Hello everyone,
I've got a few HMDA reportable files that were declined due to issues with the collateral, in these cases would we still need to report their income and DTI? The review of their income is still a part of the normal underwrite process, but since it was not used in making the credit decision/decline reason I wanted to see what everyone's thoughts on whether the income & DTI is or is not consider part of the credit decision.

Was the DTI not used in making the decision because it was within policy limits? Would the calculation have been considered if it was outside policy guidelines, such as being too high?

From the commentary:

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. For example, if the financial institution's policies and procedures do not consider income for a streamlined refinance program, the institution reports that the requirement is not applicable, even if the institution received income information from the applicant.

In your situation, I would report the income.

I am not 100% sure if they were within the policy limits, but it looks like they were because the underwriter did not include it as part of their decline reason. If the DTI was too high, the customer would have been declined.

If that is the case, then I would think you can argue that you do use DTI in making the decision. It wasn't mentioned in the underwriter's decision as it was in compliance with policy; if it wasn't in compliance, it would be a factor in the decision.

in these cases would we still need to report their income and DTI? The review of their income is still a part of the normal underwrite process,,

You report DTI.

2. Transactions for which a debt-to-income ratio was one of multiple factors. A financial institution relies on the ratio of the applicant's or borrower's total monthly debt to total monthly income (debt-to-income ratio) in making the credit decision if the debt-to-income ratio was a factor in the credit decision even if it was not a dispositive factor. For example, if the debt-to-income ratio was one of multiple factors in a financial institution's credit decision, the financial institution has relied on the debt-to-income ratio and complies with § 1003.4(a)(23) by reporting the debt-to-income ratio, even if the financial institution denied the application because one or more underwriting requirements other than the debt-to-income ratio were not satisfied.