Frequently Asked Questions

Home Mortgage Disclosure Act (HMDA)/Reg C

Categories:

Reportable Data Fields

Assuming by "GAI" you are referencing "gross annual income", the rule allows for you to report the income used for qualification based on the manner in which your underwriting policies dictate the income should be determined/calculated. Commentary under the rule states:

"When a financial institution evaluates income as part of a credit decision, it reports the gross annual income relied on in making the credit decision. For example, if an institution relies on an applicant's salary to compute a debt-to-income ratio but also relies on the applicant's annual bonus to evaluate creditworthiness, the institution reports the salary and the bonus to the extent relied upon. If an institution relies on only a portion of an applicant's income in its determination, it does not report that portion of income not relied on. For example, if an institution, pursuant to lender and investor guidelines, does not rely on an applicant's commission income because it has been earned for less than 12 months, the institution does not include the applicant's commission income in the income reported. Likewise, if an institution relies on the verified gross income of the applicant in making the credit decision, then the institution reports the verified gross income. Similarly, if an institution relies on the income of a cosigner to evaluate creditworthiness, the institution includes the cosigner's income to the extent relied upon. An institution, however, does not include the income of a guarantor who is only secondarily liable."

There are a couple of issues to address under this question. Whether the data must be collected and reported is dependent upon the manner in which the application was taken (see chart below). Regarding making a decision to collect and report the sex of an applicant who is transgender was addressed by the CFPB via allowance for the consumer to select both male and female. You should rely on guidance provided by your legal counsel or compliance expert in addition to the guidance by the CFPB.

A chart (see category - Ethnicity, Race & Sex (Chart) of the specific requirements for documenting ethnicity, race and sex is provided for your use in determining whether or not to document this data via visual observation or surname, based on the manner in which the application is taken, is provided below.

There are a few ways to determine the purchaser type, starting with asking the purchasing entity (in this case the investor). You can also typically make this determination by researching the purchasing entity, if necessary, by the organizational corporate filings with the appropriate Secretary of State for the state in which they are domiciled. In many cases, you may also find the information necessary to make this determination by looking up the web site of the entity (if available) and using any disclosures provided regarding the legal disclaimer/disclosure or licensing, as applicable. Many agreements (contracts) executed regarding the purchasing of the loans may also identify the type of entity purchasing the loan.

Regulation C does not prevent you from assigning a new loan number for your own purposes when a loan is purchased; however, this would only be for your own internal use or other regulatory requirements regarding reporting, other than your LAR filing. When reporting the loans for HMDA purposes, loans purchased by your institution for the reportable calendar year (remember purchased loans are not reported quarterly, if applicable to your organization staring in 2020) are required to identify the loan on the LAR submission by reporting the Universal Loan Identifier already established/created by the original institution that originated the loan, and not the loan number you may have created for other purposes.

Regarding the first question, this is not removed by the rule. The applicant continues to have the option to select "I do not wish to provide this information". However, if the applicant provides some or all of the data and also selects "I do not wish to provide this information" via an application taken by mail, internet or telephone, the data (in whole or partial as completed by the applicant) that was provided is reported.

Regarding the second question, Regulation C makes the distinction regarding applications taken online (electronic media) by applying different requirements for documenting ethnicity, race and sex by distinguishing whether the online application was taken via a system which includes or does not include a video component. If the application is taken via electronic media which includes a video component, it is considered taken in person. If the application is taken via electronic media which does not include a video component, it is considered taken via mail. Therefore the requirements of when the application is taken in person or via mail would apply accordingly.

A chart (see category - Collecting Ethnicity, Race & Sex (Chart)) of the specific requirements for documenting ethnicity, race and sex is provided for your use in determining whether or not to document this data via visual observation or surname, based on the manner in which the application is taken, is provided below.

Yes, if self-reported or by following the requirements provided regarding collecting the data by visual observation or the applicant's surname. The requirement for collecting this data by visual observation or surname is detailed above under the responses regarding the collection of ethnicity and race.

A chart (see category - Collecting Ethnicity, Race & Sex (Chart)) of the specific requirements for documenting ethnicity, race and sex is provided for your use in determining whether or not to document this data via visual observation or surname, based on the manner in which the application is taken, is provided below.

The reporting of ethnicity and race (also the applicant's sex) is optional on purchased loans.

It is only necessary to collect ethnicity and race on an application taken via telephone if the applicant provides the ethnicity and race (also sex) after the person taking the application has provided the verbal disclosure regarding why this data is collected (this verbal disclosure is required on a phone application), if the applicant elects to provide this data. Identifying whether this data was obtained via visual observation or surname is only required for applications taken in person or via electronic media which includes a video component, or an application begins in a different manner but is completed at some point via either of these methods (face-to-face, whether in person or via video transmission).

<A chart (see category - Collecting Ethnicity, Race & Sex (Chart)) of the specific requirements for documenting ethnicity, race and sex is provided for your use in determining whether or not to document this data via visual observation or surname, based on the manner in which the application is taken, is provided below.

Rate Spread is reported on all loans after 1/1/2018, but is reported as not applicable for loan assumptions, reverse mortgage loans, and loans purchased. As of reporting in 2018 the data for loans with an action taken date in 2017 the proper way to report an item as not applicable changes to "NA" (without the slash).

In this case the whether the loan is originated or receives adverse action and the terms include a repayment period other than in months, the reported maturity term would be converted to an equivalent number of whole months without any remainder. Example: for a 30 year fixed rate loan using a bi-weekly repayment plan, the maturity term would still be indicated as 360 months (26 weeks per year x 30 years = 780 expected payments but the term in months would be reported as 360).

Yes, an option for indicating "not applicable" is provided. However, if a commercial loan originator is originating a covered loan under Regulation C, it would be prudent to ensure the loan originator is not required to be licensed or registered with the NMLSR for the particular transaction being reported. Commentary under Regulation C regarding this issue is cited below in the citations provided, and is summarized as follows:

An NMLSR ID for the mortgage loan originator is not required to be reported if the mortgage loan originator is not required to be obtained and therefore not assigned. For example, certain individual mortgage loan originators may not be required to obtain an NMLSR ID for the particular transaction being reported by the financial institution, such as a commercial loan. However, some mortgage loan originators may have obtained an NMLSR ID even if they are not required to obtain one for that particular transaction. If a mortgage loan originator has been assigned an NMLSR ID, a financial institution complies by reporting the mortgage loan originator's NMLSR ID regardless of whether the mortgage loan originator is required to obtain an NMLSR ID for the particular transaction being reported by the financial institution. In the event that the mortgage loan originator is not required to obtain and has not been assigned an NMLSR ID, a financial institution complies by reporting that the requirement is not applicable.

You should also refer to the SAFE Act (Regulations G & H), state licensing laws and your legal/compliance professionals for the determination of any required licensing applicable to the specific transactions reportable under HMDA.

If you are the originating institution, the loan is a closed-end mortgage loan, and the loan is not sold to another entity during the calendar year being reported on the LAR, you will report the loan amount as stated on the legal obligation. Here is a summary of how the loan amount is reported on the LAR:

Closed Loans (Originated) -

  • Closed-End Mortgage Loan = the amount to be repaid as disclosed on the legal obligation (not including a purchased loan, an assumption, or a reverse mortgage).
  • Open-End Line of Credit = the amount of credit available to the borrower under the terms of the plan (not applicable to a reverse mortgage provided via an open-end line of credit).
  • Refinance = the amount of credit extended under the terms of the new debt obligation.
  • Assumption = the unpaid principal balance at the time of the assumption.
  • Reverse Mortgage = the initial principal limit (even if not federally insured).
  • Counteroffers (accepted) = the loan amount granted (see closed-end and open-end loan amount detail above).
  • Multiple-Purpose Loans = the entire amount of the covered loan, even if only a part of the proceeds is intended for home purchase, home improvement, or refinancing.
  • Home Improvement Loans = the entire amount of a home improvement loan, even if only a part of the proceeds is intended for home improvement.
Loan Requests Receiving Adverse Action (Applications) -
  • Counteroffers (rejected by the consumer) = the loan amount initially requested (prior to the counteroffered amount).
  • Approved But Not Accepted (including preapprovals) = the loan amount approved.
  • Denial (including preapprovals) = the loan amount for which the applicant applied.
  • Closed for Incompleteness = the loan amount for which the applicant applied.
  • Withdrawn = the loan amount for which the applicant applied.
Purchased Loans -
  • Closed-End Mortgage Loans = the unpaid principal balance at the time of purchase.
  • Open-End Line of Credit = the amount of credit available to the borrower under the terms of the plan.


Disclaimer: These questions and answers are provided based on those received during webinars provided by the ICE Mortgage Technology Compliance Department, and those submitted to ICE Mortgage Technology directly by you. This content is intended for general information purposes with the goal of assisting ICE Mortgage Technology’s customers and non-customers, in complying with the future provisions under Regulation C (HMDA). This information is provided as a courtesy to ICE Mortgage Technology’s customers and ICE Mortgage Technology makes no representation or warranty regarding the accuracy of the information set forth herein, and you may not rely on this information to ensure your company’s compliance with Regulation C (HMDA). This publication should not be construed as legal advice or opinion on any specific facts or circumstances, including the application of the HMDA regulations. You are advised to consult your own compliance staff or attorney regarding your specific residential mortgage lending questions or situation to ensure your compliance with all applicable laws and regulations.