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#2271000 - 05/29/22 01:59 AM GMI on loan application for HMDA exempt loan
MAFCCons Offline
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My company is a non-bank lender who finances agricultural lending. Some of that is consumer lending so we will quite often have a consumer dwelling secured loan with agricultural property (poultry farm, etc.). I understand that Reg B requirement to collect GMI on purchase or refinance of primary residence. However, should our loan application have the GMI (DI) information if the loan would be exempted under HMDA.

Example: Home Improvement loan for primary residence on 150 acre poultry farm. Consumer purpose, secured by dwelling but exempt for HMDA since ag property. It is not a purchase or refinance so Reg B also not applicable. Is it a violation to collect that information if we use a standard URLA for our consumer transactions?

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#2271007 - 05/31/22 12:59 PM Re: GMI on loan application for HMDA exempt loan MAFCCons
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
Is it a violation to collect that information if we use a standard URLA for our consumer transactions?

It would be a violation for collecting the information, not using the application. However, regularing using the application that request the DI for those transactions would jeopardise any defense you may have that the information is inadvertently being collected.

From 1002.13(b) - 6. Inadvertent notation. If a creditor inadvertently obtains the monitoring information in a dwelling-related transaction not covered by § 1002.13, the creditor may process and retain the application without violating the regulation.

If you are going to regularly use the application for "exempt" transactions then the key will be to have all persons taking an application to be fully trained for when they are to collect the DI.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2271016 - 05/31/22 02:31 PM Re: GMI on loan application for HMDA exempt loan MAFCCons
MAFCCons Offline
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Follow-up question - if we are unaware at time of a "mail or internet" application that the HMDA exemption would apply or not, would that be a violation? Some of our properties are not quite as straightforward as my example above. If it is F2F or telephone, we should be able to determine whether it is exempt based on discussion with the applicant.

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#2271030 - 05/31/22 05:14 PM Re: GMI on loan application for HMDA exempt loan MAFCCons
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
If the application is being mailed to the applicant wouldn't the person mailing the application inquire to the nature of the loan request and mail the appropriate application?

I don't know how your on-line application process is set up but it should be set up to present the appropriate application if the consumer is applying for a consumer loan vs a mortgage loan.

The inadvertent notation exemption is set up for those cases where the information was inadvertently collected. But if the only application being used for all your loan requests requests the DI then you are routinely asking for the information and IMO you could not claim the inadvertent collections of the information.

The the financial institution has some responsibility in doing their due diligence in order to provide the correct documents to the consumer.

My company is a non-bank lender who finances agricultural lending.

As you note agricultural lending is primarily exempt from HMDA due the "primarily agricultural" exemption but Reg. B has no such exemption.

If your "consumer" loan percentage is low then I would consider not using an application with the DI information and use a separate DI collection form for those requests that require it once the loan officer determines the DI collection applies.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#2271047 - 05/31/22 08:53 PM Re: GMI on loan application for HMDA exempt loan MAFCCons
MAFCCons Offline
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Thank you!

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