant’s identity.

DISCLOSURE AND REPORTING

The bank is required to submit two copies of the completed HMDA-LAR by March 1 following the calendar year for which the loan data is completed. If it submits the register by computer tape or diskette it is required to send only one copy.

The bank is required to make the LAR available to the public after the LAR is modified. The modified LAR (which is one where the application number, the date of the application, and the date the action was taken have been deleted) must be available to the public by March 31 for any requests received on or before March 1, and within 30 days for a request received after March 1.

The bank is required to make the HMDA Disclosure Statement available to the public at the main office no later than three business days after receipt from the Federal Financial Institutions Examination Council.

The bank is also required to either (1) within ten business days of receiving it, make the HMDA Disclosure Statement available in at least one branch office in each additional metropolitan statistical area (MSA) where the bank has offices; or (2) post the address for sending written requests in the lobby of each branch office in other MSAs where the institution has offices, and mail or deliver a copy of the disclosure statement within 15 calendar days of receiving a written request.

The bank is required to post a general notice stating the availability of the bank's HMDA Disclosure Statement in the lobbies of its main office and branch offices in the MSA.

RECORD RETENTION

The Bank must retain a copy of the HMDA LAR for 3 years. The modified LAR must be made available to the public for a period of 3 years, and the Bank’s HMDA Disclosure Statements must be made available to the public for 5 years.

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