HMDA Frequently Asked Questions (FAQs) | Wolters Kluwer
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HMDA Resource Center

  • HMDA Frequently Asked Questions (FAQs)

    The information presented here summarizes general guidance under HMDA, Regulation C, Unofficial Verbal Guidance from the CFPB (which the CFPB provides with the proviso that it may not be relied upon), and other sources, based on the existing information available at the time of the presentation. It is intended only to act as a quick reference and not as a substitute for the law, regulations or official commentary. There are continuing, ongoing developments in this area. Therefore, always consult official sources of information, including the regulation text and official commentary, for a complete understanding of the law, including the regulations.

    Applications
    Commercial/Business Loans
    Data Points
    Data Publication
    Demographic Information
    Examinations (Including Examination Tolerances)
    Filing Instruction Guide
    LAR Quarterly Recording Requirements
    Legal Entity Identifier
    Loan Purpose
    Non-Natural Persons
    Posters
    Property Value
    Purchased Loans
    Rates


    Applications

    Q: How does a lender comply with the 2018 HMDA demographic question requirements using the current Uniform Residential Loan Application (which does not include the 2018 HMD demographic questions)?
    A: Per Fannie Mae, “lenders have the option to use the Demographic Information Addendum with the current URLA dated 7/05 (revised 6/09) as a replacement for the existing Section X, Information for Government Monitoring Purposes. If the Demographic Information Addendum is used with the current URLA, Section X may be left blank, crossed or grayed out or otherwise deleted . . . Lenders may use the updated Demographic Information Addendum (rev 9/2017) now. Lenders may continue using the previous version with the old instructions until they have updated to the newer form.”

    Q: Why does the redesigned Uniform Residential Loan Application include a language preference question?
    A: Per Fannie Mae, the “Federal Housing Finance Agency (FHFA), our regulator and conservator, has required the GSEs to add the preferred language question to the URLA to allow borrowers who prefer to communicate in a language other than English to identify that language and to enable mortgage industry participants to connect borrowers to available language access resources. For additional information, please visit FHFA’s website.

    Q: When does a Financial Institution report an application?
    A: A Financial Institution reports an application in the calendar year in which it takes final action on the application. See 12 CFR §1003.4(a)(8); Supplement I to Part 1003 – Staff Commentary §1003.4(a)(8)(i) at Paragraph 14. WK Example: If an application is approved by the Financial Institution on December 1, 2018, accepted by the applicant on December 2, 2018, and closed on January 15, 2019, the Financial Institution does not report the application in calendar year 2018. Rather, the Financial Institution reports the application as an origination in the 2019 report.

    Commercial/Business Loans

    Q: For a commercial/business loan to a corporation, how does a lender report the occupancy type when the sole stockholder/employee of the corporation occupies the property?
    A: Per the Filing Instructions Guide for HMDA Data Collected in 2018 (FIG), there are 3 options for occupancy type: 1 Principal Residence; 2 Second Residence and 3 Investment Property. Also per the FIG for HMDA 2018 data, Occupancy Type cannot be left blank.

    Staff Commentary advises that as to the first two options, Principal Residence and Second Residence, the applicant or borrower, as applicable, must occupy the dwelling. If, however, the applicant or borrower is not going to occupy the dwelling, the Occupancy Type is Investment Property. This is true even if the dwelling is not acquired or held for investment purposes. Based on the above, Investment Property becomes the catch all for anything that does not qualify as a Principal Residence or Second Residence.

    Staff commentary includes an example. If a corporation purchases a residence that it does not occupy, but that is for the long-term residential use of its employees, the property is an Investment Property. Notice though that the CFPB does not address whether an artificial entity, such as a corporation, can ever be deemed to be occupying a dwelling under HMDA.

    Q: If a Financial Institution chooses to prepare a Closing Disclosure for a business/commercial (“business”) loan because an investor requires the same, does that change the reporting requirements for Total Loan Costs, Origination Charges, Discount Points and Lender Credits?
    A: For covered loans subject to the disclosure requirements of Regulation Z, a Financial Institution is required to report amounts shown on the Closing Disclosure for Total Loan Costs, Origination Charges, Discount Points, and Lender Credits. See 12 CFR 1003.4(a)(17)-(20). Business loans are not subject to the disclosure requirements of Regulation Z.  Since determining whether a loan is for a business purpose is sometimes subjective, however, some investors will not purchase a business loan unless there is a Closing Disclosure. The theory is that having a Closing Disclosure will avoid compliance issues should a business loan be deemed a consumer loan post-closing. The existence of a Closing Disclosure raises a question of whether a Financial Institution is required to report the amounts shown on the Closing Disclosure for a business loan. Per Unofficial Verbal Guidance, the existence of a voluntarily prepared Closing Disclosure does not change the analysis. A Financial Institution reports not applicable for Total Loan Costs, Origination Charges, Discount Points and Lender Credits if the loan is not subject to the disclosure requirements of Regulation Z.

    Q: If a Financial Institution chooses to prepare a Closing Disclosure for a business/commercial (“business”) loan because an investor requires the same, does that change the reporting requirements for Total Loan Costs, Origination Charges, Discount Points and Lender Credits?
    A: For covered loans subject to the disclosure requirements of Regulation Z, a Financial Institution is required to report amounts shown on the Closing Disclosure for Total Loan Costs, Origination Charges, Discount Points, and Lender Credits. See 12 CFR 1003.4(a)(17)-(20). Business loans are not subject to the disclosure requirements of Regulation Z.  Since determining whether a loan is for a business purpose is sometimes subjective, however, some investors will not purchase a business loan unless there is a Closing Disclosure. The theory is that having a Closing Disclosure will avoid compliance issues should a business loan be deemed a consumer loan post-closing. The existence of a Closing Disclosure raises a question of whether a Financial Institution is required to report the amounts shown on the Closing Disclosure for a business loan. Per Unofficial Verbal Guidance, the existence of a voluntarily prepared Closing Disclosure does not change the analysis. A Financial Institution reports not applicable for Total Loan Costs, Origination Charges, Discount Points and Lender Credits if the loan is not subject to the disclosure requirements of Regulation Z. 

    Data Points

    Q: What are the final actions that can be taken?
    A: There are eight possible final actions that can be taken. They are (1) Loan originated; (2) Application approved but not accepted; (3) Application denied; (4) Application withdrawn by applicant; (5) File closed for incompleteness; (6) Purchased loan; (7) Preapproval request denied; and (8) Preapproval request approved but not accepted. See January 2017 Filing instructions guide for HMDA data collected in 2018, p. 16.

    Q: Is a Financial Institution only required to report discount points paid by the borrower?
    A: Section 1003.4(a)(19) of Regulation C requires a Financial Institution to report discount points paid to reduce the interest rate on covered loans subject to the disclosure requirements of Regulation Z, 12 CFR 1026.19(f). In the Section-by-Section Analysis included in the publication of the final HMDA rule, the CFPB stated that the discount points that a Financial Institution would report are those listed on Line A.01 of the Closing Cost Details page of the Closing Disclosure. Note that Line A.01 lists the amount of the discount points paid and is not limited to discount points paid by the borrower. Despite that fact, other statements in the Section-by-Section Analysis refer to “discount points paid by the borrower.” Upon contacting the CFPB regarding the matter, the Unofficial Verbal Guidance from the CFPB is that a Financial Institution would report the total discount points entered on Line A.01 regardless of who paid the discount points.

    Q: When does a Financial Institution report not applicable (more precisely, “NA”) for Total Loan Costs, Total Points and Fees, Origination Charges, Discount Points and Lender Credits?
    A: The list of those times when a Financial Institution reports not applicable (more precisely, “NA”) for Total Loan Costs, Total Points and Fees, Origination Charges, Discount Points and Lender Credits is lengthy. Financial Institutions report not applicable for (a) applications; (b) open-end lines of credit, (c) reverse mortgages; (d) loans or lines of credit made primarily for business or commercial purposes; and (e) for purchased loans originated prior to the effective date of Regulation Z, 12 CFR 1026.19(f) (October 3, 2015). Also note that that per Unofficial Verbal Guidance if the Action Taken is 2 Application approved but not accepted; 3 Application denied; 4 Application withdrawn by applicant; 5 File closed for incompleteness; 7 Preapproval request denied; and 8 Preapproval request approved but not accepted, the Financial Institution should also be reporting not applicable for those items. See also 12 CFR §1003.4(a)(17)-(20) and Supplement I to Part 1003 – Staff Commentary §1003.4(a)(17)-(20).

    Data Publication

    Q: Beginning with 2017 data, where will the CFPB publish my HMDA data?
    A: Beginning with 2017 data, the CFPB publishes each institution’s Modified Loan/Application Register (LAR) at the following site. In addition to the LAR, as of April 2018 the same site has Disclosure Reports, MSA/MD Aggregate Reports, and National Aggregate Reports marked “COMING SOON.” The CFPB expects to begin publishing “Snapshot National Loan-Level Dataset” in May 2018. View the site.

    Demographic Information

    Q: How does the Consumer Financial Protection Bureau’s April 2017 proposal to make further changes to Regulation C affect the collection of demographic information?
    A: The CFPB intends for the proposal to clarify the instructions for collecting demographic information. The proposed clarifications make it clear that an applicant is free to select what may appear to be inconsistent categories at first blush—such as Hispanic or Latino, and Not Hispanic or Latino. The proposed clarifications would make it clear that an applicant can select a subcategory without first selecting a category. Please see the proposed clarifications to Appendix B of Regulation C at the CFPB website for the full text of the Appendix B proposal.

    Q: What do aggregated categories and disaggregated categories mean?
    A: Aggregated categories and disaggregated categories refer to the categories and subcategories on the demographic information collection form. The aggregated categories for Ethnicity are Hispanic or Latino and Not Hispanic or Latino. The disaggregated categories for Ethnicity are the subcategories and additional information section below Hispanic or Latino. The aggregated categories for Race are American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White. The disaggregated categories for Race are the subcategories and additional information sections below the applicable Race categories.

    Examinations (Including Examination Tolerances)

    Q: What are the tolerances for reporting the debt-to-income ratio (DTI) and the combined loan-to-value ratio (CLTV) for 2018 data?
    A: The authorities published a separate item/excerpt for HMDA data for 2018 and beyond, and titled it FFIEC HMDA Examiner Transaction Testing Guidelines. That excerpt is found here. Although that excerpt does contain tolerances for (i) the application date, (ii) the amount of the covered loan, (iii) the amount applied for, (iv) the date of the action taken (as long as it is within the same calendar year), and (v) rounding errors for gross annual income, that examination excerpt does not contain tolerances for DTI or CLTV. It may be helpful to remember the following considerations for reporting those ratios.

    1. Report what the Institution relied upon in making the credit decision; it is not necessary that the ratio be dispositive to the credit decision.
    2. When, for example, an Institution calculates a ratio according to its own requirements and also calculates a second ratio according to a secondary market investor, and the Institution relies on the second calculation, report that ratio.
    3. Report not applicable for purchased loans, when a file is closed for incompleteness, when an application is withdrawn before a credit decision is made, when the Institution does not rely on a ratio, for DTI, when the applicant and co-applicant are not natural persons, and when a multifamily dwelling secures or is intended to secure the loan.
    4. The authorities do not direct the lender as to which property or properties to use to calculate the CLTV.

    Please also recall the following announcement from the new director of the CFPB:  “. . . for HMDA data collected in 2018 and reported in 2019, the Bureau does not intend to require financial institutions to resubmit data unless data errors are material, or to pay penalties with respect to data errors. Accordingly, collection and submission of the 2018 HMDA data will provide financial institutions an opportunity to focus on identifying any gaps in their implementation of the additional requirements and making improvements in their HMDA compliance management systems for future years. The Bureau expects that any supervisory examinations of 2018 HMDA data will be diagnostic, to help institutions identify compliance weaknesses, and will credit good-faith compliance efforts.” Learn more here. At this time, it is not clear what the CFPB considers a “material” error” or what impact the above statement will have on the written 2018 transaction testing excerpt referred to above.

    Do also recall that an Institution is required to report separately the Property Value relied on in making a credit decision. Staff Commentary provides, for example, that “if an institution relied on the purchase price of the property in calculating the loan-to-value ratio, it reports that value.” Therefore, it appears that expectations are that the Property Value reported separately is part of the CLTV calculation.

    Filing Instruction Guide

    Q: Where can I find the Filing Instruction Guide (FIG) for 2018 data collection under HMDA?
    A: You may find a link for Version 3.4 of the FIG at: https://www.consumerfinance.gov/data-research/hmda/for-filers. You may find a pdf of the document at: https://www.consumerfinance.gov/data-research/hmda/static/for-filers/2018/2018-hmda-fig.pdf. It is best to check periodically for updates, especially since the CFPB has already updated the FIG 4 times.

    LAR Quarterly Recording Requirements

    Q: Are there recording requirements for LARs within a reporting period?
    A: Section 1003.4(f) of Regulation C requires Institutions to record data on which final action is taken within 30 calendar days of the end of each quarter.  For example, if an Institution originates a loan on March 20, Regulation C requires that the Institution record the data for that loan in its LAR on or before April 30.

    Legal Entity Identifier

    Q: Where does an institution acquire a legal entity identifier?
    A: The initial link is https://www.leiroc.org/lei.htm. From there, follow the How to Obtain an LEI link to create a user name and password.

    Loan Purpose

    Q: What are the rules for reporting the Loan Purpose under HMDA?
    A: Section 1003.4(a)(3) of Regulation C as expanded on by the Filing instructions guide for HMDA data collected in 2018 states that there are six options for reporting the Loan Purpose under HMDA: 

    1. Home Purchase
    2. Home Improvement
    3. Refinancing
    4. Cash-Out Refinancing
    5. Other
    6. Not applicable

    One of the first things to notice regarding that list is that it is different from the list of loan purposes under TRID and it is different from the selections on the redesigned Uniform Residential Loan Application (URLA). 

    Under TRID, the options are:

    1. Purchase
    2. Refinance
    3. Construction [which is not an option under HMDA]
    4. Home Equity [which is not an option under HMDA]

    The redesigned URLA selection list is even shorter in that the options are:

    1. Purchase
    2. Refinance
    3. Other/Specify [which, depending on an applicant’s answer, may not be an option under HMDA]

    An Institution must take care not to confuse one list with another when the institution records and reports Loan Purpose.

    With the above in mind, Staff Commentary under Regulation C provides the following guidance/rules:

    1. Institutions may rely on the written statement of an applicant (such as a selection on an application).  The importance of this statement cannot be overstated.  If an applicant completes an application by selecting Purchase, according to the first rule in Regulation C, an Institution may rely on that information.  If on the other hand, an applicant completes an application by selecting Other and specifies Educational Expenses, according to the first rule in Regulation C, an Institution may rely on that specification and report Other under HMDA.  Why Other?  See Item III below.
    2. Institutions may also rely on oral statements of an applicant.  Unlike a written statement, best practices call for documentation.
    3. If an Institution does not rely on a statement from an applicant, Regulation C provides the following waterfall guidance:
      1. If any part of the proceeds are to be used for Home Purchase, report Home Purchase.
      2. If any part of the proceeds are to be used for an Institution's separate Cash-out refinancing product, and no part of the loan proceeds are to be used for Home Purchase, report Cash-out refinancing.
      3. If any part of the proceeds are to be used for Refinancing, and no part of the loan proceeds are to be used for Home Purchase or an Institution's separate Cash-out refinancing product, report Refinancing.
      4. If any part of the proceeds are to be used for Home Improvement, and no part of the loan proceeds are to be used for Home Purchase, an Institution's separate Cash-out refinancing product, or Refinancing, report Home Improvement.
      5. Except for business/commercial loans (which must be Home Purchase, Refinancing or Home Improvement), for everything else (other than Purchases where origination occurred prior to January 1, 2018), report Other.
      6. Report not applicable for Purchases where origination occurred prior to January 1, 2018.
       

    Please see the Staff Commentary for further details and examples, including information on loans secured by one dwelling but for the purchase of another dwelling and construction loans.

    Non-Natural Persons

    Q: Is there a difference in meaning when Regulation C uses the words “applicant and co-applicant” and “applicant or co-applicant” when referring to exclusions for non-natural persons?
    A: In Staff Commentary at Paragraph 4(a)(23) regarding the Debt-to-Income ratio, the CFPB states that an Institution complies with the regulation by reporting not applicable “when the applicant and co-applicant, if applicable, are not natural persons.”  Based on Unofficial Verbal Guidance, the CFPB advises that the word “and” means that an Institution would report not applicable if both applicants are non-natural persons.  If Regulation C states “or” in another section, that would mean either applicant.  Note that other exclusions might apply, however.  For example, if there are two applicants and only one is a non-natural person, Regulation C provides that the Institution would also report not applicable if the Institution did not rely on a Debt-to-Income ratio when making the credit decision.

    Posters

    Q: What are the requirements for displaying posters?
    A: Effective January 1, 2018, Regulation C provides that a “financial institution shall post a general notice about the availability of its HMDA data in the lobby of its home office and of each branch office physically located in each MSA and each MD.” See 12 CFR 1003.5. There is safe harbor content for the poster within Regulation C.

    Property Value

    Q: Is an institution required to report the Property Value when an application is denied?
    A: If an Institution does not rely on a Property Value in making a credit decision, the Institution reports not applicable for Property Value.  Assuming that an Institution relies on a Property Value in making a credit decision, there does not appear to be an exception for reporting the Property Value when an application is denied.  Staff Commentary only provides exceptions for files closed for incompleteness before a credit decision is made, applications withdrawn before a credit decision is made, and those times when an Institution does not rely on the Property Value in making the credit decision.

    Purchased Loans

    Q: If a Financial Institution originates a loan, sells it, and then repurchases it in the same calendar year, does the Financial Institution report both the origination and repurchase?
    A: Section 1003.4(8)(i)(A) of Regulation C requires Financial Institutions to report whether a loan is “originated or purchased.” In addition to reporting the origination, Staff Commentary for Section 1003.4(a) at Paragraph 5 states that “a purchase includes a repurchase of a covered loan, regardless of whether the institution chose to repurchase the covered loan or was required to repurchase the covered loan because of a contractual obligation and regardless of whether the repurchase occurs within the same calendar year that the covered loan was originated or in a different calendar year.” Therefore, a repurchase is reported as a purchase. Note, however, that a repurchase does not include a temporary transfer. See Staff Comment for Section 1003.4(a) at Paragraph 5(ii) for temporary transfer details.

    Rates

    Q: How does a lender report the Introductory Rate Period when the period is measured in days rather than months?
    A: Section 1003.4(a)(26) of Regulation C requires financial institutions to report the number of months for the first interest rate period when an application or origination involves a transaction that includes a change in the interest rate over time.  The data field is “Introductory Rate Period.”  The most common examples would be loans with teaser rates or adjustable rate loans.  By contrast, a financial institution would report not applicable for fixed rate loans without a teaser rate and for purchased loans.  There is also an exception for preferred rate loans that may or may not change post-origination. 

    If an Introductory Rate Period is two months, then a financial institution would report 2.  There is special guidance, however, for those times when the Introductory Rate Period is stated in a number of days.  Staff Commentary includes two rules.  First, if the number of days is more than one month, say 50 days, the financial institution would report “an equivalent number of whole months without regard for any remainder.”  For 50 days, a financial institution would therefore report 1.  The second rule is if the number of days is less than one month, say 20 days, a financial institution reports 1.  Staff Commentary does not define “month” as being a particular number of days.