HMDA

Question 1

What is the purpose of HMDA?

Answer 1

The Home Mortgage Disclosure Act requires certain financial institutions to collect, report, and disclose information about their mortgage lending activity.

one statutory purpose of HMDA is to provide the public with information that will help show whether financial institutions are serving the housing credit needs of the communities and neighborhoods in which they are located.

A second statutory purpose is to aid public officials in distributing public sector investment so as to attract private investment to areas where it is needed.

Finally, the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) amended HMDA to require the collection and disclosure of data about applicant and borrower characteristics to assist in identifying possible discriminatory lending patterns and enforcing antidiscrimination statutes.

Question 2

True or false:

HMDA is a disclosure law that prohibits specific lender activities and establishes a quota system of mortgage loans to be made in any geographic area.

Answer 2

False. HMDA is a disclosure law but does not require either such thing.

Question 3

What is HMDA data used for? (3)

Answer 3

• Fair lending Examinations
• CRA examinations
• HMDA disclosures provide the public with info on home mortgage lending activities of particular reporting entities and of their communities. These disclosures are used by local, state, and federal officials to evaluate housing trends and issues and by community orgs to monitor financial institution lending patterns.

Question 4

What is a financial institution?

Answer 4

An institution is required to comply with Regulation C only if it is a financial institution as that term is defined in Regulation C. The definition of financial institution includes both
depository financial institutions and nondepository financial institutions, as those terms are separately defined in Regulation C. 12 CFR 1003.2(g).

An institution uses these two definitions, which are outlined below, as coverage tests to determine whether it is a financial institution that is required to comply with Regulation C. For the purpose of these examination procedures, the term financial institution refers to an institution that is either a depository financial institution or a nondepository financial institution that is subject to Regulation C.

Question 5

A bank, savings association, or credit union is a depository financial institution subject to reg C if it meets what coverage tests? (5)

Answer 5

• Asset-size threshold
• location test
• loan activity test
• federally related test
• loan volume threshold

Question 6

What is the asset size threshold to be considered a depository financial institution?

Answer 6

On the preceding December 31, the bank, savings association, or credit union had assets in excess of the asset-size threshold published annually in the Federal Register, as included in the Official Interpretations, 12 CFR Part 1003, Comment 2(g)-2, and posted on the Bureau’s website. 12 CFR 1003.2(g)(1)(i).

The phrase “preceding December 31” refers to the December 31 immediately preceding the current calendar year. For example, in 2019, the preceding December 31 is December 31, 2018.

For data collection in 2021, the asset-size exemption threshold is $48 million. Banks, savings associations, and credit unions with assets at or below $48 million as of December 31, 2020, are exempt from collecting data for 2021.

December 31, 2022- $54 million

Question 7

What is the location test to be considered a Depository financial institution?

Answer 7

On the preceding December 31, the bank, savings association, or credit union had a home or branch
office located in a metropolitan statistical area (MSA).

For purposes of this location test, a branch office for a bank, savings association, or credit union is an office:

(a) of the bank, savings association, or credit union
(b) that is considered a branch by the institution’s Federal or State supervisory agency.

For purposes of Regulation C, an automated teller machine or other free-standing electronic terminal is not a branch office regardless of whether the supervisory agency would consider it a branch.

Question 8

What is the loan-activity test to be considered a depository financial institution?

Answer 8

During the preceding calendar year, the bank, savings association, or credit union originated at least one home purchase loan or refinancing of a home purchase loan secured by a first lien on a one-to-four-unit dwelling.

Question 9

What is the federally related test to be considered a depository financial institution?

Answer 9

The bank, savings association,
or credit union:

a. Is federally insured; or
b. Is federally regulated; or
c. Originated at least one home purchase loan or refinancing of a home purchase loan that was secured by a first lien on a one-to-four-unit dwelling and also
(i) was insured, guaranteed, or supplemented by a Federal agency or
(ii) was intended for sale to the Federal National Mortgage Association (Fannie Mae) or the Federal Home Loan Mortgage Corporation (Freddie Mac).

Question 10

What is the loan volume threshold to be considered a depository financial institution?

Answer 10

The bank, savings association, or credit union meets or exceeds either the closed-end mortgage loan or the open-end line of credit loan-volume threshold in each of the two preceding calendar years.

• A bank, savings association, or credit union that originated at least (100) 25 for 2023 closed-end mortgage loans in each of the two preceding calendar years, or originated at least 200 open-end lines of credit in each of the two preceding calendar years meets or exceeds the loan-volume threshold.

Some transactions are exempt from the count or partially exempt.

Question 11

Under Regulation C, a for-profit mortgage-lending institution other than a bank, savings association, or credit union is a nondepository financial institution and subject to Regulation C if it meets what requirements? (2)

Answer 11

• Location Test

- loan volume thresholds

Question 12

What is the location test requirement to be considered a nondepository financial institution?

Answer 12

The institution had a home or branch office in a metropolitan statistical area (MSA) on the preceding December 31. The phrase “preceding December 31” refers to the December 31 immediately preceding the current calendar year. For example, in 2019, the preceding December 31 is December 31, 2018.

For purposes of this location test, a branch office of a nondepository financial institution is any one of the
institution’s offices at which the institution takes from the public applications for covered loans. A nondepository financial institution is also deemed to have a branch office in an MSA or metropolitan division (MD) if, in the preceding calendar year, it received applications for, originated, or purchased five or more covered loans related to property located in that MSA or MD, even if it does not have an office in that MSA.

Question 13

What are the loan volume thresholds to be considered a nondepository financial institution?

Answer 13

The institution meets or exceeds either the closed-end mortgage loan threshold or the open-end line of credit threshold in each of the two
preceding calendar years.

• An institution that originated at least 100 closed-end mortgage loans in each of the two preceding calendar years, or originated at least 500 open-end lines of credit in each of the two preceding calendar years meets or exceeds the loan-volume threshold.

Some transactions are exempt from the count or partially exempt.

Question 14

What is the regulation C exemption based on state law?

Answer 14

Regulation C provides that financial institutions may apply for an exemption from coverage. Specifically, the Bureau may exempt a State-chartered or State-licensed financial institution if the Bureau determines that the financial institution is subject to a State disclosure law that contains requirements substantially similar to those imposed by Regulation C and adequate enforcement provisions. Any State-licensed or State chartered financial institution or association of such institutions may apply to the Bureau for an exemption. An exempt institution shall submit the data required by State law to its State supervisory agency. A financial institution that loses its exemption must comply with Regulation C beginning with the calendar year following the year for which it last reported data under the State disclosure law.

Question 15

A financial institution is required to collect, record, and report information only for transactions that are subject to Regulation C.

What transactions are considered covered loans and how do you determine if a loan is covered?

Answer 15

A covered loan can be either a closed-end mortgage loan or an open-end line of credit, but an excluded transaction cannot be a covered loan.

To determine if a transaction is subject to Regulation C, a financial institution should first determine whether the loan or line of credit involved in the transaction is either a closed-end mortgage loan or an open-end line of credit.

If the loan or line of credit is neither a closed-end mortgage loan nor an open-end line of credit, the transaction does not involve a covered loan, and the financial institution is not required to report information related to the transaction. If the loan or line of credit is either a closed-end mortgage loan or an open-end line of credit, the financial institution must determine if the closed-end mortgage loan or open-end line of credit is an excluded transaction.

If the closed-end mortgage loan or the open-end line of credit is an excluded transaction, it is not a covered loan, and the financial institution is not required to report information related to the transaction. If the loan or line of credit is a closed-end mortgage loan or an open-end line of credit and is not an excluded transaction, the financial institution may be required to report information related to the transaction.

Question 16

What is a closed end mortgage loan? (3)

covered loan

Answer 16

A closed-end mortgage loan is:

1. An extension of credit;
2. Secured by a lien on a dwelling; and
3. Not an open-end line of credit.

Question 17

What is an open end line of credit? (3)

covered loan

Answer 17

An open-end line of credit is:

1. An extension of credit;
2. Secured by a lien on a dwelling; and
3. An open-end credit plan for which:
   a. The lender reasonably contemplates repeated transactions;
   b. The lender may impose a finance charge from time to- time on an outstanding unpaid balance; and
   c. The amount of credit that may be extended to the borrower during the term of the plan (up to any limit set by the lender) is generally made available to the extent that any outstanding balance is repaid.

Financial institutions may rely on Regulation Z, 12 CFR 1026.2(a)(20), and its official commentary when determining whether a transaction is extended under a plan for which the lender reasonably contemplates repeated transactions, the lender may impose a finance charge from time-to-time on an outstanding unpaid balance, and the amount of credit that may be extended to the borrower during the term of the plan is generally made available to the extent that any outstanding
balance is repaid.

Question 18

Is the following example a covered transaction?

A business-purpose transaction that is exempt from Regulation Z but is otherwise open-end credit under Regulation Z and is secured by a lien on a dwelling that is not an excluded transaction.

Answer 18

This would be a covered transaction.

A business-purpose transaction that is exempt from Regulation Z but is otherwise open-end credit under Regulation Z, 12 CFR 1026.2(a)(20), would be an open-end line of credit under Regulation C if it is an extension of credit secured by a lien on a dwelling and is not an excluded transaction.

Question 19

What is the importance of “extension of credit” when determining if a closed end loan or open end line of credit is a covered transaction?

Answer 19

A closed-end loan or open-end line of credit is not a closed end mortgage loan or an open-end line of credit under Regulation C unless it involves an extension of credit.

Question 20

True or false:

Individual draws on an open end line of credit are separate extensions of credit.

Answer 20

False. they are not separate extensions of credit.

Question 21

What is an extension of credit?

Answer 21

Under Regulation C, an “extension of credit” generally requires a new debt obligation. Thus, for example, a loan modification where the existing debt obligation is not satisfied and replaced is not generally a covered loan (i.e., closed-end mortgage loan or open-end line of credit) under Regulation C. Except as described below, if a transaction modifies, renews, extends, or amends the terms of an existing debt obligation, but the existing debt obligation is not satisfied and replaced, the transaction is not a covered loan.

The two exceptions that an extension of credit be a new debt obligation are assumptions and New York State consolidations.

Question 22

Is the following a covered loan?

Open-end LOC secured by 1-4 family dwelling that was modified, renewed, extended, or amended the terms of the existing debt obligation, but the existing debt obligation was not satisfied and replaced.

Answer 22

NO, if a transaction modifies, renews, extends, or amends the terms of
an existing debt obligation, but the existing debt obligation is not satisfied and replaced, the transaction is not a covered loan.

Question 23

What is an assumption?

Answer 23

Assumptions are extensions of credit under Regulation C.

A loan assumption is a transaction in which a financial institution enters into a written agreement accepting a new borrower in place of an existing borrower as the obligor on an existing debt obligation. Regulation C clarifies that assumptions include successor-in-interest transactions in
which an individual succeeds the prior owner as the property owner and then assumes the existing debt secured by the property. Assumptions are extensions of credit even if the new borrower merely assumes the existing debt obligation and no new debt obligation is created.

Question 24

What is a New York State consolidation, extension, and modification agreement?

Answer 24

Regulation C provides that transactions completed pursuant to a New York State consolidation, extension, and modification agreement (New York CEMA) and classified as a supplemental mortgage under New York Tax Law Section 255, such that the borrower owes reduced or no mortgage
recording taxes, is an extension of credit. However, the regulation also provides that certain transactions providing new funds that are consolidated into a New York CEMA are excluded from the HMDA reporting requirements.

Question 25

What is a dwelling and how does it factor into covered loans?

Answer 25

A loan is not a closed-end mortgage loan and a line of credit is not an open-end line of credit unless it is secured by a lien on a dwelling. A dwelling is a residential structure. There is no requirement that the structure be attached to real property or that it be the applicant’s or borrower’s residence.

Question 26

What are some examples of dwellings? (8)

Answer 26

1. Principal residences;
2. Second homes and vacation homes;
3. Investment properties;
4. Residential structures whether or not attached to real
   property;
5. Detached residential structures;
6. Individual condominium and cooperative units;
7. Manufactured homes or other factory-built homes; and
8. Multifamily residential structures or communities, such as apartment buildings, condominium complexes,
   cooperative buildings or housing complexes, and manufactured home communities.

Question 27

Are multifamily homes considered dwellings under HMDA?

Answer 27

Yes, A dwelling is not limited to a structure that has four or fewer
units. It also includes a multifamily dwelling, which is a dwelling that includes five or more individual dwelling units. A multifamily dwelling includes a manufactured home
community.

Question 28

Is a manufactured home community considered a dwelling?

Answer 28

Yes, a loan related to a manufactured home community is secured by a dwelling even if it is not secured by any individual manufactured homes, but is secured only by the land that constitutes the manufactured home community.

Question 29

Is the following example considered a dwelling?

A loan that is secured only by the common areas of a condominium complex or only by an assignment of rents from an apartment building

Answer 29

This is not secured by a dwelling.

a loan related to a multifamily residential structure or community other than a manufactured home community is not secured by a dwelling unless it is secured by one or more individual dwelling units.

Question 30

Is the following example considered a dwelling?

landlord uses a covered loan to improve five or more dwellings, each with one individual dwelling unit, located in different parts of a town, and the loan is secured by those
properties

Answer 30

No, the covered loan is not secured by a multifamily dwelling as a covered loan secured by 5 or more separate dwellings, which are not multifamily dwellings in more than one location is a not a loan secured by a multifamily dwelling.

Question 31

Is the following example secured by a multifamily dwelling?

investor purchases 10 individual unit condominiums in a 100- unit condominium complex using a covered loan.

Answer 31

The covered loan would not be secured by a multifamily dwelling, as a covered loan secured by five or more separate dwelling that are located within a multifamily dwelling, but which is not secured by the ENTIRE multifamily dwelling is not secured by a multifamily dwelling as defined by HMDA.

Question 32

What are some things that would not be considered dwellings? (4)

Answer 32

1. Recreational vehicles, such as boats, campers, travel
   trailers, or park model recreational vehicles;
2. Houseboats, floating homes, or mobile homes constructed
   before June 15, 1976;
3. Transitory residences, such as hotels, hospitals, college
   dormitories, or recreational vehicle parks; and
4. Structures originally designed as a dwelling but used
   exclusively for commercial purposes, such as a home
   converted to a daycare facility or professional office.

Question 33

Is the following a dwelling?

Property used for both Residential and commercial purposes like a building with both apartment and retail units.

Answer 33

Its depends. It is a dwelling if the property’s primary use is residential. If the property’s primary use is commercial it is not a dwelling

Question 34

Is the following a dwelling?

A property used for both long-term housing and to provide
assisted living or supportive housing services.

Answer 34

It is a dwelling. However, transitory residences used to provide such services are not dwellings. Properties used to provide medical care, such as skilled nursing, rehabilitation, or long-term medical care, are not dwellings. If a property is used for long-term housing, to provide related services (such as assisted living), and to provide medical care, the property is a dwelling if its primary use is residential.

Question 35

How can a bank determine if a property’s primary use is residential?

In order to identify if it is a dwelling.

Answer 35

A financial institution may use any reasonable standard to
determine a property’s primary use, such as square footage,
income generated, or number of beds or units allocated for
each use. It may select the standard on a case-by-case basis.

Question 36

What transactions are specifically excluded from coverage under HMDA? (13)

“Excluded Transactions”

Answer 36

1. A closed-end mortgage loan or an open-end line of credit that a financial institution originates or purchases in a fiduciary capacity, such as a closed-end mortgage loan or an open-end line of credit that a financial institution originates or purchases as a trustee.
2. A closed-end mortgage loan or an open-end line of credit secured by a lien on unimproved land.
3. A closed-end mortgage loan or an open-end line of credit that is temporary financing.
4. The purchase of an interest in a pool of closed-end mortgage loans or open-end lines of credit, such as
   mortgage-participation certificates, mortgage-backed securities, or real estate mortgage investment conduits.
5. The purchase solely of the right to service closed-end mortgage loans or open-end lines of credit.
6. The purchase of a closed-end mortgage loan or an open end line of credit as part of a merger or acquisition or as part of the acquisition of all of a branch office’s assets and liabilities.
7. A closed-end mortgage loan or an open-end line of credit, or an application for a closed-end mortgage loan or open end line of credit, for which the total dollar amount is less than $500.
8. The purchase of a partial interest in a closed-end mortgage loan or an open-end line of credit.
9. A closed-end mortgage loan or an open-end line of credit if the proceeds are used primarily for agricultural purposes or if the closed-end mortgage loan or open-end line of credit is secured by a dwelling that is located on real property that is used primarily for agricultural purposes.
10. A closed-end mortgage loan or an open-end line of credit that is or will be made primarily for business or commercial purposes, unless it is a home improvement loan, a home purchase loan, or a refinancing.
11. A closed-end mortgage loan if the financial institution originated fewer than 100 closed-end mortgage loans in either of the two preceding calendar years.
12. An open-end line of credit if the number of open-end lines of credit that the financial institution originated in either of the two preceding calendar years does not meet or exceed the applicable threshold. (500 or fewer in proceeding two calendar years)
13. A transaction that provided (or, in the case of an application, proposed to provide) new funds to the borrower in advance of being consolidated in a New York CEMA classified as a supplemental mortgage under New York Tax Law Section 255. However, the transaction is excluded only if final action on the consolidation was taken in the same calendar year as the final action on the new funds transaction.

Question 37

Is the following an excluded transaction?

Closed end mortgage loan secured by a lien on unimproved land, but the borrower tells the bank they plan to use the loan proceeds to build a dwelling on the property a year after purchasing the land.

Answer 37

No this is not excluded.

Generally, a loan or line of credit must be secured by a dwelling to be a covered loan. Regulation C also lists closed-end mortgage loans and open-end lines of credit secured only by vacant or unimproved land as excluded transactions. However, a loan or line of credit secured by a lien on unimproved land is deemed to be secured by a dwelling (and might not be excluded) if the financial institution knows, based on information that it receives from the applicant or borrower at the time the application is received or the credit decision is made, that the proceeds of that loan or credit line will be used within two years after closing or account opening to construct a dwelling on, or to purchase a dwelling to be placed on, the land.

Question 38

A closed end mortgage loan or open end line of credit that is temporary financing is considered an excluded transaction.

Are there any exceptions to this?

Is a construction only loan considered temporary financing?

Answer 38

Yes financing would not be considered temporary (thus excluded) if it is designed to be replaced by a separate permanent financing extended to the same borrower at a later time. The separate permanent financing may be extended by any lender (i.e., by either the lender that extended the temporary financing or another lender).

In addition, a construction-only loan or line of credit is considered temporary financing and excluded under Regulation C if the loan or line of credit is extended to a person exclusively to construct a dwelling for sale.

Question 39

The following is an excluded transaction:

A closed-end mortgage loan or an open-end line of credit if the proceeds are used primarily for agricultural
purposes or if the closed-end mortgage loan or open-end line of credit is secured by a dwelling that is located on real property that is used primarily for agricultural purposes.

How should examiners determine if the transaction is primarily for agriculture purposes and what are examples of primary agricultural purposes?

Answer 39

Regulation C directs financial institutions to Regulation Z’s official commentary for guidance on what is an agricultural purpose.

Regulation Z’s official commentary states that agricultural purposes include planting, propagating, nurturing, harvesting, catching, storing, exhibiting, marketing, transporting, processing, or manufacturing food, beverages, flowers, trees, livestock, poultry, bees, wildlife, fish, or shellfish by a natural person engaged in farming, fishing, or growing crops, flowers, trees, livestock, poultry, bees, or wildlife.

A financial institution may use any reasonable standard to determine the primary use of the property, and may select the standard to apply on a case-by-case basis.

Question 40

The following is an excluded transaction:
A closed-end mortgage loan or an open-end line of credit
that is or will be made primarily for business or commercial purposes, unless it is a home improvement loan, a home purchase loan, or a refinancing.

What is meant by unless it is a home improvement loan, a home purchase loan, or a refinancing?

How can examiners determine if a loan is primarily for business or commercial purposes?

Answer 40

Not all transactions that are primarily for a
business purpose are excluded transactions. Thus, a
financial institution must collect, record, and report data
for dwelling-secured, business-purpose loans and lines of
credit that are home improvement loans, home purchase
loans, or refinancings if no other exclusion applies.

Regulation C provides that, if a closed-end mortgage loan
or an open-end line of credit is deemed to be primarily for
a business, commercial, or organizational purpose under
Regulation Z, 12 CFR 1026.3(a) and its official
commentary, then the loan or line of credit also is deemed
to be primarily for a business or commercial purpose.

Question 41

A bank is not required to collect, record, or report closed end mortgage loans if it originated fewer than 100 in either two proceeding calendar years.

Even though they are excluded, can a bank still report applications for, originations of, and purchases of closed end mortgage loans?

What are the regulation B implications?

Answer 41

A financial institution may report applications for, originations of, and purchases of closed-end mortgage loans that are excluded transactions under 12 CFR 1003.3(c)(11). However, a financial institution that chooses to report such excluded applications, originations, and purchases must report all such applications it received for closed-end mortgage loans, all closed-end mortgage loans it originates, and all closed end mortgage loans it purchases that would otherwise be covered loans for a given calendar year.

Regulation B permits a financial institution to collect information regarding the ethnicity, race, and sex of an applicant for a closed-end mortgage loan that is an excluded transaction under 12 CFR 1003.3(c)(11), if the financial institution submits HMDA data concerning such closed-end mortgage loans and applications or if it submitted such HMDA data for any of the preceding five calendar years.

Question 42

A financial institution is not required to collect, record, or report open-end lines of credit if it originated fewer than 500 of them in either of the two preceding calendar years.

Even though they are excluded, can a bank choose to report such excluded applications, originations, or purchases?

What are the regulation B implications?

Answer 42

Yes, but must report all applications for otherwise covered open-end lines of credit that it receives, all otherwise covered open-end lines of credit it originates, and all otherwise covered open-end lines of credit it purchases that would otherwise be covered loans for a given calendar year.

Regulation B permits a financial institution to collect information regarding the ethnicity, race, and sex of an applicant for an open-end line of credit that is an excluded transaction under 12 CFR 1003.3(c)(12), if it submits HMDA data concerning such open-end lines of credit and applications or if it submitted such HMDA data for any of the preceding five calendar years.

Question 43

The following is an excluded transaction:
A transaction that provided (or, in the case of an application, proposed to provide) new funds to the borrower in advance of being consolidated in a New York CEMA classified as a supplemental mortgage under New York Tax Law Section 255.

Are there any exceptions?

Answer 43

Yes, the transaction is excluded only if final action on the consolidation was taken in the same calendar year as the final action on the new funds transaction.

Additionally, the transaction is excluded only if, at the time that it originated the transaction providing the new funds, the financial institution intended to consolidate the loan into a New York CEMA. This exclusion does not apply to similar preliminary transactions that are consolidated pursuant to laws other than New York Tax Law Section 255. Such preliminary transactions under other laws must be reported if they are covered loans and are not covered by another exclusion.

New funds provided in advance of being consolidated into a New York CEMA classified as a supplemental mortgage under New York Tax Law Section 255 are reported only insofar as they form part of the total amount of the reported New York CEMA. They are not reported as a separate amount. If a New York CEMA that consolidates an excluded preliminary transaction is carried out in a transaction involving an assumption, the financial institution reports the New York CEMA and does not report the preliminary transaction separately.

Question 44

What should a financial institution do after determining whether a transaction involves a covered loan?

Answer 44

It must determine whether it has engaged in activity that obligates it to report information about the transaction.

Generally, a financial institution is required to report information for actions taken on applications (as that term is defined below) for covered loans, originations of covered loans, and purchases of covered loans. If a financial institution receives an application and that application results in the financial institution originating a
covered loan, the financial institution reports the origination of the covered loan, and does not separately report the application.

Question 45

What categories of lending activities/transactions should be considered for HMDA reporting? (4)

Answer 45

• Applications
• Originations and Purchases of Covered Loans
• Transactions involving Multiple Entities
• Transactions with Partial exemptions

Question 46

What is an application? (3)

Answer 46

An application is:

• an oral or written request
• for a covered loan
• that is made in accordance with procedures the financial institution uses for the type of credit requested.

This definition of application is similar to the Regulation B definition, except that prequalification requests are not applications under Regulation C. Interpretations that appear in the official commentary to Regulation B are generally applicable to the definition of application under Regulation C, except for those interpretations that include a prequalification request within the definition of application.

Question 47

Is a preapproval considered an application for reporting purposes?

What is a preapproval? (4)

Answer 47

It depends. Under Regulation C, a request for a preapproval may be treated differently than a request for a prequalification for certain types of loans. The determination of whether a request is a prequalification request (which is not an application) or a preapproval request (which might be an application) is based on Regulation C, not on the labels that a financial institution uses or interpretations of other regulations, such as Regulation B.

A preapproval request is an application under Regulation C if the request is:

1. For a home purchase loan;
2. Not secured by a multifamily dwelling;
3. Not for an open-end line of credit or for a reverse mortgage; and
4. Reviewed under a preapproval program (see definition of preapproval program)

Question 48

What is a preapproval program? (2)

relevant to determine if a pre approval should be reported as an application

Answer 48

A preapproval program for purposes of Regulation C is a program in which the financial institution:

1. Conducts a comprehensive analysis of the applicant’s creditworthiness (including income verification), resources, and other matters typically reviewed as part of the financial institution’s normal credit evaluation program; and then
2. Issues a written commitment that: (a) is for a home purchase loan; (b) is valid for a designated period of time and up to a specified amount; and (c) is subject only to specifically permitted conditions.

Question 49

The written commitment issued as part of a preapproval program can be subject to only what types of conditions? (3)

Required for pre approvals to be considered applications under reporting requirements.

Answer 49

The written commitment issued as part of the preapproval program can be subject to only the following types of conditions:

1. Conditions that require the identification of a suitable property;
2. Conditions that require that no material change occur regarding the applicant’s financial condition or creditworthiness prior to closing; and
3. Limited conditions that
   (a) are not related to the applicant’s financial condition or creditworthiness and
   (b) the financial institution ordinarily attaches to a traditional home mortgage application.

Examples of conditions ordinarily attached to a traditional home mortgage application include requiring an acceptable title insurance binder or a certificate indicating clear termite inspection sale of the applicant’s present home to purchase a new home, a settlement statement showing adequate proceeds from the sale of the present home.

Question 50

Is the following a pre approval program as defined under HMDA?

Bank does not regularly use procedures to consider pre approval requests but instead considers requests on an ad hoc basis.

Answer 50

No. If a financial institution does not regularly use procedures to consider requests but instead considers requests on an ad hoc basis, the financial institution is not required to treat the ad hoc requests as having been reviewed under a preapproval program. However, a financial institution should be generally consistent in following uniform procedures for considering such ad hoc requests.

Question 51

When is a financial institution obligated to report HMDA data on an application? (2)

Answer 51

Under Regulation C, a financial institution must collect, record, and report data regarding an application it receives if:

(1) the application did not result in the financial institution originating a covered loan; and
(2) the financial institution took action on the application or the applicant withdrew the application while the financial institution was reviewing it.

Question 52

When would a bank report a transaction as an application vs an origination?

Answer 52

If the application results in the financial
institution originating a covered loan, the financial institution reports the covered loan, not the application itself.

Otherwise it would be reported as an application.

Question 53

When would a bank report preapproval requests as applications or originations?

Answer 53

Although requests under preapproval programs are applications, a financial institution reports data regarding a request under a preapproval program only if the preapproval request is denied or approved but not accepted. A financial institution will also report a request under a preapproval
program that results in the financial institution originating a home purchase loan, but it will be reported as an originated covered loan.

Question 54

On what document does a bank report HMDA data?

And reporting years are dependent on what?

Answer 54

On the HMDA LAR for the calendar year during which it takes action even if the bank received the application in the previous calendar year.

Question 55

True or false:

A financial institution must collect, record, and report information regarding originations and purchases of covered loans.

Answer 55

True.

Question 56

Does a repurchase of a covered loan need to be reported? (not a repurchase agreement)

Answer 56

Yes.

A purchase includes a repurchase of a covered loan, regardless of whether the financial institution chose to repurchase the covered loan or was required to repurchase it because of a contractual obligation, and regardless of whether the repurchase occurred within the same calendar year that the covered loan was originated or in a different calendar year.

Question 57

Should the following transaction be reported as a purchase under HMDA?

Temporary transfer of a covered loan to an interim funder or warehouse creditor as part of an interim funding agreement under which the bank that originated the loan is obligated to repurchase it for sale to a subsequent investor. (repurchase agreements)

Answer 57

No.

A purchase does not include a temporary transfer of a covered loan to an interim funder or warehouse creditor as part of an interim funding agreement under which the financial institution that originated the covered loan is obligated to repurchase it for sale to a subsequent investor. Such funding agreements are often referred to as repurchase agreements and are sometimes used as the functional equivalents of warehouse lines of credit.

Question 58

How should transactions involving multiple entities generally be reported?

Answer 58

Only one financial institution reports the origination of a covered loan. If more than one institution is involved in the origination of a covered loan, the institution that makes the credit decision approving the application before loan closing or account opening is responsible for reporting the origination of the covered loan. It is not relevant whether the loan closed in the reporting financial institution’s name.

If more than one institution approved an application prior to loan closing or account opening and one of those institutions purchased the covered loan after closing or account opening, the institution that purchased the covered loan after closing or account opening is responsible for reporting the origination of the covered loan.

Question 59

True or false:

Transactions involving multiple entities

If a financial institution reports a covered loan as an origination, it reports all of the information required to be reported for the origination of a covered loan, even if the covered loan was not initially payable to the financial institution that is reporting the covered loan as an origination.

Answer 59

True

Question 60

True or false:

Transactions involving multiple entities

When reporting a covered loan as an
origination, a financial institution cannot rely on exceptions or
exclusions that apply to purchased covered loans, but that do
not apply to originations of covered loans.

Answer 60

True

Question 61

For transactions involving multiple entities, how should the reporting entity report applications that did not result in originations?

Answer 61

In the case of an application that did not result in an origination, a financial institution reports the action it took on that application if it made a credit decision on the application or was reviewing the application when the application was withdrawn or closed for incompleteness. The financial institution is also required to report the application if the financial institution was reviewing the application when it was withdrawn or the file was closed for incompleteness.

Question 62

Who reports the HMDA information in the following scenario?

Financial institution makes a credit decision on a covered loan or application through the actions of an agent.

Answer 62

If a financial institution makes a credit decision on a covered loan or application through the actions of an agent, the financial institution reports the covered loan or application. State law determines whether one party is the agent of another party.

Question 63

What does it mean if a covered loan or application is covered by a partial exemption?

Answer 63

This means the bank is not required to collect, record, and report specific data points.

Question 64

What conditions must a financial institutions meet to be eligible for partial exemptions? (2)

What if a bank does not meet the requirements for eligibility?

Answer 64

• must be an insured depository institution or credit union
• must not have received a less than satisfactory rating on its two most recent CRA PE ratings as of Dec 31 of the preceding year (overall needs or substantial noncompliance)

A financial institution that does not satisfy either the definition of an “insured credit union” or an “insured depository institution” may not rely on either of the partial exemptions, even if it satisfies the loan-volume thresholds. Similarly, an insured depository institution that does not satisfy the criteria regarding CRA examination history cannot rely on either of the partial exemptions.

Question 65

When do partial exemptions apply? (2)

Answer 65

Each of the partial exemptions applies only to certain covered loans and applications and only if an applicable loan-volume threshold is met.

An insured depository institution or insured credit union:

(1) must meet the applicable loan-volume threshold for closed-end mortgage loans in order for a partial exemption to apply to its closed-end mortgage loan transactions; and
(2) Must meet the applicable loan-volume threshold for open-end lines of credit in order for a partial exemption to apply to its open-end line of credit transactions.

Question 66

Therefore, if a covered loan or application is covered by a partial exemption, the financial institution is required to collect, record, and report __ specific data points specified in 12 CFR 1003.4(a)(1)–(38), but is exempt from collecting, recording, and reporting __other specific data points for that transaction

Answer 66

22 data points

26 data points

Question 67

What is the loan volume threshold for the closed end mortgage partial exemption?

Answer 67

A partial exemption applies to an eligible financial institution’s applications for, originations of, and purchases of closed-end mortgage loans if the institution originated fewer than 500 closed-end mortgage loans in each of the two preceding calendar years.

Similar to other data collection and reporting, the bank would only count covered loans.

Question 68

What is the loan volume threshold for partial exemption on open end lines of credit?

Answer 68

A partial exemption applies to an eligible financial institution’s applications for, originations of, and purchases of open-end lines of credit if the institution originated fewer than 500 open-end lines of credit in each of the two preceding calendar years.

However, a financial institution is not required to collect or report any information for open-end lines of credit if the institution originated fewer than 500 open-end lines of credit during either of the two preceding calendar years. This is because open-end lines of credit are excluded transactions for a financial institution that originated fewer than 500 open end lines of credit during either of the two preceding calendar years.

Question 69

True or False:

The partial exemption for closed-end mortgage loans and the partial exemption for open-end lines of credit operate independently of one another. Thus, in a given calendar year, an eligible financial institution may be able to rely on one or both partial exemptions.

Answer 69

True

Question 70

If a partial exemption applies to a covered loan or application, what data points need not be collected or reported (26)

Answer 70

• Universal Loan Identifier (ULI) (1003.4(a)(1)(i)) If a bank does not report ULI it must report a non-universal loan identifier.
• Application Channel (1003.4(a)(33))
• Loan Term (1003.4(a)(25))
• Reasons for Denial (1003.4(a)(16)17
• Property Address (1003.4(a)(9)(i))
• Manufactured Home Secured Property Type
(1003.4(a)(29))
• Manufactured Home Land Property Interest
(1003.4(a)(30))
• Property Value (1003.4(a)(28))
• Multifamily Affordable Units (1003.4(a)(32))
• Debt-to-Income Ratio (1003.4(a)(23))
• Combined Loan-to-Value Ratio (1003.4(a)(24))
• Credit Score (1003.4(a)(15))
• Automated Underwriting System (1003.4(a)(35))
• Interest Rate (1003.4(a)(21))
• Introductory Rate Period (1003.4(a)(26))
• Rate Spread (1003.4(a)(12))
• Non-Amortizing Features (1003.4(a)(27))
• Total Loan Costs or Total Points and Fees (1003.4(a)(17))
• Origination Charges (1003.4(a)(18))
• Discount Points (1003.4(a)(19))
• Lender Credits (1003.4(a)(20))
• Prepayment Penalty Term (1003.4(a)(22))
• Reverse Mortgage Flag (1003.4(a)(36))
• Open-End Line of Credit Flag (1003.4(a)(37))
• Business or Commercial Purpose Flag (1003.4(a)(38))
• Mortgage Loan Originator Identifier (1003.4(a)(34))

Question 71

True or false:

A financial institution may not opt to collect, record, and report one or more of the 26 data points for a covered loan or application that is covered by a partial exemption.

Answer 71

False. A bank can still choose to collect a report all exempt data points even if covered by a partial exemption.

Question 72

Of the 26 partially exempt data points which Seven have multiple data fields and why is that important if a bank chooses to collect and report the exempt data?

Answer 72

Property address, credit score, reasons for denial, total loan costs or total points and fees, non-amortizing features, application channel, and automated underwriting system have multiple data fields.

If a financial institution opts to report a data point with multiple fields, it must report all of the data fields that make up that data point.

Question 73

What should bank’s report on the LAR for partially exempt data points if applicable?

Answer 73

Either exempt or NA.

Question 74

If a covered loan or application is covered by a partial exemption, a bank must collect, record, and report what 22 data points?

Answer 74

• Ethnicity (1003.4(a)(10)(i))
• Race (1003.4(a)(10)(i))
• Sex (1003.4(a)(10)(i))
• Age (1003.4(a)(10)(ii))
• Income (1003.4(a)(10)(iii))
• Legal Entity Identifier (LEI) (1003.5(a)(3))
• Application Date (1003.4(a)(1)(ii)
• Preapproval (1003.4(a)(4))
• Loan Type (1003.4(a)(2))
• Loan Purpose (1003.4(a)(3))
• Loan Amount (1003.4(a)(7))
• Action Taken (1003.4(a)(8)(i))
• Action Taken Date (1003.4(a)(8)(ii))
• State (1003.4(a)(9)(ii)(A))
• County (1003.4(a)(9)(ii)(B))
• Census Tract (1003.4(a)(9)(ii)(C))
• Construction Method (1003.4(a)(5))
• Occupancy Type (1003.4(a)(6)
• Lien Status (1003.4(a)(14))
• Number of Units (1003.4(a)(31))
• HOEPA Status (1003.4(a)(13))
• Type of Purchaser (1003.4(a)(11))

Question 75

How many data fields are reported on the HMDA LAR and how many are described in reg C?

Why are these two numbers different?

Answer 75

Each data point may correspond to more than one field reported on the HMDA LAR. Accordingly there are 48 data points described in Regulation C and 110 fields reported on the HMDA LAR. One example of a data point that corresponds to multiple fields is the ethnicity data point. Each applicant and co-applicant may enter up to five ethnicities on their application.

Question 76

Regulation C requires a financial institution to record the data about a covered loan or application on a HMDA LAR, what are the specific timing requirements for recording loans?

Answer 76

Regulation C requires a financial institution to record the data about a covered loan or application on a HMDA LAR within 30 calendar days after the end of the calendar quarter in which the financial institution takes final action on the covered loan or application.

A financial institution is not required to record all of its HMDA data for a quarter on a single HMDA LAR. Rather, a financial institution may record data on a single HMDA LAR or may record data on one or more HMDA LARs for different branches or different loan types (such as home purchase loans or home improvement loans or loans on multifamily dwellings).

Other regulations may require more frequent recording.

Quarterly records can be maintained in any format as long as they are available upon request.

Question 77

In addition to the required HMDA data, what do bank’s need to submit with their LAR? (7)

Answer 77

1. Its name;
2. The calendar year and, effective January 1, 2020, if applicable, the calendar quarter to which the data relate (see 12 CFR 1003.5(a)(1)(ii)20 for information on quarterly reporting);
3. The name and contact information for a person who can be contacted with questions about the submission;
4. The financial institution’s appropriate Federal agency;
5. The total number of entries in the submission;
6. The financial institution’s Federal Taxpayer Identification Number (TIN); and
7. The financial institution’s Legal Entity Identifier (LEI).

Question 78

True or False:

If two financial institutions that previously reported HMDA data merge and the surviving financial institution retained its LEI but obtained a new TIN, the surviving financial institution reports the new TIN beginning with its next HMDA data submission.

Answer 78

True

Question 79

How should a financial institution of a subsidiary of a bank or savings association complete and submit its HMDA LAR?

When is a financial institution considered a subsidiary for HMDA reporting purposes?

Answer 79

A financial institution that is a subsidiary of a bank or savings association must complete its own HMDA LAR and submit it, directly or through its parent, to the appropriate Federal agency for the subsidiary’s parent. 12 CFR 1003.5(a)(2).

A financial institution is a subsidiary of a bank or savings association (for purposes of reporting HMDA data to the same agency as the parent) if the bank or savings association holds or controls an ownership interest in the financial institution that is greater than 50 percent.

Question 80

How often must HMDA data be submitted by applicable institutions?

Answer 80

Under Regulation C, a financial institution must submit its annual HMDA LAR in electronic format to its appropriate Federal supervisory agency by March 1 of the year following the calendar year for which the data are collected.

Question 81

True or false:

An individual who is an authorized representative of the financial institution and who has knowledge regarding the submitted data must certify its accuracy and completeness prior to each annual submission.

Answer 81

True

Question 82

What are the record retention requirements for a HMDA LAR?

Answer 82

A financial institution must retain a copy of its submitted annual HMDA LAR for at least three years. Financial institutions may retain their annual HMDA LARs in either paper or electronic form.

Question 83

When do the quarterly reporting requirements apply to a financial institution?

What needs to be reported quarterly?

Answer 83

The HMDA Rule requires some financial institutions to report data on a quarterly basis as well as on an annual basis. The quarterly reporting requirement is effective January 1, 2020.

It applies to a financial institution that reported at least 60,000 originated covered loans and applications (combined) for the preceding calendar year.

The financial institution does not count purchased covered loans when determining whether the quarterly reporting requirement applies. If quarterly reporting is required, the financial institution must report all data required to be recorded for the calendar quarter within 60 calendar days after the end of the calendar quarter. The quarterly reporting requirement does not apply, however, to the fourth quarter of the year. the quarterly reporting requirement reports its fourth quarter data as part of its annual submission. In its annual submission, a quarterly reporter will resubmit the data previously submitted for the first three calendar quarters of the year, including any corrections to the data, as well as its fourth quarter data.

Question 84

What are the disclosure statement requirements under HMDA? (4)

Answer 84

• Under Regulation C, the FFIEC shall provide a notice to the financial institution that the financial institution’s disclosure statement (aggregated data derived from loan-level data submitted for the prior calendar year) is available.
• No later than three business days (any calendar day other than a Saturday, Sunday, or legal public holiday) after receiving notice from the FFIEC, the financial institution must make available to the public, upon request, a written notice that clearly conveys that the financial institution’s disclosure statement may be obtained on the Bureau’s website.
• A financial institution must make the notice available to the public for a period of five years.
• At its discretion, a financial institution may also provide its disclosure statement and impose a reasonable fee for costs incurred reproducing or providing the statement. Even if it provides the disclosure statement, a financial institution must comply with the notice requirement.

Question 85

What are the disclosure requirements for a modified HMDA LAR? (3)

Answer 85

-Upon request from a member of the public, a financial institution must provide a written notice regarding the
availability of its modified HMDA LAR (the financial institution’s HMDA LAR, as modified by the Bureau to protect applicant and borrower privacy). The written notice must clearly convey that the financial institution’s HMDA LAR, as modified by the Bureau to protect borrower and applicant privacy, may be obtained on the Bureau’s website.

• The notice must be made available in the calendar year following the calendar year for which the financial institution collected data. The notice must be made available for three years.
• At its discretion, a financial institution may also provide its HMDA LAR, as modified by the Bureau, and impose a reasonable fee for any costs incurred to reproduce or provide the data. Even if it decides to provide the modified HMDA LAR, a financial institution must comply with the notice requirement.

Question 86

Under the modified HMDA LAR notice requirements, how long would a bank need to make the notice available if the data was for a 2018 modified HMDA LAR?

Answer 86

The notice must be made available for three years.

For data that it was required to collect in 2018, a financial institution must make available a notice through calendar year 2021 that its modified HMDA 2018 LAR is available.

Question 87

What posted notices are required under HMDA for reporters?

Answer 87

A financial institution must post, in the lobby of its home office and each branch office physically located in an MSA or Metropolitan Division (MD), a general notice about the availability of its HMDA data on the Bureau’s website. A financial institution may, but is not required to, use the sample notice in comment 5(e)-1 to the regulation to satisfy this requirement. In any case, the notice must clearly convey that the financial institution’s HMDA data are available on the Bureau’s website.

Question 88

Is the following a violation?

An error in compiling or recording data for a covered loan or application. The error was unintentional and occurred despite maintenance of procedures reasonably adapted to avoid such errors.

Answer 88

No this is not a violation.

Question 89

True or false:

A financial institution that obtains the property-location information for applications and covered loans from third parties is not responsible for ensuring that the information reported is correct.

Answer 89

False. A bank is responsible for ensuring the accuracy of third party reporting.

Question 90

Is the following a violation?

An incorrect entry for a census tract number, where the bank maintains procedures reasonably adapted to avoid such an error.

Answer 90

This is deemed a bona fide error and is not a violation.

Question 91

Is the following a violation?

An institution makes a good-faith effort to record all data concerning covered transactions fully and accurately within thirty calendar days after the end of each calendar quarter, and some data are nevertheless inaccurate or incomplete.

Answer 91

The error or omission is not a violation of HMDA or Regulation C, provided that the institution corrects or completes the information prior to submitting the loan/application register to its regulatory agencies.

Question 92

What sort of administrative enforcement applies to HMDA violations?

Answer 92

A violation of Regulation C is subject to administrative sanctions, including civil money penalties. Compliance can be enforced by the Bureau, the U.S. Department of Housing and Urban Development, the FDIC, the FRB, the National Credit Union Administration, or the Office of the Comptroller of Currency.

Question 93

What is the open end line of credit threshold to be considered a HMDA reporter for 2020-2021?

What about for 2022?

Answer 93

2020-2021 the bank would need to have originated 500 open end lines of credit in the preceding two calendar years.

2020 the bank would need to have originated 200 open end lines of credit in the preceding two calendar years.

Question 94

What is the closed end loan threshold to become a HMDA reporter in 2020-2021?

What about prior to 2020?

Answer 94

2020-2021 originate 100 Closed end mortgage loans in each of the two preceding calendar years.

Prior to 2020 it was 25 originated loans in the the past two years.

Question 95

What procedures should examiners follow for transaction testing for HMDA? (7)

Answer 95

• Select a random sample of entries from the HMDA LAR (based on the sample table and the total number of entries) and ask the bank to provide loan files for validation. There should be both an initial sample and a total sample selected.
• if a bank’s data is collected from multiple different systems, examiners may test a single sample from the entire HMDA LAR, or test samples from selected systems based on risk
• all data fields may be reviewed or depending on the agency certain designated fields can be prioritized.
• verify accuracy of data in the initial LAR sample against data from the loan/application files. Differences that are not adequately explained should be documented as errors.
• If the number of errors in any data field reviewed equals or exceeds the Initial Sample Threshold in the HMDA table, examiners should review the remainder of the Total Sample.

-With the total sample, examiners must review all data fields that had one or more errors in the Initial
Sample and may review any or all Initial Sample data fields reviewed and found to have no errors previously.

-After reviewing the total sample, if the total number of errors in any data field equals or exceeds the resubmission threshold in column D of the HMDA table, examiners should direct the bank to correct any such data field in its full HMDA LAR and resubmit with the corrected data (scrub).

Question 96

True or false:

A bank can be directed to correct one or more individual data fields and resubmit its HMDA LAR, even if errors in that field or fields do not meet the resubmission threshold.

Answer 96

True. If examiners have a reasonable basis to believe that errors in that field or fields will likely make analysis of the HMDA data unreliable.

To illustrate, assume examiners discover that a financial institution has incorrectly coded withdrawn applications as denials to such an extent that it likely prevents reliable analysis of underwriting disparities in a fair lending examination. Examiners may direct a financial institution to correct the Action Taken data field and resubmit the HMDA LAR even if the number of Action Taken errors found in the Total Sample does not equal or exceed the Resubmission Threshold in column D of the HMDA table.

Question 97

True or false:

A financial institution may be directed to resubmit its HMDA LAR in order to include reportable applications
or loans that examiners determined were previously omitted from the HMDA LAR.

Answer 97

True

Question 98

What errors should examiners exclude from counting as errors when determining whether the number of errors equals or exceeds the initial sample threshold, or the resubmission threshold in a single data field? (4)

Answer 98

Examiners should not count the following differences between data in the HMDA LAR and in the loan files as errors:

• Three calendar days or less in the date the application was received or the date shown on the application form reported.
• One thousand dollars or less in the amount of the covered loan or the amount applied for.
• Three calendar days or less in the date of the action taken by the financial institution reported. Provided that such differences do not result in reporting data for the wrong calendar year; and
• Rounding errors in reporting the dollar amount, rounded to the nearest thousand, of the gross annual income relied on in making the credit decision or, if a credit decision was not made, the gross annual income relied on in processing the application.

Question 99

Would the following be considered an error when reviewing the HMDA LAR initial sample?

Loan file indicates June 4 as the application date, a HMDA LAR application date of June 1.

What about June 7 as the HMDA LAR application date?

Answer 99

Would not be counted as an error because it is within three calendar days of June 4, which means it means a tolerance.

Question 100

Would the following be considered an error when reviewing the HMDA LAR initial sample?

Loan file indicates June 4 as the application date but the HMDA LAR application date is May 31.

What if it HMDA LAR application date was June 8?

Answer 100

A HMDA LAR application date of May 31 or June 8 would be counted as an error because it is more than three
calendar days from June 4. Does not meet the tolerance.

Question 101

A data field generally refers to a single HMDA field identified by a distinct data field number and name.

But with respect to information on ethnicity or race of an applicant/co applicant or borrower/co borrower, a data field consists of what? (4)

Answer 101

A group of FIG fields as follows:

• The Ethnicity of Applicant or Borrower data field group: comprised of six FIG fields with
information on an applicant’s or borrower’s ethnicity (FIG Data Field Numbers 19-24);

• The Ethnicity of Co-Applicant or Co-Borrower data field group: comprised of six FIG fields with
information on a co-applicant’s or co-borrower’s ethnicity (FIG Data Field Numbers 25-30);

• The Race of Applicant or Borrower data field group: comprised of eight FIG fields with
information on an applicant’s or borrower’s race (FIG Data Field Numbers 33-40); and

• The Race of Co-Applicant or Co-Borrower data field group: comprised of eight FIG fields with
information on a co-applicant’s or co-borrower’s race (FIG Data Field Numbers 41-48).

Question 102

How would a bank report the following information:

Applicant indicates Hispanic or Latino and Mexican in response to the Ethnicity question on a loan application.

Answer 102

The bank reports the information in two FIG fields Ethnicity of applicant or Borrower 1 (1:Hispanic or Latino) and Ethnicity of Applicant or Borrower 2 (11: Mexican)

Question 103

If one or more of the six ethnicity of applicant or borrower FIG fields have errors, they would count as _____ error(s) for that data field group.

Answer 103

One

Question 104

If the Ethnicity of Applicant or Borrower data field group has errors in the Total Sample that meet or exceed the Resubmission Threshold in column D of the HMDA table, examiners should direct the financial institution to correct the ____
Ethnicity of Applicant or Borrower FIG field(s) and resubmit its HMDA LAR with the FIG field(s) corrected.

Answer 104

six

Question 105

True or false:

Examiners may direct the financial institution to make any appropriate changes in its policies, procedures, audit processes, or other aspects of its compliance management system needed to prevent the reoccurrence of errors identified within the sample that are—absent
such changes—capable of repetition, even if the number of errors does not equal or exceed either the Initial Sample Threshold in column C or the Resubmission Threshold in column D of the HMDA table, or even if the errors fall within the tolerances.

Answer 105

True

Question 106

Financial Institution A’s HMDA LAR contains 35
entries. Examiners select a Total Sample of 30 loans as shown in column A of the HMDA table.

What is the size of the initial sample?

If the initial sample identifies two errors in the action taken data field, what should examiners do?

If examiners review the total sample and identify 1 additional error in the Action taken field for a total of 3 errors, what should examiners do?

Answer 106

Initial sample is 15.

two errors in the action taken data field equals the initial sample threshold so examiners would expand and review the remaining loans in the total sample.

The additional error in the total sample brings the action taken field to 3 errors which meets the threshold for resubmission.

Examiners direct the bank to scrub the action taken field and resubmit the HMDA LAR.

Question 107

If a bank’s HMDA LAR contains 125 entries, what is the total sample size to be selected?

what about the initial sample?

Answer 107

47 loans total sample

29 loans initial sample

Question 108

Financial Institution B’s HMDA LAR contains 125
entries. Examiners select a Total Sample of 47 loans as shown in column A of the HMDA table.

Examiners test the Initial Sample of 29 loans as
shown in column B of the HMDA table and find one error in the Action Taken data field and one error in the Loan type data field, what happens next?

Answer 108

Neither error meets the threshold for expansion to the total sample.

Therefore, examiners end the HMDA transaction testing for Financial Institution B and do not proceed to Stage 2 testing of the 18 remaining entries in the Total Sample because no Stage 1 errors in any single data field equaled or exceeded
the Initial Sample Threshold.

Question 109

The bank’s HMDA LAR contains 500,000 entries, what is the total sample and initial sample size?

Answer 109

Total sample: 159 loans

initial sample: 61 loans

Question 110

Financial Institution C’s HMDA LAR contains 500,000 entries. Examiners select a Total Sample of 159 loans as
shown in column A of the HMDA table.

Examiners test the Initial Sample of 61 loans as shown in column B of the HMDA table and find two errors in the Action Taken data field and five errors in the Loan Amount data field. What should examiners do next?

What if examiners identify 2 additional errors in the action taken field, 5 additional errors in the loan amount field, and four new errors in the census tract field of the total sample?

Answer 110

Examiners should expand the sample and test the remaining 98 entries.

The additional findings bring the action taken data field to 4 errors total and the loan amount data field to 10 errors total. Additionally we have four errors in the CT field. All errors exceed the resubmission threshold.

Therefore, Financial Institution C is directed to correct the Action Taken data field, the Loan Amount data field, and the Census Tract data field and resubmit its HMDA LAR with those fields corrected.

Question 111

Financial Institution D’s HMDA LAR contains 1,000 entries. Examiners select a Total Sample of 79 loans as
shown in column A of the HMDA table.

Examiners test the Initial Sample of 35 loans as
shown in column B of the HMDA table and find one loan with an error in the FIG Applicant or Borrower Race: 1 field, and a different loan with an error in the FIG Applicant or Borrower Race: 2 field. What should examiners do next?

In the total sample examiners find one loan with an error in the FIG Applicant or Borrower Race: 2 field, and one loan with errors in both the FIG Applicant or Borrower Race: 1 field
and the FIG Applicant or Borrower Race: 2 field,
for a total of four loans with at least one error in
one of the eight Race of Applicant or Borrower FIG fields. What happens next?

Answer 111

Examiners identified a total of two errors in the Race of Applicant or Borrower data field group in the initial sample so they need to expand to the total sample.

In the remaining 44 loans in the total sample examiners identified a total of four loans with at least one error in
one of the eight Race of Applicant or Borrower FIG fields, which equals the resubmission threshold.

Therefore, Financial Institution D is directed to correct all eight FIG fields in the Race of Applicant or Borrower data field group and resubmit its HMDA LAR with those FIG fields corrected.

Question 112

HMDA policies and procedures should ensure what to be considered adequate? (2)

Answer 112

ensure the following:

1. appropriate collection, recording, and reporting of data on applications for covered loans that it receives, covered loans that it originates, and covered loans that it
   purchases pursuant to HMDA and Regulation C
   requirements; and
2. compliance with HMDA and Regulation C’s disclosure requirements

Question 113

Board and Management oversight of HMDA should include what? (8)

Answer 113

1. An institution annually or more frequently, conducts analysis to determine whether it
   must collect, record, and report data regarding dwelling secured applications and loans (covered transactions) pursuant to HMDA.
2. An institution conducts analysis to ensure that all reportable applications and loans are collected and recorded on the HMDA LAR.
3. An institution has assigned one or more individuals responsibility for the oversight of HMDA compliance, including HMDA data collection, recording, and reporting.
4. An institution has ensured individuals responsible for HMDA compliance receive access to and appropriate training on HMDA, Regulation C and its commentary,
   all applicable regulatory and statutory changes, the Filing Instructions Guide, the Guide to HMDA Reporting: Getting It Right!, and any other relevant materials.
5. The Board of Directors and management possess
   sufficient knowledge to ensure oversight of compliance with HMDA and Regulation C.
6. The Board of Directors and management provide
   appropriate resources and oversight regarding ensuring an institution’s compliance with HMDA and Regulation C.
7. An institution takes effective corrective action in response to identified HMDA deficiencies.
8. Management and, if appropriate, the Board of Directors reviews policies and procedures, monitoring and/or audit, and compliance reports regarding the institution’s HMDA data reporting, commensurate with its HMDA risk profile.

Question 114

An effective Consumer compliance program for HMDA should include what? (8)

Answer 114

9. The individuals responsible for ensuring HMDA compliance possess an adequate level of knowledge
   regarding HMDA and Regulation C, including all applicable statutory and regulatory changes.
10. An institution has developed appropriate policies and procedures, and revised those policies and procedures as necessary, to ensure HMDA compliance.
11. HMDA data are collected at all branches (if applicable),
    and, if so, whether relevant branch personnel are appropriately trained on HMDA data collection,
    recording, and reporting requirements.
12. An institution’s loan officers, including the commercial loan department, who may handle HMDA- reportable applications, are informed of collection, recording, and reporting requirements.
13. An institution has policies and procedures to ensure continuing HMDA compliance during and after major
    changes in an institution’s business or structure.
14. An institution has established internal review procedures, monitoring, and/or audit schedules, depending on the circumstances, that comprehensively
    cover all pertinent HMDA and Regulation C
    requirements, including all applicable statutory and regulatory changes since prior compliance reviews and/or audits.
15. An institution conducts compliance reviews and/or audits, as appropriate, that include a sufficient level of transactional analysis as well as written reports that detail findings and recommendations for corrective action. Also, determine whether the Board of Directors
    and management are informed of these findings and recommendations.
16. An institution adequately monitors vendors and other
    third-party service providers that perform functions or deliver services related to HMDA data collection,
    recording, and reporting.

Question 115

To determine the timing of HMDA transaction testing, financial institutions are put into what two groups?

Answer 115

FDIC HMDA reporters are divided into one of the following two size categories: financial institutions with 500 or more LAR lines, and financial institutions with fewer than 500 total LAR lines.

Question 116

What are the transaction testing timing requirements for financial institutions with 500 or more total LAR lines?

Answer 116

Examination staff will conduct transaction testing for accuracy and completeness in advance of the on-site portion of the consumer compliance examination. This approach allows an institution to resolve data errors, if any, so the examination can proceed without significant delay.

Question 117

What are the transaction testing timing requirements for Financial institutions with fewer than 500 total LAR lines?

Answer 117

Examination staff will conduct transaction testing for accuracy and completeness during the on-site portion of the consumer compliance examination, unless testing in advance of the on-site portion promotes examination efficiencies and effectiveness.

For example, there may be risk indicators from an institution’s previous HMDA review(s), such as a history of significant HMDA-related CMS deficiencies or Level 2 (Medium Severity) or Level 3 (High Severity) violations that required corrective actions related to HMDA. The risk indicators could serve as a red flag signaling that an extended period of time or additional resources may be required to conduct HMDA validation at an institution. Consequently, transaction
testing in advance of the on-site portion of the
examination would promote examination efficiencies
and effectiveness.

Question 118

For validations completed in advance of the on-site portion of the consumer compliance examination, the HMDA/CRA validation letter is either sent with or after the _____ _______ to allow an institution sufficient time to prepare for the data
validation. For validations completed during the on-site portion of the compliance examination, if applicable, this information is included in the ______ _______.

Answer 118

Information Packet

Entry Letter

Question 119

What procedures should examiners follow if systemic errors are identifies prior to transaction testing?

ex: examination
staff may find that an institution’s written policies reflect a
misunderstanding of Regulation C’s requirements regarding
which business-purpose transactions are covered by HMDA.

Answer 119

In such cases, examination staff will confirm the errors through discussion with bank management. If examination staff determines that systemic errors likely will make analysis of the HMDA data unreliable, examination transaction testing should not be completed until bank management has ensured that the errors are addressed. Once
the LAR data is corrected, examination staff will complete transaction testing in accordance with the FFIEC Testing Guidelines and these Instructions.

Question 120

What should be included in the scope of transaction testing?

Answer 120

In general for each HMDA reporter, examiner will initially review the LAR reported as final for the prior full calendar year.

If any errors identified in that review trigger resubmission, examination staff will determine through discussions with management if the root cause of the errors would impact LARs submitted for earlier years.

If the root cause of errors in each such data field is systemic across prior years, examination staff may request that bank management correct and resubmit additional years’ LARs, as appropriate, without additional transaction testing. However, if examination staff determines that the root cause of systemic errors in the prior year’s LAR did not impact LARs from earlier years for any such data field, examination staff may determine that testing LARs from additional years is unnecessary.

If the root cause of errors in one or more of the data fields for which resubmission is triggered does not appear to be systemic, or if examination staff is unable to determine the
root cause of the errors in any such data field, examination staff will determine whether it is necessary to test additional years’ LARs. Examination staff will make this determination in consultation with FDIC field territory management.

Question 121

What validation procedures should examiners follow if a bank voluntarily reports when a partial exemption applies?

Answer 121

An insured depository institution (IDI) eligible for a partial exemption from HMDA reporting may report an exemption code for data fields associated with exempt data points or may report such data fields voluntarily. If an IDI is eligible for a partial exemption with respect to a particular data point, examination staff will validate data fields associated with
that data point as part of the HMDA data validation process
but will not require resubmission of, or cite a violation in connection with, those data fields.

Question 122

True or false:

FDIC transaction testing requires validation of all data fields

Answer 122

False:

FDIC examination staff generally will review the key data fields rather than all 110 data fields.

Question 123

What are two circumstances where examination staff may see to review data from non key data fields?

Answer 123

• Fair lending review established a focal point and non key data fields are needed for analysis. Transaction testing is limited to the non key data fields. Examiners will validate these fields prior to a comparative file review, but after selecting a focal point. (fields identified based on criteria interview)
• Census tract errors. If errors are identified in this key field, examiners may need to review the non-key data fields related to property address. Even if non-key data fields are incorrect, only errors in the CT field are counted as errors.

Question 124

True or false:

Examiners can have a bank correct and potentially resubmit the HMDA LAR for errors in non key data fields.

Answer 124

True:

Upon completing a review of non-key data fields, if examination staff determines the data to be unreliable,
examination staff will then assess the extent to which the impact of the errors is significant. Examination staff will
direct an institution to correct errors in non-key data fields that would affect a consumer compliance examination, including fair lending reviews, or the accuracy of a CRA
performance evaluation. Also, in consultation with FDIC field territory management, examination staff may direct an institution to resubmit its HMDA LAR to ensure accurate aggregate data is maintained.

Question 125

What are over reported transactions and how should they be addressed?

Answer 125

If, during the accuracy review of key data fields, examination staff
identifies transactions reported on the LAR that do not meet the regulatory definition of a covered transaction and were reported in error, those transactions are considered overreported transactions.

Examination staff will not include data fields from over-reported transactions when counting the number of key data field errors. Rather, examination
staff will remove over-reported transactions from the sample universe and replace them with reportable transactions.

Nevertheless, examination staff will attempt to determine the root cause of over-reported transactions identified during transaction testing, such as a misunderstanding of the provisions of Regulation C related to business-purpose
transactions. Examination staff will address over-reporting
errors identified during transaction testing following the procedures to address systemic errors identified before
transaction testing.

Question 126

If transaction testing an initial sample results in a need to expand to the total sample, do examiners need to review every key field for the remaining sample?

Answer 126

No, FDIC examination staff will limit review in stage 2 (total sample review) to data fields in which one or more errors were found in stage one (initial sample)

Question 127

True or false:

A bank cannot be directed to resubmit its HMDA LAR to include omitted reportable applications or loans.

Answer 127

False: Banks can be directed to do this to ensure the LAR supports the use of HMDA data in FL and CRA reviews.

Question 128

Loans and applications that are HMDA reportable but omitted from the HMDA LAR generally fall into what two categories?

Answer 128

originated or purchased loans and

non-originated loan
applications (declined, withdrawn, closed for
incompleteness, or approved but not accepted) that were not
identified as covered transactions.

Question 129

In order to ensure that all reportable covered originated or purchased loans and non originated loan applications are included on the LAR,
examination staff develops an omissions universe of potentially reportable covered transactions (the omissions universe) as follows? (4)

Answer 129

• Identify departments that take applications for covered loans;
• Identify departments, if any, that purchase covered loans;
• Identify software systems and tracking reports used within these departments to capture loan application, origination, and purchase data; and
• Using the reports from these systems, compile the omissions universe.

Question 130

What are some documents examiners can request to establish the omissions universe? (5)

Answer 130

• An electronic loan trial balance that includes all loans from the commercial, consumer, and mortgage departments;
• Reconciliation or “pipeline” reports showing incoming loan applications;

• A list of non- originated applications (if no report or list of non-originated applications is available, examination
staff will have to manually compile the universe of non originated
loans from the review period);

• A list of loans sold, by loan type, if the financial
institution sells mortgage loans that are not on the trial balance for the review period; and/or

• A list of any dwelling secured loans purchased, by loan type, during the review period.

Question 131

After developing the omissions universe, examination staff

will select the omissions sample using one of two methods, what are they?

Answer 131

Targeted Sampling

Non targeted Sampling

Question 132

What is the targeted sampling method used to determine the omissions sample?

Answer 132

Targeted Sampling. This is the preferred method
because it is most likely to determine whether any applications were omitted.

Examination staff will compare the omission universe to all applications reported on the LAR.

The two most likely approaches consist of the following:
1) using an omissions universe that consists of one data set, compare all the data in that
set against all applications reported on the LAR, or
2) using an omissions universe that consists of multiple data sets, individually compare each of the sets against
all applications reported on the LAR.

Once examination staff compares the omissions
universe to the covered transactions reported on the LAR, any transactions in the omissions universe that
are not on the LAR will constitute the targeted
omissions universe.

Examination staff will use the number of transactions in the targeted omissions
universe to determine the omissions sample size using the HMDA Table.

Question 133

What is the non targeted sampling method that can be used when determining an omissions sample?

Answer 133

If targeted sampling is not feasible, examination staff will perform non-targeted
sampling from among the applications reflected in the reports considered.
For example, it may not be feasible
to conduct targeted sampling when the available data sets used to create the omissions universe have internal record identifiers that do not correlate to the record identifiers on the LAR.

When performing non-targeted sampling, the total number of transactions in the reports considered is the omissions universe and is used to determine the sample size from the HMDA Table.

Examination staff then will select a random sample from the omissions universe for review. Some transactions in the omission sample will be reported on the LAR and some will not be reported on the LAR, because the sample was created from a random sample of transactions from the omissions universe.

Question 134

How should examiners assess HMDA LAR completeness? (completeness review)

Answer 134

Examination staff will determine if an application is deemed
to have been correctly reported, correctly not reported, or incorrectly reported on the LAR, depending on whether the transaction is for a covered transaction.

During the completeness review, examination staff will use the sample
sizes and thresholds stated in the HMDA Table.

Examination staff will determine whether a transaction was (or was to be) secured by a dwelling and, if so, whether or not is an excluded transaction.

The LAR is considered complete if the number of omissions is below the thresholds listed in Column C when testing the Initial Sample or Column D when testing the Total Sample listed in the HMDA Table in Paragraph 11 of the FFIEC Testing Guidelines.

Question 135

When would an institution need to submit their HMDA data after correction?

Answer 135

Examination staff will consult with FDIC field territory management to establish a timeline for an institution’s management to correct, review, and verify corrected data. The timeline will take into consideration the nature and complexity of the required data correction, an institution’s resources, and the amount of time required to complete the consumer compliance examination, fair lending review, and/or CRA performance evaluation in a timely manner.

Question 136

When would examination staff need to revalidate HMDA data?

Answer 136

When errors of accuracy or completeness are identified that
require correction, examination staff will review the corrections made by an institution once they are completed and before the institution resubmits the data.

Question 137

What procedures should examiners follow to revalidate HMDA data following correction by the bank?

Answer 137

Examination staff will conduct revalidation by sampling in accordance
with the HMDA Table, based on the size of the institution’s corrected LAR, adjusted to address any identified omissions or over-reporting. If there were accuracy errors, examination staff will focus re-validation of corrections on the key data fields in which errors were identified during transaction testing or on any non-key data fields reviewed as part of a fair lending review or CRA performance evaluation. If there
were errors of omission, examination staff will consider the documentation provided by an institution of its corrective actions to ensure the LAR is complete.

Question 138

What should examiners do if there are persistent issues remaining during revalidation?

Answer 138

If, during the revalidation, examination staff determines that any issues have not been corrected sufficiently and errors remain, examination staff will again instruct an institution to correct the remaining errors. Before revalidating the corrected LAR, examination staff will request that an institution provide monitoring and/or audit reports that document the actions taken to correct the data error(s). In these instances, examination staff will discuss with the institution’s management expectations for the scope and documentation of the monitoring and/or audit review. Examination staff will review the monitoring and/or audit findings and revalidate LAR data to test the effectiveness of the data correction.

Question 139

True or false:

Whether or not an institution maintained procedures reasonably adapted to avoid errors is relevant to establishing a HMDA violation

Answer 139

True as provided in the administrative enforcement provisions of Regulation C.

Question 140

On the HMDA LAR what should a bank input into the Application Date Field?

Answer 140

Date the application was received or the date on the application form YYYMMDD.

Enter NA for purchased covered loans.

Question 141

On the HMDA LAR what should a bank input into the Loan Type Field?

(4 options)

Answer 141

Whether the loan or application is insured by the FHA, guaranteed by the Department of VA, Rural housing service, or farm service agency.

1-Conventional (not insured or guaranteed)
2-FHA
3-VA
4-USDA (RHS or FSA)

Question 142

On the HMDA LAR what should a bank input into the loan purpose field?

(5 options)

Answer 142

Whether the transaction is for home purchase, home improvement, refinancing, cash out refinancing, or another purpose.

1-Home Purchase
2-Home Improvement
31-Refinancing
32-Cash out Refinancing
4-Other purpose
5-Not applicable

Question 143

On the HMDA LAR what should a bank input into the Prapproval field?

(2 Options)

Answer 143

Whether the transaction involved a preapproval request for a home purchase loan under a preapproval program.

1-Preapproval requested
2-Preapproval not requested

Question 144

On the HMDA LAR what should a bank input into the Construction Method Field?

(2 options)

Answer 144

Whether the dwelling is site build or a manufactured home

1-Site Built
2-manufactured home

Question 145

On the HMDA LAR what should a bank input into the Occupancy type field?

3 options

Answer 145

Whether the property will be used as a principal residence, second residence, or investment property.

1-Principal Residence
2-Second Residence
3-Investment property

Question 146

On the HMDA LAR what should a bank input into the Loan Amount Field?

Answer 146

Amount of the loan or the amount applied for.

Question 147

On the HMDA LAR what should a bank input into the Action taken and action taken date field?

8 options

Answer 147

Type and date of action the FI took on the loan, application or preapproval request

1-Loan originated
2-application approved but not accepted
3-application denied
4-application withdrawn by applicant
5-file closed for incompleteness
6-purchased loan
7-preapproval denied
8-preapproval approved but not accepted

Action taken should be YYYYMMDD

Question 148

On the HMDA LAR what should a bank input into the Property address field?

Answer 148

Address of the Property securing the Loan or proposed to secure the loan

Street address
City
State
Zip Code

NA if the property address is not known or if the site of a manufactured home has not been identified

Question 149

On the HMDA LAR what should a bank input into the Property Location field?

Answer 149

Location of the property securing the loan or proposed to secure the loan by state, county, and Census tract.

Geocoded data of:
County
Census Tract
State

Enter NA if location is unknown or if site for manufactured home has not yet been identified.

Question 150

On the HMDA LAR what should a bank input into the Ethnicity Field?

5 options for Ethnicity
4 Options for collection

Answer 150

Applicants or Borrower’s ethnicity and if information was collected by visual observation of surname.

Enter ethnicity of applicant/borrower or coapplicant/co borrower up to 5:
1-Hispanic or Latino
11-Mexican
12-Puerto Rican
13-Cuban
14-Other Hispanic or Latino (free form text field)

2- Non Hispanic or Latino

3-Information not provided by applicant

4- Not applicable (no requirement to report)

5- No co applicant (used in the co-applicant field)

Ethnicity collection:
Indicate whether the ethnicity of the applicant or borrower, or co applicant was collected using visual observation or surname.

1-Collected on basis of visual observation or surname
2-not collected on the basis of visual observation or surname
3- Not applicable (no requirement to report)
4-No co-applicant

Question 151

On the HMDA LAR what should a bank input into the Race field?

8 options race
4 options collection

Answer 151

Applicants or borrower’s race and if information was collected by visual observation or surname.

Race: up to 5
1-American Indian or Alaskan native
2-Asian
 21-Asian Indian
 22-Chinese
 23-Filipino
 24-Japanese
 25-Korean
 26-Vietnamese
 27-Other (free form field)
3-Black or African American
4-Native Hawaiian or other Pacific Islander
 41-Native Hawaiian
 42-Guamanian or Chamorro
 43-Samoan
 44-Other (free form)
5-White
6-Information not provided
7-Not Applicable
8-No co applicant

Basis of collection:
1-Collected on basis of visual observation or surname
2-not collected on basis of visual observation or surname
3- NA
4-No co applicant

Question 152

On the HMDA LAR what should a bank input into the Sex field?

6 options for sex
4 options for collection

Answer 152

Applicant’s Sex and if information was collected by visual observation or surname.

Sex:
1-Male
2-Female
3-Information not provided. 
4-NA
5-No coapplicant
6-Applicant selected both male and female. 

Collection:
1-Collected on basis of visual observation
2-Not collected on the basis of visual observation
3-NA
4-No co applicant

Question 153

On the HMDA LAR what should a bank input into the Age field?

Answer 153

Applicants age or borrower’s age.

or

8888- NA (purchased covered loans where bank chooses not to report, or when applicant is not a natural person)

9999-No co applicant (in the co applicant field)

Question 154

On the HMDA LAR what should a bank input into the Income field?

Answer 154

If a credit decision is made, gross annual income relied on in making the credit decision, or in processing the application. Round all dollar amounts to nearest thousand.

NA - not considered, not a natural person, secured by a multifamily dwelling, purchased loans where bank chooses not to report, privacy protection.

Question 155

On the HMDA LAR what should a bank input into the type of purchaser field?

10 options

Answer 155

Type of entity that purchased the loan.

0-NA (non originated, preapproval denials/not accepted, originated or purchased loans bank did not sell during same calendar year.)
1-Fannie Mae
2-Ginnie Mae
3-Freddie Mac
4-Farmer Mac
5-Private securitizer
6-Commercial bank, savings bank, or savings association
71-Credit union, mortgage company, or finance company
72-Live insurance company
8-Affiliate institution
9-Other

Question 156

On the HMDA LAR what should a bank input into the rate spread field?

Answer 156

Difference between the APR and average prime offer rate for a comparable transaction. Enter as a percentage w/ at least 3 decimal places. As of the date the interest rate is set. (can be positive or negative)

NA- assumptions, reverse mortgages, purchased loans, not subject to reg Z.

Exempt.

Question 157

On the HMDA LAR what should a bank input into the HOEPA status field?

3 options

Answer 157

Whether the loan is a high cost mortgage under HOEPA.

1-High cost mortgage
2-Not a high cost mortgage
3-Not applicable (loans not subject to HOEPA, non originations)

Question 158

On the HMDA LAR what should a bank input into the lien status field?

Answer 158

Whether the property is a first or subordinate lien.

1-Secured by a first lien
2-secured by a subordinate lien

Question 159

On the HMDA LAR what should a bank input into the Credit score field?

Answer 159

Credit scored relied on and the name and version of the credit scoring model.

1111-Exempt
7777-Credit score not a number (meets threshold scoring systems)
8888-NA
9999-No co applicant

Name and version of credit scoring model:
1111-Exempt
1-Equifax Beacon 5.0 (FICO score 5)
2-Experian Fair Issac Risk Model V2 (FICO v2)
3-Transunion FICO risk score classic 04
4-Transunion FICO risk score classic 98
5-Vantage Score 2.0
6-Vantage Score 3.0
7-More than one credit scoring model
8-Other credit scoring model (enter specifics into the field. 
9-NA
10-No co applicant

Question 160

On the HMDA LAR what should a bank input into the Reason for denial field?

11 options
9 options if using model ECOA form

Answer 160

Reasons the application was denied. Principal reason for denial.

1111-Exempt
1-DTI
2-Employment history
3-Credit history
4-Collateral
5-Insufficient Cash (down payment, closing costs)
6-Unverifiable information
7-Credit application incomplete
8-Mortgage insurance denied
9-Other (use free form field)
10-NA (applications not denied)

If the bank uses the model form from ECOA for Notice of action taken use the following:

Code 1—Income insufficient for amount of credit requested, and
Excessive obligations in relation to income
Code 2—Temporary or irregular employment, and Length of
employment
Code 3—Insufficient number of credit references provided;
Unacceptable type of credit references provided; No credit file;
Limited credit experience; Poor credit performance with us;
Delinquent past or present credit obligations with others; Number
of recent inquiries on credit bureau report; Garnishment,
attachment, foreclosure, repossession, collection action, or
judgment; and Bankruptcy
Code 4—Value or type of collateral not sufficient
Code 6—Unable to verify credit references; Unable to verify
employment; Unable to verify income; and Unable to verify
residence
Code 7—Credit application incomplete
Code 9—Length of residence; Temporary residence; and Other
reasons specified on the adverse action notice.

Question 161

On the HMDA LAR what should a bank input into the total loan costs or total points and fees field?

Answer 161

Either total loan costs, or total points and fees charged. Dollar amounts

NA or Exempt

Question 162

On the HMDA LAR what should a bank input into the Origination charges field?

Answer 162

Total borrower paid origination charges. Dollar amount.

NA or exempt

Question 163

On the HMDA LAR what should a bank input into the discount points field?

Answer 163

Points paid to the creditor to reduce the interest rate. Dollar amount.

NA or exempt

Question 164

On the HMDA LAR what should a bank input into the lender credits field?

Answer 164

Amount of lender credits. Dollar amount.

NA or exempt

Question 165

On the HMDA LAR what should a bank input into the interest rate field?

Answer 165

Interest rate on the approved application or loan. Percentage with at least 3 decimal places. ex:4.125%

NA (no originated) or exempt

Question 166

On the HMDA LAR what should a bank input into the Prepayment penalty term?

Answer 166

Term in months of any prepayment penalty.

NA or exempt

Question 167

On the HMDA LAR what should a bank input into the DTI field?

Answer 167

Ratio of the applicants or borrower’s total monthly debt to total monthly income relied on. Enter as a percentage up to 15 decimal places.

NA-Purchased loans, no credit decision, credit decision w/o relying on DTI, non natural persons, secured by multifamily dwelling.

Question 168

On the HMDA LAR what should a bank input into the Combined LTV field?

Answer 168

Ratio of the total amount of debt that is secured by the property to the value of the property that was relied on. enter as a percentage up to 15 decimal places.

NA- purchased loans, no credit decision, credit decision w/o relying on LTV.

Exempt.

Question 169

On the HMDA LAR what should a bank input into the loan term field?

Answer 169

Number of months after which the legal obligation will mature or terminate. Term is in months. ex: 360

NA-loan or application w/o definite term
Exempt

Question 170

On the HMDA LAR what should a bank input into the Introductory rate period field?

Answer 170

Number of months until the first date the interest rate may change.

NA-fixed rate loan, purchased loan with fixed rate.

Exempt

Question 171

On the HMDA LAR what should a bank input into the non amortizing features field?

Answer 171

Whether the transaction involves a balloon payment, interest-only payments, negative amortization, or any other type of non-amortizing feature.

BALLOON PAYMENT. Indicate whether the contractual terms include, or would have included, a balloon payment by entering:
 Code 1111—Exempt
 Code 1—Balloon payment
 Code 2—No balloon payment

INTEREST-ONLY PAYMENTS. Indicate whether the contractual terms include, or would have included, interest-only payments by entering:
 Code 1111—Exempt
 Code 1—Interest-only payments
 Code 2—No interest-only payments

NEGATIVE AMORTIZATION. Indicate whether the contractual terms include, or would have included, a term that would cause the covered loan to be a negative amortization loan by entering:
 Code 1111—Exempt
 Code 1—Negative amortization
 Code 2—No negative amortization

OTHER NON-AMORTIZING FEATURES. Indicate whether the contractual terms include, or would have included, any term, other than those described in § 1003.4(a)(27)(i), (ii), and (iii) that would allow for payments other than fully amortizing payments during the loan term by entering:
 Code 1111—Exempt
 Code 1—Other non-fully amortizing features
 Code 2—No other non-fully amortizing features

Question 172

On the HMDA LAR what should a bank input into the property value field?

Answer 172

Value of the property securing loan in dollar amount.

NA- no credit decision, credit decision w/o property value.
exempt

Question 173

On the HMDA LAR what should a bank input into the manufactured home secured property type?

4 options

Answer 173

Whether the covered loan is secured by a manufactured home and land or a manufactured home and not land.

 Code 1111—Exempt
 Code 1—Manufactured home and land
 Code 2—Manufactured home and not land
 Code 3—Not applicable (not manufactured home, manufactured home community)

Question 174

On the HMDA LAR what should a bank input into the manufactured home land property interest field?

6 options

Answer 174

Information about the applicants or borrower’s ownership or leasehold interest in the land where the manufactured home is located.

1111-Exempt
1-Direct ownership
2-Indirect ownership
3-Paid leasehold
4-Unpaid leasehold
5-NA (not a manufactured home, manufactured home community, location not identified)

Question 175

On the HMDA LAR what should a bank input into the total units field?

Answer 175

Number of individual dwelling units related to the property

Question 176

On the HMDA LAR what should a bank input into the multifamily affordable units field?

Answer 176

Number of individual dwelling units related to the property that are income restricted under federal, state, or local affordable housing programs.

0-if not income restricted dwelling units
NA- not a multifamily
Exempt

Question 177

On the HMDA LAR what should a bank input into the application channel field?

Answer 177

Indicators of whether the application was submitted directly to the bank and if the obligation was initially payable to the bank.

SUBMISSION OF APPLICATION. Indicate whether the applicant or borrower submitted the application directly to your institution by entering:
 Code 1111—Exempt
 Code 1—Submitted directly to your institution
 Code 2—Not submitted directly to your institution
 Code 3—Not applicable (purchased loans)

INITIALLY PAYABLE TO YOUR INSTITUTION. Indicate whether the obligation arising from the covered loan was, or, in the case of an application, would have been, initially payable to your institution by entering:
 Code 1111—Exempt
 Code 1—Initially payable to your institution
 Code 2—Not initially payable to your institution
 Code 3—Not applicable (purchased loans, nonoriginated)

Question 178

On the HMDA LAR what should a bank input into the mortgage loan originator NMLSR identifier field?

Answer 178

The NMLSR unique identifier for the mortgage loan originator.

NA or exempt

Question 179

On the HMDA LAR what should a bank input into the automated underwriting system field?

Answer 179

Name of the automated underwriting system used by the bank to evaluate the application and the result generated by the system.

AUTOMATED UNDERWRITING SYSTEM. Indicate the automated underwriting system(s) (AUS) used by your institution to evaluate the application by entering up to five (5) of the following:
 Code 1111—Exempt
 Code 1—Desktop Underwriter (DU)
 Code 2—Loan Prospector (LP) or Loan Product Advisor
 Code 3—Technology Open to Approved Lenders (TOTAL)
Scorecard
 Code 4—Guaranteed Underwriting System (GUS)
 Code 5—Other (free form)
 Code 6—Not applicable
 Code 7—Internal Proprietary System

AUTOMATED UNDERWRITING SYSTEM RESULT. Indicate the result(s) generated by the automated underwriting system (AUS) previously indicated by entering:
 Code 1111 —Exempt
 Code 1—Approve/Eligible
 Code 2—Approve/Ineligible
 Code 3—Refer/Eligible
 Code 4—Refer/Ineligible
 Code 5—Refer with Caution
 Code 6—Out of Scope
 Code 7—Error
 Code 8—Accept
 Code 9—Caution
 Code 10—Ineligible
 Code 11—Incomplete
 Code 12—Invalid
 Code 13—Refer
 Code 14—Eligible
 Code 15—Unable to Determine
 Code 16—Other (free form)
 Code 17—Not applicable
 Code 18—Accept/Eligible
 Code 19—Accept/Ineligible
 Code 20—Accept/Unable to Determine
 Code 21—Refer with Caution/Eligible
 Code 22—Refer with Caution/Ineligible
 Code 23—Refer/Unable to Determine
 Code 24—Refer with Caution/Unable to Determine

Question 180

On the HMDA LAR what should a bank input into the reverse mortgage field?

Answer 180

Indicator whether the transaction is for a reverse mortgage.
1111-Exempt
1-Reverse mortgage
2-Non reverse mortgage

Question 181

On the HMDA LAR what should a bank input into the open end line of credit field?

Answer 181

1111-Exempt
1-OELOC
2-Not OELOC

Question 182

On the HMDA LAR what should a bank input into business or commercial purpose field?

Answer 182

1111-Exempt
1-Primarily for business or commercial purposes
2-not primarily for business or commercial purposes

Question 183

What three primary purposes does HMDA data serve?

Answer 183

The data related requirements in HMDA and Regulation C serve three primary purposes: (1) to help determine whether financial institutions are serving their communities’ housing needs; (2) to assist public officials in distributing public investment to attract private investment; and (3) to assist in identifying potential discriminatory lending patterns and enforcing antidiscrimination statutes.

Question 184

Is the following example a covered loan?

Ficus Bank extends a bridge or swing loan to finance a borrower’s down payment for a home purchase. The borrower will pay off the bridge or swing loan with funds from the sale of his or her existing home and obtain permanent financing from Ficus Bank at that time.

Answer 184

No this loan is exempt from coverage. The bridge or swing loan is excluded as temporary financing.

Question 185

Is the following example a covered loan?

Ficus Bank extends a construction loan to a borrower to finance construction of the borrower’s Dwelling. The borrower will obtain a new extension of credit for permanent financing of the Dwelling from either Ficus Bank or another lender. Ficus Bank renews the construction loan several times before the borrower obtains a new extension of credit from another lender for permanent financing.

Answer 185

The construction loan is excluded as temporary financing.

Question 186

Is the following example a covered loan?

Ficus Bank extends a construction loan to a borrower to finance construction of the borrower’s Dwelling. The construction loan will automatically convert to permanent financing after the construction phase is complete.

Answer 186

Yes. The construction loan is not temporary financing because it is not designed to be “replaced by” separate permanent financing. its is not exempt under the temporary financing provision.

Question 187

Is the following a covered loan?

Ficus Bank extends a nine-month loan to an investor, who uses the loan proceeds to purchase a home, renovate it, and sell it before the loan term expires.

Answer 187

Yes it does not meet the temporary financing exclusion. The loan is not temporary financing because it is not designed to be “replaced by” separate permanent financing.

Question 188

How Should the bank report this transaction under HMDA?

Ficus Bank receives an Application for a Covered Loan from an applicant and forwards that Application to Pine Bank, which reviews and approves the Application prior to closing. The loan closes in Ficus Bank’s name. Pine Bank purchases the loan from Ficus Bank after closing. Pine Bank is not acting as Ficus Bank’s agent when it reviews and approves the Application.

Answer 188

Because Pine Bank made the credit decision prior to closing, Pine Bank reports the transaction as an originated Covered Loan, not as a purchased Covered Loan. Ficus Bank does not report the transaction.

Question 189

How Should the bank report this transaction under HMDA?

Ficus Mortgage Company receives an Application for a Covered Loan from an applicant and forwards that Application to Pine Bank, which reviews and denies the Application before the loan would have closed. Pine Bank is not acting as Ficus Mortgage Company’s agent when it reviews and denies the Application.

Answer 189

Because Pine Bank makes the credit decision, Pine Bank reports the Application as denied. Ficus Mortgage Company does not report the Application. If, under the same facts, the Application is withdrawn before Pine Bank makes a credit decision, Pine Bank reports the Application as withdrawn, and Ficus Mortgage Company does not report the Application.

Question 190

How Should the bank report the transaction under HMDA?

Ficus Bank receives an Application for a Covered Loan from an applicant and approves the Application. Ficus Bank closes the loan in its name. Ficus Bank is not acting as Pine Bank’s agent when it approves the application or closes the loan. Pine Bank does not review the Application before closing. Pine Bank purchases the Covered Loan from Ficus Bank.

Answer 190

Ficus Bank reports the loan as an originated Covered Loan. Pine Bank reports the loan as a purchased Covered Loan.

Question 191

how Should the bank report the following transaction?

Pine Bank reviews an Application and makes a credit decision to approve a Covered Loan using the underwriting criteria provided by Ficus Mortgage Company. Pine Bank is not acting as Ficus Mortgage Company’s agent, and no one acting on behalf of Ficus Mortgage Company reviews the Application or makes a credit decision prior to closing.

Answer 191

Pine Bank reports the Application or, if the Application results in a Covered Loan, it reports the loan as an originated Covered Loan. If the Application results in a Covered Loan and Ficus Mortgage Company purchases it after closing, Ficus Mortgage Company reports the loan as a purchased Covered Loan.

Question 192

How should the bank report the following transaction?

Ficus Bank receives an Application for a Covered Loan and forwards it to Aspen Bank and Pine Bank. Ficus Bank makes a credit decision, acting as Elm Bank’s agent, and approves the Application. Pine Bank makes a credit decision and denies the Application. Aspen Bank makes a credit decision approving the Application. The applicant does not accept the loan from Elm Bank. The applicant accepts the loan from Aspen Bank and credit is extended.

Answer 192

Aspen Bank reports the loan as an originated Covered Loan. Pine Bank reports the Application as denied. Elm Bank reports the Application as approved but not accepted. Ficus Bank does not report the Application.

Question 193

Is the following example eligible for a partial exemption in 2018?

Ficus Bank is an insured depository institution as defined in Section 3 of the Federal Deposit Insurance Act, and it received satisfactory ratings in its two most recent CRA examinations as of December 31, 2017.

In 2016, Ficus Bank originated 400 Closed- End Mortgage Loans and 510 Open-End Lines of Credit.

In 2017, Ficus Bank originated 490 Closed-End Mortgage Loans and 515 Open-End Lines of Credit.

Answer 193

In 2018, a partial exemption applies to Ficus Bank’s Closed-End Mortgage Loan transactions, but a partial exemption does not apply to Ficus Bank’s Open-End Line of Credit transactions. Additionally, because Ficus Bank originated at least 500 Open-End Lines of Credit in both 2016 and 2017, Ficus Bank cannot exclude Open-End Lines of Credit from its reportable transactions in 2018 (i.e., they are not Excluded Transactions as discussed in Section 4.1.2).

Question 194

Is a bank required to report all fields in the following example?

Ficus Bank originates a Covered Loan. A partial exemption applies to the Covered Loan, but Ficus Bank opts to report that the Covered Loan does not have a balloon payment. Balloon payment is one of the data fields for the non-amortizing features data point. The other data fields that make up the non-amortizing features data point are interest-only payments, negative amortization, and other non- amortizing features.

Answer 194

Because Ficus Bank chose to report the balloon payment data field, Ficus Bank must also report whether the Covered Loan has interest-only payments, negative amortization, and other non-amortizing features.

If a Financial Institution opts to report a data point with multiple fields, it must report all of the data fields that make up that data point.

Question 195

How should a bank report the following data field?

An applicant selects all five aggregate race categories (i.e., American Indian or Alaska Native, Asian, Black or African American, Native Hawaiian or Other Pacific Islander, and White) and also selects the Chinese race subcategory.

Answer 195

Because a Financial Institution must report all of the aggregate race categories that an applicant selects and can only report a combined total of up to five aggregate race categories and race subcategories, Ficus Bank reports only the five aggregate race categories. It does not report the Chinese race subcategory.

Question 196

How should a bank report the following field?

An applicant selects the White, Asian, and Native Hawaiian or Other Pacific Islander aggregate race categories, and the Korean, Vietnamese, and Samoan race subcategories.

Answer 196

The Financial Institution must report the White, Asian, and Native Hawaiian or Other Pacific Islander aggregate race categories. The Financial Institution also reports two of the three race subcategories. The Financial Institution chooses which two race subcategories to report (i.e., Korean and Vietnamese, Korean and Samoan, or Vietnamese and Samoan).

Question 197

What is the definition of a Home purchase loan for reporting purposes? (4)

Answer 197

A Home Purchase Loan is a Closed-End Mortgage Loan or Open- End Line of Credit that is for the purpose, in whole or part, of purchasing a Dwelling.

A Home Purchase Loan includes:
(a) a Closed-End Mortgage Loan or Open-End Line of Credit secured by one Dwelling and used to purchase another Dwelling;

(b) a combined construction-to-permanent loan that is secured by a Dwelling;
(c) a separate permanent loan that replaces a construction-only loan or line of credit to the same borrower if the permanent loan is secured by a Dwelling; and
(d) a Dwelling-secured subordinate mortgage loan that finances some or all of the home purchaser’s down payment.

Question 198

What is a home improvement loan for reporting purposes? (3)

Answer 198

A Home Improvement Loan is a Closed-End Mortgage Loan or Open-End Line of Credit that is for the purpose, in whole or part, of repairing, rehabilitating, remodeling, or improving a Dwelling or the real property on which the
Dwelling is located.

For example, a Home Improvement Loan includes:
(a) a Covered Loan if any of the proceeds are used for repair, rehabilitation, remodeling, or improvement of the Dwelling or the real property on which the Dwelling securing the Covered Loan is located, even if the remainder is used for totally unrelated purposes, such as college tuition;

(b) a Covered Loan used to install a swimming pool, construct a garage, or improve landscaping on the real property on which the Dwelling securing the Covered Loan is located; and
(c) a Covered Loan used to improve a Multifamily Dwelling used for residential and commercial purposes if the proceeds are used either to improve the entire property (e.g., to replace a heating system that services the entire structure) or primarily to improve the residential portion of the Multifamily Dwelling.

Question 199

What is a refinancing for HMDA reporting purposes?

Answer 199

A Refinancing is a Closed-End Mortgage Loan or Open-End Line of Credit in which a new Dwelling-secured debt obligation satisfies and replaces an existing Dwelling secured debt obligation by the same borrower. Generally, whether the new debt obligation satisfies and replaces an existing obligation is determined by reference to the parties’ contract and applicable law. In order for a Covered Loan to be a Refinancing, both the new and existing transactions must be secured by a Dwelling. Only one borrower need be the same on the new and existing transactions.

Question 200

What is a Cash out refinancing for HMDA reporting purposes?

Answer 200

A Financial Institution reports a Covered Loan or an Application as a cash-out Refinancing if it is a Refinancing and the Financial Institution considered it to be a cash-out Refinancing when processing the Application or setting the terms under its or an investor’s guidelines.

For example, if a Financial Institution considers a loan product to be a cash-out Refinancing under an investor’s guidelines because of the amount of cash received by the borrower at closing or account opening, it reports the transaction as a cashout Refinancing. If a Financial Institution does not distinguish between a cash-out Refinancing and a Refinancing under its own guidelines, sets the terms of all Refinancings without regard to the amount of cash received by the borrower at loan closing or account opening, and does not offer loan products under investor guidelines, it reports all Refinancings as Refinancings, not cash-out Refinancings.

Question 201

What does the “other” loan purpose mean for HMDA reporting?

Answer 201

If a Covered Loan is not, or an Application is not for, a Home Purchase Loan, a Home Improvement Loan, a Refinancing, or a cash-out Refinancing, a Financial Institution reports the purpose as “other.”

For example, if a Covered Loan is for the purpose of paying educational expenses, the Financial Institution reports the purpose as “other.” A Financial Institution also uses “other” if the Covered Loan is or the Application is for a Refinancing but, under the terms of the existing credit agreement, the Financial Institution was unconditionally obligated to refinance the obligation subject to conditions within the borrower’s control.

Question 202

How should this loan be reported under the Loan purpose field?

The loan is for a Home purchase and Home improvement

Answer 202

Home purchase

Question 203

How should this loan be reported under the Loan purpose field?

Home purchase loan and refinancing

Answer 203

Home purchase loan

Question 204

How should the loan be reported under the Loan purpose field?

Home purchase and cash out refinancing

Answer 204

Home purchase loan

Question 205

How should the loan be reported under the Loan purpose field?

Home purchase and Other

Answer 205

Home purchase loan

Question 206

How should the loan be reported under the Loan purpose field?

Home improvement and refinancing

Answer 206

Refinancing

Question 207

How should the loan be reported under the Loan purpose field?

Home improvement loan and cash out refinancing

Answer 207

Cash out refinancing

Question 208

How should the loan be reported under the Loan purpose field?

Refinancing and other

Answer 208

Refinancing

Question 209

How should the loan be reported under the Loan purpose field?

Cash out refinancing and other

Answer 209

Cash out refinancing

Question 210

How should the loan be reported under the Loan purpose field?

Home improvement loan and other

Answer 210

Home improvement loan

Question 211

Ficus Bank obtains an appraisal that values a parcel of property at $100,000, an automated valuation model report that values the property at $110,000, and a broker price opinion that values the property at $105,000.

What should the bank report as the property value?

Answer 211

When approving the Application, Ficus Bank relies on the appraisal. It reports the property value as $100,000.

Question 212

What matrix is used when assessing HMDA CMPs?

Answer 212

DCP staff will use the general CMP matrices in the FIEA Manual when considering CMPs in connection with HMDA data.

CMPs related to consumer compliance and fair lending violations, with the exception of CMPs related to pattern or practice flood violations, are determined using the general Matrix for CMPs against Institutions or Matrix for CMPs against Individuals (general CMP matrices).

2018 Data no CMPs allowed bc of new rules.