Skip to content
BOL Conferences Top Gun 23
Thread Options
#2127457 - 04/21/17 01:54 PM HMDA-Business income used for credit decision
Bec Offline
Diamond Poster
Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
Loan to an individual for consumer purpose. The loan officer is indicating that they did not use the individual's income to determine credit decision, but instead, underwrote the loan based on the income of the borrower's business. My question is do we report the income from the business as that was what was used for the credit decision, or do we report NA since we did not take the borrower's income into consideration when making the credit decision.
_________________________
Go Packers

Return to Top
HMDA

   
HMDA Academy
#2127463 - 04/21/17 02:16 PM Re: HMDA-Business income used for credit decision Bec
RR Joker Offline
10K Club
RR Joker
Joined: Nov 2002
Posts: 20,654
The Swamp
Business 'income' is revenue. If he's not reporting income on his personal tax returns from the business net revenue, then I'd say 'income' was not considered.

Curious as to other responses.
_________________________
My opinion only. Not legal advice.

Say you'll haunt me - Stone Sour

Return to Top
#2127467 - 04/21/17 02:24 PM Re: HMDA-Business income used for credit decision Bec
raitchjay Offline
Power Poster
Joined: Oct 2009
Posts: 8,875
OK
I may be all wet on this one, but to me.............if the LO conjures up some number from a deck of UNO cards and qualifies the borrower based on that, that's the "income" that was "used" in making the credit decision, and i would report that number.
_________________________
I'm fixin' to fix that.

Return to Top
#2127468 - 04/21/17 02:26 PM Re: HMDA-Business income used for credit decision Bec
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,020
Bloomington, IN
Since the business does not appear to be a borrower (and I am assuming the business is not a sole proprietorship) how does this loan officer expect to collect payment from the business' revenue if the borrower fails to pay?

Also, if this loan is subject to ATR and/or QM qualifications were the Reg. Z ATR guidelines and/or Appendix Q followed for verifying the borrower's income and ATR?
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2127469 - 04/21/17 02:29 PM Re: HMDA-Business income used for credit decision Bec
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
If the bank looked at business cash flow to see what was available for the owner to take and used that, it is not "income". So I think you could justify NA. If they drilled down to what he took from the business to pay his bills, that is income to him.

I am taxed on LLC profit whether I took it or not.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#2127568 - 04/21/17 08:31 PM Re: HMDA-Business income used for credit decision Bec
Bec Offline
Diamond Poster
Bec
Joined: Jul 2010
Posts: 1,114
The Great White North
Thank you all for your responses. I'll have to dig a little deeper on the ATR situation. For some reason I am thinking this might be commercial purpose to an individual borrower.
_________________________
Go Packers

Return to Top

Moderator:  SMQ, CRCM