Classifying Home Improvement Loans
By Deb Jost
As we promised, here is the second in a series of HMDA blogs to help you prepare for your LAR submission. Today’s topic is “classifying” home improvement loans.
A financial institution must decide how they will handle non-dwelling secured home improvement loans. If you “classify” non-dwelling secured loans as home improvement loans on your system, or have otherwise coded or identified the loan as a home-improvement loan, then you must report these as home improvement loans for HMDA.
For example, if you have booked a loan or reported it on a “call report” as a home-improvement loan, you have classified it as a home-improvement loan. An institution may also classify loans as home-improvement loans in other ways, such as color-coded loan files. However, simply identifying the purpose of the loan on the application or in a credit memo is not “classifying” the loan as a home improvement loan.
Refer to Commentary to Regulation C – 12 CFR 1003.2(g) for details.