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#2262180 - 11/05/21 04:08 PM Income required for Purchased loans
Compliance Nut Offline
100 Club
Joined: Feb 2016
Posts: 118
If a loan is reported for both CRA and HMDA, does the income have to be reported for HMDA, or can NA be reported (which is how we've been doing it for years), but a new CRA officer is saying that the gross annual income must be reported on the HMDA LAR. The CRA officer is saying we need to report income on our purchased loans in order to get CRA credit.

This doesn't make sense. Has anyone ever heard this?

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#2262266 - 11/08/21 09:01 PM Re: Income required for Purchased loans Compliance Nut
Len S Offline
Diamond Poster
Joined: Oct 2004
Posts: 1,964
Connecticut
The only loans that are reported for HMDA and CRA are multifamily affordable housing which is reported as a multifamily mortgage under HMDA and Community Development under CRA. Income is not reported in either situation.

On the other hand, when you purchase a HMDA mortgage you are not required to report income, but you can optionally reported. We recommend to our client that they capture the information and then determine if it helps or hurts CRA performance (under the borrower characteristics test) and voluntarily report it when it helps and not report it when it doesn't help.
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#2262271 - 11/09/21 01:39 AM Re: Income required for Purchased loans Len S
Compliance Nut Offline
100 Club
Joined: Feb 2016
Posts: 118
Len, can you elaborate on what you mean by "and then determine if it helps or hurts CRA performance (under the borrower characteristics test) and voluntarily report it when it helps and not report it when it doesn't help."? I am fairly new to CRA, so forgive me. :0)

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#2262272 - 11/09/21 03:52 AM Re: Income required for Purchased loans Compliance Nut
Len S Offline
Diamond Poster
Joined: Oct 2004
Posts: 1,964
Connecticut
Since reporting income is not required for purchased loans when you report those loans the omission of the borrower's income dilutes your "penetration rate" under the borrower characteristics test. Therefore, not reporting the income on purchased loans dilutes your performance lending to LMI borrowers. However, if you review those loans and determine that a good many of them were to LMI borrowers (that's one reason why the big banks purchase HMDA loans - they augment their performance) then collecting and reporting that information can improve your performance.
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CRA Exam Preparation, CRA Performance Evaluations, Key Performance Benchmarks, & maps

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