There has been a slight modification as to what is considered to be a reportable request under the new HMDA rules. It still must be reported whether a loan or application involved a request for preapproval for a home purchase loan under the financial institution’s preapproval program. Under the rule that takes effect in 2018, the financial institution no longer has the option to decide whether or not to report a preapproval request that was approved but not accepted. These are now required to be reported.
Now what is considered to be a preapproval for HMDA purposes? An application could only be a preapproval request if it is for a home purchase. It cannot be secured by a multifamily dwelling and it cannot be for an open-end line of credit or for a reverse mortgage. The application must also be reviewed under a Preapproval Program which is where a comprehensive analysis of the applicant’s creditworthiness is conducted and the lender issues a written commitment that is for a home purchase loan; is valid for a designated period of time and up to a specified amount; and is subject only to specifically permitted conditions.
A loan or application should be reported as not involving a preapproval request in several circumstances. These are for a purchased loan, an open-end line of credit, a reverse mortgage, an application that was denied, an application that was closed for incompleteness or withdrawn, a loan for any other purpose other than a home purchase, or if the loan is secured by a multifamily dwelling.
Side note: When it comes to reporting the data for preapprovals, the only requests that are reported are those that were denied or approved but not accepted. The requests that resulted in origination will also be reported, but those will be as an originated Covered Loan.
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.
12 CFR 1003.4(a)(4)