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#2216051 - 06/19/19 06:57 PM HMDA reportable loan to a TBD LLC
CTbankerguy Offline
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We recieved a commercial loan application from an LLC that was to be formed prior to closing. It was for a purchase of a dwelling and is HMDA reportable.

the loan was declined and we entered the demographic information as NA as it was to be an LLC. Auditors have advised that we should have the demographic information of the quarantor as the borrower (the LLC) was never formed before we turned down the loan. We do not obtain demographic info on the guarantors when they are not the applicant. Should we have reported the guarantor as the borrower in this case when the intention was to apply as an LLC it just had not been formed?

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#2216053 - 06/19/19 07:00 PM Re: HMDA reportable loan to a TBD LLC CTbankerguy
Tater Offline
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Missouri
My thought process would have been identical to yours...did the auditors cite a portion of Reg C that drove that interpretation?
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#2216057 - 06/19/19 07:37 PM Re: HMDA reportable loan to a TBD LLC Tater
CTbankerguy Offline
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no they did not.

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#2216059 - 06/19/19 07:51 PM Re: HMDA reportable loan to a TBD LLC CTbankerguy
raitchjay Online
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OK
Not saying this is right, wrong, or indifferent, but perhaps they are looking at it as there can be no "guarantor" for an LLC that doesn't yet exist. IOW, maybe they're saying you should have taken the application in the names of the individuals, and then if/when the LLC was formed, you could have amended the application at that time. Personally, that's probably how i would treat such an application here.
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#2216354 - 06/24/19 08:57 PM Re: HMDA reportable loan to a TBD LLC CTbankerguy
David Dickinson Offline
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Central City, NE
I can see your point but there are two sides to this. Neither makes 100% sense:

1. How can an LLC apply, if it doesn't exist? I think a person applied and said "I wish to form an LLC." This is what your auditors are saying;

OR

2. If the loan officer would have made the loan, the LLC would be formed and the loan would have been made to the entity. Having Demographic Info on the guarantor(s) would be wrong. (this is a bit of an assumption, but I believe this is what you would have in the end).
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#2216404 - 06/25/19 05:15 PM Re: HMDA reportable loan to a TBD LLC CTbankerguy
raitchjay Online
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OK
My counter to that would be that they wouldn't have been guarantors when they applied....they would have been the applicants. If/when the LLC was formed, then the application could have been amended at that time. Just how i would handle it in my shop.
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#2216503 - 06/26/19 02:47 PM Re: HMDA reportable loan to a TBD LLC CTbankerguy
David Dickinson Offline
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Central City, NE
You can't go wrong with raitchjay's approach. You can go wrong with the approach that treats the applicants like an entity even though it hasn't been formed yet (like your auditors are saying).
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#2218714 - 07/30/19 12:56 PM Re: HMDA reportable loan to a TBD LLC CTbankerguy
CTbankerguy Offline
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Joined: Aug 2015
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Thanks for your imput we are going to go with your suggestion Raitchjay. thank you for the imput David and Raitchjay

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