Can you switch midstream

Posted By: Clareb

Can you switch midstream - 05/12/17 07:52 PM

Was hoping an expert can let me know the answer to this and where the statute is.

Can you switch an application midstream from one property to another without taking an action, with relation to HMDA. An example is this: Applicants have applied to purchase a home located at 1 Main Street, Anytown USA. There is a full blown loan with all six pieces. They then decide that they want to do a refinance at 75 Jones Street, Anytown USA.

As a lender, is there anything in HMDA which allows us, to change our loan application to the new address and NOT take an action on the purchase of 1 Main Street.

I cannot find anything to support the ability to change loans around and never take action on the initial loan.

PLEASE HELP!!!
Posted By: Cliff Johnson

Re: Can you switch midstream - 05/12/17 08:12 PM

I posted about it previously with somewhat the same question https://www.bankersonline.com/forum/ubbt...out#Post2124282 .

After posting, I talked with my VP here about our process and what she felt about changing it. The one point she made that I hadn't ever considered was in relation to TRID and guidance within the small-entity compliance guide https://s3.amazonaws.com/files.consumerf...4_10072016.pdf. Specifically, on page 55 and in to page 56 it talks about essentially considering address as a change of circumstance. While the situation is very specific to having issued disclosures prior to an address being known and then subsequently obtaining the address, it's not a stretch to interpret this to address changes in general. Regardless, I am still of the opinion that it's possible to just continue the same application.
Posted By: Dan Persfull

Re: Can you switch midstream - 05/12/17 09:06 PM

Applicants have applied to purchase a home located at 1 Main Street, Anytown USA. There is a full blown loan with all six pieces. They then decide that they want to do a refinance at 75 Jones Street, Anytown USA.

We treat these as amended applications. We document the requested change by the applicant and proceed from there.
Posted By: Clareb

Re: Can you switch midstream - 05/12/17 09:07 PM

Thank you so much. I did just check out the post.
Posted By: Clareb

Re: Can you switch midstream - 05/15/17 01:35 PM

Hi Dan-

I am confused as to why the original application can be discarded or ammended. HMDA says this:


ii. An institution reports the data for loan applications that did not result in originations—for example, applications that the institution denied or that the applicant withdrew during the calendar year covered by the report

Where can you see in the reg that states you can switch and therefore not report that original property? Can you site a reference?

Thanks so much.
Posted By: Truffle Royale

Re: Can you switch midstream - 05/15/17 02:11 PM

Not Dan but imho, your citation doesn't apply because no action was taken. The application was not denied or withdrawn. It was amended.
If I were to follow your logic a change in loan amount would necessitate a new application.
Changing the property address would be a valid changed circumstance for TRID and the new address would be the property you'd report for HMDA.
Posted By: Dan Persfull

Re: Can you switch midstream - 05/15/17 03:14 PM

An institution reports the data for loan applications that did not result in originations -

The application did result in an origination, just with a couple of amendments to it.

If you truly feel compelled you must record an action then what would it be? As TR stated it was not denied and the applicant didn't withdraw their request. They just changed the collateral to be used to secure the request.
Posted By: Clareb

Re: Can you switch midstream - 05/23/17 06:59 PM

Thank you both. I wish someone could point to where in the regulation where it says you can change the property and that this is not reportable for the first property.

HMDA is driven by many factors and one of the most important things we report is the location. By changing locations, you never disclose that you had an application on that property.

I feel that if a borrower changes locations they are in all practicality withdrawing their request to do a loan on a property which needs to be disclosed per HMDA. That to me would be an intent to withdraw which is stated in HMDA as a reportable action.

Thanks for your expertise smile
Posted By: kw004h

Re: Can you switch midstream - 05/23/17 08:42 PM

Originally Posted By Clare B

HMDA is driven by many factors and one of the most important things we report is the location. By changing locations, you never disclose that you had an application on that property.


Clare, I am adding my opinion to echo the advice given to you by the other posters on this thread. The location of the property, although a key piece of information, is not the sole purpose of the reporting. https://www.ffiec.gov/hmda/history.htm If you also factor in the purpose is to identify potential discriminatory lending patterns, and think about the number of data points being collected on the human applicants, I don't think it's appropriate to conclude a change in property location = a withdrawn application to report on the LAR.

Originally Posted By Clare B

I feel that if a borrower changes locations they are in all practicality withdrawing their request to do a loan on a property which needs to be disclosed per HMDA. That to me would be an intent to withdraw which is stated in HMDA as a reportable action.


The borrower is not withdrawing a request for a loan. They are changing the property they wish to use to secure the loan. They still want a loan.

You're going to report on the LAR the property location securing the originated loan. You will only report "withdrawn" if the loan applicant expressly withdraws an application before a credit decision is made.


https://www.ffiec.gov/hmda/history.htm