U.S. Department of Housing and Urban Development Washington, D.C. 20410-8000 February 13, 1995 OFFICE OF THE ASSISTANT SECRETARY TI-430 FOR HOUSING-FEDERAL HOUSING COMMISSIONER TO: ALL NONSUPERVISED TITLE I LENDING INSTITUTIONS AND OTHER NONDEPOSITORY LENDING INSTITUTIONS SUBJECT TO HMDA REPORTING SUBJECT: Home Mortgage Disclosure Act (HMDA) Update This letter is to clarify the Home Mortgage Disclosure Act (HMDA) reporting requirements and to remind recently approved Title I lenders and loan correspondents of their reporting responsibilities. Please be advised that the deadline is March 1, 1995 for submission of calendar year 1994 reports. Attached are some materials which may be helpful to you: (1) a flow chart of coverage criteria for nondepository lending institutions; (2) reporting responsibilities for loan correspondents and brokers; (3) tips on reporting your HMDA data; and (4) a copy of the latest HMDA Guide. Each time you send your HMDA report to the Department -- either your initial submission or corrections -- you should receive an error report reflecting your status after your latest submission is processed. If you do not receive this feedback within a reasonable amount of time, you should view this as reason to be concerned that your report may not have reached us. WHO MUST REPORT Please refer to Attachment 1, Coverage Criteria for Nondepository Lending Institutions, and Attachment 2, Reporting Responsibilities for Loan Correspondents and Brokers. If you are a loan correspondent or loan broker, it is important to note that only those applications for which your company made the credit decision must be considered when interpreting the coverage criteria. If you did not make the credit decision on any loans at all, except for denials that you did not send forward to your sponsoring lender, then you did not meet the 100-loan "origination" threshold for HMDA. However, you are required to report those withdrawals/denials that were FHA applications to HUD. Clarification for 1994: Denials do not count towards the 100-loan origination threshold. 2 Some lenders thought that they did not have to report in 1993 because they had less than $10 million in assets. Effective January 1993, even if your assets are less than $10 million, you are required to report if you made the credit decision on 100 or more originations of home purchase loans (including refinancings of home purchase loans), assuming you meet the other coverage criteria. Further, if your institution meets all the conditions in the coverage criteria, you must report all mortgage activity -- including FHA, VA, conventional and FmHA -- not just FHA activity. If you are exempt from HMDA Regulation C, then you must report to HUD any FHA activity on which you made the credit decision. If you are a loan correspondent that does not make credit decisions, your sponsor bears the reporting responsibility for FHA activity. If you are required to report to a regulator other than HUD, please do not report to HUD as well; this results in duplicate reporting. Finally, if you find that your reporting status for 1994 is different from the way you reported for the 1993 cycle, please call the HMDA Hotline (202-755-7530) right away so that we may change your reporting panel classification for 1994. For example, if you reported only FHA activity for 1993 but are required to report all activity for 1994, or vice versa, we need to change your status. If you reported in 1993 and determine that you are exempt for 1994, we need to know that as well. WHAT TO REPORT Report all applications for home purchase and home improvement loans (including refinancings of both) for which action was taken -- originated, denied, withdrawn, etc. -- during the calendar year covered by the current register, plus all loans that you purchased during that period. Data are to be collected for both 1- to 4-family and multifamily (5-family or more) properties. Include applications that were received in the previous calendar year but were acted upon during the calendar year covered by the current register. Please do not report applications that were still pending at the end of the calendar year. Such cases increase your error count and subsequently have to be deleted, by you, from our HMDA database. Title I lenders and loan correspondents that have no activity to report should submit a negative report in the form of a completed and signed Transmittal Sheet, along with the notation "Negative Report" either on the Transmittal Sheet itself or as an attached note. CHANGE IN 1995 PROCESSING SCHEDULE The HMDA subcommittee has made a change in the 1995 processing schedule for 1994 data. To move up the deadline for delivering the data to the central depositories throughout the country, the two-week period for institutions to review and change the preliminary disclosure statements has been eliminated. However, your institution will have the opportunity of reviewing your data via the Institution Register Summary (IRS) which we will begin generating to accompany each error report. Our final delivery 3 of all data to the Federal Reserve Board is scheduled for May 24th; therefore, all corrections have to be received at HUD at least one week prior to that date to allow time for processing. Any subsequent corrections will not be reflected in your disclosure report nor in any of the products released to the public. ADMINISTRATIVE SANCTIONS Due to the importance of accurate and timely submission of HMDA data, a violation of HMDA reporting requirements is subject to administrative sanctions, including the imposition of civil money penalties, where applicable. An unreported, inaccurate or late HMDA data submission constitutes such a violation. HUD's Mortgagee Review Board has imposed such penalties for noncompliance. 1994 HMDA SOFTWARE By now, you should have received the 1994 HMDA Software which was mailed to our HUD reporters in January. If you do not have the software and would like to obtain it, you can request it by calling the HMDA Hotline. Please note that earlier versions of the software must not be used for the 1994 data due to revised geographic boundaries (see below). NEW METROPOLITAN STATISTICAL AREA (MSA) DESIGNATIONS Beginning January 1, 1994, HMDA reporters are required to use the current metropolitan statistical area (MSA) designations as revised by the Office of Management and Budget on June 30, 1993. The 1994 HMDA software provided by the Department contains these new designations and will edit your records accordingly. If you use some other automated system to compile your data, please ensure that you are using the proper geographic codes. It is the responsibility of the lending institution to obtain all materials needed to determine the MSA, State and county codes and the census tract numbers. The HMDA Guide (Attachment 4) lists the sources of geographic information and where to obtain them. Another alternative is to procure the services of a private vendor who can geocode your data or provide you with a system which conforms to the specific reporting requirements of HMDA. AUTOMATION All lending institutions are strongly encouraged to automate the data collection and reporting process. If you report more than 100 application and loan entries, you are expected to submit the data in machine-readable form. To facilitate automated reporting, the Department provides PC software, free of charge, for use by institutions that have not acquired or developed their own system. 4 LOAN AMOUNT AND INCOME Please take care to report both Loan Amount and Annual Income rounded to the nearest thousand, as instructed. For example, a loan amount of $98,500 should be reported as "00099", not "98500". The latter translates to $98,500,000. Similarly, an annual income of $59,850 should be reported as "0060". PREQUALIFICATION PROGRAMS The Federal Reserve Board recently determined that lenders are not to include data about prequalifications in HMDA Loan/Application Registers for calendar years 1994 or 1995. If data about prequalifications are or have been collected under your data collection system, you are asked to remove these entries before submission, but only if you can easily do so. AMENDMENTS TO REGULATION C The Federal Reserve Board is in the process of publishing amendments to Regulation C which will soon be available. Compliance with these amendments will be mandatory for the collection of data that begins January 1, 1996, to be submitted to supervisory agencies no later than March 1, 1997. Institutions may comply with the amendments at their option beginning January 1, 1995. Sincerely yours, Nicolas P. Retsinas Assistant Secretary for Housing - Federal Housing Commissioner Attachments *** CHANGE OF ADDRESS/PHONE *** The HMDA Processing Group recently moved to new quarters and the new Hotline number is 202-755-7530. Please note the two addresses listed below. When using one of the express (person-to-person) deliveries, the courier address is to be used, and when using regular postal service, the mailing address is required. This is very important to avoid loss or misrouting of your report. Courier Address: Department of Housing & Urban Development Housing - Information Systems Div., HFEI ATTN: HMDA Processing 470 L'Enfant Plaza East, Suite 3119 Washington, DC 20024 Mailing Address: Department of Housing & Urban Development Housing - Information Systems Div., HFEI ATTN: HMDA Processing 451 Seventh Street, S.W., Room B-133 Washington, DC 20410-8000 Attachment 1 ___________________________________________________________________________ Coverage Criteria for Non-Depository Mortgage Lending Institutions ******************************************************************** * * * * * * * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * * * * * * * ******************************************************************** ___________________________________________________________________________ Attachment 2 REPORTING RESPONSIBILITIES FOR LOAN CORRESPONDENTS AND BROKERS Rules for loan applications received through loan correspondents require that the data must be reported by the entity that makes the credit decision. The following situations do not address the overall HMDA coverage criteria; rather, they assume that the entity responsible for reporting these loans meets the coverage criteria. A. FHA Applications The relationship between a Title I sponsor and its loan correspondent is somewhat different from the relationship between lenders and brokers, in that the Title I loan correspondent originates, processes, and closes Title I loans in its own name. The sponsoring lender has an agreement to acquire loans from the loan correspondent. Under the typical agreement, the loan correspondent delivers loan applications to the sponsor; the sponsor evaluates the application, makes a credit decision, and informs the loan correspondent whether it is willing to acquire the loan. If the sponsor approves the application, the loan closes in the name of the loan correspondent and is then sold to the sponsor. In this situation, the sponsor reports as originations those loans it purchases, and reports as denials those loans it decides not to approve. The loan correspondent does not report any of these loans or applications. If, however, the loan correspondent denies a loan application without review by the sponsor, the correspondent reports the application as a denial. B. Non-FHA Applications Scenario 1: The lender has an agreement to acquire loans from a broker. Under that agreement, the broker delivers loan applications to the lender; the lender evaluates the application, makes a credit decision, and informs the broker whether it is willing to acquire the loan. If the lender approves the application, the loan closes in the name of the lender, or closes in the name of the broker and is then acquired by the lender. In this situation, the lender reports as originations those loans it acquires (whether or not they closed in its name), and as denials those applications it decides not to approve. The broker does not report any of these loans or applications. (If the broker denies a loan application before it is submitted to the lender, the broker reports the application as a denial, assuming the broker is required to report under HMDA.) Attachment 2 (Cont'd.) 2 Scenario 2: The lender agrees with the broker to acquire loans that meet the lender's underwriting guidelines. The lender does not review loan applications prior to closing; the broker makes the underwriting decision. In this situation, the broker reports the originations, denials, withdrawals. The lender reports as purchases only those loans it decides to acquire. Scenario 3: The lender agrees with the broker to purchase loans that have government or private insurance. The lender does not review applications prior to closing. In this situation, the broker reports the originations, denials, withdrawals. The lender reports as purchases only those loans it decides to acquire. Attachment 2 (cont'd.) 3 Examples of Reporting Requirements for Loan Correspondents and Brokers For ease of description, the term "brokered" refers to applications for which you did not make the credit decision; rather, your sponsor or investor made that decision. The term "underwrote" refers to applications for which you did make the credit decision. "Denied" refers to those applications that you denied without sending forward to your sponsor or investor for a credit decision. EXAMPLE ACTIVITY REPORTING REQUIREMENTS #1 Brokered 300 loans Met the 100-loan origination threshold Underwrote 101 loans and is required to report 106 loans Denied* 5 loans -- the 101 on which you made the credit decision and the 5 denials that you did not send to your sponsor/investor. The 300 brokered loans will be reported by your sponsor/investor. #2 Brokered 300 loans Did not meet the 100-loan origination Underwrote 98 loans threshold, and thus, is exempt from HMDA Denied* 30 loans Regulation C. However, any of the 98 originations and 30 denials that were FHA loans must be reported to HUD in the HMDA format. #3 Brokered 400 loans Did not do any originations at all, and Underwrote 0 loans thus is exempt from HMDA Regulation C. Denied* 101 loans However, any of the 101 denials that were FHA loans must be reported to HUD in the HMDA format. * Please note that in addition to these denials, other applications for which action was taken without sending them forward to your sponsor/ investor are treated the same -- withdrawals, for example. Attachment 3 TIPS ON REPORTING YOUR HMDA DATA 1. Respondent IDs and Mailing Labels We identify your institution by your Respondent ID, which is your 10-digit Title I lender or loan correspondent ID (or Tax ID for those that are not FHA-approved). It is very important that all IDs are correct on both the Transmittal Sheet and Loan/Application Registers. If the Respondent ID is incorrect, your company risks not getting credit for reporting. Please label the exterior of all diskettes and tapes with the following information: Respondent ID Name of lending institution Address Contact person and telephone number Total LARs Diskette Number (1 of 1, 1 of 2, etc.) 2. Keep Updated Registers For most institutions, HMDA is not a report that can be pulled together in a few weeks; rather, it is a year-long process. Those who wait until December 31 are asking for trouble -- frequently having to use overtime and being under stress and prone to making mistakes. We encourage you to update your Loan/Application Register on an ongoing basis. If your institution is selected for review by the Monitoring Division of the Office of Lender Activities and Land Sales Registration, one of their tasks will be to review your Loan/ Application Register; this can occur at any time during the course of the year. 3. Verify Magnetic Media It is a good idea, and to your benefit, to copy your diskettes and tapes before sending them to us. We have received damaged diskettes, corrupted files, etc. requiring replacement; yet some institutions had no backup from which to copy. If you are sending tapes, please confirm that the tape can be successfully read before sending to us. Additionally, if you are using an IBM system, please turn off the "data compression," as this causes us a problem. Finally, please package all diskettes and tapes carefully, as some of the "hardware" errors are caused by diskettes and tapes damaged in transit. Attachment 3 (Cont'd.) 2 4. MSA/State/County/Census Tracts The Department can provide you with a diskette file or hard copy listing of valid MSA/STATE/COUNTY/CENSUS TRACT combinations. Please note, however, that this information is intended for use only as a reference tool of valid values for those items. It is not to be used to choose tracts that simply pass edits. As stated earlier, you need to acquire the necessary tools to properly geocode your data. 5. Application Definition There has been some confusion regarding what constitutes an application. Please note the reference materials listed below. In particular, the Official Staff Commentary on Regulation B should be helpful. 6. Observe Deadlines Each time you send in data, the Department will mail out an error report. The cover letter asks that you observe the ten-day turnaround time for corrections. 7.Reference Materials a. A Guide to HMDA Reporting, Getting it Right! This document should be studied in its entirety. It describes the reporting process, sources of geocoding information, etc. b. Regulation C, Home Mortgage Disclosure (12 CFR Part 203 ), issued by the Board of Governors of the Federal Reserve System. c. Official Staff Commentary on Regulation B, Equal Credit Opportunity, issued by the Board of Governors of the Federal Reserve System. See Section 202.2(f) Application; paragraph 3, "When an inquiry becomes an application" and paragraph 4, "Examples of inquiries that are not applications." WITH REVISED MSA, STATE & COUNTY CODES (Effective January 1, 1994) ATTACHMENT 4 A GUIDE TO HMDA Reporting Getting It Right! Federal Financial Institutions Examination Council LOAN/APPLICATION REGISTER Page ____ of ____ ______________________________________________________ ____________ Name of Reporting Institution City, State, All columns (except Reasons for Denial) must be completed for each entry. See the ______________________________________________________________________ Application or Loan Information ______________________________________________________________________ Date Application Application or Received Loan Number (mm/dd/yy) ______________________________________________________________________ Example of Loan Originated L B - 6 8 7 4 3 9 01/15/92 ______________________________________________________________________ Example of Application Denied 0 1 2 3 4 5 6 7 8 9 - 9 8 7 6 5 4 3 2 1 0 03/20/92 ______________________________________________________________________ ______________________________________________________________________ A GUIDE TO HMDA Reporting Getting It Right! LOAN/APPLICATION REGISTER Page ____ of ____ ______________________________________________________ ____________ Name of Reporting Institution City, State, All columns (except Reasons for Denial) must be completed for each entry. See the ______________________________________________________________________ Application or Loan Information ______________________________________________________________________ Date Application Application or Received Loan Number (mm/dd/yy) ______________________________________________________________________ Example of Loan Originated L B - 6 8 7 4 3 9 01/15/92 ______________________________________________________________________ Example of Application Denied 0 1 2 3 4 5 6 7 8 9 - 9 8 7 6 5 4 3 2 1 0 03/20/92 ______________________________________________________________________ ______________________________________________________________________ ___________________________________________________________________________ Contents Foreword Part I: Executive Summary: Management's Responsibilities Purpose of HMDA __________________________________________ 1 Who Must Report __________________________________________ 1 Who is Exempt ____________________________________________ 2 Mergers, Acquisitions, and Recharters ____________________ 3 Coverage Criteria for Depository Institutions ____________ 4 Coverage Criteria for Other Mortgage Lending Institutions_ 5 Reporting Requirements ___________________________________ 6 Modified Loan/Application Register _______________________ 6 Disclosure Statements ____________________________________ 7 Aggregate Tables__________________________________________ 7 Management's Responsibilities ____________________________ 8 Part II: Getting Started: Assembling the Data and Tools What Loans Are Covered? __________________________________ 9 What Loans Are Excluded? _________________________________ 9 What Information Is Reported? ____________________________10 Sources of Geographic Information ________________________11 Streamlining the Reporting Process _______________________16 ___________________________________________________________________________ Part III: Completing the Form: Step-by-Step Reporting Form __________________________________________ 17 Information Needed for Your Register ____________________ 18 About the Application or Loan ___________________________ 18 About the Action Taken __________________________________ 19 About the Property Location _____________________________ 20 About the Applicant _____________________________________ 21 About Loans That You Sell _______________________________ 21 About the Reasons for Denial ____________________________ 22 Officer's Certification and Contact Information _________ 22 Questions and Answers ___________________________________ 23 Appendix Checklist for Person Completing HMDA-LAR ________________ 26 Checklist for Certifying Officer ________________________ 27 Glossary ________________________________________________ 28 Regional Offices of the Bureau of the Census ____________ 29 State and County Codes for Counties in MSAs _____________ 30 Agency Offices __________________________________________ 46 ___________________________________________________________________________ Foreword A Guide to HMDA Reporting: Getting It Right! will assist you in complying with the Home Mortgage Disclosure Act and Regulation C. It was written to address the needs of management and to help the individuals who actually prepare the HMDA report. The Guide was developed by the Department of Housing and Urban Development (HUD) and member agencies of the Federal Financial Institutions Examination Council (FFIEC): the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), the Office of Thrift Supervision (OTS), the Federal Reserve System (FRS), and the National Credit Union Administration (NCUA). Part I is an Executive Summary for the management official who is responsible for an institution's compliance with HMDA. This chapter gives an overview of the law's requirements, explains how to determine whether an institution is covered by HMDA, and summarizes management's responsibilities. Parts II and III of the Guide contain directions for assembling the necessary tools plus step-by-step instructions for completing the HMDA Loan/Application Register (HMDA-LAR). The appendix includes checklists, a glossary, addresses for supervisory agencies and the Bureau of the Census, and a listing of geographic codes needed for reporting. The FFIEC uses information provided on the loan/application registers to produce HMDA disclosure statements for each reporting institution, as well as aggregate tables for all covered lenders in each metropolitan statistical area (MSA). These reports are used by supervisory agencies, lending institutions, governmental agencies, and community groups to monitor the housing-related lending activities of covered institutions. They also can be used to help evaluate an institution's Community Reinvestment Act performance. If you have questions that are not answered by the Guide, refer first to the Federal Reserve Board's Regulation C and the instructions for the reporting form. The Guide is a supplement to the regulation, not a substitute. For further information, contact your federal supervisory agency (see appendix). The FFIEC welcomes suggestions for changes or additions that might make this Guide more helpful. Write to FFIEC, 2100 Pennsylvania Avenue, NW, Suite 200, Washington, DC 20037. ___________________________________________________________________________ Executive Purpose of HMDA Summary: Management's The Home Mortgage Disclosure Act, Responsibilities enacted by Congress in 1975, is implemented by the Federal Reserve Board's Regulation C (12 CFR Part 203 ). HMDA was made permanent in February 1988, and was expanded in August 1989 to require additional data to be reported about applications received and about applicant and borrower characteristics. HMDA makes available to the public information that helps to show whether financial institutions are serving the housing credit needs of their neighborhoods and communities. It also helps government officials make public sector investments and indicates to private investors the neighborhoods where their efforts are needed. Finally, HMDA data help identify possible discriminatory lending patterns and assist regulatory agencies in enforcing compliance with antidiscrimination statutes. HMDA does not prohibit any activity, nor is it intended to encourage unsound lending practices or the allocation of credit. Who Must Report For many years, HMDA and Regulation C applied only to depository institutions such as banks, thrifts, and credit unions and their majority-owned subsidiaries. Prior to 1990, the subsidiary of a bank, thrift, or credit union consolidated its data into the report filed by the parent. Now, these subsidiaries are required to report separately. In 1988, Congress expanded the law's coverage to savings and loan service corporations and to mortgage banking subsidiaries of bank holding companies and savings and loan holding companies. In 1989, Congress further amended the law to include many independent, nondepository mortgage lenders. In 1991, Congress authorized the Federal Reserve Board, in consultation with HUD, to develop a new exemption standard for nondepository institutions in order to further expand coverage of independent mortgage lenders. In 1992, the Board adopted a standard for coverage. Beginning January 1, 1993, a nondepository mortgage lender, like a depository institution, generally must comply with HMDA if, at the end of the preceding calendar year, it had a home or branch office in an MSA 1 and had assets of more than $10 million. Regardless of asset size, a nondepository lender is also covered if it originated 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year. _____________________________ 1 The Office of Management and Budget (OMB) defines MSAs in terms of entire counties, except in the six New England states where they are defined in terms of cities and towns. An area usually qualifies as an MSA if it contains a city with a population of at least 50,000 or is defined by the Bureau of the Census as an urbanized area and has a population of 50,000 or more and a total metropolitan population of at least 100,000 (75,000 in New England). In the Guide, the term MSA also refers to a Primary Metropolitan Statistical Area (PMSA); a PMSA is a component of a Consolidated Metropolitan Statistical Area (CMSA), an area with a population of more than 1 million. 1 ___________________________________________________________________________ Executive Who is Exempt Summary: Management's A depository institution need not Responsibilities complete a HMDA report--even though it meets the tests for asset size and location--if it made no first-lien home purchase loans (including refinancings of home purchase loans) on 1-to-4 family dwellings in the preceding calendar year. A nondepository institution need not submit a report -- even if it meets the tests for location and asset size or lending activity -- if its home purchase loan originations (including refinancings of home purchase loans) in the preceding calendar year came to less than 10 percent of all its loan originations (measured in dollars). Refer to charts on pages 4 and 5 of the Guide for more information on the criteria for coverage. These charts relate only to determining coverage under HMDA and Regulation C. Different coverage and reporting requirements may apply under fair lending or other regulations of a particular federal agency. Institutions located in a state that has enacted a mortgage disclosure law may be granted an exemption from HMDA if they are subject to state law requirements that are substantially similar to federal requirements and there are adequate provisions for enforcement. These institutions will submit the required information to their state supervisory agency instead of to their federal regulator. Institutions will be informed by their state supervisory agency when such an exemption has been granted. 2 ___________________________________________________________________________ Mergers, Acquisitions, and Recharters When a merger or an acquisition takes place or an institution is rechartered, questions often arise about how and when to report HMDA data. Five scenarios are described below. Refer others to your federal supervisory agency for resolution. o Two institutions merge, producing a successor institution whose assets exceed $10 million. Both were previously exempt because of asset size. The successor institution's first HMDA report will be for the calendar year following the year of the merger. No data submission is required for the year of the merger. oTwo institutions merge, one covered and one exempt. The successor institution must report data for loan applications, originations, and purchases by the covered entity for the year of the merger. The successor need not report data for the previously exempt institution until the following calendar year, when it must consolidate all data for both institutions. oTwo covered institutions merge. The successor institution must report complete data for the year in which they merged; it has the option of filing a consolidated report or separate reports for that year. For subsequent calendar years, a consolidated report is required. If the institutions reported to different supervisory agencies prior to a merger, all reports for the year in which they merged and all subsequent reports must be submitted to the supervisory agency of the successor or acquiring institution. ..TX oA covered institution purchases HMDA-related loans in bulk from another entity (for example, from the Resolution Trust Corporation or from a failing institution). As neither a merger nor the acquisition of an institution is involved, the purchasing institution must report these loans as "purchased loans" in the year they are purchased. oA covered institution is rechartered. The institution must report data for the year in which it was rechartered and all subsequent years to its new supervisory agency. 3 ___________________________________________________________________________ Coverage Is the institution a bank, Criteria credit union, or savings NO See next page for Depository association? Institutions YES On the preceding December 31, did the assets of the NO It is exempt institution total more than $10 million? YES On the preceding December NO It is exempt 31, did the institution have a home or branch office /2 in an MSA? YES In the preceding calendar year, did the institution originate at least one home NO It is exempt purchase loan or refinancing of a home purchase loan secured by a first lien on a 1-to-4 family dwelling? YES Is the institution federally insured or regulated; was the mortgage loan insured, guaranteed, or NO It is exempt supplemented by a federal agency; or was the loan intended for sale to FNMA or FHLMC? YES ___________________ /2 For depository HMDA Applies to Loan institutions, a Originations, Purchases, branch office is an and Applications in the office approved as Current Calendar Year a branch by a supervisory agency. It does not include offices of affiliates or other third parties such as loan brokers, or other offices where loan applications are merely taken; nor does it include ATMs or other electronic terminals. 4 ___________________________________________________________________________ Coverage Is the lender a for-profit Criteria institution? NO It is exempt for Other Mortgage YES Lending Institutions In the preceding calendar year, did the institution's home purchase loan NO It is exempt originations (including refinancings of home purchase loans) equal or exceed 10 percent of its total loan originations, measured in dollars? YES Did the institution either: (1) have a home or branch office /3 in an MSA on the preceding December 31, or (2) receive applications NO It is exempt for, originate, or purchase 5 or more home purchase or home improvement loans on property located in an MSA in the preceding calendar year? YES Did the institution either: (1) have assets (when combined with the assets of any parent corporation) exceeding $10 million on the preceding December 31, or NO It is exempt (2) originate 100 or more home purchase loans (including refinancings of home purchase loans) in the preceding calendar year? YES ___________________ /3 For other HMDA Applies to Loan mortgage lending Originations, Purchases, institutions, a and Applications in the branch office is Current Calendar Year any office of the institution that takes applications from the public for home purchase or home improvement loans. It does not include offices of affiliates or other third parties such as loan brokers. 5 ___________________________________________________________________________ Executive Reporting Requirements Summary: Management's HMDA requires covered institutions Responsibilities to compile and disclose data about the applications they receive and the home purchase and home improvement loans they originate or purchase during each calendar year. In general, institutions must report: o Certain data about each application or loan (such as loan type and amount) and about the location of the dwelling to which it relates. o The race or national origin, sex, and gross annual income of the applicant or borrower. This requirement does not apply to banks, thrifts, or credit unions that have assets of $30 million or less. /4 An institution must maintain a loan/ application register (HMDA-LAR) on which it will enter data about each application received or loan originated and each loan purchased. The data must be presented in the format prescribed by the Federal Reserve Board in Regulation C and the accompanying instructions. The institution must send the loan/ application register to its federal supervisory agency by March 1 following the calendar year for which the loan data are compiled. Modified Loan/Application Register Beginning March 31, 1993, institutions must make their loan/application register data--modified to protect privacy interests of applicants and borrowers--available to the public upon request. Three fields are to be deleted from the register: the application or loan number, the date the application was received, and the date the action was taken. Aside from making the specified modifications, however, institutions are not required to change the format of the data from that used to collect and maintain the data. A modified register must be available no later than March 31 for requests made on or before March 1 following the year for which the data are collected, and within 30 days for requests made after March 1. This requirement applies to lending activity for 1992 and subsequent years. Institutions are strongly encouraged to make their modified loan/application register data available in census tract order, if possible. ____________________ /4 Different rules may apply for institutions regulated by the FDIC and OCC. 6 ___________________________________________________________________________ Disclosure Statements Using data from the loan/application registers, the FFIEC will prepare and send to each reporting institution a series of tables that will comprise the disclosure statement for that institution. An institution must make the statement available to the public for inspection and copying at its home office within 3 business days of receiving the disclosure statement from the FFIEC. The disclosure statement also must be made available in at least one office in each additional MSA where the institution has offices within 10 business days after receipt from the FFIEC. A reasonable fee to cover costs incurred is permitted. The disclosure statement must remain available to the public for five years, and an institution must post a general notice about its availability in the lobbies of the home office and any branch office located in an MSA. An institution may prepare its own display posters or may obtain posters from its federal supervisory agency. Aggregate Tables In addition to preparing individual disclosure statements, the FFIEC will combine the HMDA data submitted by all reporting institutions and produce aggregate tables for each MSA. The FFIEC will produce additional tables for each MSA showing the lending patterns according to demographic characteristics provided by the Bureau of the Census, such as age of housing stock. The FFIEC will send copies of the individual disclosure statements and aggregate tables to a central depository (such as a public library or a planning commission office) in each MSA, where the information is made available to the public. A directory of central data depositories may be obtained from the FFIEC. 7 ___________________________________________________________________________ Executive Management's Summary: Responsibilities Management's Responsibilities If your institution is required to comply with HMDA, management must ensure that: o Procedures are in place for collecting and maintaining accurate data regarding each application for, each origination, and each purchase of loans for home purchase or home improvement and for refinancings of these two types of loans. oThe individuals who are assigned responsibility for preparing and maintaining the data understand the regulatory requirements and are given the resources and tools needed to produce complete and accurate data. oAn officer of the institution monitors the collection of the data during the course of the year for compliance with the reporting instructions, reviews the loan/application data at year-end, and can certify to the accuracy of the data submitted to the institution's supervisory agency. oThe loan/application data are submitted on time and the institution responds promptly to any questions that may arise during the FFIEC's processing of the data submitted. Administrative sanctions. Due to the importance of accurate and timely submission of HMDA data, a violation of HMDA is subject to administrative sanctions, including the imposition of civil money penalties, where applicable. Automation. All institutions are strongly encouraged to automate the data collection and reporting process. If institutions report more than 100 application and loan entries, they are expected to submit the data in machine-readable form. Each of the agencies has provided the technical specifications for automated submission on PC diskettes and magnetic tapes. To facilitate automated reporting, several of the federal supervisory agencies also provide PC software, free of charge, for use by institutions that have not acquired or developed their own system. Contact your supervisory agency for more information. The tools your staff will need include: o Information about the MSA boundaries, to identify the MSAs in which you have home or branch offices. The appendix to the Guide provides the necessary information. o Maps and materials from the Bureau of the Census for determining the 1990 census tract numbers for properties in MSAs where you have home or branch offices. Institutions must use only 1990 census tract numbers because the FFIEC will use the corresponding 1990 demographic data in preparing the aggregate tables described on page 7. Some institutions rely on appraisers to identify the census tract numbers. Others ask their data processors to "geocode" the loans. Whatever method you choose to follow, the ultimate responsibility for the accuracy of the data--and for ensuring that 1990 census tract numbers are used--rests with your institution. The remainder of this pamphlet contains detailed instructions for completing the register or for use as a guide in producing an automated report. 8 ___________________________________________________________________________ Getting What Loans Are Covered? Started Assembling the The key to HMDA coverage is the Data and Tools purpose of the loans. You need information for loans originated or purchased, as well as for loan applications that do not result in an origination. This information is collected for two categories of loans: Home Home Purchase Improvement Loans Loans A home purchase loan is any loan secured by and made for the purpose of purchasing a dwelling. A home improvement loan is one that the borrower has indicated will be used for repairing, rehabilitating, or remodeling a dwelling and that is carried on your institution's books (or has otherwise been classified or coded) as a home improvement loan. The term applies to both secured and unsecured loans. Home equity credit lines for home improvement may be reported, at your institution's option, provided the applicant or borrower indicated at the time of application the amount of the line that will be used for home improvement. Only that portion of the credit line is to be reported. An institution that reports home equity credit line originations must also report any applications that do not result in an origination. You need to collect the data for home purchase and home improvement loans, including refinancings, on both 1-to-4 family and multifamily (5-or-more family) properties. The loan data for each calendar year will be reported on the HMDA-LAR, which comes with detailed instructions. You do not have to group loans on your register in any particular order. You may prefer to keep separate registers for the different categories of loans--or even separate registers at different branches. Keep in mind, however, that the application or loan identifiers that you use for each entry must be unique within your institution. For example, if your report contains data from several branch offices, and each keeps its own register, assign codes or series of numbers to each branch to avoid duplication. Send all the registers for your institution to your supervisory agency in a consolidated report or automated file. What Loans Are Excluded? The following are specifically excluded from reporting under HMDA: o Loans made or purchased in a fiduciary capacity. o Loans on unimproved land. oConstruction loans and other temporary financing (but construction-permanent loans must be reported). oPurchase of an interest in a pool of mortgages, such as mortgage participation certificates. oPurchases solely of servicing rights to loans. oLoans that, although secured by real estate, are made for purposes other than home purchase, home improvement, or refinancing (for example, loans to finance tuition, goods for business inventory, or a vacation). For information about refinancings refer to the question-and-answer section in this Guide. 9 ___________________________________________________________________________ Getting Started: What Information Is Assembling the Reported? Data and Tools HMDA requires the collection of certain basic information, such as loan type and amount, for any home purchase or home improvement loan that you originate, or purchase, or for which you receive an application, plus geographic data for loan properties located in metropolitan areas where you have a home or branch office. In addition, information about the race, sex, and income of the applicant or borrower is generally required for applications and originations. Reporting race, sex, and income HMDA requires institutions to collect information about the race or national origin, sex, and gross annual income of applicants or borrowers for all loan applications and loan originations. This information is not required but may be reported for loans purchased by your institution. A bank, thrift, or credit union with assets of $30 million or less is not required by HMDA to report this applicant information, but may be subject to a similar data collection rule by its supervisory agency's fair lending regulations. There is a standard form in Regulation C for obtaining the data about the race or national origin and sex of the applicant or borrower. The form is similar to the one contained in the Federal Reserve Board's Regulation B (Equal Credit Opportunity), and either form may be used to collect the data. Reporting MSA, state, and county codes and census tract numbers If a loan or application relates to property located in an MSA where you have a home or a branch office, you must report the following geographic information about the property location: oThe MSA, state, and county codes specified by the U.S. Department of Commerce in its Federal Information Processing Standards Publication (FIPS PUB 8-5), Metropolitan Statistical Areas. For 1994, these codes are also available in the appendix to this Guide. oThe 1990 census tract number (except as specified below). Although generally you must report the census tract number of the property to which the loan or application relates, you may omit the census tract number (and instead enter the code "NA" for "not applicable" in the census tract column) for any application or loan on property that: oIs located in an area that did not have census tracts for the 1990 census; or oIs located in a county that had a population of 30,000 or less in the 1990 census, even if the population later exceeds 30,000 and even if the county has census tract numbers. 10 ___________________________________________________________________________ Branch office. The term branch office refers only to offices of your institution, not offices of affiliates or other parties such as loan brokers. For a bank or other depository institution, branch office means an office approved as a branch by a supervisory agency. It does not include other offices where the institution merely takes loan applications, nor does it include free-standing ATMs. For other types of institutions (such as mortgage companies) branch office refers to any office that takes applications from the public for home purchase or home improvement loans. These entities also are considered to have a branch office in any MSA where in the preceding year they received applications for, originated, or purchased 5 or more loans for home purchase or home improvement --whether or not they had a physical office there. As a result, these lenders must keep complete geographic records of lending in the current calendar year in order to report data accurately the following year. Therefore, they may find it easier to enter geographic data routinely for any property located within any MSA. Sources of Geographic Information: o Information about MSA boundaries. The appendix to the Guide gives the MSA information that you need in submitting your data for the 1994 calendar year. o TIGER/Census Tract Street Index {Sup TM}. o 1990 Census Tract/Block Numbering Area Outline Maps. o An up-to-date local reference map. 11 ___________________________________________________________________________ Getting Started: By looking up your service area in the Assembling the appendix, you can determine if you Data and Tools have offices located within an MSA and you can obtain the corresponding codes. A list of all census tract numbers in each MSA is available from your supervisory agency or from the FFIEC. The list will help ensure that you are using only valid census tract numbers, and is another source of the MSA, state, and county codes. To determine MSA boundaries for future years, you may need to obtain FIPS PUB 8-5, Metropolitan Statistical Areas. Contact: National Technical Information Service U.S. Department of Commerce 5285 Port Royal Road Springfield, VA 22161 (703) 487-4650 Complete the "Change Request Form" found in the FIPS publication to receive updates to the list as they become available. Pencilling any changes onto your copy of the publication will keep it current and make it easier to use. Sources for 1990 census tract numbers You may choose from various products available from the Bureau of the Census for determining the correct 1990 census tract number for a given property. Census Tract/Block Numbering Area Outline Maps. You will need to use the 1990 Census Tract/Block Numbering Area Outline Maps for the counties within the MSA for which you are reporting. Besides showing the numbers for the census tracts within a particular county, these maps display the boundaries and names of the features used as census tract boundaries and the names of any counties or other subdivisions. Where a census tract boundary does not follow a visible feature such as a road, the invisible feature will be shown and labeled or symbolized. The maps are sold by the Government Printing Office in metropolitan and state packages. The average metropolitan package contains eight maps. Some metropolitan packages contain only one map; the largest contains sixty maps. The state packages contain non-metropolitan counties as defined for the 1990 Census tabulation program. They conform with the official published definitions in effect on June 30, 1990. The map sheets are oversized --generally measuring 36 by 42 inches --and map scales vary to minimize the number of map sheets. Maps may include one or more insets for densely settled areas. 12 ___________________________________________________________________________ Census Tract Street Index. Use the TIGER/Census Tract Street Index (TIGER/CTSI) for the county in which the property is located (Illustration 1). A special HMDA order form available from the Bureau of the Census (see page 15) tells you how to obtain the TIGER/CTSI for selected counties in the MSAs where you have offices. The TIGER/CTSI lets you determine the census tract numbers for properties that use street addresses. It is arranged by county within each MSA. The TIGER/CTSI provides the street name, including prefix or suffix direction (such as "north") and street type (such as "street" or "avenue"), address range, and corresponding census tract number (see illustration). Within a county, numbered streets (for example, 9th, 10th) will precede the streets listed alphabetically. The TIGER/CTSI shows the census tract number for each side of the street and, where applicable, provides county subdivision (towns, townships) and place codes as of January 1, 1990, for each street and address range. The latter may be helpful in determining the census tract number when streets with identical names and address ranges are located in different parts of the county. (County subdivision and place codes and their corresponding names are listed in the back of the TIGER/ CTSI.) As you can see from the illustration, the index pairs ranges of street addresses in the central city and suburbs of an MSA with the corresponding census tract numbers. ******************************************************************** * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * ******************************************************************** Illustration 1: 1990 TIGER/Census Tract Street Index 13 ___________________________________________________________________________ Getting Started: The 1990 TIGER/CTSI has certain Assembling the limitations: Data and Tools o The address range information covers only the urban core of major urban areas as of the late 1970's. This means that address ranges for addresses outside these areas may not appear. o Street information represents the road network circa 1986. New streets and street name changes made after 1986 will not appear in this product. o The index does not contain address range information for areas with rural type addresses (such as RFD addresses). o The extent of address coverage varies for each MSA. If you have questions about coverage for a particular MSA, contact the geography specialist in the Bureau of the Census regional office for your state before ordering. (Regional offices and telephone numbers are listed in the appendix.) Local Reference Maps. The 1990 Census Tract/Block Numbering Area Outline Maps do not show streets, street names, and address ranges within a census tract. You will therefore need to use these maps in combination with up-to-date local street maps available in your local market. You might wish to use a marker pen to highlight on the street map the boundaries of each census tract according to the outline map. ________________________________________ Note for appraisal users: Institutions that take the census tract numbers from property appraisals should ensure that appraisers use copies of the 1990 Census Tract/BNA Outline Maps for the counties in which they will be appraising properties. The ultimate responsibility for the accuracy of the census tract data--and for ensuring that 1990 census tract numbers are used--rests with your institution. ________________________________________ 14 ___________________________________________________________________________ To obtain a special HMDA order form for the TIGER/CTSI and the outline maps, contact: Customer Services Bureau of the Census Washington, DC 20233 (301) 763-4100 To obtain concepts information about census geography, contact: Geography Division Bureau of the Census Washington, DC 20233 (301) 763-3827 You also may contact the Census Bureau's regional office serving your state; offices are listed in the appendix to this Guide. The costs for the census materials will vary, depending on the size of the county. Some of the materials may refer to PMSA (primary metropolitan statistical area) in place of MSA. This distinction is not relevant for HMDA purposes, and you may treat the term as synonymous with MSA. It is the responsibility of the lending institution to obtain all materials needed to determine the MSA, state, and county codes, and the census tract numbers. The Census Bureau is not responsible for either assisting in the preparation of documents to meet program requirements or determining the appropriate census tract numbers for individual addresses. ******************************************************************** * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * ******************************************************************** Illustration 2: 1990 Census Tract Outline Map 15 ___________________________________________________________________________ Getting Started: Streamlining the Reporting Assembling the Process Data and Tools The following suggestions may help you streamline the reporting process. oBecause Regulation C calls for a register form of reporting, you are encouraged to collect the information and maintain your loan application register on an ongoing basis. If you use an outside servicer to identify the property locations, consider having the geocoding completed periodically rather than at year-end. oIf your institution handles a large volume of loans and applications, you may want to keep separate registers for home mortgage and home improvement loans. You must make sure, however, that the application identifier is unique. oYou are encouraged to develop or acquire a computer program with edit checks to maintain accurate and up-to-date records. There are various PC packages available from private vendors. Several of the supervisory agencies also have packages available free of charge for use in collecting and reporting HMDA data. oEach of the supervisory agencies has published technical specifications for automated submission of data on PC diskettes and magnetic tape. Make sure that your computer program meets the specifications of your supervisory agency. oIn many cases you may be able to wait until the loan transaction is complete to determine the census tract number (for example, from the appraisal information). But keep in mind that census tract numbers are also required for loan applications that are denied or withdrawn. oYour supervisory agency may require you to maintain your LAR on an ongoing basis. Contact your agency for details. 16 ___________________________________________________________________________ Completing Reporting Form the Form: Step-by-Step A loan/application register known as the HMDA-LAR is used for reporting the HMDA data. The register format and detailed instructions are available from your supervisory agency. You must follow the prescribed format of the HMDA-LAR, but you do not have to use the form itself so long as you use a layout that conforms to that of the register. All institutions are strongly encouraged to automate their collection and editing of HMDA data. An institution is expected to submit the data to its supervisory agency in an automated, machine-readable form unless 100 or fewer application and loan entries are reported. Your supervisory agency will provide you with instructions for electronic filing on PC diskette or magnetic tape format. A listing of the computer edits that your supervisory agency will use in reviewing your HMDA data is also available. Many vendors offer software with edit features. ******************************************************************** * * * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * * * ******************************************************************** Illustration 3: Loan/Application Register 17 ___________________________________________________________________________ Completing Information Needed for the Form: Your Register Step-by-Step You will have to collect and report certain information for each loan transaction reportable under HMDA, as described below. All column fields must be completed except "reasons for denial," which is optional under HMDA. For institutions regulated by OTS, however, completion of the "reasons for denial" is required under OTS regulations. ...About the Application or Loan oIdentification number. You may enter any application identifier (up to 25 characters long) that can be used later to retrieve the particular loan or application to which the entry relates. It is recommended that institutions not use proper names or social security numbers on the HMDA-LAR in order to ensure privacy for the applicant or borrower. The identifier must be unique among all entries from your institution. For example, if your report contains data from several branches, and each branch keeps its own register, make sure that you assign a code (or a series of numbers) to each branch to avoid duplication. oDate application received. Report either the date the application was actually received or the date shown on the application form. For purchased loans, enter the code "NA" for "not applicable." oType of loan. Enter the appropriate code to indicate whether the loan granted, applied for, or purchased was conventional, government-guaranteed, or government-insured. ******************************************************************** * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * ******************************************************************** 18 ___________________________________________________________________________ oPurpose of loan. For a 1-to-4 family dwelling, report whether the loan or application was for home purchase, home improvement, or refinancing. For loans or applications on multifamily property there is just one code; use the multifamily code whether a home purchase or home improvement loan or a refinancing is involved. oOccupancy. For a 1-to-4 family dwelling, indicate whether the property to which the loan or application relates will be the borrower's principal dwelling. For dwellings located in MSAs where you do not have home or branch offices, and dwellings not located in MSAs, enter code 3 for "not applicable," or enter the actual occupancy code if you know it. For multifamily dwellings (housing 5 or more families), regardless of location, enter code 3 for "not applicable." oLoan Amount. Report the dollar amount granted or requested in thousands. For example, if the dollar amount was $95,000, enter 95; if it was $1,500,000, enter 1500. Round to the nearest thousand; round $500 up to the next thousand. For example, if the loan was for $152,500, enter 153. But if the loan was for $152,499, enter 152. Do not report loans of less than $500. For submissions in automated form, your reporting program should add leading zeros to these amounts to fill out the column (for example, for a loan amount of $95,000, enter 00095). Leading zeros are not required for submissions in hard-copy form. ...About the Action Taken oType of action. Use the appropriate code to categorize the entry as a loan origination, as a purchased loan, or as an application that did not result in an origination. Do not report applications still pending at year-end. You will report these transactions in the calendar year when final disposition is made. oDate of action taken. Enter the settlement or closing date for originations. For applications that did not result in an origination, enter the date when the action (loan denied, file closed for incompleteness, application approved but not accepted) was taken or when the notice was sent to the applicant. For an application that was expressly withdrawn by the applicant, you may enter either the date shown on the applicant's letter or the date that you received the letter or notice. For loans that your institution purchased, enter the date of the purchase. 19 ___________________________________________________________________________ Completing the ...About the Property Form: Location Step-by-Step oMSA number, state code, and county code. Report the four-digit MSA code, two-digit FIPS code for the state, and three-digit code for the county. Enter these codes for any loan or loan application on property located in an MSA where you have a home or branch office. If the property is located outside the MSAs where you have a home or branch office (or outside any MSA), you may enter the applicable codes or you may enter "NA" in each of these columns. (See page 11 for the definition of branch office and page 30 for information about state and county codes.) In the case of a nondepository institution, these data are required for properties in any MSAs in which you originated, purchased, or received applications for 5 or more home purchase or home improvement loans in the preceding calendar year. oCensus tract number. Use only the numbers assigned in the 1990 census. This is necessary because the FFIEC will use 1990 demographic data in preparing tables from the data submitted by reporting institutions. (See pages 12-15 for sources.) Record each census tract number showing any decimal points precisely as shown on the tract/street index or other census documents. Add leading and trailing zeros to fill out the column, even though the number is not shown with leading or trailing zeros on the census documents. For example, report census tract 8.02 as 0008.02, not 802, 0802, or 8; and report census tract 1012 as 1012.00. Enter "NA" for the census tract number if the property is located in an area not divided into census tracts or in a county with a population of 30,000 or less. ******************************************************************** * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * ******************************************************************** 20 ___________________________________________________________________________ ...About the Applicant oRace or national origin and sex of the applicant. Use the appropriate codes for the categories shown in the instructions to the HMDA loan/application register. Report this information both for loans that you originate and for loan applications that do not result in an origination. You may, but are not required to, report these data for loans that you purchase. Report the data for the applicant and for the co-applicant if there is one. If there is no Co-applicant, use the numerical code given in the instructions to the HMDA-LAR for "not applicable" in the co-applicant column. oIncome of the applicant. If an application relates to a 1-to-4 family dwelling, enter the total gross annual income your institution relied on in making the credit decision. Report the amount in thousands, rounded to the nearest thousand ($500 should be rounded up to the next thousand). Enter "NA" if your institution does not take the applicant's income into account, or if the loan or application is for a multifamily dwelling, or if you choose not to collect this information for a purchased loan. You may also enter "NA" if your institution does not reflect income on the application form or related materials for loans to its employees. ...About Loans That You Sell oType of purchaser. If you sell a loan in the same calendar year in which it was originated or purchased, you must identify the type of purchaser to whom it was sold. If the loan is sold to more than one purchaser, use the code for the entity purchasing the greatest interest. If you sell only a portion of the loan, retaining a majority interest, do not report the sale. If you do not sell the loan during the same calendar year, or if the application did not result in a loan origination, enter the code "0" (zero). ******************************************************************** * * * * * * * * * * * GRAPHICS MATERIAL IN ORIGINAL DOCUMENT OMITTED * * * * * * * * * * * ******************************************************************** 21 ___________________________________________________________________________ Completing ...About the Reasons for the Form: Denial Step-by-Step You may provide as many as three reasons why a loan application was not approved. If your institution uses the model checklist provided by Regulation B in giving reasons for credit denials, consult the HMDA-LAR instructions for guidance on which reasons correspond to the various codes used in Regulation C. This is an optional item under HMDA (except that institutions supervised by OTS must list the reasons to comply with OTS regulations). Leave this column blank if the "action taken" on the application is not a denial. For example, do not complete this column if the application was withdrawn or the file was closed for incompleteness. Officer's Certification and Contact Information An officer of your institution must review the completed report and attest to its accuracy before submitting it to your supervisory agency. This certification is made on the transmittal sheet that will accompany the loan/application register. A checklist to assist the officer in making this review appears in the appendix. Verify that the transmittal sheet also includes the name and telephone number of the person at your institution who can answer questions about the report. This and the other information called for by the transmittal sheet must be part of your HMDA package whether you submit the loan data in hard copy or automated format. Remember that if your institution keeps separate registers for different branches or for the different categories of loans and applications, all must be submitted to your supervisory agency in a single package with one transmittal sheet. 22 ___________________________________________________________________________ Questions What About... and Answers An application still pending at year-end? Do not include it in that year's register. Report it in the calendar year in which final disposition is made. An application file that was closed because the applicant did not provide all the information needed for a credit decision? The answer depends on the facts. If you sent the notice of incompleteness called for by Regulation B (Equal Credit Opportunity) requesting further information and the applicant did not respond within the allotted time, enter the code for "file closed for incompleteness." On the other hand, if you did not send the Regulation B notice but instead denied the loan outright because of the missing information, enter the code for a loan denial. Do not categorize any application as withdrawn unless the applicant expressly withdrew the application prior to the credit decision. An inquiry about prequalifying for a home purchase or home improvement loan? To determine when an inquiry becomes an application that you must report under HMDA, you should look to the guidelines in the Official Staff Commentary to Regulation B. Loans originated in one calendar year and sold the next? Information concerning the sale of these loans is not reported by the selling institution. That is, you do not record the loan sales on the register for the year in which they are sold, nor do you go back and update the register for the year in which you reported the originations. Refinancings? Enter the entire amount of the refinancing if the amount outstanding on the original home purchase or home improvement loan, plus the amount of new money (if any) that is for home improvement purposes, is more than 50 percent of the total loan amount. Do not report a refinancing if 50 percent or less of the loan proceeds or amount applied for is for covered purposes. For example, if the amount outstanding on the original home purchase or home improvement loan is $30,000, the amount of new money is $70,000, and $21,000 of the new money is to be used for home improvement, the entire loan amount of $100,000 would be reported (because $51,000 or 51 percent of the total loan amount was for home purchase or home improvement purposes). Report a refinancing that meets this test whether the original loan was made by your institution or by another lender. Unsecured home improvement loans? Report loans or loan applications whether or not the loan will be secured by the property to which it relates. Loans for home improvement secured by a first lien? You may report such loans as home purchase loans if your institution ordinarily treats all first-lien loans as home purchase loans. 23 ___________________________________________________________________________ Questions Classifying home improvement and loans? You must report loans or loan Answers applications as "home improvement loans" when the borrower states that the purpose of the loan is for home improvement and the loan is classified by your institution as a home improvement loan. "Classified" can mean that the loan is recorded on your books or otherwise identified or coded as a home improvement loan. Multipurpose home improvement loans? If a borrower states that more than 50 percent of the loan proceeds will be used for home improvement purposes and the loan is classified by your institution as a home improvement loan, you may report the total loan amount as a "home improvement loan." If you use this test to report loan originations, you also must report comparable data for applications that did not result in originations. Home equity lines of credit? The reporting of home equity lines used for home improvement is optional. If you choose to report them, you must determine when you take an application whether the borrower plans to use a portion of the funds for home improvement. You may record that portion on your register as a home improvement loan. Report only the portion of the line that the borrower indicated was for home improvement. Report the line only once--in the year when the account was opened, and not in succeeding years even if there is activity on the account. If you report data for credit lines granted, you also must report data for applications that did not result in originations. Assumptions? Report the outstanding principal as an origination if your institution enters into a written agreement accepting the new party as the obligor on the loan. Do not report a loan when there is no written agreement between your institution and the new party. You must also report data for requests that did not result in assumptions. Mobile and manufactured home loans? Report any loans and applications for the purchase or improvement of such dwellings, whether or not the dwellings are considered real property under state law. If information about the potential site of the mobile home is not available, enter "NA" in the applicable columns under "property location." Loans on multifamily dwellings? Use the "multifamily dwelling" purpose code for reporting any loans and applications relating to dwellings for 5 or more families--home purchase loans, home improvement loans, and refinancings, including loans and applications handled by your commercial lending area. 24 ___________________________________________________________________________ Loans on individual condominium or cooperative units? Report in the appropriate category (home purchase, home improvement, or refinancing) for 1-to-4 family dwellings even if the unit is located in a structure that houses 5 or more families. Loan documentation that does not indicate whether the borrower plans to occupy the residence? In the case of loans your institution purchased on 1-to-4 family dwellings, report as owner-occupied unless the loan documents contain information to the contrary. Enter the code for not applicable ("3") for property that is a multifamily dwelling, is not located in an MSA, or is located in an MSA in which your institution has neither a home nor a branch office. Reporting race or national origin, sex, or gross annual income for loans purchased? You may, but need not, report race or national origin, sex, and gross annual income for loans purchased by your institution. If you choose not to provide this information. enter the numerical code for "not applicable" for race or national origin and sex and enter "NA" for income. Violations of reporting requirements? Due to the importance of accurate and timely submissions of HMDA data, a violation of HMDA is subject to administrative sanctions, including the imposition of civil money penalties, where applicable. Applications received by mail or telephone? The application form (or an accompanying document) that you send to a prospective applicant must request the race or national origin and sex of the applicant. If the applicant chooses not to provide the information, enter the code to indicate the application was by "mail or telephone." You need not request these data for an application taken entirely by telephone. Brokered or correspondent loans, or indirect paper where one entity takes the application but a second institution makes the loan decision? Data on originations must be reported by the entity that makes the credit decision and that--by prior agreement--acquires the loan at or after closing. Data on loan applications that do not result in an origination also are reported by the entity that makes the loan decision. Reporting counteroffers? If you make a counteroffer to lend an amount different from the amount the applicant initially applied for, and the counteroffer is accepted by the applicant, report it as an origination for the amount of the loan actually granted. If the applicant turns down your counteroffer or fails to respond, report it as a denial for the amount initially requested. Do not report it as an application that was withdrawn. 25 ___________________________________________________________________________ Appendix Checklist for Person Completing HMDA-LAR Regulation C requires that an officer certify the accuracy of the HMDA report that is submitted. Before presenting the register to the certifying officer for review and signature, review the following checklist and make sure the answer is "yes" for each question listed. You should also review the checklist provided in this appendix for the certifying officer; the answer should be "yes" to each of those questions as well. YES NO _________________________________________________________________ A. Transmittal Sheet 1. Is a transmittal sheet attached to your loan register? 2. Does the transmittal sheet indicate the name and address where you want your institution's disclosure statement to be sent? 3. Is the name and telephone number of the contact person provided? 4. If your institution is a nondepository institution and is owned by a bank holding company or a depository institution, does the transmittal sheet provide the name and address of the parent corporation? 5. Does the transmittal sheet list the name and address of the federal supervisory agency for your institution? (The subsidiary of a bank, thrift, or credit union should list the supervisory agency of the parent institution.) 6. If your institution's register is being submitted in an automated format, have you included the information from the transmittal sheet? 7. Does the transmittal sheet provide your institution's reporter and tax identification numbers? B. Loan/Application Register 1. Did you use the register format prescribed in Regulation C by the Federal Reserve Board? 2. If you submit hard copy, is each page of your register numbered in sequence, and does it show the total number of pages in the entire package (including the loan data from the