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#2114327 - 01/14/17 04:23 PM Help! HMDA coverage for 2017
compliance75 Offline
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We are a small size financial institution that in the preceding two years have reported less than 25 entries in the HMDA LAR. Following the 2017 HMDA Institutional Coverage tests, the Bank passes the first already existing 4. The newly implemented loan volume criteria asks if the Bank originated at least 25 home purchase loans in the preceding two calendar years (§1003.2(v) – Financial Institution).

Should I include Home Equity Lines of Credit originated by the Bank that may have been for the purpose of purchasing a dwelling, in my analysis to determine if the Bank meets the new loan volume criteria. We did not report HELOCs before.

I researched the definition of home purchase loan in 2017 §1003.2 and found no indications involving open end or closed end exclusions. I also looked into the definition of financial institution §1003.2(v) that references loans that are excluded pursuant to §1003.4(d), which in turn does not exclude HELOC loans from reporting requirements.

THANKS

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#2114328 - 01/16/17 04:23 AM Re: Help! HMDA coverage for 2017 compliance75
David Dickinson Offline
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Here's the CFPB's Institutional Coverage flowchart:
http://files.consumerfinance.gov/f/201510_cfpb_2017-hmda-institutional-coverage.pdf

The coverage test states:
A bank, savings association, or credit union will not be subject to Regulation C in 2017 unless it meets the asset-size, location, federally related, and loan activity tests under current Regulation C and it originates at least 25 home purchase loans, including refinancings of home purchase loans, (as those terms are defined in current Regulation C) in both 2015 and 2016

You raise a good question that I had not considered. My opinion: You use the 2017 (current) rules to define your coverage, not the 2018 definition. The 2017 test doesn't use the term "covered closed-end mortgage loans" or "covered open-end lines of credit". If you don't report HELOC's today, because they are optional reporting, I don't think you need to consider it in the coverage test for 2017. Reg C is consistent in using the term "loan" for closed-end loans and "open-end line of credit" when referring to LOC's. The 2017 coverage test refers to "loans".
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#2114513 - 01/18/17 02:23 PM Re: Help! HMDA coverage for 2017 compliance75
Kathleen O. Blanchard Offline

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I agree that if your institution did not report HELOCs in 2015 and 2016, do not count any that might have been used for a purchase or refinance of a purchase for the coverage test for 2017.
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#2114579 - 01/18/17 05:40 PM Re: Help! HMDA coverage for 2017 compliance75
compliance75 Offline
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Thank you

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#2120056 - 03/01/17 05:48 PM Re: Help! HMDA coverage for 2017 compliance75
KPAP Offline
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Midwest
I'm going to piggyback on to this post.....We're a similar FI, who also pass the first 4 tests but the majority of our loans are sold to the secondary market and reported by our investor. Would these loans be counted as originated by the financial institution and go towards our 25 loan volume total? In 2015 and 2016 the bank only reported 11 and 13 originated loans on the LAR, because we do not report the loans that we sell secondary market. I'm thinking the new loan volume test has exempted us from HMDA reporting, for 2017 at least, but I'm not sure if I'm accurately accounting for all of our "originated" loans. Thanks!

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#2120061 - 03/01/17 06:02 PM Re: Help! HMDA coverage for 2017 KPAP
Truffle Royale Offline

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Quote:
...the majority of our loans are sold to the secondary market and reported by our investor.


huh? Who made the underwriting decision on these loans?
If it was your bank, you should be reporting them on your LAR as originations.
The investor would report as purchased loans.

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#2120064 - 03/01/17 06:04 PM Re: Help! HMDA coverage for 2017 compliance75
Truffle Royale Offline

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Additionally, they would count as originations for the 2017 tally for volume test.

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#2120068 - 03/01/17 06:10 PM Re: Help! HMDA coverage for 2017 Truffle Royale
KPAP Offline
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Midwest
The investor made the underwriting decision on the loans.

And, thank you!
Last edited by KPAP; 03/01/17 06:11 PM.
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#2120245 - 03/02/17 04:37 PM Re: Help! HMDA coverage for 2017 compliance75
KPAP Offline
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Posts: 59
Midwest
Ok, so we reached out to our state banking association and they said that the loans would not be counted towards our 25 since the investor makes the credit decision and reports the loans on their LAR. This means we would be exempt from reporting for 2017. We've reached out to the FDIC to verify this, but it could potentially be very good news for us. Has anyone heard directly from their regulators how these types of loans should be counted?

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#2120467 - 03/03/17 06:21 PM Re: Help! HMDA coverage for 2017 compliance75
POWFNB Offline
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KPAP, I have the same question. No response from our regulator as of yet.

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#2120474 - 03/03/17 06:39 PM Re: Help! HMDA coverage for 2017 POWFNB
Truffle Royale Offline

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David's post above references 'loan activity tests' under Reg C.
The Small Entity Guide on page 36 at 4.2.3. references the criteria for the loan activity test.
Back at page 10, it talks about the threshold change for 2017.
If you're not making the credit decision, it's not an origination to count for 2017.

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