In discussing HMDA reporting with our real estate department, they said sometimes they don't make the decision on the loan; the investor does directly. It is my understanding that if we don't make the credit decision, we don't report. We are, in essence, acting as a broker in that situation.

However, there are times where we decline the loan, but send it to an investor who may or may not approve the loan. In this case, if we made a credit decision, such as declining the loan, we should provide the customer with an Adverse Action because we made that decision. However, if the investor then approves or declines the loan, would the investor not be responsible to send out a decline and report the decision on their HMDA-LAR; or if they approved it and we closed it/sold it to them, wouldn't they be responsible to report it on their end? We wouldn't report it because we didn't make that decision. Am I correct?

If you denied the loan, you denied the loan. You owe that customer a AA notice. If you denied the loan, how did you then forward it onto an investor for consideration?

It helps to think of these as transactions, not customers. You denied a loan. That is an entry on your LAR since you made the decision.

If you then forward that information onto an investor, and they approve/deny, they have made that decision and they report. I would think this second transaction would be an additional entry in your LOS.

Hope this makes sense

It makes perfect sense; I don't know why we would pass it on to an investor if we have the ability to make the decision and said no; they tell me it's for customer service but I haven't quite figured that one out.

I told them to add something to the loan application number to know it is a separate transaction, but they are really having a hard time understanding this concept for some reason and it makes me start questioning myself! That's why I'm the queen of insanity! ha ha ha

If they deny it, that should be the end of it.

They should know the investors guidelines. If, on the other hand, they aren't sure if they could get it approved or not, send it to an investor and it is denied, then it is the investor's responsibility.

Sounds like the LO may have pulled the denial trigger too quick without exhausting all options.