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#2197207 - 11/02/18 05:32 PM Income not relied upon
angela aniol Offline
Junior Member
Joined: Nov 2017
Posts: 48
This seems like a very confusing part of HMDA. If we have a loan with a borrower who has assets derived from annuitization or depletion of an asset, I understand that we adjust our reportable income by removing that amount from the LAR. Has anyone been doing this or have had many loans that require this change to the reportable income?

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#2197261 - 11/02/18 09:08 PM Re: Income not relied upon angela aniol
hmdagal Offline
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hmdagal
Joined: Dec 2002
Posts: 3,841
We make the adjustment for potential annuitization or depletion of assets. Current annuitization is included in income. We don't see a lot of this, and our LOS does the calculation for us as long as the income source is correctly identified.


4. Income data - assets. A financial institution does not include as income amounts considered in making a credit decision based on factors that an institution relies on in addition to income, such as amounts derived from underwriting calculations of the potential annuitization or depletion of an applicant's remaining assets. Actual distributions from retirement accounts or other assets that are relied on by the financial institution as income should be reported as income. The interpretation of income in this paragraph does not affect § 1003.4(a)(23), which requires, except for purchased covered loans, the collection of the ratio of the applicant's or borrower's total monthly debt to the total monthly income relied on in making the credit decision.


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#2197263 - 11/02/18 10:47 PM Re: Income not relied upon angela aniol
angela aniol Offline
Junior Member
Joined: Nov 2017
Posts: 48
HMDAgal, Are you using Encompass? If so, what screen in Encompass is the adjustment made. I think this would be a rate occurrence, but need to stay on top of it. I have read the Reg you quote above. Just was curious how others are handling it.

Thank you.

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#2197300 - 11/05/18 04:15 PM Re: Income not relied upon angela aniol
hmdagal Offline
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hmdagal
Joined: Dec 2002
Posts: 3,841
We don't use Encompass. The LOS that we use has a HMDA screen that shows the correct income. The income screens the UW uses list each source of income, and if it's from annuitization of assets it is excluded from the income on the HMDA screen, but included in the DTI calculation.

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#2197331 - 11/05/18 06:34 PM Re: Income not relied upon angela aniol
angela aniol Offline
Junior Member
Joined: Nov 2017
Posts: 48
Thank you hmdagal

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