I am trying to answer the question of a lender who came from a very large bank and says "we always used the FNMA 1003 application for interim construction loans & here you say
we can't because it has the government monitoring information on it"

I find 2 items on BOL that appear to conflict.
Item 1 indicates Reg C / HMDA says you can only collect if the loan is reportable and that if you are not a HMDA bank then Reg B says collect it on all loans for purch or refi (no matter interim )
I read this as "HMDA trumps Reg B - if you are a HMDA bank then only collect on HMDA reportable loans"
by Dan Persfull
http://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=737149&page=5


Item 2 indicates that even though HMDA is n/a because of interim
Reg B still requires that monitoring info be collected
I read this as "HMDA does not trump Reg B"
by David Dickinson
http://www.bankersonline.com/lending/guru2004/gurus_ldng101804e.html

Does HMDA Trump Reg B so that if you are a HMDA bank then you can only collect when the loan will be HMDA reportable - Or Not?

If you are a HMDA reporter, then you must collect GMI on every HMDA reportable loan.

If a loan is not HMDA reportable, then you still need to look to Reg B to see if it needs to be collected under ECOA.

One does not "trump" the other. Keep in mind that Reg B excludes temporary financing, so in your case of construction you would not collect it under Reg B or Reg C.

If this an interim construction only loan than GMI is not collected for either Reg. B or Reg. C. However, if you intend to do the end financing then you would collect GMI and you are doing a construction permanent loan. All our construction loans are 2 phase const/perm loans. We collect the GMI at application and report it when the construction loan is converted to permanent financing.

To clarify what MN Banker said, "Keep in mind that Reg B excludes temporary financing". Reg. B does not exempt temporary loans from the collection of GMI. Reg. B exempts construction only loans from the collection of GMI.

First, I think you have mine and Dan's opinion's back wards. I have always said (short paraphrase) "if you are a HMDA bank, don't worry about Reg B's GMI rules".

Second, Dan & I have discussed this here at BOL and on the phone several times. I quit bringing up my side of the issue (until now)

Look at §202.13(d) [I wish this was in plain English]. I believe this section basically says what I said above (HMDA banks don't do Reg B GMI). If you don't agree, what do you do with situations like these:

1. Reg B only allows collection of GMI on primary dwellings. HMDA requires collection on rentals, vacation homes, etc. Wouldn't you be violating §202.5(b) [don't ask for race, sex, etc.] when you collect GMI on a non-primary dwelling?

2. HMDA wants you to collect GMI on all natural persons. Reg B wants you to collect GMI on borrowers for their primary dwelling. When you have a cosigner that will not live in the home, Reg B would say not to collect. HMDA says to collect. Wouldn't this violate §202.5(b)?

I believe very strongly that you're either a Reg B bank or a Reg C bank. It's been interesting to watch the evolution of this here at BOL. Five years ago, Dan was the only one saying different. Slowly I've watch many of you agree with him. Honestly, I've never seen a HMDA bank cited for not collect GMI on a HELOC used to purchase a house (it's exempt from HMDA, but several of you say to collect but not report - for Reg B).

I remember even calling Dan on this and he stated that even his examiners disagreed with him (they thought he should not be collecting GMI unless it was a HMDA loan). However, Dan's a smart man. He knows his regs inside and out. He convinced them that it was OK. I believe Dan told me that they left still disagreeing with him, but indicating they would not cite him for this since he supported his position well.

This should be an interesting discussion. Let's hear from the other side.

Actually David my examiners, FDIC, agreed with me. That is why I have stuck to this opinion over the years.

I also rest my opinion on the following from 202.5(a):

(2) Required collection of information. Notwithstanding paragraphs (b) through (d) of this section, a creditor shall request information for monitoring purposes as required by §202.13 for credit secured by the applicant's dwelling. In addition, a creditor may obtain information required by a regulation, order, or agreement issued by, or entered into with, a court or an enforcement agency (including the Attorney General of the United States or a similar state official) to monitor or enforce compliance with the Act, this regulation, or other federal or state statutes or regulations.

and from the Commentary 202.5(a)(2):

2. Information required by Regulation C. Regulation C generally requires creditors covered by the Home Mortgage Disclosure Act (HMDA) to collect and report information about the race, ethnicity, and sex of applicants for home improvement loans and home-purchase loans, including some types of loans not covered by §202.13.

Sorry, Dan. I didn't mean to misquote you.

Your post makes it clear to me that I have been misunderstanding this one. I know you tried to explain it to me before, but this time it seems to be sinking in.

I give, but 2 questions still remain (anyone can answer these):
1. What does §202.13(d) mean? (Someone please give me a play English understanding.) Has anyone ever had a substitute monitoring system other than HMDA?

2. Has anyone ever been cited for not collecting GMI under Reg B for a loan that wasn't subject to HMDA? Sometime back we had a similar question here at BOL and I posted that I had not ever seen or heard of a bank being cited for not collecting on a non-reportable (not HMDA) loan. I asked anyone to step up and say "we were cited for this". After no response, I bumped it up and asked again. Still no one admitted to ever seeing this. Doesn't make me right, but it's interesting.

OK Dan. Are you keeping score?

David, no I'm not keeping score but I think we may be one and one...

From the Commentary to 202.13(d):

13(d) Substitute monitoring program.

1. Substitute program. An enforcement agency may adopt, under its established rule-making or enforcement procedures, a program requiring creditors under its jurisdiction to collect information in addition to information required by this section.

As I read this David an enforcement agency, such as the OCC, FDIC, FTC, etc. can adopt a program for collecting monitoring information for institutions under their enforcement umbrella, IN ADDITION to in the information required by 202.13. [edited] IOWs the information required my 202.13 must always be collected where applicable.

As for the second question I know of no one that has been cited by an Examiner, but I have seen posts where internal and external auditors were trying to cite them for collecting GMI under Reg. B when the loan was not subject to Reg. C.

WOW - - - Duling Gurus - - -

Its nice to know that even you guys can have problems interpreting what the regs say and, how they all relate, and trying to communicate that in plain english.

THANKS for the help

Thanks for making me laugh. Actually, we duel often. I've been know to call Randy, Dan, John & Andy to "debate" topics often (I find it sporting!)

Always more to know and learn. That's why I like compliance and Love BOL!

Ok-
I'm going to ask a somewhat related and probably stupid question.

Since the new HMDA rules-we have not collected GMI on non-HMDA loans. And this year the OTS "suggested" that we also complete a more detailed fair lending review.

So if you don't have this information on Reg B loans, do you just ignore them in the review?

Thanks for humoring me guys.

I'm in the middle of this debate with our external auditor right now. The loan she's trying to cite is construction with lot purchase and we plan to do the take-out (we use the 2 closing method). I'm saying we collected correctly, she's saying we collected when we should not have.

and we plan to do the take-out

I have to disagree with the auditor based on that statement.

Not only must you collect the GMI you must provide a ETIL & GFE for the permanent phase of the transaction within 3 days of the application for the construction and permanent phases. Which you obviously have or you wouldn't be planning on doing the take out.

I have instructed our processors that, in the absence of a take-out commitment, they are to assume we will be doing the permanent phase and go ahead and double disclose. That set of instructions is the one that includes "collect GMI on the construction application."

If the auditor insists on this point, I'm going to agree to disagree as long as she notes in the audit report that I disagreed.

Yesterday our bank had an exit interview with our external auditors for 3rd Qtr compliance. One item they hit us on was that we did not collect GMI on a heloc. It was my thought that since helocs are not HMDA reportable, we don't collect the GMI. I am thoroughly confused now. Any help would be greatly appreciated. Thank you.

Did you have a HELOC where the purpose was to purchase? Not the norm, but it does happen.

If it is a purchase, we collect the GMI even though we do not report revolving LOCs on HMDA.

The purpose of the heloc was to get money out for personal use.

From the commentary:

5. Transactions not covered. The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements. An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling.

If there was no existing lien on the home, it wouldn't be considered a refinance in my eyes. So are you saying for Reg B-we did not need to collect the GMI? Sorry for my ignorance on this one.

In my opinion, GMI should not have been collected. Don't forget, you are not allowed to collect GMI for loans UNLESS covered by HMDA or the narrow requirement under B.

Glad to hear that. We did not collect it, and I am arguing the fact. Thank you for the information Kathleen B!

Am I correct in understanding that a Land Only loan should not collect GMI?

This is what I am gathering from the regulations and this feed.

Thank you in advance for a response to this specific question regarding Land Only Loans.

Vacant land loans are not hmda reportable.

The exception would be if you had a home improvement loan secured by land only, you 'identify' the loan as home improvement, and you opt to report non-dwelling secured home improvement loans for HMDA. If all of these are true, you would need to collect GMI.

Otherwise - no. It would not be required by either Reg C or Reg B.

Thank you so much JWills and RR Becca. I really appreciate your feedback and confirmation.

David, no I'm not keeping score but I think we may be one and one...

From the Commentary to 202.13(d):

13(d) Substitute monitoring program.

1. Substitute program. An enforcement agency may adopt, under its established rule-making or enforcement procedures, a program requiring creditors under its jurisdiction to collect information in addition to information required by this section.

As I read this David an enforcement agency, such as the OCC, FDIC, FTC, etc. can adopt a program for collecting monitoring information for institutions under their enforcement umbrella, IN ADDITION to in the information required by 202.13. [edited] IOWs the information required my 202.13 must always be collected where applicable.

As for the second question I know of no one that has been cited by an Examiner, but I have seen posts where internal and external auditors were trying to cite them for collecting GMI under Reg. B when the loan was not subject to Reg. C.




What is the opinion on collecting GMI when you are a non-HMDA bank for loans that would not be covered under Reg. B? Would the exception still apply? I recently attended a conference where the provided this link that explains the requirements between the two regs. I found it to be helpful when determining when to collect/not collect.