Home Mortgage Disclosure Act

Home Mortgage Disclosure Act

Introduction

·  Regulation CC is found at 12 CFR 1003

·  Requires the collection and reporting of certain home loan data

·  Requires the collection of applicant and borrower information to assist in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes

·  No significant changes for 2013

Definitions

Application

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 includes:

·  The principal residence of the borrower

·  Vacation homes

·  Second homes

·  Rental property

·  Mobile or manufactured homes

·  Multifamily structures

·  Condominiums or cooperative units

A dwelling does not include:

·  Recreational vehicles such as boats or campers

·  Transitory residences such as hotels, hospitals, and college dormitories

Home Improvement Loan

·  A home improvement loan is a loan where the proceeds are intended for repairing, rehabilitating, remodeling, or improving the dwelling.

·  Loans secured by a lien on a dwelling must be included in the HMDA report.

·  Home improvement loans not secured by a lien on a dwelling are only reportable if the financial institution classifies the loan as a home-improvement loan on its books, in the call report, or in some other fashion.

Home Purchase Loan

A home purchase loan is a loan made for the purpose of purchasing a dwelling and is secured by the dwelling or another dwelling.

Preapproval Program

·  A request for preapproval for a home purchase loan is an application for HMDA purposes if:

o  The request is reviewed under a pre-approval program

o  There is a comprehensive analysis of the creditworthiness of the applicant

o  A written commitment to the applicant is issued

o  The commitment is valid for a designated period of time

o  The commitment extends an offer to make home purchase loan up to a specified amount

·  The written commitment may not be subject to conditions other than:

o  Conditions that require the identification of a suitable property

o  Conditions that require that no material change has occurred in the applicant's financial condition or creditworthiness prior to closing

o  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)

Prequalification

·  A prequalification is a request by a prospective loan applicant for a preliminary determination on whether they qualify for credit and/or the dollar amount for which they would qualify.

·  Regulation C does not require credit unions to report these applications if the decision is based on less rigorous underwriting standards and there is no binding written commitment from the credit union.

Refinancing

Refinancing is the satisfaction of an existing obligation that is replaced by a new obligation by the same borrower where both the existing and the new loan are secured by a lien on a dwelling.

Exempt Status

A credit union is exempt from the reporting requirements of HMDA for one calendar year if at least one of the following are NOT met as of the preceding December 31:

·  Asset Threshold ($42 for 2013 data collection)

·  Home or branch office in an MA

·  The institution originated 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

·  The institution is federally insured or regulated or the mortgage was insured, guaranteed, or supplemented by a federal agency, or the loan was intended for sale to Federal National Mortgage Association (FNMA) or Federal Home Loan Mortgage Corp. (FHLMC)

Change in Exempt Status

·  If a credit union becomes exempt from HMDA reporting requirements, the collection of HMDA data may stop with the next calendar year.

·  If the credit union loses its exemption, data collection would begin the following year.

·  If the credit union is part of a merger and the merger results in a covered credit union, data collection must begin January 1 of the following calendar year.

Compiling Loan Data

Loan Purpose

Only loan applications with the following qualifying loan purposes need to be reported:

·  Home purchases

·  Home improvements

·  Refinancing of a home purchase or a home improvement loan

Loan Disposition

An application for a covered loan must be reported regardless of disposition (originated, denied, withdrawn, etc.).

Exemptions From Reporting

Applications for the following loan types are exempt from reporting, even if they otherwise qualify for reporting:

·  Loans on unimproved land

·  Temporary financing (bridge loans and constructions loans)

·  Purchase of an interest in a pool of mortgages

·  Purchases solely of servicing rights to loans

·  The acquisition of only a partial interest in a home purchase or a home improvement loan (such as in certain consortium loans)

·  Prequalification requests for mortgage loans that are not denied or that don’t result in the origination of a home-purchase loan

·  Loans acquired as part of a merger or acquisition

Optional Home Equity Line of Credit Reporting

·  At a credit union’s option, home equity lines of credit for home purchase or home improvement may be reported.

·  Applications for HELOCs must be excluded if the proceeds are intended for a purpose other than home purchase or home improvement.

·  If a credit union decides to report home equity credit line originations, it must also report any applications that do not result in an origination.

Required Data

The following data must be collected and reported for each HMDA-covered loan or application:

·  A specific loan or application number

·  The date the application was received

·  The type of loan

·  The type of property the loan or application relates to

·  The purpose of the loan

·  The owner-occupancy status of the property the loan relates to

·  The loan amount

·  Whether the application is a request for preapproval

·  The action taken on the application

·  The action taken date

·  The location of the property to which the loan applies, by metropolitan area, state, county and census tract

·  The ethnicity, race, or sex of the applicant and co-applicant (if applicable)

·  The income level relied on in processing the loan

·  The type of entity that purchased the loan

·  The spread if the loan APR exceeds an average of comparable prime mortgage rates by at least 1.5 percentage points for first-lien loans or 3.5 percentage points for subordinate lien loans

·  Whether the loan is subject to the Home Ownership and Equity Protection Act of 1994

·  The lien status of the loan or application

Optional Data

The following data collection is optional:

·  Reasons for denial

·  Requests for preapproval that are approved by the institution but not accepted by the applicant

·  Home equity lines of credit information

Collecting Monitoring Data

There are special procedures that must be followed when collecting data pertaining to the applicant’s race, ethnicity and sex.

General

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.

Telephone Applications

For applications taken by telephone, the lender must state the information in the collection form orally.

Disclosure

Regardless of the method of collection, you must inform the applicant of the following:

·  The federal government requests this information in order to monitor compliance with federal statutes that prohibit lenders from discriminating against applicants on these bases.

·  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.

Racial Designations

You must offer the applicant the option of selecting one or more racial designations.

Collecting Via Visual Observation

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.

Collection Not Required

If the applicant declines to answer the 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.

Form of Disclosure

·  The request for the required data can be included on the loan application or on a separate form that refers to the loan application.

·  Use of the model form is recommended

Maintaining the Loan Application Register (HMDA-LAR)

Non-exempt credit unions are required to maintain a register of all HMDA-covered applications and loans.

Required Updating and Reporting

·  The HMDA-LAR must be updated within 30 days after the end of each calendar quarter.

·  Separate registers may be maintained for different branch offices or different loan types; however, they must be submitted to the Federal Reserve Board in a single package.

·  A credit union is obligated to compile and report information on loans only once. This should be done during the year in which the action is taken on a loan application.

·  The completed HMDA-LAR must be submitted to the NCUA via the Consumer Financial Protection Bureau (CFPB) no later than March 1 of the year following the calendar year the compiled information applies to.

Required Information

Specific information must be reported by credit unions in certain forms and using the codes supplied by the Federal Reserve. The following chart outlines each section of the LAR and rules that apply to data collection and reporting.

Data / Rules /
Application or Loan Number / ·  Enter an identifying loan number that can be used later to retrieve the loan or application file
·  Must not exceed 25 characters
·  Use letters, numerals, or a combination of both
Date Application Received / ·  Enter the date the loan application was received
·  The date shown on the application form may used
·  Enter “NA” for purchased loans
·  For paper submissions only, use numerals in the form MM/DD/CCYY
·  For submissions in electronic form, the proper format is CCYYMMDD
Loan Type / See codes
Property Type / ·  Use Code 1 (1-4 family), for loans on individual condominium or cooperative units.
·  If you cannot determine (despite reasonable efforts to find out) whether the loan or application relates to a manufactured home, use Code 1 (1-4 family).
Purpose / Do not report a refinancing if, under the loan agreement, you were unconditionally obligated to refinance the obligation, or you were obligated to refinance the obligation subject to conditions within the borrower's control.
Owner-Occupancy / ·  For purchased loans, use Code 1 (owner occupied) unless the loan documents or application indicate that the property will not be owner-occupied as a principal residence.
·  Use Code 2 (not owner-occupied) for second homes or vacation homes, as well as for rental properties.
·  Use Code 3 if the property to which the loan relates is a multifamily dwelling; is not located in a metropolitan area; or is located in a metropolitan area in which your institution has neither a home nor a branch office. Alternatively, at your institution's option, you may report the actual occupancy status, using Code 1 or 2 as applicable.
Loan Amount / ·  Enter the amount of the loan or application rounded to the nearest thousand.
·  Do not report loans below $500.
·  For a home purchase loan that you originated, enter the principal amount of the loan.
·  For a home purchase loan that you purchased, enter the unpaid principal balance of the loan at the time of purchase.
·  For a home improvement loan, enter the entire amount of the loan, even if only a part of the proceeds is intended for home improvement.
·  If you opt to report home-equity lines of credit, report only the portion of the line intended for home improvement or home purchase.
·  For refinancings, indicate the total amount of the refinancing, including both the amount outstanding on the original loan and any amount of new money.
·  For a loan application that was denied or withdrawn, enter the amount applied for.
Pre-approvals / ·  Enter code 2 (pre-approval requested) if your institution has a preapproval program but the applicant does not request a preapproval.
·  Enter code 3 (not applicable) if your institution does not have a covered preapproval program.
·  Enter code 3 (not applicable) for applications or loans for home improvement or refinancing, and for purchased loans.
Action Taken Type / ·  Use Code 1 (loan originated) for a loan that is originated, including one resulting from a request for preapproval.
·  For a counteroffer, use Code 1 (loan originated) if the applicant accepts. Use Code 3 (application denied) if the applicant turns down the counteroffer or does not respond.
·  Use Code 2 (approved but not accepted) when the application is approved but the applicant (or the loan broker or correspondent) fails to respond to your notification of approval or your commitment letter within the specified time. Do not use this code for a preapproval request.
·  Use Code 3 (denied) for applications you deny
·  Use Code 4 (withdrawn) only when the application is expressly withdrawn by the applicant before a credit decision is made. Do not use code 4 if a request for preapproval is withdrawn; preapproval requests that are withdrawn are not reported under HMDA.
·  Use Code 5 (closed for incompleteness) if you sent a written notice of incompleteness under Regulation B and the applicant did not respond to your request for additional information within the period of time specified in your notice. Do not use this code for requests for preapproval that are incomplete; these preapproval requests are not reported under HMDA.
Action Taken Date / ·  For loans originated, enter the settlement or closing date.
·  For loans purchased, enter the date of purchase by your institution.
·  For applications and preapprovals denied, applications and preapprovals approved but not accepted by the applicant, and files closed for incompleteness, enter the date that the action was taken by your institution or the date the notice was sent to the applicant. (Be consistent!).