Unpaid Principle Balance for Purchased HMDA

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Question:

Reporting of purchased loans on HMDA. We have started purchasing loans and now need to report them on HMDA. For the section on Loan Amt - it specifies if it is a home purchase loan that we purchased 0 we enter the unpaid principal balance of the loan at time of purchase but it does not reference specifically what we use as the balance Original or unpaid prin balance)if the purchased loan is a home improvement or a refi. We have a consultant tells us that we report them all (purchase, refi or h/i) with the unpaid principle balance but in reading the HMDA guidelines and regs I am not sure if that is correct. Can you help clarify this for me?

Answer:

The HMDA Getting it Right booklet is specific as to loans for home purchase, but the same specificity isn't shown for home improvement or refinancings. On page A-2 (2010 version) it states as to a reported loan amount:

b. For a home purchase loan that you purchased, enter the unpaid principal balance of the loan at the time of purchase.

c. For a home improvement loan, enter the entire amount of the loan "including unpaid finance charges if that is how such loans are recorded on your books" even if only a part of the proceeds is intended for home improvement.

e. For reinancings, indicate the total amount of the refinancing, including both the amount outstanding on the original loan and any amount of "new money."

The keyword "purchased" isn't in the two other categories so I can see the reason for confusion. But I also don't believe examiners see value if (for instance) a bank purchases and reports $1,000,000 of home improvement loans in a low-income area, but those loans actually have combined balances of only $100,000 when purchased. I would uniformly report the balance purchased, although I could not find specific guidance for that.

While I could argue the home improvement and refi original balances should be reported because "purchased" is not qualified in those two, I believe the spirit and intent of the LAR reporting would be contrary to that.

First published on BankersOnline.com 5/13/13