Skip to content
BOL Conferences Top Gun 23
Thread Options
#2192472 - 09/13/18 05:40 PM Purchased Transactions & The New Partial Exemption
GTS333 Offline
Gold Star
Joined: Jun 2010
Posts: 256
If our institution doesn't qualify for the new sub-500 loan partial exemption, and we purchase a HMDA reportable loan from an institution that does, do we need to figure out how to collect and report the exempt data fields, or do we just report what the originating institution collected/reported? (I realize UIL has its own requirement here).

Thanks
_________________________
My opinion, take it for what its worth. Opinions expressed are my own and not those of my employer and are not legal advice.

Return to Top
HMDA

   
HMDA Academy
#2192522 - 09/13/18 08:24 PM Re: Purchased Transactions & The New Partial Exemption GTS333
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
There has been no guidance that I've seen on this, but I believe you would not be required to complete the exempt data fields. You would simply report what the originating institution reported (Exempt / 1111). As you know, this doesn't work for the ULI.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#2192742 - 09/17/18 02:23 PM Re: Purchased Transactions & The New Partial Exemption GTS333
hmdagal Online
Power Poster
hmdagal
Joined: Dec 2002
Posts: 3,824
We've been told by the CFPB (not in writing, of course), that the exempt codes won't be available to us for loans that we purchase, even if the original institution could use them.

Return to Top
#2192769 - 09/17/18 04:38 PM Re: Purchased Transactions & The New Partial Exemption GTS333
Tarhe Offline
Diamond Poster
Joined: Nov 2006
Posts: 1,291
California
We are a small servicer and will be exempt. We do sell our mortgage loans to large investors though. For loans that we sell, we can still report the exempt codes on our LAR - but will the large investor then need to report ALL codes? Sounds like the CFPB won't allow the purchasing bank to utilize the exempt codes. Do others see this as perhaps affecting our ability to sell? (Management is considering having us continue to report ALL fields on the LAR for this reason.)

Return to Top
#2192773 - 09/17/18 04:53 PM Re: Purchased Transactions & The New Partial Exemption GTS333
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
We wrote the CFPB on this issue. We haven't heard back yet. I'll post if/when we do.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#2192793 - 09/17/18 05:57 PM Re: Purchased Transactions & The New Partial Exemption GTS333
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,341
Galveston, TX
Based on how the current regulation is written, I see nothing that would change a purchaser's reporting responsibilities. What the original institution may have or may not have reported when the loan was originated is really neither here nor there. It isn't now nor would it be in the future.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2192844 - 09/17/18 09:07 PM Re: Purchased Transactions & The New Partial Exemption GTS333
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I agree with you Randy; however, I firmly believe this is not what Congress wanted. They wanted to give relief to small institutions. Not give relief to small institutions that don't sell loans. If you sell loans to a large institution, you're still stuck with the burden of collect and passing on the info. That's not regulatory relief.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#2192859 - 09/17/18 10:46 PM Re: Purchased Transactions & The New Partial Exemption GTS333
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,341
Galveston, TX
There are a lot of secondary market requirements that banks that want to participate in the secondary market have to do. Not sure what that has to do with reducing the regulatory burden. You want to sell loans, you meet the investor requirements. I do not see it as a related issue. What is not already in the file that you are selling? Nobody includes a HMDA LAR with the loans that they sell and nobody that sells these loans send a specific HMDA recap that I know of telling the investor how to report them. The HMDA information that the purchaser has to report is readily apparent in the files already. The fact that the investor has to include the loan on their LAR is not going to be impacted by whether the seller reports or not
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2192868 - 09/17/18 11:55 PM Re: Purchased Transactions & The New Partial Exemption GTS333
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Not sure what that has to do with reducing the regulatory burden.
I don't think this is worth arguing over, but it has everything to do with reducing regulatory burden. Numerous bankers explained to their Representatives about the burden of HMDA. Congress listened and passed a law that said to reduce the burden. If the burden isn't really reduced, nothing is accomplished. I'd liken it to disparate treatment. You might think it's okay, but the result is wrong. If the CFPB "reduces" what small banks have to report, but in the real world, small banks still have to collect and report to their investor, then they are still burdened.

What is not already in the file that you are selling?
It's all in the file, but the investors are requiring the small originator to hand them the data - at least from the clients I've heard from on this. The investor is not saying "I'll mine for the data and complete our LAR with it. They are requiring the originator to hand them all of this data.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#2192883 - 09/18/18 12:28 PM Re: Purchased Transactions & The New Partial Exemption GTS333
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,341
Galveston, TX
I am not really arguing, but there is no way the CFPB is going to bend on this one. The small banks that want to portfolio - they get a break. If they are selling their loans, well it is a business decision and business as usual - nothing changes on those. Whatever they have been doing this year to meet investor requirements will just remain in place. There is nothing more they need to gather for an investor that is not already in an investor file.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2192890 - 09/18/18 01:05 PM Re: Purchased Transactions & The New Partial Exemption GTS333
Adam Witmer Offline
Power Poster
Joined: Sep 2010
Posts: 2,643
Great discussion, David and Randy. I think the point here is that small reporters who sell on the secondary market need to have conversations with their investors to understand what they require. I would hate to see a small reporter try to pull the plug on collecting data that they have to go back and recreate for an investor at a later time. The good news (I guess) is that small reporters will still qualify for the exemption on some loans even if they must report full data for their secondary market loans, as they have the option to voluntarily report.
_________________________
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
www.compliancecohort.com

Return to Top
#2192896 - 09/18/18 01:37 PM Re: Purchased Transactions & The New Partial Exemption GTS333
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 80,341
Galveston, TX
"I would hate to see a small reporter try to pull the plug on collecting data that they have to go back and recreate for an investor at a later time."

Name one piece of HMDA data that a smaller reporter would have to recreate that is not already in a file that is prepared to secondary market standards? Additionally, a purchaser is already exempt from reporting certain data points. What do you think a purchaser does when they buy a loan that was originally made in 2016? There is no purchaser exemption from reporting the required 2018 data points on those either.

"The good news (I guess) is that small reporters will still qualify for the exemption on some loans even if they must report full data for their secondary market loans"

I am really confused by this statement. Why would an exempt small reporter have to fully report there secondary market loans on their own HMDA LAR. A purchaser could care less what the seller has reported.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2192898 - 09/18/18 02:02 PM Re: Purchased Transactions & The New Partial Exemption rlcarey
Adam Witmer Offline
Power Poster
Joined: Sep 2010
Posts: 2,643
Well, I really wasn't trying to debate but rather point out the need for small filers to talk to their investors. wink And I do agree with you, Randy, that the secondary market has always required more - it is a cost of doing business.

Originally Posted By rlcarey
Name one piece of HMDA data that a smaller reporter would have to recreate that is not already in a file that is prepared to secondary market standards?

I was referring to reporters that may have to manually create their LAR and manually compile data. Yes, the information is always in the file, but not necessarily on a silver platter (my term) that the secondary market may want.

Originally Posted By rlcarey
Why would an exempt small reporter have to fully report there secondary market loans on their own HMDA LAR. A purchaser could care less what the seller has reported.

They wouldn't have to but may choose to in order to have the "silver platter" ready for the investor. Even if they don't report it (which is what I would recommend), creating the silver platter for the investor would be the same amount of work.

The point I was trying to make (which apparently didn't happen) was that small reporters who sell on the secondary market should make sure they have conversations with their investors to ensure they understand their investor expectations.
_________________________
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
www.compliancecohort.com

Return to Top
#2192950 - 09/18/18 04:57 PM Re: Purchased Transactions & The New Partial Exemption GTS333
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Quote:
Name one piece of HMDA data that a smaller reporter would have to recreate that is not already in a file that is prepared to secondary market standards?

NMLSR ID
Introductory Rate Period
Non-Amortizing Features
Number of units

Also, although these might be in the file, how does the investor know what values the lender used to make the decision when it comes to
Income & Property Value

How you are accustomed to the method used by investors may be different than what I am seeing. Many investors require the originator to hand them a list of the HMDA data. It isn't as easy as "you'll find it in the file". IOW, the exemption doesn't provide any relief to the originator. I'd liken this to disparate treatment (not the intent, but certainly the outcome).

Quote:
The point I was trying to make (which apparently didn't happen) was that small reporters who sell on the secondary market should make sure they have conversations with their investors to ensure they understand their investor expectations.

Excellent point.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top