Skip to content
GeoDataVision
Thread Options Tools
#503 - 01/22/01 08:10 PM HMDA Comments!
Lucy Griffin Offline

Diamond Poster
Lucy Griffin
Joined: Nov 2000
Posts: 1,544
If you haven't commented already on the Fed's proposal to amend Regulation C -- HMDA -- we've just made it easy for you. So get your comments in! This proposal is the first step in using existing regulations to accomplish other goals, such as finding out more about sub-prime lending and stopping predatory lending. The burden is going to fall most heavily on banks, so this is a very important topic for comment.

If you have ideas in addition to those we have included, please share them with us. Go to this link to get started: http://www.bankersonline.com/compliance/regccomment.html

------------------


Return to Top
General Discussion
#504 - 01/24/01 12:47 AM Re: HMDA Comments!
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
One comment I have is the difference between depository institutions and mortgage lenders in terms of when they are required to file HMDA LAR's.

If my bank makes one loan for purchase money or refinance of purchase money, then we are on the hook for HMDA reporting for the next year. Because apartment building purchase is included, or because we always seem to have at least one "good" customer who needs a quick loan to close escrow, it seems that every year I get to file a LAR containing a whopping 30 loans, most of which are small home equity loans.

However, the proposal for non-depository institutions states if they make more then $50MM in loans then they are subject to reporting.

My comment is why can't the requirements for banks and non-banks be the same?

Another comment I have is - who is going to review the expanded HMDA LAR's for the "under-regulated" lenders to see if they are accurate? Does anyone examine these LAR's? I know that the examiners crawl all over my pitiful HMDA LAR, and heaven help me if they decide if the annual income reported on a loan was off by one thousand dollars.....

Another comment on the APR proposal, a few of my HMDA entries are for COMMERCIAL / Business loans that were made to acquire rental property. What APR would I report for a commercial loan that floats with prime and had many different fees? Does anyone think that reporting APR's on business loans will help in the detection of predatory lending?

And finally, if anyone cares to know, most smaller commercial banks in So. California avoid mortgage lending these days for two reasons:
1. Intense rate and marketing competition from non-bank lenders has reduced profit margins to minimal amounts.
2. Regulatory burden makes these loans costly unless the Bank can produce a significant volume. Due to reason #1, that doesn't happen.

So bottom line is that many banks simply no longer compete for that market, leaving it wide open for "under-regulated" and "predatory" lenders.

_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

Return to Top
#505 - 01/24/01 01:41 AM Re: HMDA Comments!
Anonymous
Unregistered

Bonnie - from what I've read in the proposal commercial loans are exempt from the APR requirement because business purpose loans are exempt from TILA (Reg Z). That doesn't help with everything else, but maybe it's one consolation.

Return to Top
#506 - 01/24/01 06:33 PM Re: HMDA Comments!
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Business Loan exemption from the APR reporting is a small consolation.

I guess the point that really irks me is that the predatory loans that this new reporting is trying to uncover are for the most part made by lenders who loosely regulated. Many are state licensed companies and who examines their HMDA LAR?

Put it this way, if you are a shady operator with little supervision, are you going to file a report that shows you made predatory loans? I don't think so.

So, the ones who will have this enforcement beaten into them are the highly regulated depository institutions.

I still recall (and it wasn't that many years ago) being cited for a HMDA violation when I reported the borrower's income as $533,000 when in fact her income was $535,000. I know that technically my report was inaccurate, but did that have a significant impact on the spirit of what HMDA was supposed to reflect?

_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

Return to Top
#507 - 01/24/01 09:05 PM Re: HMDA Comments!
Lucy Griffin Offline

Diamond Poster
Lucy Griffin
Joined: Nov 2000
Posts: 1,544
Thanks, Bonnie, for your excellent observations. Submitting comments on this proposal is very important. It has a great deal of momentum and will take strong arguments to stop or modify. Bonnie's points are important ones, going to cost and the result of product offerings on small banks.

One very important topic to include in your comment letter is the cost of implementation, complete with training and procedural changes. Also, the cost and chilling effect are important for the FRB to hear about. Provide a few details -- or a LOT of details.

Also send copies of your comments to your Senators and Congressmen. Include a copy for Senator Phil Gramm. He is one of the most likely people to take action to limit the scope of this proposal.


Return to Top
#508 - 01/24/01 09:35 PM Re: HMDA Comments!
Anonymous
Unregistered

Bonnie,

I work for a business bank and only report less than 40 loans per year. You mentioned in your message that there is always a customer that needs "a quick loan to close escrow." I encourage you to look at the rules for temporary financing and bridge loans. It may be that some of these loans are not technically reportable after all.

I agree with you on some of your other comments. I would like to see something done about the rules that make us a reporter too. Why is it just ONE purchase money loan (or refinance)in the previous calendar year? The threshold should be raised considerably!!! Make it 100 or something like that. In my opinion, our 40 loans which aren't enough to draw any conclusions from. The compliance burden related to capturing and reporting these loans does not seem to make sense for a business bank that does not advertise or actively solicit these types of loans. The majority of them are made to principals, partners and owners of businesses that have deposits/loans with us and don't want the hassle of providing their financial data to another lender.

HMDA reporting should only be required for institutions that are actively involved in home mortgage and home improvement lending. There are plenty of them out there!

Dolly Nugent
VP/Compliance Officer
Citizens Business Bank


Return to Top
#509 - 01/24/01 10:30 PM Re: HMDA Comments!
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Dolly,
Those are excellent points! We are like you in that we do absolutely NO advertising of consumer loan products. Most of our loans are to existing customers who would rather just deal with one bank. Occasionaly we get a non-customer that applies for a loan. In most cases, that applicant has either excessive debt or very bad credit, and they are submitting applications to many lenders in hopes of getting approval.

I understand what you are saying about the temporary or bridge financing exlusions from HMDA reporting, but I guess I am gun shy after being second guessed during an exam as to whether a loan was truly "temporary."

The other episode I found amusing was when an examiner was looking at our HMDA LAR and requested some files to sample for accuracy. One of the files was a commercial loan for an apartment building purchase. Question asked to me was "Where is the application for this loan?" I pointed to the 2 foot stack of financial statements and tax returns and said "That's it!" (smile)

_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

Return to Top
#510 - 01/25/01 12:40 PM Re: HMDA Comments!
Anonymous
Unregistered

This is slightly off-topic, but a few of you have mentioned the "origination of one single-family loan" requirement.

My bank originates multi-family loans and purchases single-family loans in large quantity. I have asked the FRB HMDA Hotline for an interpretation (they even transferred me to their legal dept) and they opined that we still have to file, even though we may not be *originating* a single family loan during the year.

Has anyone else encountered this question before? I would be interested in your opinions.


Return to Top
#511 - 01/26/01 05:15 AM Re: HMDA Comments!
Anonymous
Unregistered

Bonnie,

I understand completely. I have gathered much information from other Compliance Officers on the temp financing issue and have documented that if the loan is less that 2 years and will not be repaid from ordinary income, it is to be considered temp financing. Most of the loans that we don't report are bridge loans.

I have spelled out what we will consider to be temp financing and i apply the "rule" consistently.

Dolly Nugent
Citizens Business Bank


Return to Top
#512 - 01/26/01 03:21 PM Re: HMDA Comments!
Pat Patrick Offline
New Poster
Joined: Dec 2000
Posts: 23
Winston-Salem, NC
Re: Mandatory HELOC reporting. In the proposal, the Fed says it thinks most HELOCs have a home improvement component. Conversely, a Consumer Bankers Assn. 1999 study indicated that less than 25% of HELOCs have a home imp component. Based on the CBA conclusion, if we must report all HELOC applications, then 75% of the reported appls wouldn't have anything to do with HMDA/home imp purposes.

Re: Subprime focus of the proposal: (1) It appears that the fed govt already has a pretty good idea of who the subprime home lenders are -- HUD publishes an annual list. (2) The Agencies' recent withdrawal of the Call Report subprime loan reporting proposal raises doubts to me about the govt's need for further subprime data from depository institutions.

Re: Predatory Lending: (1) The Agencies have said publicly and often that depository institutions are not the prime offenders. Presuming that's true, why require more reporting from all of us, to catch a few scofflaws who are outside our banking world? (2) Fraudulent, deceptive practices already are illegal under other state and federal laws. We should urge more enforcement of those (as the FTC and some state govts have recently done successfully).

Re: APRs: I think APR reporting is one of the worst parts of the proposal. Extensive cost to the industry (programming systems/software that currently don't talk to HMDA systems and that disclose but don't store APR) not only won't have benefit -- it may potentially cause harm. Well-intentioned consumer and minority advocates already draw some erroneous discrimination conclusions from HMDA disparity ratios, due to the lack of accompanying data about creditworthiness that contributed to the loan decisions. Reporting APRs will just add to the misunderstanding. As with disparity ratios, HMDA doesn't show the underlying credit data that may have contributed to the price. Also, other things not reflected by HMDA data can affect APR, including voluntary actions by consumers like amount of down payment, paying extra points to buy down initial rates on variable loans, special lender promotions, etc.

_________________________
Pat Patrick Wachovia Corp. Compliance 336-732-3394 pat.patrick@wachovia.com

Return to Top
#513 - 01/26/01 04:20 PM Re: HMDA Comments!
Andy_Z Offline
10K Club
Andy_Z
Joined: Oct 2000
Posts: 27,503
On the Net
Pat makes some excellent points, especially in the APR comments.

While I have to agree that there isn't enough information on the LAR to draw some of the conclusions people want, I will carefully word my comments so as to not invite additional data input requirements. Initially it was recommended that they collect more than the additional 4 items they want now, I believe.

These are times of irony. The government requires that we keep customer information confidential but that we give them more than they have now.

I vote we do away with HMDA and give customers one more disclosure allowing them to report their loan if they want to. (Yes, my tongue is in my cheek.)

------------------
Andy Zavoina
Opinions stated are not necessarily that of my employer.

[This message has been edited by Andy Z (edited 01-26-2001).]

_________________________
AndyZ CRCM
My opinions are not necessarily my employers.
R+R-R=R+R
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

Return to Top
#514 - 01/26/01 11:28 PM Re: HMDA Comments!
Princess Romeo Offline

Power Poster
Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Andy, tongue-in-check or not, I think that is an EXCELLENT idea!

I wonder how many people declined because their credit is abysmal would be willing to report that.

Ah.., I guess I can still dream....

_________________________
CRCM,CAMS
Regulations are a poor substitute for ethics.
Just sayin'

Return to Top