HMDA + Approved Not Accepted = Confusion
When it comes to HMDA, there is a lot of confusion on reporting the type of action taken, especially when it comes to Approved Not Accepted.
To understand when you should report Approved Not Accepted you need to understand terms such as “underwriting or creditworthiness conditions” and “customary commitment or closing conditions”.
Listen to the video as Dave explains.
We have a “HMDA Action Taken” webinar coming up on June 25, 2019, where we will get into all the HMDA Action Taken codes and get into the weeds on the more complicated ones, like Approved Not Accepted. We hope you will join us!
Want to see more HMDA tools? Check out our Free “HMDA” Resources HERE!
HMDA: Denied or Approved Not Accepted?
Question: We approved an applicant, but before closing it was determined that legal access to the property was not obtained (all owners of surrounding properties did not sign easements). For HMDA, would this be a denial or approved not accepted?
Answer: If you ultimately denied the application because of the access issues, you would owe the applicant an adverse action notice for Regulation B purposes. However, for HMDA this must be reported as “Approved but not Accepted”. HMDA wants to know how the applicant was treated while Regulation B wants to know how the application was treated. In this case, the applicant was approved but the application was denied.
Join us for the HMDA Action Taken Deep Dive Webinar on June 25, 2019. We will answer all the questions submitted during the live webinar, in writing.
Find more HMDA Tools Here – https://store.bankerscompliance.com/link/LendingFD
Proposed HMDA Changes
Yesterday, the CFPB issued a proposal that seeks to make changes to the existing HMDA Rule. They also issued an Advance Notice of Proposed Rulemaking (ANPR) to solicit comments as to whether certain other changes are needed.
The proposed changes include:
1. Raising the HMDA coverage threshold
For closed-end mortgage loans the proposal seeks to permanently increase the current threshold of 25 to either 50 or 100. This would mean that if you stay below the threshold in either of the two preceding calendar years, you would not have to report closed-end loans as of January 1, 2020.
For open-end lines of credit, the proposal seeks to extend the temporary (and current) threshold of 500 for another two years (until January 1, 2022). After that date, the proposal seeks to set the threshold permanently at 200.
2. Small Filers
The proposal also seeks to incorporate the Small Filer exemptions into the Regulations.
The ANPR seeks comment on the following:
1. HMDA Data Points
The CFPB is requesting input on the current data fields to determine if they should make any changes or require additional data to be reported. Specifically, they want to assess if the data requirements appropriately balance the benefits and burdens associated with data reporting. The CFPB has set out four topics they would like comments to address with respect to the data fields (see page 13 of the ANPR).
2. HMDA Coverage for Certain Business/Commercial Loans
The proposal also requests comments as to whether reporting business/commercial purpose loans extended to a non-natural person (and secured by a multifamily dwelling) are a burdensome and/or whether data actually useful to the CFPB. Page 15 of the ANPR outlines what they want comments to address.
If you’re still struggling with the existing HMDA Rules, we have a variety of HMDA webinars available On-Demand. Be sure to check them out!
Want to know more about HMDA? – https://www.bankerscompliance.com/banking-regulations-compliance-services/reviews-2/hmda/
HMDA Loan Term
You would think reporting the loan term (field #82) for HMDA would be fairly straightforward but it can actually be quite complicated!
If you have a closed-end loan, you can forget the odd days and just report the number of whole months between the first payment and loan maturity. Imagine you make a loan today and the first payment isn’t due for about 50 or 60 days. You start counting with that first payment. So, if you’re making a 30-year loan, you’d have 360 months.
If you have an open-end line of credit, you also forget the odd days and report whole months, but you start counting from line origination to the maturity date. So, your loan term may differ depending on whether you have a loan or a line.
If we look at the next data field, the introductory rate period (#83), it doesn’t matter if it’s closed-end or open-end, you count from loan/line origination until the first rate change. So, again, you could likely have different answers for the introductory rate period than you do for the loan term.
These are the kind of things we will talk about in our upcoming webinar, HMDA: Advanced Lessons. On April 11th, we will spend two hours talking about the things that are causing the most headaches. We are going to assume that you understand HMDA and dig a little deeper at a higher level. So, we’ll get into mixed-use properties, demographic information and Reg B vs. Reg C vs. TRID when it comes to applications. We’ll also look at Reg B vs. Reg C when it comes to action taken codes and more.
2019 HMDA Getting It Right Guide
Just a heads up that the FFIEC has released the 2019 version of their HMDA Getting it Right Guide. The updated guide incorporates amendments imposed by the Economic Growth, Regulatory Relief and Consumer Protection Act and the CFPB’s 2018 HMDA interpretive rule.
If you still need help to understand the HMDA requirements, we are here to help! We have several HMDA webinars coming up in the next couple months and even more that are available on demand. Check them out today!