Under the new HMDA regulation that will take effect in 2018, the HOEPA status is one of the data points that will not change. As it was under the old HMDA rule, an institution must report whether or not the loan is considered to be a high-cost mortgage under Regulation Z. Section 1026.32 (a) states that these are consumer loans that are secured by the borrower’s principal dwelling and must surpass either the APR trigger, the total points/fees trigger or the prepayment penalty trigger.
Once it is determined that the mortgage is secured by a principal dwelling, the specific trigger requirements must be met. The APR trigger is where the APR exceeds the APOR for a comparable transaction by more than either 6.5% for first-lien transactions; 8.5% for first-lien transaction if the dwelling is personal property and the loan amount is less than $50,000; or by 8.5% for subordinate-lien transactions.
The total points/fees trigger is reached when the points and fees will exceed 5% of the total loan amount for a transaction that is at least $20,000. This can also be triggered when the points/fees total amount is less than either 8% of the total loan amount or less than $1,000 for a transaction with a loan amount of less than $20,000.
The prepayment penalty trigger can occur in two situations. The first is where the creditor has charged a prepayment penalty that can occur more than 36 months after consummation. The other situation is where the penalties exceed more than 2% of the amount that was prepaid.
If the loan is not subject to HOEPA status, then this data point should be reported as not applicable on the HMDA LAR. The only other time that this data point is reported as not applicable is when the loan did not end in origination.
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.