Origination Charges Just One New HMDA Reporting Requirement.

The new HMDA regulation that will take effect in 2018 will require a financial institution to report a myriad of new information. One of these new data points is the total origination charges that are considered borrower paid either at or before closing. This information can be found on page 2 of the Closing Disclosure in Line A. In the case where a corrected Closing Disclosure was delivered and the total charges that are borrower paid have changed, then the corrected amount should be reported on the HMDA LAR.

This is a relatively straight forward addition to the HMDA LAR and there are a few circumstances where this data point will be reported as being “not applicable”. This will occur if the application did not result in origination or if the transaction itself is not subject to Regulation Z.  Another reason that this would be “not applicable” is if it is a purchased loan with an application that was received prior to the effective date of Regulation Z.

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

Mortgage Loan Originator NMLS Identifier

Starting in 2018, an institution will report the NMLS ID for the mortgage loan originator.  This is a unique number that is assigned to a loan originator through the National Mortgage Licensing System & Registry. The loan officer does not necessarily have to have one in order to provide loan originating services. If they are not required to have a NMLS ID number and they have not obtained one, then this data point should be reported as being “not applicable”.

There are some instances where the loan officer has obtained a NMLS ID but can originate a loan without one as it is not required by the state. The NMLS ID number should be reported on the HMDA LAR regardless of this, unless the transaction falls into one of two categories. First, if it is a purchased loan that is subject to 12 CFR 1026.36(g) (consumer credit transaction secured by a dwelling) and was originated prior to January 10, 2014. The other is if it is a purchased loan not subject to 12 CFR 1026.36(g) and it was originated prior to January 1, 2018. In these instances, this data point should be reported as being “not applicable”.

There are times when there is more than one loan officer associated with that particular transaction. If this occurs, the financial institution should report the NMLS ID of the loan officer who had the primary responsibility for the transaction as of the date of action taken.

 

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

 

Application Channel and New HMDA Data

There are two questions for this data point that must be reported as part of the new HMDA data. First, you must report whether the applicant submitted the application directly to your financial institution. For HMDA purposes, an application is treated as being submitted directly to your financial institution if the applicant was directed to a third-party agent who performed origination activities on behalf of the financial institution. However, this would not be the case if the third-party agent assisted the applicant with their application for a loan with another institution. If the applicant completed an application with a broker or correspondent who then sent the application to your financial institution for approval, then this would not be reported as being submitted directly to your financial institution.

The other data point that must be reported is whether the obligation that arises from the application is or would have been initially payable to your financial institution. For applications that are withdrawn, denied, or closed for incompleteness, this particular data point should be reported as “not applicable” if at the time action was taken, the financial institution had not determined whether the loan would be initially payable to this institution.

The one major exception is when you are reporting on a purchased loan. In this instance, both of these data points should be reported as being “not applicable”.

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

Reporting of the Introductory Rate Period New HMDA Regulation

Under the new HMDA regulation, an institution must now report the introductory interest rate period. If there is one involved in the transaction, you must report the number of months from the day the loan closed until the first day that the interest rate may change. If the introductory interest rate period is measured in days, then the institution should report the number of whole months that the period meets and disregard any of the remainder. For instance, if the introductory interest rate period is 40 days, then the institution should report the term as being “1” on their HMDA LAR. If the period is less than one whole month, then the institution should still report the period as being “1”.

There are circumstances where “not applicable” will be reported on the HMDA LAR. One instance is with preferred rates. This data point is not required to be reported when the introductory interest rate period is based on preferred rates. That is unless the terms of the loan provide that the preferred rate will expire at a defined time. Preferred rates occur when the terms of the loan state that the initial rate is fixed but that it may increase or decrease if a certain event occurs, for example if an employee of the financial institution decides to find other employment. The other instance where this data point is reported as “not applicable” is when you are reporting on a fixed rate transaction.

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

 

Institutions Will Report Prepayment Penalty Term In 2018

Come 2018, an institution will have to report the term of the prepayment penalty on their HMDA LAR. There are several instances where this data point should be reported as “not applicable”. This is when the application is not subject to Regulation Z, it is for a reverse mortgage, when it is a purchased loan, and if the transaction does not involve a prepayment penalty.  If there is a prepayment penalty, then the term must be reported in months.

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

 

Property Value Must Be Reported Under 2018 HMDA Regulation

Under the 2018 HMDA regulation, the value of the property that is (or will be used) to secure the loan must be reported. This data point depends upon which value the institution uses to determine the loan-to-value ratio. If the institution relies on the appraisal for this determination, then the appraised value is reported. The other option that an institution can rely on is the purchase price of the property. When entering the property value, the institution should enter the full amount with rounded to the nearest dollar. It is important to note that the method that is chosen should remain consistent throughout the HMDA LAR.

If the file was closed for incompleteness or withdrawn before a credit decision was made, then this data point should be reported as “not applicable”. This remains true even if the institution determined a value for the property before final action was taken.  When an institution makes a credit decision without relying on the property value, then “not applicable” should also be entered on the HMDA LAR.

 

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

HMDA 2018 Regulation And Loan Term

Under the new HMDA regulation that will take effect in 2018, the term of the HMDA reportable loan must be entered on the HMDA LAR. This data point is relatively easy. A institution must report the number of months until the loan matures or terminates. If the loan does not have a definite term, like with reverse mortgages, the institution should report this data point as being “not applicable”.  For open-end lines of credit that have a definite term, both the draw and repayment period counting from the account opening to the termination date should be included when reporting the loan term on the HMDA LAR.

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

 

 

Credit Score Information New 2018 HMDA Requirement

The 2018 HMDA regulation will require an institution to report an applicant’s credit score information. While this is a new data point, it is relatively straight-forward. An institution must report both the credit score and the name and version of the scoring model that was used when making the credit decision. If multiple scores were relied upon, then the institution should report only one of those scores. When this occurs, deciding which score to report is up to the institution but the method should remain consistent throughout the HMDA LAR. On the other hand, if the loan had more than one applicant and the institution relied on only a single credit score then that score should be reported for either the applicant or the co-applicant.

 If a credit scoring model was used that was not an option provided by the HMDA regulation, then the institution should report this data point as “other”. If this is selected, the specific credit scoring model that was used must be entered.

Reporting this data point as “not applicable” is an option. This can occur when the loan was: a purchased loan, the institution did not rely on a credit score, closed for incompleteness, withdrawn before a credit decision was made, or if the applicant is not a natural person.

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.

All HMDA Reporters Will Have To Report Reasons for Denial

While this is a familiar data point for OCC regulated banks – now all HMDA reporters will have to report the reason for denial. For current reporters, it has been slightly modified by the 2018 HMDA regulation. If the HMDA reportable loan was denied, an institution must report the principal reasons for denial. This reporting requirement not only applies to complete applications, an institution must also report the reasons for denial when an institution denies a request for a preapproval. The regulation allows up to four principal reasons to be reported on the HMDA LAR.   For loans that were not denied, this data point should be reported as being not applicable.

The possible reasons for denial are: Debt-to-income ratio; employment history; credit history; collateral; insufficient cash; unverifiable information; credit application incomplete; mortgage insurance denied; other; and not applicable. If a principal reason for denial falls under the “other” category, the institution must report the specific reason as part of their HMDA data. It is important to note that an institution cannot enter the same code twice as a reason for denial on the HMDA LAR, for instance if you deny a loan for delinquent credit obligations and bankruptcy you would only enter credit history one time.

 

Lien Status Reporting Still Required Under New HMDA Regulation

Under the HMDA regulation that will take effect in 2018, an institution is still required to report the lien status. This data point must be reported for loans that were originated, purchased loans, and those that did not result in origination. This includes preapprovals, denials and withdrawals.

How to determine the lien status is really up to the institution. The HMDA regulation allows the institution to use the best information that is available to them at the time final action was taken. While there is no specific method listed in the regulation, an institution can use such documents as the title search or the applicant’s credit report to determine the lien status.

For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.