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#2265029 - 01/21/22 10:39 PM HMDA Action Taken--URLA Transition
Learned Hand Offline
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Joined: Feb 2019
Posts: 40
Just found out that our Mortgage department had a loan pending based on the old URLA that wasn't going to close before the mandatory transition date, so they decided that we should deny the application on the old URLA and make the applicant re-apply on the new URLA.

Two questions:
1. Does that sound OK? An adverse action with the only reason being "application form expired" seems odd, but I can't come up with a better way to report what was done.
2. This was a situation where there was a counteroffer and acceptance prior to the URLA-related denial. The Mortgage department decided that it should report the original loan terms for HMDA purposes, not the counteroffer terms, because the application was denied. I'm thinking that because the applicant accepted the counteroffer, and then the application was denied for other reasons, we should be reporting the counteroffer terms for HMDA purposes. Is that correct?

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#2265046 - 01/24/22 01:54 PM Re: HMDA Action Taken--URLA Transition Learned Hand
rlcarey Offline
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Galveston, TX
It does not sound correct at all. Why would you deny a loan because the lender could not move the loan to closing before the application expired? Why would you not have just had them complete an updated application form?
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#2265052 - 01/24/22 03:46 PM Re: HMDA Action Taken--URLA Transition Learned Hand
Rocky P Offline
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Joined: Jun 2003
Posts: 7,650
Florida
. . . And if the person is a minority, get ready to explain to a regulator why the applicant was penalized by a lender issue.
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#2265060 - 01/24/22 04:39 PM Re: HMDA Action Taken--URLA Transition Learned Hand
COMPL101TX Offline
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Joined: Apr 2018
Posts: 108
We had the same issue. We had to terminate the loans in the old 1003 to be able to run DU and sell the loan. We are terminating them internally as withdrawn, but are treating the new loan application as the same transaction and reporting the application date from the old 1003. The original application, terminated as withdrawn, will not be reported.

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#2265114 - 01/24/22 10:54 PM Re: HMDA Action Taken--URLA Transition Learned Hand
Learned Hand Offline
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Joined: Feb 2019
Posts: 40
Thanks to all for the responses. I would have been dealing with this at the time of the transition, but I'd just started at this Bank and was told the business line had it covered. I presumed my predecessor would've helped the business line get to the best possible process; that's what I get for not confirming for myself, I guess.

At this point, I don't know which would be worse: (1) reporting the original application files on the HMDA LAR as denied with the "new application needed" reason, and reporting the new application files as if they were new applications; or (2) marking the original application files as non-reportable, manually changing the LAR data for the new application files to reflect the original application date, and then having to explain why the application date in the LAR for those files doesn't match the application date in our system.

Option 1 is going to slightly inflate our # of denied loans, and total # of loans/applications. Option 2 is going to give us LAR data that is accurate, but not supported by our files. (Having to explain why borrowers got a new LE based on the new 1003 doesn't sound like fun, either.) No good options here; any opinion on which is least bad?

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#2265210 - 01/25/22 11:00 PM Re: HMDA Action Taken--URLA Transition Learned Hand
COMPL101TX Offline
100 Club
Joined: Apr 2018
Posts: 108
We have a Memo to File saved to address the issue of loan documents not matching up between the new loan and the application date. Not a perfect solution but it's the best we could do in this situation.

I'll let the HMDA experts respond to your question on option 1 or 2 but if it was me, I would not double count (would go with option 2). Those files shouldn't have been denied in the first place.

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#2265780 - 02/03/22 08:26 PM Re: HMDA Action Taken--URLA Transition Learned Hand
Norman Paperman Offline
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Norman Paperman
Joined: Aug 2012
Posts: 1,700
48.934476, -114.343735
Very interesting to read this. I presented the same in another thread and Randy forwarded me here.
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