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#2159217 - 01/04/18 07:35 PM Collected on the Basis of Visual Observation
JoeG Offline
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DuPage county, IL
If Ethnicity information is not provided by applicant in a mail, internet, or telephone application, what do we report for HMDA purposes relating to: Was Ethnicity of Applicant or Borrower Collected on the Basis of Visual Observation or Surname?

1, Report as Not collected on the basis of visual observation or surname
2, Report as Not applicable
3. Report by leaving this field blank

Thanks of the help!

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#2159235 - 01/04/18 08:15 PM Re: Collected on the Basis of Visual Observation JoeG
Indy Banker Offline
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There are a couple of other threads from last month with that question and I don't think there was a firm, unanimous consensus reached yet...

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#2159257 - 01/04/18 09:07 PM Re: Collected on the Basis of Visual Observation JoeG
Dan Persfull Offline
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Bloomington, IN
If Ethnicity information is not provided by applicant in a mail, internet, or telephone application, what do we report for HMDA purposes relating to: Was Ethnicity of Applicant or Borrower Collected on the Basis of Visual Observation or Surname?

Everything I've read the past couple of days points to reporting "based on visual observation" is based on if the applicants/borrowers are met with in person anytime during the application process. See Appendix B.

If you did not meet with the applicant(s) face to face anytime during the application process you report NA. If you did meet with them then you must request the information and you would then report Code 1, 2 or 4 as applicable.

Any opposing viewpoints are welcomed.
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#2159258 - 01/04/18 09:18 PM Re: Collected on the Basis of Visual Observation JoeG
#12 Offline
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Dan, from guidance issued by the CFPB (the N/A chart), we can only report N/A in this field for Purchased Covered loans and when the applicant or coapplicant is not a natural person.

I'm truly not sure how to answer this one!
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#2159273 - 01/04/18 10:01 PM Re: Collected on the Basis of Visual Observation JoeG
Dan Persfull Offline
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Yeah, I know (scratches head) but again Appendix B makes reference to visual observation only in the case of in person applications.

I originally thought you would report the basis of visual observation for all (except non natural persons & purchased loans) until I re-read Appendix B which kind of persuaded me the other way.
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#2159306 - 01/05/18 03:48 AM Re: Collected on the Basis of Visual Observation JoeG
Truffle Royale Offline

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I've read all the threads too but held fast to NA for this. My LOS seems to support me because that's what it wants to default to.

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#2159320 - 01/05/18 01:26 PM Re: Collected on the Basis of Visual Observation #12
Adam Witmer Offline
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Originally Posted By Dan Persfull

[I]If you did not meet with the applicant(s) face to face anytime during the application process you report NA. If you did meet with them then you must request the information and you would then report Code 1, 2 or 4 as applicable.


This is my current understanding as well.

Originally Posted By #12

Dan, from guidance issued by the CFPB (the N/A chart), we can only report N/A in this field for Purchased Covered loans and when the applicant or coapplicant is not a natural person.


The October NA chart now says the following under "Collected on the basis of visual observation or surname": NOTE: Use Code 3 if the requirement to report the applicant’s or borrower’s ethnicity does not apply to the covered loan or application that your institution is reporting.

To me, this seems to align exactly with what Dan said: if you don't see them, you can't make a visual observation, so the field would not apply.

So basically, it is my current understanding that if you have an application by mail, internet, and telephone and do NOT also meet with them face-to-face them during the application process, then you would enter Code 3 (—Information not provided by applicant in mail, internet, or telephone application) for the ETHNICITY OF APPLICANT OR BORROWER, and then Code 3 (—Not applicable) for ETHNICITY COLLECTED ON THE BASIS OF VISUAL OBSERVATION OR SURNAME.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2159325 - 01/05/18 01:48 PM Re: Collected on the Basis of Visual Observation JoeG
RR Joker Offline
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But that NOTE could be read and interpreted more than one way. It is confusing as all heck.
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#2159352 - 01/05/18 03:05 PM Re: Collected on the Basis of Visual Observation JoeG
Adam Witmer Offline
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Agreed, and I could be wrong though I haven't seen any further clarification anywhere at this point.
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#2159355 - 01/05/18 03:12 PM Re: Collected on the Basis of Visual Observation JoeG
RR Joker Offline
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FWIW, NA makes the most sense...if we dare apply sense laugh!
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#2159356 - 01/05/18 03:14 PM Re: Collected on the Basis of Visual Observation JoeG
Adam Witmer Offline
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It seems these rules leave us no choice in a few places.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2166858 - 03/06/18 04:24 PM Re: Collected on the Basis of Visual Observation JoeG
Banker K, CRCM Offline
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I have an update from the CFPB on this per PHONE conversation (of course). It is pretty consistent with their answer via phone convo with them in late 2017...consistently UNCLEAR, but...feel free to contact them yourselves too. Would like to know what you all have decided to do. Basically they said they don't care if we mark "not collected..." or "NA" in apps not taken F2F but to be CONSISTENT.

HERE IS MY QUESTION I ASKED THE CFPB VIA EMAIL 3/5/18:

Good Morning,

We have an unresolved question pertaining to the collection method/visual observation fields.
If an application is not taken in person, should we report those fields as “NA” or “Not collected on basis of visual observation…”?
For example: customer applies via phone, and provides the GMI orally. For collection method, do we mark “not collected…” or do we report on the LAR as “NA” instead?

Filing year: 2018
Regulation Section: §1003.4(a)(10)(i)

The regulation states to notate the collection method of the GMI (collect “the following information about the applicant or borrower…and whether this information was collected on the basis of visual observation or surname.”).
The regulation does not include a stipulation whether the app was taken in person or not.
However, the sample GMI exhibit (Data Collection Form) includes language that has been confusing many in the industry since it states to complete how the information was collected “for an application taken in person”.


HERE ARE MY NOTES OF THE PHONE CONVO WITH THE CFPB ON 3/5/18:

3/5/18

A paralegal from the CFPB called me back (unfortunately, I got another call; sometimes they respond via email).
She consulted with their attorneys, and this is their response:

Appendix B does not expressly address what to report regarding collection method for apps not taken in person.
Only #11 addresses phone apps and it doesn’t address the collection method (only completing the GMI portion).
#10 addresses the collection method, and expressly addresses in-person applications.
Since the rule does not specifically address this, we are not prohibited from selecting “NA” or “Not Collected…”.
Recommended whatever we decide to use, be consistent.
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#2166864 - 03/06/18 04:34 PM Re: Collected on the Basis of Visual Observation Banker K, CRCM
Truffle Royale Offline

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Ah yes, that old chestnut resurfaces again in the land of definitive HMDA answers:
Quote:
Recommended whatever we decide to use, be consistent.
smirk

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#2166998 - 03/07/18 02:55 PM Re: Collected on the Basis of Visual Observation JoeG
RR Becca Offline
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out of the frying pan...
I've got a curveball on this today. What if the application is in person for the application but by phone for the co-applicant (or the applicant provided the co-applicant's information)? At that point are the "visual basis" questions YES/NO for the applicant but NA for the co-applicant?
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#2167003 - 03/07/18 03:10 PM Re: Collected on the Basis of Visual Observation JoeG
Truffle Royale Offline

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I would say yes, now that we have the ability to break out the answers for each applicant.

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#2167004 - 03/07/18 03:11 PM Re: Collected on the Basis of Visual Observation JoeG
RR Joker Offline
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The Swamp
I would say absolutely yes.
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#2167008 - 03/07/18 03:21 PM Re: Collected on the Basis of Visual Observation JoeG
Dan Persfull Offline
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Bloomington, IN
Since the regulation allows one applicant to provide the DI for the missing applicant I would have to opine the answer would be No in the case where it was provided by the one applicant that was met with in person. The one applicant provided the information for the missing applicant therefore the DI was not collected on the basis of visual observation.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2167014 - 03/07/18 03:28 PM Re: Collected on the Basis of Visual Observation Dan Persfull
Truffle Royale Offline

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Quote:
What if the application is in person for the application but by phone for the co-applicant (or the applicant provided the co-applicant's information)?
I would opine that Joker and I answered the first part while Dan's answer is for the parenthetical part.

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#2167015 - 03/07/18 03:31 PM Re: Collected on the Basis of Visual Observation JoeG
RR Joker Offline
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The Swamp
Agree
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#2167017 - 03/07/18 03:35 PM Re: Collected on the Basis of Visual Observation JoeG
RR Becca Offline
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out of the frying pan...
Makes sense to me (inasmuch as anything HMDA can these days).

Thanks, all!
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#2168585 - 03/16/18 02:12 PM Re: Collected on the Basis of Visual Observation JoeG
RR Joker Offline
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Well, my LOS just made this decision for me. It will absolutely and vehemently NOT allow NA to be checked on anything but a non human applicant. If you check NA, it wipes out the Race/Sex/Ethnicity checked boxes.

Dang it all...by now I'm sure my staff thinks I'm completely and utterly crazy.
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#2168587 - 03/16/18 02:16 PM Re: Collected on the Basis of Visual Observation RR Joker
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Originally Posted By RR Joker
Dang it all...by now I'm sure my staff thinks I'm completely and utterly crazy.



Haha! I'm having the same experience. "We've decided to do it this way!" "Oh, wait... Need to go back..."

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#2168589 - 03/16/18 02:20 PM Re: Collected on the Basis of Visual Observation JoeG
RR Joker Offline
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Oddly, I don't get a Validity error if I do it the way I want to do it in the HMDA software. Stupid, stupid just stupid!
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#2168805 - 03/16/18 08:58 PM Re: Collected on the Basis of Visual Observation JoeG
Likes to Comply Offline
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The instructions in the Reference Chart and I believe also in the FIG, it doesn't carve out this question as being only applicable to in person applications. So if you just ask yourself, was the demographic info based on visual observation/surname and it was, then report Code 1 (which could only ever happen in person). In every other situation you/LO did not collect the information based on visual observation, so Code 2 is appropriate (the applicants either provided the information or they didn't). Otherwise, if it was an entity Code 3 is applicable.

At least that's the context we read it in.

ETHNICITY COLLECTED ON THE BASIS OF VISUAL OBSERVATION OR SURNAME. Indicate whether the ethnicity of the applicant or borrower, or of the first co-applicant or co-borrower, as applicable, was collected on the basis of visual observation or surname by entering:
 Code 1—Collected on the basis of visual observation or surname
 Code 2—Not collected on the basis of visual observation or
surname
 Code 3—Not applicable
NOTE: Use Code 3 if the requirement to report the applicant’s or borrower’s ethnicity does not apply to the covered loan or application that your institution is reporting.
 Code 4—No co-applicant
NOTE: Use Code 4 in the co-applicant field if there are no co-applicants or co-borrowers
If there is more than one co-applicant or co-borrower, provide the required information only for the first co-applicant or co-borrower listed on the collection form.
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#2168813 - 03/16/18 09:25 PM Re: Collected on the Basis of Visual Observation Likes to Comply
Truffle Royale Offline

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Look at the Demographic Information form itself.
It reads: To be completed by financial institution (for applications taken in person).

The references you give, Likes to Comply, reference HOW to report WHAT the answers are IF the application was taken F2F.

CFPB has verbally responded on this a couple times, as has been documented in various threads on this topic. Note I said verbally responded, not clarified. The closest they've come to any sort of clarification is to say there is no specific answer to this so be consistent in your interpretation.

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