When we sell a mortgage loan on the secondary market, we report the purchaser code for that investor. What should we do if we are required to repurchase the loan from the investor in the same year. Do we change the purchaser code back to loan not sold in calendar year? Thank you.

wow - good question. I think you could argue this a couple of ways. You DID sell the loan. But then you bought it back. If you look at it strictly based on that, it would last be a purchased loan and could be reported as such.

I'll be interested to see what others have to say on this.

Would like to bring this back up and see if there is any more info at this time. What are other institutions doing with repurchased loans regarding whether or not to change what was initially reported for the purchaser code?

I would handle as 2 transactions; we sold the loan, and we purchased the loan.

I agree. It's reported as a sold loan and a purchased loan.

I have a client who on an on-going basis purchases a very substantial volume of mortgages from a mortgage company subject to a repurchase agreement between the bank and the mortgage company. The OCC told the client that the purchased mortgages are not reportable under HMDA because of the repurchase agreement (allegedly this was confirmed by the FRB). This became a very big issue for CRA purposes because if the loan purchases were reportable under HMDA they would be included in the CRA performance evaluation and would have created a very big problem for the client because most of the mortgages were outside their Assessment Area. Fortunately for the client the Agency told them the loans were not reportable under HMDA and therefore not included in their CRA performance evaluation. I don't know if the mortgage originator is reporting the mortgages as sold, but I assume they are not if the purchaser is not reporting the mortgages as purchased under HMDA.

This is the only time in my experience with hundreds of banks that I have seen this type of situation. But it would suggest that you should not be reporting the mortgages as sold to an investor. Has anyone else encountered this type of situation and if so, how did you report (or not report) and did it pass muster when you were examined?

Here is the response from HMDA Help regarding repurchased loans:


We apologize for the delay in responding to your inquiry, but further research needed to be done. Your question was a question that was brought to the Board's C&CA Division legal staff's attention from examiners and others in the banking industry. The Board's C&CA Division legal staff advised us to respond to the "originated loans - later repurchased" as given below. There is no reference in the HMDA Guide for Reporting, but this regulatory interpretation carries as much weight as would a reference in the Guide.

When a loan is repurchased by the originator within the same calendar year as originated, the originator should not report it as sold, and the purchaser (that subsequently puts it back to the originator) should not report it as purchased. If the repurchase happens in a subsequent calendar year, however, all the purchases and repurchases should be reported in their respective calendar years. Note that these examples apply whether the repurchase is voluntary or involuntary.

EXAMPLE:

1. Bank A originates loan 001 in 2008 and sells it to Bank B. However, in 2008, Bank A buys the loan back from Bank B.

Reporting of Bank A for 2008 -- Bank A would report loan 001 as an origination and, after the buy back, should make sure that the type of purchaser code is 0 and not codes 1 through 9. Bank A does not report the buy back of loan 001 as a purchased loan.

Reporting of Bank B for 2008 -- Bank B would report its original purchase from A.


2. Bank A originates loan 002 in 2008 and sells it to Bank B. However, in 2009, Bank A buys the loan back from Bank B.

Reporting of Bank A for 2008 and 2009 -- Bank A would report loan 002 as an origination and reports the proper purchaser code for Bank B for 2008.
Bank A reports the buy back of loan 002 as a purchase for 2009.

Reporting of Bank B for 2008 and 2009 -- Bank B reports loan 002 as a loan purchase for 2008. Bank B need not report the sale of loan 002 for 2009.

It looks to me like example 1 given by the HMDA Helpline conflicts with the HMDA Helpline statement

Statement: "When a loan is repurchased by the originator within the same calendar year as originated, the originator should not report it as sold, and the purchaser (that subsequently puts it back to the originator) should not (emphasis added) report it as purchased."

Example 1 (mortgage originated, sold and repurchased in the same calendar year): "Bank B would report its original purchase from A"

Am I missing something?