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#2163728 - 02/08/18 08:01 PM HMDA Non Originated Application
HMDA Specialist Offline
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Posts: 76
Good Afternoon:

As per Regulation Guide if an application did not result in an origination and is a denied, withdraw or closed for incompleteness the lender should report the original terms requested by the customer.

The question is: What happens if the customer initially apply for a Nonconforming Loan in the amount of $100,000.00 with an interest rate of 4.25% for 30 years. But during the process change the circumstances and request a FHA Loan in the amount of $90,000.00 with an interest rate of 3.25% for 20 years.

The re disclosure was sent by mail, but the customer never send the signed or acknowledge of receipt of the re disclosure.

For TRID if three days was gone after the send by mail stamp, is understood that the customer receive the documents.

But for HMDA Purpose, what are my "initial request" the initial in the amount of $100,000.00 or the last application of the costumer in the amount of $90,000.00?

What I'm going to report in the LAR?
Last edited by HMDA Specialist; 02/08/18 08:03 PM.
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#2163758 - 02/08/18 09:14 PM Re: HMDA Non Originated Application HMDA Specialist
RR Joker Offline
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first, this is not any kind of requirement and would mean nothing to me "but the customer never send the signed or acknowledge of receipt"

I would report the action and the details based on when action occurred. However, your details seem incomplete to me and based on the whole story, I may have a different opinion...but it does sound like the customer changed mid - stream and wanted the lower loan amount/product and rate...before whatever happened, happened.
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#2163819 - 02/09/18 01:00 PM Re: HMDA Non Originated Application HMDA Specialist
Adam Witmer Offline
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Originally Posted By HMDA Specialist
As per Regulation Guide if an application did not result in an origination and is a denied, withdraw or closed for incompleteness the lender should report the original terms requested by the customer.
Just to clarify: counteroffers may require you to report the new terms. Based on the preamble, it appears that the CFPB wants FIs to report the "final disposition of the application in response to the terms of the counteroffer."

Here are a few excerpts from the August 2017 final rule:
"The Bureau recognized that revised comments 4(a)(8)(i)-9 and 4(a)(8)(i)-13 may be read as in tension regarding how to report the action taken on an application for which a counteroffer is made, the applicant expresses interest in the new terms, and the financial institution provides a conditional approval to which the applicant does not respond or which otherwise does not result in an originated loan. Comment 4(a)(8)(i)-9 could be read to require the financial institution to report the action taken as a denial on the original loan terms applied for, while comment 4(a)(8)(i)-13 could be read to require the action taken to be reported as a denial, file closed for incompleteness, approved but not accepted, or application withdrawn, depending on the circumstances.....

In addressing inquiries raising this concern, the Bureau had provided informal guidance that a financial institution should follow comment 4(a)(8)(i)-13 when an application for which a counteroffer is made is followed by a conditional approval that does not result in an originated loan. In accordance with this informal guidance, and to address the need to provide a full range of options in reporting the action taken on an application when there is a counteroffer, the Bureau proposed to amend the language of comment 4(a)(8)(i)-9 to broaden the possible actions taken that could be reported. The Bureau proposed to clarify that, if the applicant agrees to proceed with consideration of the financial institution's counteroffer, the counteroffer takes the place of the prior application, and the financial institution reports the action taken on the application under the terms of the counteroffer. In addition, the Bureau proposed to illustrate this interpretation by providing an example in comment 4(a)(8)(i)-9. The example would clarify that, if a financial institution makes a counteroffer, the applicant agrees to proceed with consideration of the counteroffer, and the financial institution sends a conditional approval letter stating the terms of the counteroffer, the financial institution reports the action taken on the application in accordance with comment 4(a)(8)(i)-13 regarding conditional approvals."


Continuing on...
"One commenter who expressed opposition to the changes preferred that comment 4(a)(8)(i)-9 be read to require that the action taken be reported as loan denied whenever a counteroffer is made and the loan is not ultimately originated. This commenter also stated that the new language was a major change and that financial institutions would have problems implementing it before the effective date."

"The Bureau now adopts the amendment to comment 4(a)(8)(i)-9 largely as proposed, with some modifications to address commenters' concerns. First..... Second, the comment is revised to clarify that a financial institution reports the action taken based on the final disposition of the application in response to the terms of the counteroffer. Information such as the application date and ULI will not change as a result of the existence of a counteroffer with which the applicant is proceeding. An additional example is also added to the commentary.

"The Bureau agrees with the industry commenter who stated that the guidance would ease the difficulties of reporting by allowing financial institutions' systems to reflect more accurately the specifics of the loan file at the time of final action."

"Furthermore, the Bureau has replaced the language in the proposed comment stating that the counteroffer takes the place of the prior application. This change is meant to make clear that the revisions to comment 4(a)(8)(i)-9 do not treat a counteroffer as a new covered loan that must be reported as a separate entry in the loan/application register, but rather provide that for purposes of reporting action taken, where the applicant agrees to proceed with consideration of the financial institution's counteroffer, the financial institution reports the action taken field as the disposition of the application based on the terms of counteroffer.
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#2163896 - 02/09/18 05:51 PM Re: HMDA Non Originated Application HMDA Specialist
Breeco Offline
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What action would be reported if the counter offer is accepted, but the borrower recinds the origination during the three-day right to recind?

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#2163899 - 02/09/18 05:57 PM Re: HMDA Non Originated Application HMDA Specialist
Dan Persfull Offline
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Paragraph 4(a)(8)(i)

10. Action taken—rescinded transactions. If a borrower rescinds a transaction after closing and before a financial institution is required to submit its loan/application register containing the information for the transaction under § 1003.5(a), the institution reports the transaction as an application that was approved but not accepted.
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#2163900 - 02/09/18 05:59 PM Re: HMDA Non Originated Application HMDA Specialist
Dan Persfull Offline
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If you are referring to 2017 reporting the following would be applicable.

Paragraph 4(a)(8).

2. Action taken--rescinded transactions. If a borrower rescinds a transaction after closing, the institution may report the transaction either as an origination or as an application that was approved but not accepted.
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#2163910 - 02/09/18 06:29 PM Re: HMDA Non Originated Application HMDA Specialist
Breeco Offline
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Breeco
Joined: Aug 2014
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Nebraska
Thank you so much--I was searching for recind rather than rescind--can't spell as it's Friday.
Last edited by MiniMee; 02/09/18 06:48 PM.
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#2164660 - 02/15/18 03:17 PM Re: HMDA Non Originated Application HMDA Specialist
fretzer Offline
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Joined: Dec 2008
Posts: 76
Pennsylvania
In regards to the reported loan amount on the HMDA LAR - I understand 1003.4(a)(7) states "if" the applicant accepts the counteroffer report the amount granted, but what happens when a new LE is sent due to a "change of circumstance" because the appraisal may have come in lower than expected?

If there's a confirmed receipt of the revised LE; the applicant does not return a signed copy but continues providing requested information and the loan is ultimately denied due to other factors, how should the loan amount be reported? Appreciate feedback.

Paragraph 4(a)(7).

1. Loan amount--counteroffer. If an applicant accepts a counteroffer for an amount different from the amount initially requested, the institution reports the loan amount granted. If an applicant does not accept a counteroffer or fails to respond, the institution reports the loan amount initially requested.

2. Loan amount--multiple-purpose loan. Except in the case of a home-equity line of credit, an institution reports the entire amount of the loan, even if only a part of the proceeds is intended for home purchase or home improvement.

3. Loan amount--home-equity line. An institution that has chosen to report home-equity lines of credit reports only the part that is intended for home-improvement or home-purchase purposes.

4. Loan amount--assumption. An institution that enters into a written agreement accepting a new party as the obligor on a loan reports the amount of the outstanding principal on the assumption as the loan amount.

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#2253656 - 05/07/21 05:16 PM Re: HMDA Non Originated Application Adam Witmer
Rebecca Offline
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Joined: Apr 2021
Posts: 5
Can you tell me where this Preamble is located? I cannot find the August 2017final rule.

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#2253667 - 05/07/21 08:08 PM Re: HMDA Non Originated Application HMDA Specialist
rlcarey Offline
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Galveston, TX
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