Just after the New Year thing start to heat up for HMDA reporting, and here are a few popular topics related to HMDA reporting that the team at Compliance Alliance has been hearing about:
- What if more than one institution is involved? Only one institution reports the action taken, and if more than one institution is involved, the one who makes the credit decision is the one who reports the application or origination, regardless of in which institution’s name the loan closes. If the file was closed prior to a credit decision being made, then the institution who was reviewing the application in expectation of making a credit decision is the one who reports it.
- What do I report for the application date? An institution may choose to report either the date the application was received, or the date listed on the application. The commentary states that institutions should generally try to be consistent in which date is selected.
- Is a loan secured by a mixed-use property HMDA reportable? If a business loan is secured by mixed-use real property, the primary use of the property must be determined to see if the property is either primarily residential use and would be classified as a dwelling, therefore making the loan potentially HMDA reportable, or if the property is primarily non-residential in nature and therefore would not be considered a dwelling and the loan secured by this property would not be considered a dwelling-secured, HMDA reportable loan. The commentary indicates that an institution can use any reasonable standard to determine the primary use of the property, such as square footage or income generated, although institutions are not limited to just those two examples. There is no mention of needing to be consistent, so institutions are free to evaluate different mixed-use properties differently when making the determination of whether the property is primarily residential or primarily non-residential.
- Is this structure considered to be a dwelling? The definition of “dwelling” in the HMDA regulation is fairly broad and generally includes residential structures. The commentary helps to limit this definition not to include vehicles, houseboats and transitory residences like hotels, hospitals and dormitories. When trying to draw the line between what is and what is not a dwelling, particularly for the transitory residence exception, think of the attributes of the places mentioned: hotels, hospitals, dormitories, etc. These are places that a person stays to accomplish a specific task or goal: hotel (business or pleasure trip), hospital (get well and go home), and dormitories (go to school, then go back home). None of the transitory residence examples have any sense of permanence such that an individual wouldn’t normally change their mailing address, voter registration, vehicle registration, etc. because that is not really where they are residing, it is simply where they will be for a short period of time.
- Is my short-term loan exempt as temporary financing? This exemption from HMDA reporting really isn’t determined by the length of the loan term in the way that many other regulations approach temporary financing. In order to be exempt as temporary financing the loan or line must be designed to be replaced by separate permanent financing at a later time. A six-month loan may not be temporary financing, but a loan with a two-year term might be considered temporary financing. Only by reviewing the details of the transaction can you determine if it is exempt as temporary financing.
These are but some of the many varied questions that come up when trying to prepare your HMDA LAR. If you have a question about HMDA reporting or how to report it on your LAR, ask our hotline specialists. We’ll help to figure out if something is reportable, and if so, how to report it.