Skip to content
BOL Conferences
Thread Options
#1294040 - 11/25/09 08:38 PM HMDA - classifying unsecured Home Improvement Loan
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
A little debate going on about when does an institution "classify" an unsecured loan as "Home Improvement."

If a lender accepts an application for a personal loan, and the borrower indicates they will be using some of the money for home repairs, does that "classify" the loan as Home Improvement?

If the lender has a "Purpose" field in their loan system, and they record the purpose of a personal or auto-secured loan as "Home Improvement" or "Home Repair" (as opposed to Consolidate Debt, Vacation, Purchase Car, etc.) does that "classify" the loan as Home Improvement?

Or would the lender need to set up an actual "Home Improvement" class of loans in order to classify the loan as Home Improvement?
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

Return to Top
HMDA

   
HMDA Academy
#1294047 - 11/25/09 08:43 PM Re: HMDA - classifying unsecured Home Improvement Loan Princess Romeo
#12 Offline
Diamond Poster
Joined: Jun 2005
Posts: 1,343
Originally Posted By: Princess Rooney
A little debate going on about when does an institution "classify" an unsecured loan as "Home Improvement."

If a lender accepts an application for a personal loan, and the borrower indicates they will be using some of the money for home repairs, does that "classify" the loan as Home Improvement? No

If the lender has a "Purpose" field in their loan system, and they record the purpose of a personal or auto-secured loan as "Home Improvement" or "Home Repair" (as opposed to Consolidate Debt, Vacation, Purchase Car, etc.) does that "classify" the loan as Home Improvement? Yes

Or would the lender need to set up an actual "Home Improvement" class of loans in order to classify the loan as Home Improvement? Not necessarily. An institution can classify loans in several different ways, including a purpose code, loan type, or even a separate color of file folders


IMHO
_________________________
CRCM

Return to Top
#1294058 - 11/25/09 08:49 PM Re: HMDA - classifying unsecured Home Improvement Loan Princess Romeo
aaron.kennedy@co Offline
New Poster
Joined: Nov 2009
Posts: 10
are the terms of the loan in sync with the terms of a your home improvement loans as defined by your product descriptions? If the terms are not the same as those of your home improvement loan programs or you do not even list home improvement loans in your product offerings than your regulator may object. otherwise as long as the terms are similar and the product is listed than you can.

Return to Top
#1294066 - 11/25/09 08:51 PM Re: HMDA - classifying unsecured Home Improvement Loan aaron.kennedy@co
#12 Offline
Diamond Poster
Joined: Jun 2005
Posts: 1,343
Just to add: check out page D-4 and D-5 in the 2009 HMDA GIR.
_________________________
CRCM

Return to Top
#1294235 - 11/25/09 10:39 PM Re: HMDA - classifying unsecured Home Improvement Loan #12
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I like to say it this way:
If I gave you 30 minutes and said "produce a list of all HI loans", could you do it? If so, you must have a way to retrieve them by classification (purpose code, etc.).

If you had to search through loan files and look at the purpose or search comments, then you're not classifying them for HMDA purposes.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#1295280 - 11/30/09 02:11 PM Re: HMDA - classifying unsecured Home Improvement Loan David Dickinson
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Quote:
or you do not even list home improvement loans in your product offerings than your regulator may object.


They may object but they would have no regulatory basis to cite you for any violation. The regulation does not specify you have to have a "home improvement program", all it specifies in order for a non dwelling secured loan to be reported is that the purpose be for home improvement and the financial institution classifies the loan as a home improvement loan.

Until we stopped reporting them in 2004 we had no home improvement program in our product offerings. All non dwelling secured home improvement loans were priced according to the loan type, i.e. auto, unsecured, CD, etc.

FWIW I agree with #12's and David's responses.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1295399 - 11/30/09 04:39 PM Re: HMDA - classifying unsecured Home Improvement Loan Dan Persfull
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
So what happens if the institution did not realize this was the consequence of assigning "Purpose" codes and never obtained GMI on any of these loans, and if the applicaiton was denied, no purpose code was assigned?
_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

Return to Top
#1295446 - 11/30/09 05:18 PM Re: HMDA - classifying unsecured Home Improvement Loan Princess Romeo
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Although normally purpose codes are not assigned to denials you still classify originated loans as home improvement loans therefore all applications for home improvement should be reported.

If you have not been reporting these loans then IMO you have violations because these loans meet the definition of a home improvement loan. They are both for the purpose of home improvement and classified as such by the financial institution.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1295456 - 11/30/09 05:26 PM Re: HMDA - classifying unsecured Home Improvement Loan Princess Romeo
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
I think the first step is to size the issue. How many of these are there vs. other types of loans, how much of a change to the LAR?

Once you know that you can determine how to proceed, whether to discuss with regulators, etc. Many require resubmissions even after public data is released because they can then download the data and to be a "learning experience".

I usually prefer voluntary resubmission because it shows a proactive stance. I find regulators get ticked if you had significant errors and did not resubmit. Always worth it to give them a heads up if a big change.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top

Moderator:  SMQ, CRCM