Reg B-GMI / HELOC / non-HMDA

We are a HMDA reportable bank that has opted not to report HELOC's. However, during a recent teleseminar they stated that it is a violation if we fail to collect GMI when we have a HELOC for the purpose of purchase or refinance the applicant's principal dwelling. Since we don't report HELOC's should we still collect the GMI? and if so, what should we do with it?

Ha....that's the $10,000 question, the answer for which depends upon who you ask. Reg B requires that you gather GMI for a loan that is primarily for the purchase or refinance of a dwelling occupied or to be occupied by the applicant as a principal residence. However, we do not report HELOCs and we do not gather GMI. We were formally cited for gathering GMI on construction loans (for principal residences)because these are not reportable under HMDA....though the loan technically IS for the purchase of a dwelling occupied or to be occupied as a principal residence under Reg B. So we quit gathering for ANY loan for which there is optional reporting (and we have opted out) or for any other loan that is exempted from HMDA reporting (such as construction or bridge loans). Next exam, we'll probably be cited for that. We had been gathering GMI on construction loans since the beginning of time....never a mumbling word from an examiner....then all of a sudden, a formal citation.

Swiggles is right. Technically, Reg B & Reg C are 2 different regulations with 2 different requirements. You are right to collect GMI on all loans required by Reg B but only report those loans that are subject to Reg C.

In the past, most examiners would just look at HMDA banks and expect you only collect and report HMDA applicable loans. IOW, collect GMI only if you report it. I'm still in the camp of this approach but, as Swiggles explained, there is a risk of being cited. Most examiners that I know won't cite you for this, but they may.

Thank you both!!!