Hi - I have seen some threads about this but really no final answers and no response to my follow-up yet, so I'm starting a new post.

As you read, please keep in mind that our Adverse Action timing is fine (we sent the letters on time with reasons we thought were proper, but need to get a procedure going forward). Also please keep in mind that YES, negative income does happen (ours had negative AGI on their tax return). I saw these statements being questioned on other threads.

We have had some very odd situations come up in our Secondary Market (SM) the past month. Each is unique, but we are running into problems for what to report for: Reg B denial reason on the Adverse Action Notice, as well as Reg C fields for Income and DTI.

Here are the 3 scenarios:

• Customer applies with a stated income, but SM/investor rules do not allow it to be used, and therefore the income is "-0-". Would we say deny Reg B for "Other: No Income" or "Income Insufficient"? Would we report HMDA income as "-0-" or "NA"? Would we report HMDA DTI as "NA" since a percentage calculation cannot be made with a -0-?
• Customer applies with a stated income on a joint application, one customer having a positive (but low) income, and the other cusotmer having very negative income (YES, it is a negative AGI on the tax returns) and ultimately the income for the joint application is negative. A negative DTI is calculated by our LOS. Would we deny Reg B for "Other" No Income" or "Income Insufficient"? We are reporting HMDA income as its negative number (which is allowed in 2018). Would we report the DTI as the negative DTI % from our LOS or as "NA"?
• Customer applies with no income (unemployed; ex: co-applicant has good credit history but no income, and the primary applicant has bad credit history). Would we say deny Reg B for "Other: No Income" or "Income Insufficient"? Would we report HMDA income as "-0-" or "NA"? Would we report HMDA DTI as "NA"?

Thanks in advance.
If any of you have come across these situations I would love to hear how you are disclosing (AAN, HMDA Income, HMDA DTI).

Here's the bottom line: Report the income you relied upon. Also, the reason many struggle with negative income and yet you say you've seen it, you are using ADJUSTED Gross Income. That can be negative. Gross Income can never be negative - before adjustments.


If the underwriting won't accept their income to be used and you're left with $0, report HMDA as $0. Income was used and considered, so NA is not appropriate. I think the same is true for DTI. I believe you should report "0" for DTI. Reg B would be "income insufficient" or Other: Cannot accept your (type of) income" - filling in what it is that you cannot accept.


I agree with reporting income as a negative number and believe you should report the negative DTI. You made a credit decision based on this, so you should report it as you considered it. Reg B: "Income insufficient" is the reason, so state that.


Reg B: I would report "Income Insufficient". HMDA: Report income as $0 and the DTI as "0".

Thank you so much for your input David - I truly appreciate it.

Hello friends - I have a new situation and just need someone to think through it with me, please!

Customer applies and has sufficient income. File is going along smoothly until...CUSTOMER LOSES EMPLOYMENT!
Now income is $0. It is non-existent now.
Do you think the 3rd scenario fits this best (i.e. NO income)? Deny for "income insufficient". HMDA reports income $0 and DTI 0 as well?

And new follow-up question to these...even though we are using denial reason of "income insufficient..." do we still include on the Adverse Action Notice that "decision based on credit report"?

Thanks in advance.

You report the income you relied on. They (sort of) addressed this exact situation in the preamble to the 2017 HMDA amendments.

From the preamble to the 2017 final rule:
"Another [commenter] asked for guidance in reporting income as “0,” such as when an applicant becomes unemployed after applying for the loan....

...Finally, the Bureau notes that the 2015 HMDA Final Rule and the 2018 FIG do not include any language that would bar a financial institution from reporting an applicant's gross annual income as “0” or even a negative number when that is the accurate figure that it relied on."

I would.

Thanks for your input Adam!

Can I chime in here and ask what about the DTI? What would we report with no income?

Never mind. I neglected to read all the posting.

Would 0 DTI really be the correct answer when there is 0 income. 0 DTI says to me that the person has 0 debts. 0 income would result in an infinite DTI, which is a very different situation.

I want to say NA would be the best fit here because the DTI wasn't relied on if it can't be calculated, but I don't feel great about it.

Has anyone tried to submit a LAR with "0" income? I get a formatting error regarding income, but have confirmed there is a 0 (not blank) in the income field and when I upload a file without "0" income (changed to NA), there's no formatting issue.

I was wondering if there would be edits for 0 income. While the preamble I referenced earlier in this post seems to say that reporting an income of 0 is permissible, the FIG also says this:

1) Income must be either a positive or negative integer rounded to the nearest thousand or NA, and cannot be left blank.

I'm not a math expert, but I'm not sure that 0 is a "positive or negative integer."

Are you getting this error on software or on the CFBP's system? Anyone else have issues?

We have a validity edit flagged in our software, which I bypassed to see if I would get it from the CFPB as well. Then we received the formatting error from the CFPB, so didn't get as far as the edits. I agree 0 isn't a "positive or negative integer" so I guess that leaves us with NA as our only option.

Update- turns out I was looking at the wrong line in the text file and the formatting issue was not caused by the 0 income. After fixing the real income formatting issue and returning income to 0 on this record, I was able to upload the file with no formatting errors and no validity edits from the CFPB. Still had to bypass the validity edit from my software.

We submitted yesterday with a handful of files showing $0 (from adopting the procedures recommended by David much earlier in this thread). It went just fine. Our software is very thorough (and not shy) about throwing out validity, quality, or their own error alerts, and they did not generate any for reporting $0 in those situations.

We're all just doing the best we can good luck out there.

Thanks for the clarification GNunn and additional confirmation Banker K.

Has anyone received any guidance or discussed with a regulator the situation of what to report for DTI when income is reported as 0? Reporting income as 0 makes total sense when that is truly the income that was used, but reporting DTI as 0 because on these I can see both sides of why this doesn't make sense, and why some say it does. I'm on the fence and we have a handful of files where we have 0 income and we are looking for clarification/opinions around reporting the DTI on these.