We adopted Appendix Q for underwriting, which allows for income consideration for the applicant of their 25% or more ownership in a corporation. When this is done for ATR it shows that in the event it was necessary, the applicant has access to that income by way of a dividend distribution. However, this applicant may not have taken any dividends for quite a few years and does not pay themselves a salary.
Current HMDA rules requires that we report the income relied on in evaluating the credit-worthiness of applicants. We cannot report income from, for example, a guarantor who is only secondarily reliable.
So we have a two applicants/borrowers that are individuals. They have salary from jobs. They are both owners of a corporation, together owning 100%. They are not being paid a salary or receiving dividends from the corporation from what we can see in three years of tax returns.
For ATR the net business income was considered for underwriting. Would this be reported for HMDA? It seems like it would not be since the corporation is not an applicant/borrower on the loan and since the monies have not actually been paid to the individuals.
Are you reporting corporation's net income as individual income of the applicant for HMDA?
Always learning something new...