The guy I talked to mentioned the Loan Scenarios was developed more by the engineering side and is mostly a document on getting the pipe delimited text right. He mentioned not to rely on it very much at all for actual HMDA reporting regulations.

I know this is in older post and I have read through a couple of these threads. I get what we have to report visual/surname on a face to face. Encompass is automatically reporting 2 for this on non-face to face applications. My question though, even though the NA guide doesn't say it, is that if the borrower on a non-face to face application does not give the loan officer the information, should that be reported as NA, since the data was never actually captured? I just did a review on some of our data and hit a road block as to me it does not make sense to report 2, as the data was never received. Probably overthinking it, being stuck at work on Christmas Eve and all.

I know some are reporting 3- not applicable for that field in the cases where it's not face-to-face and they don't provide, but I'm standing by my position that it should be 2- not collected on the basis. Code 3 should only be used, based on the CFPB reference chart, for purchased loans, applicants that are not natural persons, or application received prior to 1/1/2018.

To report not applicable, enter “Code 4” for Ethnicity of Applicant or Borrower and “Code 3” for Ethnicity Collected on the Basis of Visual Observation or Surname for:
- Purchased covered loans for which the financial institution chooses not to report the applicant’s or co-applicant’s ethnicity, race, and sex, appendix B;
- Covered loans or applications when applicant or co-applicant is not a natural person, appendix B
NOTE: Use Code 3 for Ethnicity Collected on the Basis of Visual Observation or Surname if the financial institution received the application prior to January 1, 2018, and the financial institution chooses not to report whether the ethnicity of the applicant or borrower, or of the first co-applicant or co-borrower, as applicable, was collected on the basis of visual observation or surname, Comment 4(a)(10)(i)-2

I agree with burke. I also agree it doesn't make sense to report "2" when an application is not taken in person. However, Code 3 (NA) should only be used for purchased loans and loans to non-natural persons. Therefore, you are left with a "yes" or "no" answer. Since you didn't complete the info on basis of visual observation, the answer is "no" (or code 2).

If you look at the filing guide Edit Check V632 - If Ethnicity of Co-Applicant or Co-Borrower Collected on the Basis of Visual Observation or Surname equals 2; then Ethnicity of Co-Applicant or Co-Borrower: 1 must equal 1, 11, 12, 13, 14, 2 or 3, and cannot be left blank, unless an ethnicity is provided in Ethnicity of Co-Applicant or Co-Borrower: Free Form Text Field for Other Hispanic or Latino.

I understand the confusion - because it wasn't taken in person anyway!

I agree with David and burke. The only option available is a yes or a no, you just have to use the logic here. If it is not face-to-face and doesn't qualify for any of the reasons for reporting 3 in the NA guide, all you are left with is code 2.

Thanks all. Unfortunately I haven't been able to run any edit tests as we are working out some system kinks. I will take your advise. Thanks again and have a happy new year.

Truffle, do you have any source docs for this 'clarification'?

Is this still holding true - has anyone heard any official (or unofficial - or anything, really) at this point clarifying the 1 vs. 2 when an application is not taken in person?

I still report it as stated above.

Just finished a HMDA exam for 2018 data and they didn't even look at that field. We're still using 2 and not 3.

QuestSoft has determined that it should be 2. It errors out if I put 3. If I had my druthers, I'd report 3 because NA logically answers the question. But, as we all know, since when is the gubmint logical?

They added in 'surname' as well now, so technically you could fill it out based on the surname in a non-face-to-face transaction, which is why we use a 2 and not a 3.

Anyone coding based on surname and not visual?

Yeah, thought so.

Surname was there with old HMDA too and it was clear under the old and new rules that surname could only be used in conjunction with a face-to-face application.

CloudShape, you're not allowed to fill in on a non-face to face application. If it comes to you blank, then you report 'information not reported.' It doesn't matter if you think you can guess based on the surname or even if it's your mother's application and she left it blank. Reg C requires you to capture the information the borrower provides. The CFPB ruled that allowing borrowers to self-identify using newly expanded categories and requiring lenders to identify (only when borrowers choose not to) using today’s limited categories is the best balance of consumer protection and lender regulatory burden.

I stand corrected. The way it is worded is visual OR surname so I thought that had changed. We have never filled it in based on surname and I am not sure who would or why. But we do use 2 based on the FIG.

I don't want to be crass here, but i think surname has its place in the DI gathering process. Someone who looks the way they look (especially a male, since there is no married name to worry about) with the last name of "Hernandez" can lead you down a different DI path than a person looking exactly the same with a last name of "Bhattacharya".

I second raitchjay above. Surname definitely can play into the LO's choice when face to face applicant declines to give information.

Is this still holding true - has anyone heard any official (or unofficial - or anything, really) at this point clarifying the 1 vs. 2 when an application is not taken in person?

We had our exit interview this morning for our HMDA Data Validation for the 2017 & 2018 reporting years. There was only 1 finding. The number of units was entered incorrectly to the LAR.

FWIW for non face-to-face applications we report Code 3 - NA for whether the information was determined by visual observation. This process was not questioned and I would estimate 65-70% of our applications are non face-face applications.

to the best of my knowledge, QuestSoft will not let me enter 3. I'll have to try again on the 2020 LAR.

Interesting! Thank you for sharing. It seems like (for now) the examiners aren't picking on this.

Really? I have QuestSoft and i'm 99% certain that i record those kinds just as Dan does.

really? Maybe there's been an update and I'm still stuck in pre-update mode. I'll try it and see.

Dan: Thanks for letting us know. That doesn't surprise me as my discussions with the CFPB and various regulators have indicated they aren't going to cite this one way or the other until the CFPB clarifies it. I'm surprised they haven't clarified it by now (every time I talk with the CFPB, they say they are going to "soon").

Whenever I mark an entry in QS as "taken by telephone" or some other method besides face-to-face, it changes all of my visual observation answers to 2s.

^^^this.