Home Mortgage Disclosure Act (HMDA)/Reg C

Would HELOC loans purchased from another institution count towards the 100 open-end lines of credit?

This question is more complicated than it may initially appear. Regulation C sets the "25 or more closed-end loans and 100 open-end loans or more thresholds" for determining applicable financial institutions, based on loans "originated". Only one institution can ever consider the transaction as originated, but the number of times a loan could be reported as purchased would be unlimited, if bought and sold multiple times on the secondary market.

The answer is dependent upon whether the loan is truly considered "originated" or "purchased". This is determined by when the loan is purchased, and whether the reporting institution was involved in the credit decision. For example, if an institution makes the credit decision on a loan request, the loan is subsequently closed, and the same institution purchases the loan following the closing; this loan is considered originated and not purchased. Commentary under Regulation C provides several examples regarding when a loan is considered originated versus purchased. You should rely on your legal counsel or compliance experts, if unsure regarding this distinction. That being said, Commentary under Regulation C also clarifies when a loan is clearly considered purchased and not originated, such as:

Clearly Purchased - If covered loans are acquired in bulk from another institution (for example, from the receiver for a failed institution), but no merger or acquisition of an institution, or acquisition of a branch office, is involved, the acquiring financial institution reports the covered loans as purchased loans (Commentary ¶4(g)-1ii).

Therefore in response to the original question asked; if the number of transactions involving open-end lines of credit total 100 or more and are considered originated - yes, it meets this benchmark. If the loans are considered purchased - no, they would not meet this benchmark.



***NOTE - The most recent final rule amends the 100 open-end lines of credit to temporarily increase this figure to 500 open-end lines of credit, so insert 500 rather than 100 for the years of 2018 & 2019)***

Citation(s):§1003.2(g); Commentary ¶2(g); Commentary ¶4(g)-1ii; Commentary ¶4(g)-2 thru -5