We received an application and when credit was run, it was decided that we could not do the loan. In this case, there was income stated on application, however, we did not even do any further analysis since the credit was so bad. Is it acceptable in this case to report income as NA for Hmda?

If you "relied on" income in any way in making your credit decision, I'm not sure why you wouldn't want to list the actual amount rather than NA. I suppose if you didn't rely on it at all, and you feel comfortable that you can prove that to an examiner, then yes - NA would work.

The technical answer is "NA" because you didn't use it in your analysis. As GTS333 is saying, it might be easier to simply list it rather than try to argue with an auditor/examiner that even though it's right there in front of you, you didn't use it.

I thought income was used or would have used. If they withdrew it before you denied them you would definitely have to report it. It makes no sense to not report when you deny and report when you withdraw. I'm not saying it has to make sense, but I've always read the below as if you have an income and the program they are applying for would consider income, then you report the income. Otherwise, institutions would never have to report income for borrowers with low credit scores. Nobody is doing further analysis on the income of borrower with a 500.

6. Income data - credit decision not requiring consideration of income. A financial institution complies with § 1003.4(a)(10)(iii) by reporting that the requirement is not applicable if the application did not or would not have required a credit decision that considered income under the financial institution's policies and procedures.

We report the income no matter what. But if, for example, the credit score is too low, officers do not figure the DTI. Therefore, we didn't rely upon it even though there is enough information in the file to get a preliminary ratio.

Inherent_Risk: You're stepping over the first rule and looking at a commentary. The first rule (from the regulation) is "report what you relied upon." If you didn't rely upon an income and decided to deny the loan, the answer is to report "NA." That's my point of the "technical answer."

I agree with David regarding the technical answer, the problem that I have run into with examiners on this is that they insist you considered it if you have it. It is very difficult to prove that you didn't take it into consideration...even if you didn't. Which I believe is the point of some of the other answers. It is easier to just always use it and report it.

The CFPB pretty clearly wanted this information. The preliminary rule specifically required it. In order to clarify what (not when) to report, they changed it. I don't disagree that you can read the current reg to not require the income when you deny and don't rely on it, but you'll be hard pressed to find somewhere saying that you report NA in this situation. I think "technically" its very ambiguous, and reporting won't get you in a fight with your examiner and NA very well might. Hopefully, they clean this up in the next rule.

From the preliminary rule: "The proposal revises the instructions in appendix A to be consistent with proposed § 1003.4(a)(10)(ii) and to provide additional guidance. Instruction 4(a)(10)(ii)–1 provides that the financial institution should report the gross annual income that it relied on in making the credit decision requiring consideration of income or, if the application was denied or withdrawn or the file was closed for incompleteness before a credit decision requiring consideration of income was made, the gross annual income collected as part of the application process."

From the Final: "Information concerning income on applications when no credit decision was made provides valuable data to understand access to credit and underwriting decisions. The Bureau recognizes, however, as suggested by commenters, that the proposal’s description of the requirement to report income in those circumstances created confusion about what income information to report. To respond to the concerns raised by the commenters, the Bureau is not adopting the language in proposed § 1003.4(a)(10)(ii) that describes reporting income on applications when no credit decision was made. Instead, the Bureau is retaining the language currently used in § 1003.4(a)(10) to describe what to report in that circumstance. The final rule provides that if a credit decision is not made, a financial institution reports the gross annual income relied on in processing the application for a covered loan that requires consideration of income. In that case, the financial institution should report whatever income information it was relying on when the application was withdrawn or closed for incompleteness, which could include the income information provided by the applicant initially, any additional income information provided by the applicant during the application process, and any adjustments to that information during the application process due to the institution’s policies and procedures. These adjustments may include, for example, reducing the income amount to reflect verified income or to eliminate types of income not considered by the financial institution. In addition, proposed comment 4(a)(10)(ii)-5, finalized as comment 4(a)(10)(iii)-5, is revised to clarify that a financial institution is not necessarily required to report the income information initially provided on the application. Rather, the financial institution may update the income information initially provided by the applicant with additional information collected from the applicant if it relies on that additional information in processing the application."

I also think it's informative that HMDA itself lists income with other demographic information and requires it for applicants. It is not just an underwriting field. It just happens to be the only DI field that can be used in underwriting.

304(b)(4): "the number and dollar amount of mortgage loans and completed applications involving mortgagors or mortgage applicants grouped according to census tract, income level, racial characteristics, age and gender;

The commentary states we should report the verified income of an applicant if that is what we relied on. If a borrower presents an application that includes income but then states that they don't report any income on their tax return (BSA was notified), should we report zero or what the borrower stated on the application? We're supposed to report what we relied on and what we relied on was zero since ultimately the income would have been unverifiable. I'm inclined to report what was on the application but I struggle with that since we didn't use that. They would have qualified if the income had been reported.

You are to report what you relied upon. I understand you to say that this is $0, so you should report that.

I'm assuming you denied this request. I'm also assuming you denied it for "unable to verify income." It only makes sense to me that you would report $0 for income as this will all tie together (that's what you relied upon but you couldn't rely upon the application income). If you reported the income from the application, then the reason for denial wouldn't make sense.

David, thank you for such a quick response! Agreed and yes, the AAN reason was income. That makes the DTO zero as well based on some other posts I've read.

Another application we truly need to report income as NA. This is because the source of repayment was depletion of an asset. I'm not sure how that affects what we report for DTI. Would DTI also be NA or 0 or neither?

Let me clarify, the borrower had no continuing income beyond when the application was submitted. The borrower was relocating, had no income lined up in the new city, but had assets that would be used to repay debt.

I agree Income would be reported as "NA".

The Commentary to §1003.4(a)(10)(iii) #4 says do 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… the ratio of the applicant’s or borrower’s total monthly debt to the total monthly income relied on in making the credit decision.

Also, the Commentary to §1003.4(a)(10)(iii) #6 says to report …not applicable if the application did not or would not have required a credit decision that considered income under the financial institution’s policies and procedures. …even if the institution received income information from the applicant.


I think DTI would also be "NA" because you wound't be relying on a ratio as prescribed by Reg C (Total Monthly Deb divided by Total Monthly Income).

You relied on the applicant having 0 income (and assumedly denied them for this reasons). I would report 0 for income and NA for DTI in both situations. I'm still not sure how dividing a number by 0 gives you a 0 DTI, but I have also seen that as answer given in several different places.

Inherent_Risk: Do you think income should be "0" or "NA"?

The commentary clearly states we should not include depletion of an asset as income and the FIG has that portion of the commentary in the NA category. I just am not sure about the DTI when you report income as NA. David's suggestion of NA seems logical (although we know that logic and regs don't often coincide).

I think it's tough. I can see NA (especially if this is a commercial transaction where procedures generally just say use what you have), but I'm assuming if the borrower would have had an income, you would have used it according to your procedures and reported it, which is why my gut would say 0. You did consider it, it just happened to be 0 and didn't contribute anything.

We're reporting 0, because neither of these situations are shown as a reason to report NA in the CFPB's reference chart. Also, if there is income from depletion of assets, we're reporting the DTI used in underwriting, which includes that income.