HMDA 2018 Regulation And Loan Term
Under the new HMDA regulation that will take effect in 2018, the term of the HMDA reportable loan must be entered on the HMDA LAR. This data point is relatively easy. A institution must report the number of months until the loan matures or terminates. If the loan does not have a definite term, like with reverse mortgages, the institution should report this data point as being “not applicable”. For open-end lines of credit that have a definite term, both the draw and repayment period counting from the account opening to the termination date should be included when reporting the loan term on the HMDA LAR.
For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.
Credit Score Information New 2018 HMDA Requirement
The 2018 HMDA regulation will require an institution to report an applicant’s credit score information. While this is a new data point, it is relatively straight-forward. An institution must report both the credit score and the name and version of the scoring model that was used when making the credit decision. If multiple scores were relied upon, then the institution should report only one of those scores. When this occurs, deciding which score to report is up to the institution but the method should remain consistent throughout the HMDA LAR. On the other hand, if the loan had more than one applicant and the institution relied on only a single credit score then that score should be reported for either the applicant or the co-applicant.
If a credit scoring model was used that was not an option provided by the HMDA regulation, then the institution should report this data point as “other”. If this is selected, the specific credit scoring model that was used must be entered.
Reporting this data point as “not applicable” is an option. This can occur when the loan was: a purchased loan, the institution did not rely on a credit score, closed for incompleteness, withdrawn before a credit decision was made, or if the applicant is not a natural person.
For more information on HMDA regulations, 2018 data point changes or our HMDA compliance services, please call Rhonda Wannemuehler or Betsy Reynolds at 855-734-7655.
All HMDA Reporters Will Have To Report Reasons for Denial
While this is a familiar data point for OCC regulated banks – now all HMDA reporters will have to report the reason for denial. For current reporters, it has been slightly modified by the 2018 HMDA regulation. If the HMDA reportable loan was denied, an institution must report the principal reasons for denial. This reporting requirement not only applies to complete applications, an institution must also report the reasons for denial when an institution denies a request for a preapproval. The regulation allows up to four principal reasons to be reported on the HMDA LAR. For loans that were not denied, this data point should be reported as being not applicable.
The possible reasons for denial are: Debt-to-income ratio; employment history; credit history; collateral; insufficient cash; unverifiable information; credit application incomplete; mortgage insurance denied; other; and not applicable. If a principal reason for denial falls under the “other” category, the institution must report the specific reason as part of their HMDA data. It is important to note that an institution cannot enter the same code twice as a reason for denial on the HMDA LAR, for instance if you deny a loan for delinquent credit obligations and bankruptcy you would only enter credit history one time.