Application Channel and New HMDA Data
There are two questions for this data point that must be reported as part of the new HMDA data. First, you must report whether the applicant submitted the application directly to your financial institution. For HMDA purposes, an application is treated as being submitted directly to your financial institution if the applicant was directed to a third-party agent who performed origination activities on behalf of the financial institution. However, this would not be the case if the third-party agent assisted the applicant with their application for a loan with another institution. If the applicant completed an application with a broker or correspondent who then sent the application to your financial institution for approval, then this would not be reported as being submitted directly to your financial institution.
The other data point that must be reported is whether the obligation that arises from the application is or would have been initially payable to your financial institution. For applications that are withdrawn, denied, or closed for incompleteness, this particular data point should be reported as “not applicable” if at the time action was taken, the financial institution had not determined whether the loan would be initially payable to this institution.
The one major exception is when you are reporting on a purchased loan. In this instance, both of these data points should be reported as being “not applicable”.
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.
HMDA 2018 Action Taken and Action Taken Date
When reporting information regarding the action taken for a loan, there will not be any substantial changes under the new HMDA regulation. The type of action taken must be reported as being one of the following: originated or purchased; approved but not accepted; withdrawn; denied; or closed for incompleteness. In addition to these familiar data points, there will be values that specifically address the action taken for preapprovals come 2018.
An institution reports a loan as being originated if it was approved before closing and if there was an extension of credit. The loan is also reported as being originated if the loan began as a request for a preapproval but resulted in the loan being originated. The Action Taken Date that is reported for originated loans is either the closing date or the account opening date.
Another possible action taken is if the loan was purchased. These are loans that were purchased by the financial institution after closing and where no credit decision was made by the institution prior to closing. The date that the loan was purchased is reported as the Action Taken Date on your HMDA LAR.
If the loan was approved before closing but the applicant either failed to respond or the loan was not otherwise closed, then the action taken would be reported as approved but not accepted. The regulation allows some flexibility as to the date that is reported. The institution can choose to report: the approval date; the deadline for accepting the offer; or the date that the file was closed as the Action Taken Date. It is up to the lender to choose which date to report, but it should remain consistent.
An application is reported as being denied under certain circumstances. A loan is considered to be denied if the financial institution decided to deny the application after a credit decision was made. The other circumstance is when a counteroffer was made and it was not accepted. The Action Taken Date that is reported is either the date that the action was taken on the application or the date that the Adverse Action Notice was sent to the borrower.
For withdrawals, an application is reported as such when the it was expressly withdrawn by the borrower before a credit decision has been made. The date that the borrower contacted the lender to withdraw the application is reported as the Action Taken Date.
A loan file is reported as being closed for incompleteness when the financial institution sent the borrower a notice of incompleteness and the borrower failed to respond with the additional information that was requested. The lender may have reporting options regarding this type of Action Taken but it depends on if the lender provided an Adverse Action Notice to the borrower with the reason for denial being incompleteness. If this occurs, then the loan file can either be reported as being denied or being closed for incompleteness. Like with denied loans, the lender can use the date that the action was taken or the date of the Adverse Action Notice is reported as the Action Taken Date.
For an application that is a preapproval request that was approved but not accepted, any reasonable date can be reported as the Action Taken Date. This is up to the institution and such dates could be the approval date, deadline for accepting the offer, or the date that the file was closed. When the application is a preapproval request that was denied, the date of the denial or the date of the Adverse Action Notice sent to the applicant is reported as the Action Taken Date.
The CFPB has recently issued a proposed correction in regards to this data point. This concerns how to report the action taken when a counteroffer was made and the institution provided a conditional approval but the applicant does not respond. The correction states that this would be reported as either: a denial, file closed for incompleteness, approved but not accepted, or as application withdrawn. It all would depend upon the particular circumstances.
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.