Manufactured Home Secured Property Type & Manufactured Home Land Property Interest
Beginning in 2018, a financial institution will report manufactured home information as part of their HMDA data. Specifically, the secured property type and the land property interest information should be reported in regards to the manufactured home that is securing the loan.
For the secured property type, a financial institution will have to report whether the loan is secured by a manufactured home and land or if the land is not securing the loan. A financial institution will report that the Manufactured Home is not secured by land even if the Manufactured Home is considered real property under state law.
For the land property interest, the financial institution should report the information about the applicant’s ownership interest in the land where the manufactured home is located. The first option that can be reported is direct ownership. This is used when the applicant has direct ownership in the land and the ownership is more than a possessory real property ownership interest. Another option is indirect ownership. This is reported when the applicant is a member of a resident-owned community that is structured as a housing cooperative which owns the underlying land. If the applicant lives in a resident-owned community but is not a member, the land property interest would be reported as a paid leasehold. A paid leasehold can occur when the applicant does not have an ownership interest in the land but they have a written lease for the lot that specifies rent payments. This data point can also be reported as an unpaid leasehold. This occurs when there is no written lease and therefore no agreement for rent payments.
There is an additional circumstance for the land property interest data point. This will be reported as “not applicable” if the location for the manufactured home has not yet been identified at the time action was taken. When it comes to reporting these data points as “not applicable” on your HMDA LAR, there is some overlap. Both of these data points will be reported as “not applicable” when the dwelling that is securing the loan is not a manufactured home or if it is a manufactured home community that is a multifamily dwelling.
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.
Debt-to-Income Ratio New HMDA Reporting Requirement
Another addition to what must be collected as part of your HMDA data in 2018 is the borrower’s debt-to-income ratio. This must be reported if the DTI ratio was relied upon when the financial institution made their credit decision. This does not mean that in order for this data point to be reportable it had to be a deciding factor when the financial institution made their credit decision. The DTI ratio merely had to have been considered during the credit decision process.
On your HMDA LAR, this data point can be reported as being “not applicable” in a number of circumstances. One instance is if the DTI ratio was not relied upon when the credit decision was made. “Not applicable” can also occur when you are reporting on a purchased loan and for applications that were closed for incompleteness or withdrawn before a credit decision could be made. Another occasion where “not applicable” is reported on your HMDA LAR is when the applicant and the co-applicant are not natural persons. It is important to note that when reporting the DTI ratio, what is securing the loan will also affect what you report on your HMDA LAR. When the loan is secured by a multifamily dwelling, this data point should be reported as “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.
Discount Points, Lender Credits, and Interest Rate New HMDA Regs
For the new HMDA regulation, a financial institution will now have to report more information in regards to the terms of the loan. This includes such information as the total discount points, lender credits and the interest rate.
The total discount points that are paid to the creditor to reduce the interest rate can be found on page 2 of the Closing Disclosure on Line A.01. If there were no discount points paid, then this data point should be left blank. The other data point that can be found on the Closing Disclosure is the total of lender credits which is on page 2 Line J. Like with the discount points, if there were no lender credits, this data point should be left blank. If a revised Closing Disclosure was issued, then the revised amounts should be reported on the HMDA LAR.
Both of these data points are to be reported as “not applicable” in the same circumstances. The first is if the application did not end in origination. The second circumstance is if the loan or application is not subject to Regulation Z. The last instance is if it is a purchased loan with an application that was received prior to the effective date of Regulation Z.
Another item that must be reported as part of your HMDA data is the interest rate. This data point must be reported for loans that originated and for those that are approved but not accepted. For applications that were denied, withdrawn or closed for incompleteness, this data point 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.
Mortgage Loan Originator NMLS Identifier
Starting in 2018, an institution will report the NMLS ID for the mortgage loan originator. This is a unique number that is assigned to a loan originator through the National Mortgage Licensing System & Registry. The loan officer does not necessarily have to have one in order to provide loan originating services. If they are not required to have a NMLS ID number and they have not obtained one, then this data point should be reported as being “not applicable”.
There are some instances where the loan officer has obtained a NMLS ID but can originate a loan without one as it is not required by the state. The NMLS ID number should be reported on the HMDA LAR regardless of this, unless the transaction falls into one of two categories. First, if it is a purchased loan that is subject to 12 CFR 1026.36(g) (consumer credit transaction secured by a dwelling) and was originated prior to January 10, 2014. The other is if it is a purchased loan not subject to 12 CFR 1026.36(g) and it was originated prior to January 1, 2018. In these instances, this data point should be reported as being “not applicable”.
There are times when there is more than one loan officer associated with that particular transaction. If this occurs, the financial institution should report the NMLS ID of the loan officer who had the primary responsibility for the transaction as of the date of action taken.
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.
New HMDA Regulation Will Bring Big Change To Rate Spread Data Point
The rate spread is a familiar data point that many institutions are used to reporting, however, the new HMDA regulation that will take effect in 2018 will bring a big change. The old regulation did not require an institution to report the rate spread if the annual percentage rate (APR) did not exceed the average prime offer rate (APOR) by a certain percentage. Under the new HMDA regulation, the rate spread is now required to be reported in most cases. In order to determine the rate spread, you must take the difference between the loan’s APR and a comparable transaction’s APOR.
The rate spread can be determined manually or by using the FFIEC’s Rate Spread Calculator which can be found here: https://www.ffiec.gov/ratespread. The FFIEC website also provides the Average Prime Offer Rates tables and a batch rate spread calculator for multiple loan calculations.
If the institution decides to manually find the APOR, they must first determine the comparable transaction. In order to do this, the institution must look at the loan’s amortization type and loan term. For fixed-rate loans the transaction’s maturity (or the period until the last payment will be due) is used. If the loan is an open-end line of credit but has no definitive length of time, then an institution may use a 30-year fixed-rate loan as the comparable transaction. For variable-rate loans, the initial fixed-rate period is used. When the maturity term is not in whole years, the term should be rounded to the nearest whole year. For example, if the loan matures at 10 years and 3 months, then the term for a comparable transaction will be 10 years.
The next step in determining the APOR is to establish the rate set date. This should be the date that the institution set the loan’s interest rate for the final time before closing. For instance, if the rate was set according to a lock agreement, then the date of that agreement is used. The last step in determining the APOR is to determine the most recent APOR as of the rate set date. These rates can be found on the applicable tables on the FFIEC’s website.
When entering the rate spread on your HMDA LAR, you should round it to at least three decimal places. If the APR exceeds the APOR, then a positive number should be reported. However, if the APR is less than the APOR, a negative number should be reported as the rate spread.
There are some circumstances in which the rate spread is not reported. An institution should report this data point as being “Not Applicable” if the loan: does not end in origination, is a purchased loan, an assumption, a reverse mortgage, or if it is not subject to Regulation Z. The only instance where the rate spread should be reported for a loan that was not originated is when the application was approved but not accepted. In this case, the difference between the APR of the loan that would have resulted if it was accepted and a comparable transaction’s APOR as of the date that the interest rate was set is reported 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.
2018 HMDA Regulation Brings Additional Value Added To Type of Purchaser
Under the HMDA regulation that will take effect in 2018, an institution must report the type of purchaser for each HMDA reportable loan. This data point remains relatively the same, however an additional value has been included in the new HMDA regulation. It must be reported whether the loan was purchased by: Fannie Mae; Ginnie Mae; Freddie Mac; Farmer Mac; a private securitizer; a commercial bank, savings bank, or savings association; credit union, mortgage company, or finance company; life insurance company; affiliate institution; other type of purchaser; or if the loan was not sold during the calendar year. While this data point is fairly straight-forward, there are some reporting requirements that should be noted.
If the institution knows or reasonably believes that the loan will be securitized by the entity purchasing the loan, it should be reported as being purchased by a private securitizer. A private securitizer is an institution other than the already listed government-sponsored enterprises (Fannie Mae, Ginnie Mae, Freddie Mac, and Farmer Mac). If the institution is not reasonably certain that the purchaser will securitize the loan, then it should be reported as being purchased by the appropriate institution. Another caveat in regards to private securitizers is if the purchaser fits into one of the other reportable types and is also a private securitizer. In this case, the loan should be reported as being purchased by a private securitizer.
An affiliate institution is a company that controls or is controlled by the financial institution. If the purchaser of the loan is an affiliate institution but also fits into one of the other reportable types, then the purchaser should be reported on your HMDA LAR as being an affiliate.
The purchaser should be reported as being Not Applicable if the application was denied, withdrawn, closed for incompleteness, or approved but not accepted. Another situation in which Not Applicable should be reported is if the institution sells some interest in the loan but retains the majority interest. However, if the institution sells all or the majority interest to more than one entity, then the entity that purchased the greater interest should be reported on your 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.
Applicant Data Point – Age, Ethnicity, Race and Sex
GMI Update – Latest Information
On August 24, the CFPB issued several clarifications to the HMDA regulation that will take effect in 2018. One of the major areas clarified is in regards to the GMI and certain situations that can occur.
One area that has been specifically addressed is when an applicant selects an ethnicity or race subcategory, but not the main aggregate category. When reporting this on your HMDA LAR, only the selected subcategories should be entered. The CFPB has clarified that an institution should not report an aggregate category that the applicant did not select.
The other situation addressed is when the borrower selects the option of “Other” when identifying their ethnicity or race. The CFPB states that the applicant may complete the “Other” subcategory even though they did not specifically select the subcategory of “Other”. If this occurs, the institution may, but is not required to, select the Other category. The institution would then report this accordingly.
There is also a clarification as to how the Other” race or ethnicity subcategory (when selected) should be reported. The 2018 HMDA regulation allows the institution to report up to five selections for each section of the GMI. When an applicant selects “Other” and also provides a specific ethnicity or race, it is only counted as one selection on your HMDA LAR.
Probably some of the biggest changes that will come with the 2018 HMDA regulation has to do with the collection of what is commonly referred to as Government Monitoring Information (GMI). Starting in 2018, an institution must now report the borrower’s age along with their ethnicity, race and sex. While the majority of what must be reported is nothing new to institutions, the ethnicity and race data points have been altered so as to give the borrower the option of being more detailed. This information will now be more expansive so as to provide financial institutions and those who monitor their activities, a better idea of who their consumers are. As it was under the old regulation, the borrower can decide whether or not they wish to provide their ethnicity, race or sex.
When it comes to reporting ethnicity, the borrower first has two options. They can either indicate that they are Not Hispanic or Latino or that they are Hispanic or Latino. If the borrower indicates that they are Hispanic or Latino, then the borrower has the option to select up to four subcategories. These are: Mexican, Puerto Rican, Cuban, and Other. If Other is selected, the borrower can provide the specific ethnicity that was not listed as a subcategory. The financial institution should then report both the selection of Other and the additional information that the borrower has provided.
The borrower’s race is another data point that will be expanded in 2018. Along with the usual aggregate categories that financial institutions have been collecting, there are now subcategories that correspond with those choices. The options that the borrower has to identify their race are: American Indian or Alaska Native; Asian (Asian Indian, Chinese, Filipino, Japanese, Korean, Vietnamese, or Other Asian); Black or African American; Native Hawaiian or Other Pacific Islander (Native Hawaiian, Guamanian or Chamorro, Samoan, or Other Pacific Islander); White; Information not provided by applicant in mail, internet or telephone application; and Not Applicable.
Each race category that is selected must be reported by the financial institution as the borrower is able to select more than one. As it was when reporting the borrowers’ ethnicity, if Other has been selected and additional information is given, both must be reported. The regulation does limit how many selected categories may be reported. The 2018 HMDA regulation states that only five aggregate race categories and race subcategories combined can be reported. If the borrower selects all five of the race categories and also some of the subcategories, then the financial institution would report just the five aggregate categories. Just remember, there is no limit as to how many boxes that a borrower can report.
The last data point that must be collected for the GMI is the borrower’s sex. Here, the borrower has the option to indicate whether they are male or female. If the borrower selects both, then the financial institution should report it as such.
As it was under the old HMDA rule, if during a face-to-face interview a borrower chooses not to provide any of the GMI, the loan officer should indicate this and then collect the information themselves based on visual observation. If this occurs, the loan officer should not choose any of the subcategories when reporting the borrowers’ ethnicity or race.
The borrowers age is a new data point that must be collected in 2018. The borrower/co-borrowers age should be reported as it was on the day the institution received the application. If the loan in question was purchased from another institution, then there is the option to report the borrower’s age as being Not Applicable. The only other situation in which Not Applicable may be reported for the age is when the borrower is not a natural person (i.e. a trust, corporation, or a partnership). The one caveat to this rule is that the age of the borrower must be reported if they are the beneficiary of a trust.
While these additions are not required to be collected until 2018, the CFPB has stated that they are allowing institutions to use the new GMI form for any application that is taken in 2017, in order to help loan officers become accustomed to the new form and to hopefully diminish the amount of reporting mistakes come 2018. If you would like to see what the new GMI addendum will look like, both the CFPB ( Consumerfinance.gov/HMDA) and Fannie Mae (Fanniemae.com/1003) have published examples.
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.