We have a non-natural borrower and the co-borrower is an individual. Application was denied based on co-borrower's poor credit. There was no information on the credit report on the business borrower. For 2018 HMDA, do I report the non-natural borrower's credit as "NA" and the co-borrower his actual credit score? What is confusing me is the wording of the comment 4(a)(15)-7 where it states, "If the applicant AND co-applicant, if applicable, are non natural persons" then report NA. The word "AND" means if there is a co-borrower then they too must be a non-natural person to be able to use "NA".

Correct. What this means is you don't report a credit score when BOTH applicants are not people. Since you have one applicant/borrower that is a person, you need to preempt the credit score relied on.

It sounds like you relied on only one credit score - the one belonging to the co-borrower. Report it.

Now to something you didn't ask, but stated:
If you’re only relying on one credit score yet have two applicants, you can report the score used in either the applicant or co-applicant data field (#62 or #63). In other words, you don't have to report "8888" (NA) in Data Field #62 because that is the non-natural applicant and then report the natural person's score in Data Field #63 (syncing up the score to the specific applicant).

Just to clarify, I'll say it one more way: If you use only the credit score of a second co-applicant in your credit decision, you can report it in the credit score field for either the applicant or co-applicant and “8888” for “Not applicable” for the other credit score field. The credit score reported is not tied to the specific applicant/co-applicant like demographic information is.



In a transaction involving two or more applicants or borrowers for whom the financial institution obtains or creates a single credit score and relies on that credit score in making the credit decision for the transaction, the institution complies... by reporting that credit score for the applicant and reporting that the requirement is not applicable for the... other applicant. [Commentary to §1003.4(a)(15) #3]

Thank you for not only answering the question asked but also expanding to a related issue as well.

David,

If we have a 3rd borrower and we used the 3rd borrower's credit score to make our credit decision, we can report it on either field #62 or #63, is that correct? We would just have to be consistent with our approach?

Correct. You are to report the credit score used. It doesn't matter who it belongs to and #62 is not limited to the applicant / #63 is not limited to the co-applciant.

On the same topic of business entity (non-natural) borrower and an individual borrower, but with regard to the applicant information. Unlike the credit score and DTI where the word AND is used in the commentary, the demographic information and income commentary wording is an OR. So does that mean we don't report the demographic information for the natural person and report NA for both? Same for income, although it is only one field?

I believe you posted this in the other HMDA forum, and I answered it there.

You are right. Sorry about that. I thought I had posted it in the wrong forum so I put it in here too. Thanks for answering in the other forum.