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#2200444 - 12/12/18 03:50 PM Small Filer Exemption (state)
newyork Offline
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If we fall under the small file exemption and have properties that will be reported to HMDA on a MSA/MD area where we have a branch, do we include the State? or not include the State since we fall under the exemption?

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#2200461 - 12/12/18 04:52 PM Re: Small Filer Exemption (state) newyork
rlcarey Online
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State does not fall under the exempted fields.
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#2200468 - 12/12/18 05:09 PM Re: Small Filer Exemption (state) newyork
Adam Witmer Offline
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The state field is a mess when you dig into it. That said, you will typically need to include the state code, even if you are using the partial exemption. Here is a Q&A I wrote for a class on the HMDA partial exemption:

Q7: Is the state field (state abbreviation) exempt from reporting or do we need to report the state abbreviation under the property address and also the state code for the geocoding information?

A: There has been quite a bit of confusion over the state field and this is actually a fairly complicated topic.

First, it is important to understand that the state code is required twice on the new version of the LAR: once under the property address as an abbreviation and once under the geocoding information as part of the Federal Information Processing Standards (FIPS) county and census tract codes.

The challenge with the CFPB HMDA changes is that the new validity edit (V-709) for property address appears to only exclude the street address, city, and zip and does not appear to exclude the state abbreviation. Therefore, this would initially appear to say that the State field is not exempt.

When we review the actual Regulation and Interpretive and Procedural rule, however, we will find that, while the state field is not technically exempt, it does not necessarily need to be provided for every single LAR entry. To explain, CFPB guidance is clear that the property address requirements of 1003.4(a)(9)(i) - which include the state field - are included in the partial exemption. On the other hand, the state disclosure requirement found in 1003.4(a)(9)(ii)(A) (which is part of the longstanding “geocoding” requirements) is not included in the partial exemption and are unchanged by the Act. This tells us that we only have to worry about the “geocoding” requirement found in 1003.4(a)(9)(ii)(A) which requires the following:

(ii) If the property is located in an MSA or MD in which the financial institution has a home or branch office, or if the institution is subject to paragraph (e) of this section, the location of the property by:
(A) State;

The commentary to Regulation C expands upon this as follows:

"1. Optional reporting. Section 1003.4(a)(9)(ii) requires a financial institution to report the State, county, and census tract of the property securing the covered loan or, in the case of an application, proposed to secure the covered loan if the property is located in an MSA or MD in which the financial institution has a home or branch office or if the institution is subject to § 1003.4(e). Section 1003.4(a)(9)(ii)(C) further limits the requirement to report census tract to covered loans secured by or applications proposed to be secured by properties located in counties with a population of more than 30,000 according to the most recent decennial census conducted by the U.S. Census Bureau. For transactions for which State, county, or census tract reporting is not required under § 1003.4(a)(9)(ii) or (e), financial institutions may report that the requirement is not applicable, or they may voluntarily report the State, county, or census tract information."

As you can see from 1003.4(a)(9)(ii) and its associated commentary, the state field (as well as the county and census tract of the property) are only required in three cases: 1) when the property is located in an MSA or MD in which the financial institution has a home or branch office, 2) if the financial institution optionally chooses to report the information found in 1003.4(a)(9)(ii) when the property is outside of an MSA or MD where they have a branch or home office, and 3) if the institution is a large CRA reporter subject to 1003.4(e). The bottom line is that the State field can be reported for every LAR entry, but is not technically required every time (for most partially exempt reporters).

All of that said, it is important to understand that the CFPB has been providing informal responses stating that the state field is not exempt, which is a misleading statement if not fully taken in context. While the state field is not technically exempt - as it must be included when the county and census tract codes are provided - it would not technically be required on a loan where the property was not in an MSA/MD where the financial institution had a branch and the financial institution also chose to opts-out of reporting the county and census tract codes. Unfortunately, quite a few in the industry have taken the general and informal responses from the CFPB as stating that the state field must be reported on every loan. Again, we do not believe that this is technically correct as the state field is only required when county and census tract codes (the other elements of the Property Location field) are also provided on a LAR entry.

The result of this confusion is that, while the state field shouldn’t be required for every LAR, there is a good chance that some examiners and/or vendors will require the state field for every LAR entry. Therefore, some financial institutions may choose to just optionally report the state field (and other applicable data fields within the larger data points) for every LAR entry and not worry about utilizing the opt-out option found in 1003.4(a)(9)(ii).

We did contact the CFPB and were able to confirm our thinking that there are some specific instances when the State field could be coded as NA and not provided.
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All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2200511 - 12/12/18 07:57 PM Re: Small Filer Exemption (state) newyork
David Dickinson Offline
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This is a mess. After the small filer exemptions came out, we edited our training outline. Here is the page on address. I emailed this to the CFPB and they agreed with how we had it broken out and stated:

12. Property Address and Location:
a. Report the address of the property that secures (or is proposed to secure) the loan or line. [§1003.4(a)(9)]

b. Property Within Your MSA:
Include the following if the property is located in a metropolitan statistical area (MSA) where the bank has a home or branch office. [§1003.4(a)(9)(ii)] …financial institutions may report that the requirement is not applicable… (N/A) [Commentary to §1003.4(a)(9)(ii) #1]

i. Street Address (*Small Filers – “Exempt”)
ii. City (*Small Filers – “Exempt”)
iii. Zip Code (5 or 9 digit) (*Small Filers – “Exempt”)
iv. State
v. County (5-digit code)
vi. Census Tract (only counties with populations of 30,000+)

c. Property Outside Your MSA
*Small Filers are exempt from reporting address information for properties outside an MSA; however, if data is voluntarily provided for any field (e.g. street address), Small Filers must complete all fields for the data point (i.e. street address, city, zip, and state).
If the property is located outside a metropolitan statistical area (MSA) where the bank has a home or branch office, you need only report the following. You …may voluntarily report the…county, or census tract information [§1003.4(a)(9)(i)].

i. Street Address
ii. City
iii. Zip Code (5 or 9 digit)
iv. State

d. CRA - Large banks
If the property is located outside any MSA, you must provide all information (6 items) in 1.b. for small business and community development loans, even if you qualify as a Small Filer. [§1003.4(e)]
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#2201645 - 12/28/18 05:05 PM Re: Small Filer Exemption (state) newyork
jmyhmda Offline
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The Compliance Reporter software that our bank uses offers a "Set all Exempt" button to convert our data, after setting all exempt fields I see that on a property located in an MSA/MD where we do not have a branch, the fields show:

Street - Exempt
City - Exempt
State - XX (2 digit abbreviation code)
County - NA
Census Tract - NA

Would this be the correct entries or should those entries with information (the State code, County and Census Tract) be changed to Exempt?

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#2201656 - 12/28/18 06:01 PM Re: Small Filer Exemption (state) newyork
David Dickinson Offline
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This is a tricky area and one that is easily confused (even by CFPB personnel). Here's how we explain it in our HMDA Training outline:


12. Property Address and Location:
a. Report the address of the property that secures (or is proposed to secure) the loan or line. [§1003.4(a)(9)]


b. Property Within Your MSA:
Include the following if the property is located in a metropolitan statistical area (MSA) where the bank has a home or branch office. [§1003.4(a)(9)(ii)] …financial institutions may report that the requirement is not applicable… (N/A) [Commentary to §1003.4(a)(9)(ii) #1]

i. Street Address (*Small Filers – “Exempt”)
ii. City (*Small Filers – “Exempt”)
iii. Zip Code (5 or 9 digit) (*Small Filers – “Exempt”)
iv. State
v. County (5-digit code)
vi. Census Tract (only counties with populations of 30,000+)


c. Property Outside Your MSA
*Small Filers are exempt from reporting address information for properties outside an MSA; however, if data is voluntarily provided for any field (e.g. street address), Small Filers must complete all fields for the data point (i.e. street address, city, zip, and state).
If the property is located outside a metropolitan statistical area (MSA) where the bank has a home or branch office, you need only report the following. You …may voluntarily report the…county, or census tract information [§1003.4(a)(9)(i)].

i. Street Address
ii. City
iii. Zip Code (5 or 9 digit)
iv. State

d. CRA - Large banks
If the property is located outside any MSA, you must provide all information (6 items) in 1.b. for small business and community development loans, even if you qualify as a Small Filer. [§1003.4(e)]

---------------------
If you do not have an office in a MSA, the State, County and Census Tract are all exempt. However, if you are a large CRA bank, you have to provide all 6 location items.
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#2201668 - 12/28/18 06:32 PM Re: Small Filer Exemption (state) newyork
jmyhmda Offline
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Thank you for clearing that up, I was leaning toward marking them exempt but not 100% confident.

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#2201840 - 01/02/19 02:22 PM Re: Small Filer Exemption (state) newyork
newyork Offline
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So for a small filer that has the property outside an MSA, and chooses not to report any voluntary information, the entries will be:

street address: Exempt
City: Exempt
Zip code: Exempt
State: NA
county: NA
Census Tract: NA

and for a small filer that has a property address inside an MSA, and chooses not to report any voluntary information, the entries will be:
Street address: Exempt
city: Exempt
zip code: Exempt
State: NY
County: anywhere
Census: 12345


does this look correct?

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#2201841 - 01/02/19 02:33 PM Re: Small Filer Exemption (state) newyork
Adam Witmer Offline
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Your summary looks correct with two items of clarification:

1) A large CRA reporter is required to provide the state/county/census tract.

2) For loans where the property is in an MSA where you have a home/branch office, the state/county/census tract are required (as reporting is not optional when the property is in an MSA where you have a home/branch office).
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Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2201860 - 01/02/19 03:27 PM Re: Small Filer Exemption (state) newyork
David Dickinson Offline
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David Dickinson
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Central City, NE
Quote:
So for a small filer that has the property outside an MSA, and chooses not to report any voluntary information, the entries will be:

street address: Exempt
City: Exempt
Zip code: Exempt
State: NA
county: NA
Census Tract: NA

I don't think you want to say "NA" for State, County and Census Tract. You want to report "Exempt" for all 6 items.
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#2201873 - 01/02/19 04:18 PM Re: Small Filer Exemption (state) newyork
Adam Witmer Offline
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Originally Posted By David Dickinson
I don't think you want to say "NA" for State, County and Census Tract. You want to report "Exempt" for all 6 items.

David, I think newyork is asking about both fields that are exempt as well as fields that are not exempt, but are optional reporting.

So, to clarify, State, County and Census Tract don't have an "Exempt" option in the 2019 FIG leaving NA as the only option when not reporting an alphanumeric entry. Also, these three fields technically aren't exempt but are optional reporting when the loan does not have a property in an MSA/MD where the bank also has a home/branch office. In other words, the Property Location data fields are not exempt but voluntary/optional when applicable (i.e. not in an MSA), like they always have been, meaning that "NA" is the correct code/entry rather than "Exempt".

Agree?
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Adam Witmer, CRCM

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

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#2201880 - 01/02/19 05:25 PM Re: Small Filer Exemption (state) newyork
David Dickinson Offline
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Central City, NE
You're right Adam. I didn't even look at the FIG. I just "shot from the hip" with that last post because I'm seeing several people that are reporting "NA" in exempt fields.

Thanks for correcting me on this.
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#2201884 - 01/02/19 05:34 PM Re: Small Filer Exemption (state) newyork
Adam Witmer Offline
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I completely get it, David. wink And that is a great reminder for anyone reading this that we can't just report NA for exempt fields as the FIG provides specific instructions for each data field as to how the exemption should be noted. Great point.
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Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2201937 - 01/02/19 11:46 PM Re: Small Filer Exemption (state) David Dickinson
GTS333 Offline
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Originally Posted By David Dickinson

d. CRA - Large banks
If the property is located outside any MSA, you must provide all information (6 items) in 1.b. for small business and community development loans, even if you qualify as a Small Filer. [§1003.4(e)]


I am assuming you're talking about CRA data collection for the 6 items in your 1.b., correct? So, you'd still be reporting items i-iii as Exempt for HMDA purposes. Do you have a citation to the source for that please? Thanks!!
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#2201944 - 01/03/19 12:57 PM Re: Small Filer Exemption (state) newyork
Adam Witmer Offline
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The rules say that if you are a large CRA reporter, you must always report BOTH 1) the Property Location data point (which includes the data fields of State, County, and Census Tract) as well as 2) the Property Address data point (which includes Street Address, City, State, and Zip). In other words, if a large CRA reporter is exempt (which is probably pretty rare), they do not have an option to not report the Property Location and Property Address as both must be reported (i.e. 6 items David referenced).

The citation for this is found in 1003.4(e) which says:
"(e) Data reporting for banks and savings associations that are required to report data on small business, small farm, and community development lending under CRA. Banks and savings associations that are required to report data on small business, small farm, and community development lending under regulations that implement the Community Reinvestment Act of 1977 (12 U.S.C. 2901 et seq.) shall also collect the information required by paragraph 4(a)(9) of this section for property located outside MSAs and MDs in which the institution has a home or branch office, or outside any MSA."

As you can see, the rule says that large CRA reporters must collect "the information required by paragraph 4(a)(9)." For clarification purposes, paragraph 4(a)(9) refers to BOTH the Property Address data point (4)(a)(9)(i) AND the Property Location data point (4)(a)(9)(ii). I'm not sure if this was intentional by the CFPB, but the way this reads, it says that large CRA reporters must report the Property Address and Property Location - which indirectly says that the exemption can't be used for these two fields for large CRA rerpoters.

Also to clarify, the Property Location (and associated data fields) is not technically an exempt data point - it is optional reporting in cases where a property is located outside of an MSA/MD where the financial institution has a branch/main office. In other words, the Property Location is NOT optional in two cases: 1) If the property securing a loan on a LAR entry is located in an MSA/MD where the financial institution has a branch/main office and 2) for large CRA reporters.
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Adam Witmer, CRCM

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

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#2201955 - 01/03/19 03:13 PM Re: Small Filer Exemption (state) Adam Witmer
GTS333 Offline
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Ah, I see! Thank you - I had missed that. Thanks so much for the clarification.
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#2202344 - 01/08/19 06:39 PM Re: Small Filer Exemption (state) newyork
GTS333 Offline
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Does anyone know the citation in regulation BB that addresses which banks and savings associations are required to report data on small business, small farm, and community development lending under the CRA? I'm not as familiar with CRA and am trying to nail down who those institution are, as the discussion above suggests they are "large", but I would like more detail.

Thank you!!
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#2202353 - 01/08/19 07:07 PM Re: Small Filer Exemption (state) newyork
Adam Witmer Offline
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See 228.42 of Regulation BB for CRA reporting requirements. By definition in 228.12, large banks and have an asset size threshold for 2019 less than 1.252 billion.
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Adam Witmer, CRCM

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

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#2204000 - 01/25/19 04:06 PM Re: Small Filer Exemption (state) newyork
GTS333 Offline
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I wanted to provide a quick update on this topic after talking with the CFPB's regulatory attorneys recently. I had submitted this issue to the CFPB through their regulatory question portal online.

While the language of section 1003.4(e) appears to encompass all of 1003.4(a)(9), the CFPB's view around the partial exemption does not align with that reading. Instead, they've informally noted that banks and savings associations that are required to report data on small business, small farm, and community development lending under CRA (i.e. are subject to section 1003.4(e)), that also qualify for the partial HMDA exemption, may report the “Property Address” data points for Section 1003.4(a)(9)(i) (including street, city and zip code) using their exempt codes, rather than with actual data. The Property Location data points (including State, County and Census Tract) must of course still be reported using actual data, as those data points are not covered by the partial exemption.

This position from the Bureau contradicts the approach outlined by several folks above, so I wanted to pass that information along.
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#2204009 - 01/25/19 04:59 PM Re: Small Filer Exemption (state) newyork
Adam Witmer Offline
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Thanks for passing that info along, GTS333. It is always good to hear what the CFPB is saying to others about new rules we are all trying to work through.

The concern I have with the approach the CFPB gave is that 1003.4(e) specifically references 1003.4(a)(9) rather than just 1003.4(a)(9)(ii) (property location). Due to this, the Regulation encompasses both 1003.4(a)(9)(ii) (property location) AND 1003.4(a)(9)(i) (property address). Whether or not they intended it this way (and I would speculate that they probably did not intend this), the way the rule is written clearly covers all of 1003.4(a)(9), which includes both the property address and property location.

As you know, verbal (nonbinding, unofficial, etc.) opinions don't help when an examiner (or even an entire regulatory agency) takes a different approach, and in this case, a literal reading of the rule. Therefore, including all of 1003.4(a)(9)(ii) is the conservative approach which will guarantee an avoidance of examiner criticism - which is exactly why I (and others) have taken the position that I have.

That said, I would think that this issue will be somewhat rare as I don't know of too many large CRA reporters that also qualify for the partial exemption.
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Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2204025 - 01/25/19 05:28 PM Re: Small Filer Exemption (state) newyork
GTS333 Offline
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Thanks Adam - I don't disagree with you that a strict reading of Regulation C covers both, and that's exactly the question I posed to the Bureau. Remember however that the partial exemption came after the current version of Regulation C was updated, and has been implemented entirely by a interpretive/procedural rule from the Bureau which does not modify Regulation C. The Bureau has technical authority to interpret and enforce Regulation C however they see fit, which they've done here. So, if they are telling me that's their interpretation of how the exemption should be applied to existing Reg. C, I'm personally going to go with it. Have you heard of any other agency or examiner taking a contrary approach so far?

Though, I understand you're point and view on taking the most conservative approach, and I agree that the number of institutions that qualify for the partial exemption and are large CRA filers seems few if any, so this is probably a moot point. The best solution would of course be for the CFPB to update Reg. C to incorporate its views on the partial exemption.
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#2204035 - 01/25/19 05:46 PM Re: Small Filer Exemption (state) GTS333
Adam Witmer Offline
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All good points, GTS33 and I really don't disagree with you. It would absolutely be best for the CFPB to update Regulation C (which they are planning to do for the partial exemption). As you know, my point on the conservative approach is based off the unofficial, non-binding, verbal reply you got, which can make for a challenging argument when someone takes a different approach - though that doesn't mean you are wrong. Again, I hope this gets addressed in the next revision of Regulation C and I will be sure to include this in my comment letter if it doesn't. wink

Originally Posted By GTS333
Have you heard of any other agency or examiner taking a contrary approach so far?

I haven't heard of any examiners even reviewing this yet as we are still so early in the game and they have said they won't be criticizing banks for their 2018 data. It's the 2019 data that worries me....
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Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
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#2204146 - 01/28/19 05:44 PM Re: Small Filer Exemption (state) newyork
David Dickinson Offline
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Central City, NE
My discussions with a CFPB representative said the CRA rules trump the Small Filer exemption. IOW, if you are a small filer, but make a loan to a small business or community development loan (ag loans are all exempt from HMDA, so this isn't a concern), you DO NEED to report all address info. The Small Filer exemption only repealed those parts of HMDA, not the CRA requirement found in §1003.4(e) of HMDA.
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#2204214 - 01/28/19 11:03 PM Re: Small Filer Exemption (state) newyork
GTS333 Offline
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Hi David - Can you please help me understand this a little more. The requirement in 1003.4(e) is strictly a HMDA requirement, and relates to the data that gets included in your annual filing. Are you talking about storing the 1003.4(a)(9) data for CRA purposes and making it available to examiners? That I suppose I can understand, but I'm not sure I see how it forces this data to be included in your HMDA data (but I may just be missing the specific CRA requirement). Thanks!
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#2204258 - 01/29/19 03:42 PM Re: Small Filer Exemption (state) newyork
David Dickinson Offline
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Central City, NE
If you are a "small filer" for HMDA, but a "Large bank" for CRA, the requirements of §1003.4(e) apply. This section requires reporting of all 6 property location info. The regulatory relief act exempted parts of §1003.4(a)(9), but not §1003.4(e).
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