One area we see confusion with over and over again is use of the term “line of credit”. There are many banks that refer to a multiple advance, closed-end transaction (such as a construction loan) as a line of credit. This isn’t necessarily wrong, but it can cause a lot confusion when you start to consider the compliance implications. For example, Regulation Z and HMDA define a “line of credit” as being open-end (meaning a borrower can draw the money, pay it back, and draw it again – like a HELOC). HMDA coverage and reporting are driven by both closed-end “loans” and open-end “lines”. If you are counting closed-end loans as lines because that’s the terminology your bank uses, you are setting yourself up for problems.
Do you want to learn more about which institutions and applications are covered by HMDA? Be sure to join us for our HMDA Transaction Coverage webinar on April 17, 2018!