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#2126185 - 04/13/17 04:55 PM HMDA Clarification
David Dickinson Offline
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The CFPB just released 150 pages of Technical Corrections and Clarification to the 2018 rules.
http://files.consumerfinance.gov/f/documents/201704_cfpb_NPRM_HMDA.pdf

I'm doing quick scan and found this about Spec House builder loans:
A home purchase loan does not include a construction-only loan or line of credit that is designed to be replaced by separate permanent financing extended to the same borrower at a later time or that is extended to a person exclusively to construct a dwelling for sale.
YEAH!
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#2126198 - 04/13/17 05:26 PM Re: HMDA Clarification David Dickinson
Kathleen O. Blanchard Offline

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It is great that they clarified for the builder loans. I am sure they received many inquiries. I know I asked. At the time they said they would be covered but if that changed they would let us know. smile

They did answer my (and I assume others) multifamily question...as proposed here, a loan secured by 5 or more properties of less than 5 units each will be multifamily, and all fields with special reporting for multifamily will follow those rules. That is a big change and I assume this clarification will remain as proposed.
Last edited by Kathleen B; 04/13/17 05:28 PM.
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#2126223 - 04/13/17 07:49 PM Re: HMDA Clarification David Dickinson
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That's the first thing I looked for. Construction -only. YAY!!!
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#2126224 - 04/13/17 07:49 PM Re: HMDA Clarification David Dickinson
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I assume so too since they put it in the Technical Clarification.

If anyone sees anything of significance, please post it here. Thanks!
(together, we're better!)
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#2126228 - 04/13/17 07:56 PM Re: HMDA Clarification David Dickinson
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It's pretty plainly written, as well:

In addition, a loan secured
by five or more separate dwellings in more than one location is a loan secured by a multifamily
dwelling. For example, assume a landlord uses a covered loan to improve five or more rental
property dwellings located in different parts of a town, and the loan is secured by those
properties. The loan should be reported as secured by a multifamily dwelling.
Last edited by RR Joker; 04/13/17 07:57 PM.
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#2126236 - 04/13/17 08:15 PM Re: HMDA Clarification David Dickinson
Kathleen O. Blanchard Offline

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I had called so many times about the multifamily (after they told me this was how to apply it) that they were annoyed with me. I just wanted a published answer, I didn't really care what the answer was.
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#2126251 - 04/13/17 09:05 PM Re: HMDA Clarification David Dickinson
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I am so excited right now about the construction-only loans I am doing cartwheels...........in my head!

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#2126260 - 04/13/17 09:41 PM Re: HMDA Clarification crcmnot
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Don't get hurt! Perhaps you should get some builder's risk insurance!
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#2126280 - 04/14/17 02:04 AM Re: HMDA Clarification David Dickinson
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This is a lot of tweaking! Still reading.
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#2126288 - 04/14/17 12:38 PM Re: HMDA Clarification David Dickinson
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Aggregate race and ethnicity:

I noted that the aggregate categories do not have to be completed if the applicant/borrower only chooses the subcategories in both race and ethnicity. So, presumably it will not be an "edit" if the main aggregate category is left blank but the sub (disaggregated) category is completed.

Also, if an applicant chooses both Hispanic or Latino and Not Hispanic or Latino, report both.[/b] That has been an ongoing question.
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#2126330 - 04/14/17 02:47 PM Re: HMDA Clarification David Dickinson
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I'm guessing banks won't be given the same leeway to correct LAR mistakes on the 2018 LAR that the CFPB has to put out the new regulation and correct it's mistakes as it goes. I'm just always amazed at the "typographical" errors (.97 for 97, for example) that they have to correct.
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#2126733 - 04/18/17 04:04 PM Re: HMDA Clarification David Dickinson
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Very relieved to see the clarification on multifamily(yay, I won't have to keep trying to explain this to our commercial lenders!!) and the construction loans, *whew* but in my mind they have planted a new fear in my brain with the disaggregated/aggregated thing. So we just leave the main category blank? I guess once the edits are available we can see if leaving it blank would create an edit.
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#2126762 - 04/18/17 05:23 PM Re: HMDA Clarification David Dickinson
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Personally, I think the multi-family definition is ridiculous. It flies in the face of any other multi-family definition in existence!
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#2126776 - 04/18/17 05:53 PM Re: HMDA Clarification RR Joker
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out of the frying pan...
Originally Posted By RR Joker
Personally, I think the multi-family definition is ridiculous. It flies in the face of any other multi-family definition in existence!


I agree. I'm grateful that they clarified what they actually want instead of leaving us guessing...but what they want makes no sense to me.
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#2126792 - 04/18/17 06:28 PM Re: HMDA Clarification David Dickinson
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^^^^^ Agree to Becca & Joker.

bOaty said:
Quote:
So we just leave the main category blank?

Correct. As M.C. Hammer said "Can't touch this". If the applicant selects any race (main or sub), you report exactly what they say. If they select any ethnicity, you report exactly what they say. Same with sex. Don't touch what they say.

Therefore, if they mark a sub-race or sub-ethnicity, you transfer that info to the LAR and don't select a main category.
However, if they don't select a race and/or ethnicity & you see them during the application process, you pick race(s) and ethnicity(ies) but can't choose subcategories. Its that simple. smile That's why the instructions to competing the Demo Info (Appendix B) is now 3 pages long!
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#2126801 - 04/18/17 07:06 PM Re: HMDA Clarification David Dickinson
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Thanks, David!

The thing that I like about multifamily is we do a lot of apartment lending and a good number of those are big complexes but each building is only four units. So if you have 150 units but they are all in a 4-plex, under the current rules we have to call those a 1-4 family which also makes no sense at all either.
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#2126817 - 04/18/17 07:39 PM Re: HMDA Clarification David Dickinson
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out of the frying pan...
What makes my head hurt is them wanting to call 15 rental houses with individual addresses scattered across 3 counties (don't laugh, we have some like that) multi-family.
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#2126820 - 04/18/17 07:46 PM Re: HMDA Clarification David Dickinson
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Hey, I'll take a rule that I might not agree with over ambiguity any day of the week when it comes to regulations.
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#2126821 - 04/18/17 07:50 PM Re: HMDA Clarification David Dickinson
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Agree.....as long as it's clear what they want, it doesn't matter to me if they want to have a field to report lawns with pink flamingos in the yard.
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#2126845 - 04/18/17 08:49 PM Re: HMDA Clarification David Dickinson
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Ssshhh! That might be the next thing they come up with!!!
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#2126869 - 04/18/17 10:09 PM Re: HMDA Clarification RR Becca
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Originally Posted By RR Becca
What makes my head hurt is them wanting to call 15 rental houses with individual addresses scattered across 3 counties (don't laugh, we have some like that) multi-family.


So, for HMDA purposes, such a loan will be reported as a multifamily loan in 2018 and beyond. For CRA (Regulation BB), since the examiners always use HMDA data to evaluate the institution, will such loans also be considered multifamily loans?
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#2127328 - 04/20/17 06:34 PM Re: HMDA Clarification Sinatra Fan
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Originally Posted By Sinatra Fan
Originally Posted By RR Becca
What makes my head hurt is them wanting to call 15 rental houses with individual addresses scattered across 3 counties (don't laugh, we have some like that) multi-family.


So, for HMDA purposes, such a loan will be reported as a multifamily loan in 2018 and beyond. For CRA (Regulation BB), since the examiners always use HMDA data to evaluate the institution, will such loans also be considered multifamily loans?


At this point I would have to say no but I need to ponder that and all of its implications. I should look at the Call Report definitions.
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#2127331 - 04/20/17 06:36 PM Re: HMDA Clarification David Dickinson
Kathleen O. Blanchard Offline

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Re race and ethnicity, I think that leaving the aggregate categories blank when an applicant only selects the disaggregate category is going to greatly complicate fair lending analysis. I would like to see the rule say that the applicant can do that, but that the FI or the system should then "assume" the aggregate category.
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#2127343 - 04/20/17 07:12 PM Re: HMDA Clarification Kathleen O. Blanchard
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Originally Posted By Kathleen B
Originally Posted By Sinatra Fan
Originally Posted By RR Becca
What makes my head hurt is them wanting to call 15 rental houses with individual addresses scattered across 3 counties (don't laugh, we have some like that) multi-family.


So, for HMDA purposes, such a loan will be reported as a multifamily loan in 2018 and beyond. For CRA (Regulation BB), since the examiners always use HMDA data to evaluate the institution, will such loans also be considered multifamily loans?


At this point I would have to say no but I need to ponder that and all of its implications. I should look at the Call Report definitions.


The Call Report has this to say about multifamily properties (and that is what drives loans to be reported as secured by multifamily properties for CRA and thus not small business or small farm). These are typical building/complex multifamily structures, not standalone 1-4 family properties.

1.d Secured by multifamily (5 or more) residential properties. Report (on the FFIEC 041, in
column B; on the FFIEC 031, in columns A and B for large institutions and highly complex
institutions – as defined for assessment purposes – with foreign offices, and in column B for
all other institutions with foreign offices) all other nonfarm residential loans secured by real
estate as evidenced by mortgages (FHA and conventional) or other liens that are not
reportable in Schedule RC-C, part I, item 1.c. Specifically, include loans on:

(1) Nonfarm properties with 5 or more dwelling units in structures (including apartment
buildings and apartment hotels) used primarily to accommodate households on a more or
less permanent basis.

(2) 5 or more unit housekeeping dwellings with commercial units combined where use is
primarily residential.

(3) Cooperative-type apartment buildings containing 5 or more dwelling units.

Exclude loans for multifamily residential property construction and land development
purposes and loans secured by vacant lots in established multifamily residential sections or in
areas set aside primarily for multifamily residential properties (report in Schedule RC-C, part I,
item 1.a,(2)). Also exclude loans secured by nonfarm nonresidential properties (report in
Schedule RC-C, part I, item 1.e).
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#2127366 - 04/20/17 08:10 PM Re: HMDA Clarification David Dickinson
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Re multifamily (HMDA v. CRA). It would be useful if the HMDA definition applied to 5 or more rental properties. The example is of a landlord, but I have (in Private Banking) had customers with more than 5 second homes, none of which were rented and which were often cross collateralized. That could open up the door to align CRA which has to do with providing affordable housing. I don't know that the call report would be changed, but perhaps the Q and A could provide guidance.
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