Hello,

Is there ever an instance to where one would collect GMI information for a commercial loan that is only applicable to Reg B? My understanding is that if the loan is a purchase/refinance and secured by principal dwelling (not sure if this is ever possible for commercial loans), that this would make the loan HMDA reportable, thus GMI would have to be collected anyways- satisfying both Reg B/C requirements.

I am not very familiar with Reg B and commercial lending, so any input would be really appreciated.

Thank you,

John

You are correct that commercial loans would not be subject to Reg B GMI collection unless the application is for the purchase or refinance of a dwelling occupied or to be occupied by the applicant as a primary residence.

(1) A creditor that receives an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, shall request...

HMDA rules are a completely different matter.

Thanks Adam. I appreciate the response.

Ok, so if I have a transaction that has a purpose of refinance or purchase and is also being secured by primary dwelling, wouldn't this transaction by HMDA reportable, thereby requiring the FI to collect GMI? I suppose this would also satisfy GMI requirements for both regs B and C. With HMDA, refi and purchase would both be loan purposes that are reportable and the transaction would also be dwelling secured.

It seems that the requirements for B would make every transaction also HMDA reportable. Am I missing something here?

Thanks again!

Remember that Commercial is usually referred to as a department. You must distinguish if a consumer PURPOSE loan is originated in a commercial loan department, because if so, all consumer regs apply. Commercial loan officers generally feel regs are beneath them.

If an examiner wants to find a problem, they'll look for consumer purpose loans booked in a commercial department, or deposit accounts opened in a wealth management area. Never fails!

John, a commercial/business purpose loan will only be HMDA reportable if it is a purchase, refinance, or home improvement loan under HMDA definitions. It is extremely important that your commercial lenders (and everyone else for that matter) understand what is HMDA reportable and what is not - they really need to know this at the time the application is first taken. If an application is HMDA reportable, GMI (now referred to as Demographic Information or DI) is always required. If a commercial/business purpose loan is not HMDA reportable (either you aren't a HMDA reporter or the purpose is not a purchase, refinance, or home improvement loan under HMDA definitions), then your GMI (DI) rules default to Regulation B requirements.

If you are a HMDA reporter (which is seems), then it would be rare that any of your non-HMDA loans would require DI info under Regulation B, but it could happen. Off hand, I can't think of a clear-cut example for commercial loans, but the example I have always given for consumer purpose mortgages is when a bank does not report open-end lines of credit for HMDA (meaning DI is not required for HMDA purposes) but a HELOC is an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence. The same would be true for a commercial loan if there is a scenario where an application for credit is primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence. The challenge is that HMDA rules basically trump the Reg B DI requirements, though Reg B is a bit more encompassing than HMDA - meaning that both rules apply.

For training purposes, a HMDA reporter can make DI collection an easy 2-step process. First, if an application is HMDA reportable, collect the DI. If it is not, you need to determine if the application is primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence. If it is, collect the DI (under Reg B). If it is not, DI is not needed.