I wasn't able to sit in for the HMDA training David Dickinson presented but some of my group did. I have now listened to it during the 30 day archive period (LOVE that, BTW!!). I have a follow up question for David, if he's out there and willing to answer yet another HMDA / application date question.

David referenced during the call that HMDA is an application regulation and went on to say that yes, things change, just document them. Here's my question. Customer originally requests product A but we ultimately end up with product B. Is the application date the original request where we had enough info to make that decision but we ultimately ended up somewhere else which required its own gathering of info needed to ultimately make that decision? Which place in time is the application date?

From the other regs position, I have trained my bankers to give the at application / early disclosures at the front end and if it changes significantly (i.e., different product), they should give another set of disclosures. However, I have taken the position that the follow up set of disclosures is not required but good practice. I'm not feeling quite as positive about that position anymore.

Does the application date for HMDA LAR need to match up with how we tie in the application date for RESPA / Reg Z and Reg B? If so, does the application date change if you end up in a different place than the original product applied for? That could be because of a counteroffer (denial of original request) or because we suggest a better product fit, even though they qualify for what they originally requested.

Help??

First, anyone can post their opinion on this.


Yes, it should. It sounds like you had a new application for product B (or at least a counter-offer). Therefore, I would have a new application date. However, it really depends on what changed. For instance, if you went from a 2nd market loan to an in house loan (or from a closed-end to an open-end loan), I think you have a new application (new disclosures are triggered too). If you went from a 5 year loan to a 6 year loan, I don't think you have a new application.

Maybe you can provide some specifics so we can provide a better answer.


I agree. If you have a new application, you need new disclosures. If something is "tweaked" (term, loan amount, etc.), then new disclosures are not required.

You have answered my questions. In the first one, I was talking about going from say a HELOC request to a term home equity loan or a 30 year conventional to a 30 year FHA. I have tended to treat them for both HMDA and the other regs as a continuation of the original application. What I'm hearing from you is that they are not just a continuation but rather a new application for a new product with all new disclosures.

I would assume from a HMDA perspective that if the loan originates in some form, I don't report the various iterations it may have taken throughout the discussion phase. Meaning, customer initially says they want a 30 year conventional and they qualify but through our discussions, we come to the conclusion that they are better served in a 30 year FHA. We report the origination of the FHA but don't report the approved / not accepted of the conventional. The application date for the FHA would be the date we "switched" to trying to see how they fit into an FHA? There would be two sets of GFE and other early disclosures based on the original application date and the date we swithced to trying the FHA option. Correct?

I see these as counter-offers. Since the counter-offer was accepted, you have one reportable application. You're right that don't need to report each one of these "switches" on the LAR. This is a good question/discussion.

I'd love to hear others opinions.

My original point of HMDA being an "application regulation" and that things change is illustrated by your posts. Let's say the first request was to refinance a home equity loan. That's HMDA reportable. So the LO collects GMI. Then they "switch" and decide to get a HELOC. Your institution doesn't report HELOCs, so now it's not HMDA. Are you in violation? No. At the time of application, you had a HMDA reportable application, so you violation exists. There are numerous other examples of this.

Here's my take, similar but not identical.

HMDA is both an application and a loan regulation. It requires you to collect certain information at the time of application and report that information based on the application information if the a loan is not originated. If a loan is originated then HMDA not only requires you to report the information gathered at the time of application (GMI) but is also requires you to report specifics on the loan origination which may be different from the original application information.

In theory I agree the application dates should generally be the same for HMDA, RESPA, etc., however that will not always be the case. IMO the application date for HMDA is when the the loan request originated. With the new pre-approval guidelines I could have an application for HMDA purposes today. But it may be two weeks from now before I have an application for RESPA purposes due to an identified property.

As for changes to the application I have no problem with David's analysis. We treat them as amendments to the original request and IMO I do not think amending the loan request triggers new disclosures unless you go form a fixed rate mortgage to an ARM, in that case you would have to provide the ARM disclosure. The same would hold true going from a closed-end product to an open-end product, you would have to provide the open-end (HELOC) disclosure. How we treat these applications for HMDA purposes the application date would be the date we received the original application....the "application" date for disclosures would be the documented dates where a property was identified, went from a fix to a variable, etc. As is often referred to in HMDA documentation of procedures and consistency in those procedures are key.

Thank you both for your input. Good items of discussion. Appreciate your thoughts!

BTW - did I mention that Officer and Volunteer positions are available in the "I Hate HMDA Club?"

It is exactly these twists and turns that we get in real life dealing with customers who are not always sure of what they want, or are considering many different things at different times, that can make HMDA so vexing.

On the one hand, if someone applies for an ARM and switches to a fixed rate, it would seem odd to only show the date of application starting from the time the customer said they wanted to switch. What becomes of the first application? Do we report that as withdrawn or approved not accepted? How many times should one report the same basic request (Joe Customer wants loan on his house.)

Don't forget to run OFAC on your regulatory agency before submitting your HMDA data. (kidding....I hope!)

Good points Bonnie. I often say "HMDA is like trying to put square pegs into round holes. Sometimes things just don't fit."