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#262041 - 10/27/04 07:14 PM HMDA and Co-Signers and/or Guarantors
Anonymous
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Help me please. Do we need to collected GMI for co-signers or guarantors?

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Lending Compliance
#262042 - 10/27/04 07:29 PM Re: HMDA and Co-Signers and/or Guarantors
hmdagal Offline
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hmdagal
Joined: Dec 2002
Posts: 3,841
If they sign the note, you need to collect the information. If they sign a separate guaranty form, you do not.

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#262043 - 01/20/06 08:04 PM Re: HMDA and Co-Signers and/or Guarantors
Noopette Offline
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Noopette
Joined: Nov 2004
Posts: 76
I hate to be a pest, but this is why I'm getting confused. In this post, the GMI was required if the guarantors signed the note, but not if they just signed a guaranty form. Now it appears the answer is just NO to GMI. Is that because of some rule changes between this post in 2004 and now?

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#262044 - 01/20/06 08:08 PM Re: HMDA and Co-Signers and/or Guarantors
Judy G Offline
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Joined: Sep 2005
Posts: 40
Somewhere out there
HMDA wants to know info on the Applicant and Co-Applicant. If the Applicant is a company or corporation, not a natural person, then there is no GMI to collect on the Applicant. Co-Signers sign the note and a/k/a Co-Borrower a/k/a Co-Applicant.

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#262045 - 01/20/06 08:21 PM Re: HMDA and Co-Signers and/or Guarantors
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
Noopette:

A co-borrower/signer is directly liable on the note, a guarantor is secondarily liable.

Simple rule to remember:

If they sign the note/loan agreement you collect GMI. If they only sign a guaranty you do not.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#262046 - 01/20/06 08:42 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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New York State
I have to challenge the other response. HMDA addresses "applicants" and "co-applicants". A co-signer is neither one of these and one would not collect GMI for the co-signer.

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#262047 - 01/20/06 08:46 PM Re: HMDA and Co-Signers and/or Guarantors
David Dickinson Offline
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Central City, NE
I disagree. A "co-signer" certainly is an applicant. They just don't receive benefit.
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http://www.bankerscompliance.com

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#262048 - 01/20/06 08:50 PM Re: HMDA and Co-Signers and/or Guarantors
Dan Persfull Offline
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Bloomington, IN
You might want to look at 203.4(a)(10). Once the person signs the note they become directly liable as a borrower.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#262049 - 01/20/06 08:56 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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New York State
Quote:

I disagree. A "co-signer" certainly is an applicant. They just don't receive benefit.



I have to tell you that in all of our HMDA reporting years, we have never included co-signers and have never been challenged by an examiner on this. I still don't feel that co-signer is synonymous with applicant.

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#262050 - 01/20/06 08:58 PM Re: HMDA and Co-Signers and/or Guarantors
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Quote:

we have never included co-signers and have never been challenged by an examiner on this




Then you have been fortunate.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#262051 - 01/20/06 09:01 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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Posts: 933
New York State
Quote:

Quote:

we have never included co-signers and have never been challenged by an examiner on this




Then you have been fortunate.



Maybe so. I'm running this by our EIC at this very moment. Honestly, it has never been even a consideration.

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#262052 - 01/20/06 09:03 PM Re: HMDA and Co-Signers and/or Guarantors
Judy G Offline
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Joined: Sep 2005
Posts: 40
Somewhere out there
Is it in the terminology? UpstateNY - could you actually be taking about guarantors but calling them co-signers?

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#262053 - 01/20/06 09:07 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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Posts: 933
New York State
Quote:

Is it in the terminology? UpstateNY - could you actually be taking about guarantors but calling them co-signers?



Don't think so, but I'll come back to this post after I hear from our examiner.

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#262054 - 01/23/06 07:57 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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Posts: 933
New York State
Quote:

Quote:

Is it in the terminology? UpstateNY - could you actually be taking about guarantors but calling them co-signers?



Don't think so, but I'll come back to this post after I hear from our examiner.



Well, I said I would post the examiners response. Haven't heard yet, but here's the response from the HMDA Helpline:"A co-signer signs on the loan so that if the applicant defaults the co-signer will be asked to assume the payments. The co-signer is not an applicant or a co-applicant."
I'm sure there will continue to be different opinions, but for the moment, I feel better.

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#262055 - 01/23/06 08:41 PM Re: HMDA and Co-Signers and/or Guarantors
Dan Persfull Offline
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Bloomington, IN
I totally disagree with the answer from HMDA Help. If they are not applicants, then why are you required to report their income on the LAR if it is used to qualify the loan?

From the GIR:

Page 1:

Every loan application, origination, and purchase that falls into one or more of the three categories must be reported. With some exceptions, for each trans-action the lender reports data about:

¢ the loan, such as its type and amount;
¢ the property, such as its location and type;
¢ the disposition of the application, such as whether it was denied or resulted in an origination; and
¢ the applicant (namely, ethnicity, race, sex, and income).

Page A-7:

d. If the applicant or coapplicant is not a natural person or the applicant or co-applicant information is unavailable because the loan has been purchased by your institution, enter “NA.”

Page D-13

Similarly, if an institution relies on the income of a cosigner to evaluate creditworthiness, the institution includes this income to the extent relied upon. But an institution does not include the income of a guarantor who is only secondarily liable.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#262056 - 01/23/06 08:45 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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New York State
Like I said, I felt better for the moment. I can't disagree with anything that you are saying Dan. I only know that this is how we have historically treated co-signers. That certainly doesn't make it right, but at least I have backing from one source. I'll still post the examiners response also. Dan, where do you input the co-signers GMI if you have an applicant, co-applicant and co-signer?

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#262057 - 01/23/06 08:55 PM Re: HMDA and Co-Signers and/or Guarantors
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
If you have more than one co-applicant then you report on the applicant and the first co-applicant. See page A-7.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#262058 - 01/23/06 08:57 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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Joined: Apr 2003
Posts: 933
New York State
Quote:

If you have more than one co-applicant then you report on the applicant and the first co-applicant. See page A-7.




Right, then the co-signer is not reported. I know, I know, we could have a loan with three applicants, and the third would not be reported either. I'm just not convinced that a co-signer is reported at all.

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#262059 - 01/24/06 03:00 PM Re: HMDA and Co-Signers and/or Guarantors
poppy Offline
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We resorted to having our legal counsel tell us what is the difference between "co-applicant" and co-signer." They tell us that a "co-applicant" is involved in the application process and personally receive benefit from the funds.

A "co-signer" on the other hand, is someone who is liable for a credit obligation of a consumer, but does not receive goods, services, or money in return for that obligation. Co-signers typically come into the transaction after application, although we do see their personal information and signature on an application form to authorize the loan officer to pull a credit bureau report.

We've not had any issues arise with our examiners during a HMDA exam using these definitions.

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#262060 - 01/24/06 04:17 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
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Posts: 933
New York State
Poppy, do you report co-signers for HMDA or not?

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#262061 - 01/24/06 05:19 PM Re: HMDA and Co-Signers and/or Guarantors
Noopette Offline
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Noopette
Joined: Nov 2004
Posts: 76
What if you have an LLC where the guarantors did not sign the note personally but the bank used their personal income to make the credit decision and their personal applications are in the file. The bank relied on the income of the guarantors to evaluate creditworthiness. My guess is that because they didn't sign the note, they are not subject to HMDA, but if the bank relied on their income, they should have turned them into cosigner and have them primarily obligated. Any thoughts?

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#262062 - 01/24/06 05:35 PM Re: HMDA and Co-Signers and/or Guarantors
Dan Persfull Offline
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Dan Persfull
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Posts: 47,517
Bloomington, IN
Go back to my post #498710 in this thread and read the text from page D-13 of the GIR.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#262063 - 01/24/06 06:40 PM Re: HMDA and Co-Signers and/or Guarantors
poppy Offline
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Posts: 224
upstateNY - no, we do not report co-signers.

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#262064 - 01/25/06 02:43 AM Re: HMDA and Co-Signers and/or Guarantors
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Read the Co-signer notice - specifically the 3rd paragraph:
Quote:

Notice to Cosigner

You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.


You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increases this amount.


The bank can collect this debt from you without first trying to collect from the borrower. The bank can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.


This notice is not the contract that makes you liable for the debt.



If the co-signer is just as liable as the primary applicant, how can you say they aren't an applicant/borrower?
_________________________
David Dickinson
http://www.bankerscompliance.com

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#262065 - 01/25/06 08:13 PM Re: HMDA and Co-Signers and/or Guarantors
upstateNY Offline
Platinum Poster
Joined: Apr 2003
Posts: 933
New York State
Quote:

Read the Co-signer notice - specifically the 3rd paragraph:
Quote:

Notice to Cosigner

You are being asked to guarantee this debt. Think carefully before you do. If the borrower doesn't pay the debt, you will have to. Be sure you can afford to pay if you have to, and that you want to accept this responsibility.


You may have to pay up to the full amount of the debt if the borrower does not pay. You may also have to pay late fees or collection costs, which increases this amount.


The bank can collect this debt from you without first trying to collect from the borrower. The bank can use the same collection methods against you that can be used against the borrower, such as suing you, garnishing your wages, etc. If this debt is ever in default, that fact may become a part of your credit record.


This notice is not the contract that makes you liable for the debt.



If the co-signer is just as liable as the primary applicant, how can you say they aren't an applicant/borrower?




Just got back to this post this afternoon. I think we are cross-pollinating too many regs. By the way, I said I would get back when I heard from the examiner. He admitted to have never been asked this question and to not looking for co-signer information on HMDA LAR's. (He's a seasoned examiner too.)

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