Supplement I to Part 1003 - Official Interpretations
12:8.0.2.1.4.0.1.11.10 :
Supplement I to Part 1003 - Official Interpretations Link to an
amendment published at 84 FR 58003, Oct. 29, 2019. Link to an
amendment published at 85 FR 28406, May 12, 2020. Introduction
1. Status. The commentary in this supplement is the
vehicle by which the Bureau of Consumer Financial Protection issues
formal interpretations of Regulation C (12 CFR part 1003).
Section 1003.2 - Definitions 2(b) Application
1. Consistency with Regulation B. Bureau interpretations
that appear in the official commentary to Regulation B (Equal
Credit Opportunity Act, 12 CFR part 1002, Supplement I) are
generally applicable to the definition of application under
Regulation C. However, under Regulation C the definition of an
application does not include prequalification requests.
2. Prequalification. A prequalification request is a
request by a prospective loan applicant (other than a request for
preapproval) for a preliminary determination on whether the
prospective loan applicant would likely qualify for credit under an
institution's standards, or for a determination on the amount of
credit for which the prospective applicant would likely qualify.
Some institutions evaluate prequalification requests through a
procedure that is separate from the institution's normal loan
application process; others use the same process. In either case,
Regulation C does not require an institution to report
prequalification requests on the loan/application register, even
though these requests may constitute applications under Regulation
B for purposes of adverse action notices.
3. Requests for preapproval. To be a preapproval program
as defined in § 1003.2(b)(2), the written commitment issued under
the program must result from a comprehensive review of the
creditworthiness of the applicant, including such verification of
income, resources, and other matters as is typically done by the
institution as part of its normal credit evaluation program. In
addition to conditions involving the identification of a suitable
property and verification that no material change has occurred in
the applicant's financial condition or creditworthiness, the
written commitment may be subject only to other conditions
(unrelated to the financial condition or creditworthiness of the
applicant) that the lender ordinarily attaches to a traditional
home mortgage application approval. These conditions are limited to
conditions such as requiring an acceptable title insurance binder
or a certificate indicating clear termite inspection, and, in the
case where the applicant plans to use the proceeds from the 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. Regardless of its name, a program that satisfies the
definition of a preapproval program in § 1003.2(b)(2) is a
preapproval program for purposes of Regulation C. Conversely, a
program that a financial institution describes as a “preapproval
program” that does not satisfy the requirements of § 1003.2(b)(2)
is not a preapproval program for purposes of Regulation C. If a
financial institution does not regularly use the procedures
specified in § 1003.2(b)(2), but instead considers requests for
preapprovals on an ad hoc basis, the financial institution need not
treat ad hoc requests as part of a preapproval program for purposes
of Regulation C. A financial institution should, however, be
generally consistent in following uniform procedures for
considering such ad hoc requests.
2(c) Branch Office Paragraph 2(c)(1)
1. Credit unions. For purposes of Regulation C, a
“branch” of a credit union is any office where member accounts are
established or loans are made, whether or not the office has been
approved as a branch by a Federal or State agency. (See 12 U.S.C.
1752.)
2. Bank, savings association, or credit unions. A branch
office of a bank, savings association, or credit union does not
include a loan-production office if the loan-production office is
not considered a branch by the Federal or State supervisory
authority applicable to that institution. A branch office also does
not include the office of an affiliate or of a third party, such as
a third-party broker.
Paragraph 2(c)(2)
1. General. A branch office of a for-profit mortgage
lending institution, other than a bank savings association or
credit union, does not include the office of an affiliate or of a
third party, such as a third-party broker.
2(d) Closed-end Mortgage Loan
1. Dwelling-secured. Section 1003.2(d) defines a
closed-end mortgage loan as an extension of credit that is secured
by a lien on a dwelling and that is not an open-end line of credit
under § 1003.2(o). Thus, for example, a loan to purchase a dwelling
and secured only by a personal guarantee is not a closed-end
mortgage loan because it is not dwelling-secured.
2. Extension of credit. Under § 1003.2(d), a
dwelling-secured loan is not a closed-end mortgage loan unless it
involves an extension of credit. For example, some transactions
completed pursuant to installment sales contracts, such as some
land contracts, depending on the facts and circumstances, may or
may not involve extensions of credit rendering the transactions
closed-end mortgage loans. In general, extension of credit under §
1003.2(d) refers to the granting of credit only pursuant to a new
debt obligation. Thus, except as described in comments 2(d)-2.i and
.ii, 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
closed-end mortgage loan under § 1003.2(d) because there has been
no new extension of credit. The phrase extension of credit thus is
defined differently under Regulation C than under Regulation B, 12
CFR part 1002.
i. Assumptions. For purposes of Regulation C, an
assumption is a transaction in which an institution enters into a
written agreement accepting a new borrower in place of an existing
borrower as the obligor on an existing debt obligation. For
purposes of Regulation C, 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. Under § 1003.2(d), assumptions are extensions of
credit even if the new borrower merely assumes the existing debt
obligation and no new debt obligation is created. See also
comment 2(j)-5.
ii. New York State consolidation, extension, and modification
agreements. A transaction completed pursuant to a New York
State consolidation, extension, and modification agreement 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 under § 1003.2(d).
Comments 2(i)-1, 2(j)-5, and 2(p)-2 clarify whether such
transactions are home improvement loans, home purchase loans, or
refinancings, respectively. Section 1003.3(c)(13) provides an
exclusion from the reporting requirement for a preliminary
transaction providing or, in the case of an application, proposing
to provide new funds to the borrower in advance of being
consolidated within the same calendar year into a supplemental
mortgage under New York Tax Law section 255. See comment 3(c)(13)-1
concerning how to report a supplemental mortgage under New York Tax
Law section 255 in this situation.
2(f) Dwelling
1. General. The definition of a dwelling is not limited
to the principal or other residence of the applicant or borrower,
and thus includes vacation or second homes and investment
properties.
2. Multifamily residential structures and communities. A
dwelling also includes a multifamily residential structure or
community such as an apartment, condominium, cooperative building
or housing complex, or a manufactured home community. A loan
related to a manufactured home community is secured by a dwelling
for purposes of § 1003.2(f) even if it is not secured by any
individual manufactured homes, but only by the land that
constitutes the manufactured home community including sites for
manufactured homes. However, a loan related to a multifamily
residential structure or community that is not a manufactured home
community is not secured by a dwelling for purposes of § 1003.2(f)
if it is not secured by any individual dwelling units and is, for
example, instead secured only by property that only includes common
areas, or is secured only by an assignment of rents or dues.
3. Exclusions. Recreational vehicles, including boats,
campers, travel trailers, and park model recreational vehicles, are
not considered dwellings for purposes of § 1003.2(f), regardless of
whether they are used as residences. Houseboats, floating homes,
and mobile homes constructed before June 15, 1976, are also
excluded, regardless of whether they are used as residences. Also
excluded are transitory residences such as hotels, hospitals,
college dormitories, and recreational vehicle parks, and structures
originally designed as dwellings but used exclusively for
commercial purposes, such as homes converted to daycare facilities
or professional offices.
4. Mixed-use properties. A property used for both
residential and commercial purposes, such as a building containing
apartment units and retail space, is a dwelling if the property's
primary use is residential. An institution may use any reasonable
standard to determine the primary use of the property, such as by
square footage or by the income generated. An institution may
select the standard to apply on a case-by-case basis.
5. Properties with service and medical components. For
purposes of § 1003.2(f), a property used for both long-term housing
and to provide related services, such as assisted living for senior
citizens or supportive housing for persons with disabilities, is a
dwelling and does not have a non-residential purpose merely because
the property is used for both housing and to provide services.
However, transitory residences that are used to provide such
services are not dwellings. See comment 2(f)-3. Properties
that are used to provide medical care, such as skilled nursing,
rehabilitation, or long-term medical care, also are not dwellings.
See comment 2(f)-3. If a property that is used for both
long-term housing and to provide related services also is used to
provide medical care, the property is a dwelling if its primary use
is residential. An institution may use any reasonable standard to
determine the property's primary use, such as by square footage,
income generated, or number of beds or units allocated for each
use. An institution may select the standard to apply on a
case-by-case basis.
2(g) Financial Institution
1. Preceding calendar year and preceding December 31. The
definition of financial institution refers both to the preceding
calendar year and the preceding December 31. These terms refer to
the calendar year and the December 31 preceding the current
calendar year. For example, in 2021, the preceding calendar year is
2020, and the preceding December 31 is December 31, 2020.
Accordingly, in 2021, Financial Institution A satisfies the
asset-size threshold described in § 1003.2(g)(1)(i) if its assets
exceeded the threshold specified in comment 2(g)-2 on December 31,
2020. Likewise, in 2021, Financial Institution A does not meet the
loan-volume test described in § 1003.2(g)(1)(v)(A) if it originated
fewer than 100 closed-end mortgage loans during either 2019 or
2020.
2. Adjustment of exemption threshold for banks, savings
associations, and credit unions. 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.
3. Merger or acquisition - coverage of surviving or newly
formed institution. After a merger or acquisition, the
surviving or newly formed institution is a financial institution
under § 1003.2(g) if it, considering the combined assets, location,
and lending activity of the surviving or newly formed institution
and the merged or acquired institutions or acquired branches,
satisfies the criteria included in § 1003.2(g). For example, A and
B merge. The surviving or newly formed institution meets the loan
threshold described in § 1003.2(g)(1)(v)(B) if the surviving or
newly formed institution, A, and B originated a combined total of
at least 500 open-end lines of credit in each of the two preceding
calendar years. Likewise, the surviving or newly formed institution
meets the asset-size threshold in § 1003.2(g)(1)(i) if its assets
and the combined assets of A and B on December 31 of the preceding
calendar year exceeded the threshold described in §
1003.2(g)(1)(i). Comment 2(g)-4 discusses a financial institution's
responsibilities during the calendar year of a merger.
4. Merger or acquisition - coverage for calendar year of
merger or acquisition. The scenarios described below illustrate
a financial institution's responsibilities for the calendar year of
a merger or acquisition. For purposes of these illustrations, a
“covered institution” means a financial institution, as defined in
§ 1003.2(g), that is not exempt from reporting under § 1003.3(a),
and “an institution that is not covered” means either an
institution that is not a financial institution, as defined in §
1003.2(g), or an institution that is exempt from reporting under §
1003.3(a).
i. Two institutions that are not covered merge. The surviving or
newly formed institution meets all of the requirements necessary to
be a covered institution. No data collection is required for the
calendar year of the merger (even though the merger creates an
institution that meets all of the requirements necessary to be a
covered institution). When a branch office of an institution that
is not covered is acquired by another institution that is not
covered, and the acquisition results in a covered institution, no
data collection is required for the calendar year of the
acquisition.
ii. A covered institution and an institution that is not covered
merge. The covered institution is the surviving institution, or a
new covered institution is formed. For the calendar year of the
merger, data collection is required for covered loans and
applications handled in the offices of the merged institution that
was previously covered and is optional for covered loans and
applications handled in offices of the merged institution that was
previously not covered. When a covered institution acquires a
branch office of an institution that is not covered, data
collection is optional for covered loans and applications handled
by the acquired branch office for the calendar year of the
acquisition.
iii. A covered institution and an institution that is not
covered merge. The institution that is not covered is the surviving
institution, or a new institution that is not covered is formed.
For the calendar year of the merger, data collection is required
for covered loans and applications handled in offices of the
previously covered institution that took place prior to the merger.
After the merger date, data collection is optional for covered
loans and applications handled in the offices of the institution
that was previously covered. When an institution remains not
covered after acquiring a branch office of a covered institution,
data collection is required for transactions of the acquired branch
office that take place prior to the acquisition. Data collection by
the acquired branch office is optional for transactions taking
place in the remainder of the calendar year after the
acquisition.
iv. Two covered institutions merge. The surviving or newly
formed institution is a covered institution. Data collection is
required for the entire calendar year of the merger. The surviving
or newly formed institution files either a consolidated submission
or separate submissions for that calendar year. When a covered
institution acquires a branch office of a covered institution, data
collection is required for the entire calendar year of the merger.
Data for the acquired branch office may be submitted by either
institution.
5. Originations. Whether an institution is a financial
institution depends in part on whether the institution originated
at least 100 closed-end mortgage loans in each of the two preceding
calendar years or at least 500 open-end lines of credit in each of
the two preceding calendar years. Comments 4(a)-2 through -4
discuss whether activities with respect to a particular closed-end
mortgage loan or open-end line of credit constitute an
origination for purposes of § 1003.2(g).
6. Branches of foreign banks - treated as banks. A
Federal branch or a State-licensed or insured branch of a foreign
bank that meets the definition of a “bank” under section 3(a)(1) of
the Federal Deposit Insurance Act (12 U.S.C. 1813(a)) is a bank for
the purposes of § 1003.2(g).
7. Branches and offices of foreign banks and other entities -
treated as nondepository financial institutions. A Federal
agency, State-licensed agency, State-licensed uninsured branch of a
foreign bank, commercial lending company owned or controlled by a
foreign bank, or entity operating under section 25 or 25A of the
Federal Reserve Act, 12 U.S.C. 601 and 611 (Edge Act and agreement
corporations) may not meet the definition of “bank” under the
Federal Deposit Insurance Act and may thereby fail to satisfy the
definition of a depository financial institution under §
1003.2(g)(1). An entity is nonetheless a financial institution if
it meets the definition of nondepository financial institution
under § 1003.2(g)(2).
2(i) Home Improvement Loan
1. General. Section 1003.2(i) defines a home improvement
loan as a closed-end mortgage loan or an open-end line of credit
that is for the purpose, in whole or in part, of repairing,
rehabilitating, remodeling, or improving a dwelling or the real
property on which the dwelling is located. For example, a
closed-end mortgage loan obtained to repair a dwelling by replacing
a roof is a home improvement loan under § 1003.2(i). A loan or line
of credit is a home improvement loan even if only a part of the
purpose is for repairing, rehabilitating, remodeling, or improving
a dwelling. For example, an open-end line of credit obtained in
part to remodel a kitchen and in part to pay college tuition is a
home improvement loan under § 1003.2(i). Similarly, for example, a
loan that is completed pursuant to a New York State consolidation,
extension, and modification agreement and that is classified as a
supplemental mortgage under New York Tax Law section 255, such that
the borrower owes reduced or no mortgage recording taxes, is a home
improvement loan if any of the loan's funds are for home
improvement purposes. See also comment 2(d)-2.ii.
2. Improvements to real property. Home improvements
include improvements both to a dwelling and to the real property on
which the dwelling is located (for example, installation of a
swimming pool, construction of a garage, or landscaping).
3. Commercial and other loans. A home improvement loan
may include a closed-end mortgage loan or an open-end line of
credit originated outside an institution's residential mortgage
lending division, such as a loan or line of credit to improve an
apartment building originated in the commercial loan
department.
4. Mixed-use property. A closed-end mortgage loan or an
open-end line of credit to improve a multifamily dwelling used for
residential and commercial purposes (for example, a building
containing apartment units and retail space), or the real property
on which such a dwelling is located, is a home improvement loan if
the loan's proceeds are used either to improve the entire property
(for example, to replace the heating system), or if the proceeds
are used primarily to improve the residential portion of the
property. An institution may use any reasonable standard to
determine the primary use of the loan proceeds. An institution may
select the standard to apply on a case-by-case basis. See comment
3(c)(10)-3.ii for guidance on loans to improve primarily the
commercial portion of a dwelling other than a multifamily
dwelling.
5. Multiple-purpose loans. A closed-end mortgage loan or
an open-end line of credit may be used for multiple purposes. For
example, a closed-end mortgage loan that is a home improvement loan
under § 1003.2(i) may also be a refinancing under § 1003.2(p) if
the transaction is a cash-out refinancing and the funds will be
used to improve a home. Such a transaction is a multiple-purpose
loan. Comment 4(a)(3)-3 provides details about how to report
multiple-purpose covered loans.
6. Statement of borrower. In determining whether a
closed-end mortgage loan or an open-end line of credit, or an
application for a closed-end mortgage loan or an open-end line of
credit, is for home improvement purposes, an institution may rely
on the applicant's or borrower's stated purpose(s) for the loan or
line of credit at the time the application is received or the
credit decision is made. An institution need not confirm that the
borrower actually uses any of the funds for the stated
purpose(s).
2(j) Home Purchase Loan
1. Multiple properties. A home purchase loan includes a
closed-end mortgage loan or an open-end line of credit secured by
one dwelling and used to purchase another dwelling. For example, if
a person obtains a home-equity loan or a reverse mortgage secured
by dwelling A to purchase dwelling B, the home-equity loan or the
reverse mortgage is a home purchase loan under § 1003.2(j).
2. Commercial and other loans. A home purchase loan may
include a closed-end mortgage loan or an open-end line of credit
originated outside an institution's residential mortgage lending
division, such as a loan or line of credit to purchase an apartment
building originated in the commercial loan department.
3. Construction and permanent financing. A home purchase
loan includes both a combined construction/permanent loan or line
of credit, and the separate permanent financing that replaces a
construction-only loan or line of credit for the same borrower at a
later time. A home purchase loan does not include a
construction-only loan or line of credit that is designed to be
replaced by separate permanent financing extended by any financial
institution to the same borrower at a later time or that is
extended to a person exclusively to construct a dwelling for sale,
which are excluded from Regulation C as temporary financing under §
1003.3(c)(3). Comments 3(c)(3)-1 and -2 provide additional details
about transactions that are excluded as temporary financing.
4. Second mortgages that finance the downpayments on first
mortgages. If an institution making a first mortgage loan to a
home purchaser also makes a second mortgage loan or line of credit
to the same purchaser to finance part or all of the home
purchaser's downpayment, both the first mortgage loan and the
second mortgage loan or line of credit are home purchase loans.
5. Assumptions. Under § 1003.2(j), an assumption is a
home purchase loan when an institution enters into a written
agreement accepting a new borrower as the obligor on an existing
obligation to finance the new borrower's purchase of the dwelling
securing the existing obligation, if the resulting obligation is a
closed-end mortgage loan or an open-end line of credit. A
transaction in which borrower B finances the purchase of borrower
A's dwelling by assuming borrower A's existing debt obligation and
that is completed pursuant to a New York State consolidation,
extension, and modification agreement and is 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
assumption and a home purchase loan. See comment 2(d)-2.ii.
On the other hand, a transaction in which borrower B, a
successor-in-interest, assumes borrower A's existing debt
obligation only after acquiring title to borrower A's dwelling is
not a home purchase loan because borrower B did not assume the debt
obligation for the purpose of purchasing a dwelling. See §
1003.4(a)(3) and comment 4(a)(3)-4 for guidance about how to report
covered loans that are not home improvement loans, home purchase
loans, or refinancings.
6. Multiple-purpose loans. A closed-end mortgage loan or
an open-end line of credit may be used for multiple purposes. For
example, a closed-end mortgage loan that is a home purchase loan
under § 1003.2(j) may also be a home improvement loan under §
1003.2(i) and a refinancing under § 1003.2(p) if the transaction is
a cash-out refinancing and the funds will be used to purchase and
improve a dwelling. Such a transaction is a multiple-purpose loan.
Comment 4(a)(3)-3 provides details about how to report
multiple-purpose covered loans.
2(l) Manufactured Home
1. Definition of a manufactured home. The definition in §
1003.2(l) refers to the Federal building code for manufactured
housing established by the U.S. Department of Housing and Urban
Development (HUD) (24 CFR part 3280.2). Modular or other
factory-built homes that do not meet the HUD code standards are not
manufactured homes for purposes of § 1003.2(l). Recreational
vehicles are excluded from the HUD code standards pursuant to 24
CFR 3282.8(g) and are also excluded from the definition of dwelling
for purposes of § 1003.2(f). See comment 2(f)-3.
2. Identification. A manufactured home will generally
bear a data plate affixed in a permanent manner near the main
electrical panel or other readily accessible and visible location
noting its compliance with the Federal Manufactured Home
Construction and Safety Standards in force at the time of
manufacture and providing other information about its manufacture
pursuant to 24 CFR 3280.5. A manufactured home will generally also
bear a HUD Certification Label pursuant to 24 CFR 3280.11.
2(m) Metropolitan Statistical Area (MD) or Metropolitan Division
(MD).
1. Use of terms “Metropolitan Statistical Area (MSA)” and
“Metropolitan Division (MD).” The U.S. Office of Management and
Budget (OMB) defines Metropolitan Statistical Areas (MSAs) and
Metropolitan Divisions (MDs) to provide nationally consistent
definitions for collecting, tabulating, and publishing Federal
statistics for a set of geographic areas. For all purposes under
Regulation C, if an MSA is divided by OMB into MDs, the appropriate
geographic unit to be used is the MD; if an MSA is not so divided
by OMB into MDs, the appropriate geographic unit to be used is the
MSA.
2(n) Multifamily Dwelling
1. Multifamily residential structures. The definition of
dwelling in § 1003.2(f) includes multifamily residential structures
and the corresponding commentary provides guidance on when such
residential structures are included in that definition. See
comments 2(f)-2 through -5.
2. Special reporting requirements for multifamily
dwellings. The definition of multifamily dwelling in §
1003.2(n) includes a dwelling, regardless of construction method,
that contains five or more individual dwelling units. Covered loans
secured by a multifamily dwelling are subject to additional
reporting requirements under § 1003.4(a)(32), but are not subject
to reporting requirements under § 1003.4(a)(4), (10)(iii), (23),
(29), or (30).
3. Separate dwellings. A covered loan secured by five or
more separate dwellings, which are not multifamily dwellings, in
more than one location is not a loan secured by a multifamily
dwelling. For example, assume a 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. The covered loan is not secured by a
multifamily dwelling as defined by § 1003.2(n). Likewise, a covered
loan secured by five or more separate dwellings that are located
within a multifamily dwelling, but which is not secured by the
entire multifamily dwelling (e.g., an entire apartment
building or housing complex), is not secured by a multifamily
dwelling as defined by § 1003.2(n). For example, assume that an
investor purchases 10 individual unit condominiums in a 100-unit
condominium complex using a covered loan. The covered loan would
not be secured by a multifamily dwelling as defined by § 1003.2(n).
In both of these situations, a financial institution reporting a
covered loan or application secured by these separate dwellings
would not be subject to the additional reporting requirements for
covered loans secured by or applications proposed to be secured by
multifamily dwellings under § 1003.4(a)(32). However, a financial
institution would report the information required by §
1003.4(a)(4), (a)(10)(iii), and (a)(23), (29), and (30), which is
not applicable to covered loans secured by and applications
proposed to be secured by multifamily dwellings. See comment
2(n)-2. In addition, in both of these situations, the financial
institution reports the number of individual dwelling units
securing the covered loan or proposed to secure a covered loan as
required by § 1003.4(a)(31). See comment 4(a)(31)-3.
2(o) Open-End Line of Credit
1. General. Section 1003.2(o) defines an open-end line of
credit as an extension of credit that is secured by a lien on a
dwelling and that is an open-end credit plan as defined in
Regulation Z, 12 CFR 1026.2(a)(20), but without regard to whether
the credit is consumer credit, as defined in § 1026.2(a)(12), is
extended by a creditor, as defined in § 1026.2(a)(17), or is
extended to a consumer, as defined in § 1026.2(a)(11). Aside from
these distinctions, institutions may rely on 12 CFR 1026.2(a)(20)
and its related commentary in determining whether a transaction is
an open-end line of credit under § 1003.2(o). For example, assume a
business-purpose transaction that is exempt from Regulation Z
pursuant to § 1026.3(a)(1) but that otherwise is open-end credit
under Regulation Z § 1026.2(a)(20). The business-purpose
transaction is an open-end line of credit under Regulation C,
provided the other requirements of § 1003.2(o) are met. Similarly,
assume a transaction in which the person extending open-end credit
is a financial institution under § 1003.2(g) but is not a creditor
under Regulation Z, § 1026.2(a)(17). In this example, the
transaction is an open-end line of credit under Regulation C,
provided the other requirements of § 1003.2(o) are met.
2. Extension of credit. Extension of credit has the same
meaning under § 1003.2(o) as under § 1003.2(d) and comment 2(d)-2.
Thus, for example, a renewal of an open-end line of credit is not
an extension of credit under § 1003.2(o) and is not covered by
Regulation C unless the existing debt obligation is satisfied and
replaced. Likewise, under § 1003.2(o), each draw on an open-end
line of credit is not an extension of credit.
2(p) Refinancing
1. General. Section 1003.2(p) defines a refinancing as a
closed-end mortgage loan or an 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.
Except as described in comment 2(p)-2, whether a refinancing has
occurred is determined by reference to whether, based on the
parties' contract and applicable law, the original debt obligation
has been satisfied or replaced by a new debt obligation. Whether
the original lien is satisfied is irrelevant. For example:
i. A new closed-end mortgage loan that satisfies and replaces
one or more existing closed-end mortgage loans is a refinancing
under § 1003.2(p).
ii. A new open-end line of credit that satisfies and replaces an
existing closed-end mortgage loan is a refinancing under §
1003.2(p).
iii. Except as described in comment 2(p)-2, a new debt
obligation that renews or modifies the terms of, but that does not
satisfy and replace, an existing debt obligation, is not a
refinancing under § 1003.2(p).
2. New York State consolidation, extension, and modification
agreements. Where a transaction is completed pursuant to a New
York State consolidation, extension, and modification agreement and
is classified as a supplemental mortgage under New York Tax Law
section§ 255, such that the borrower owes reduced or no mortgage
recording taxes, and where, but for the agreement, the transaction
would have met the definition of a refinancing under § 1003.2(p),
the transaction is considered a refinancing under § 1003.2(p).
See also comment 2(d)-2.ii.
3. Existing debt obligation. A closed-end mortgage loan
or an open-end line of credit that satisfies and replaces one or
more existing debt obligations is not a refinancing under §
1003.2(p) unless the existing debt obligation (or obligations) also
was secured by a dwelling. For example, assume that a borrower has
an existing $30,000 closed-end mortgage loan and obtains a new
$50,000 closed-end mortgage loan that satisfies and replaces the
existing $30,000 loan. The new $50,000 loan is a refinancing under
§ 1003.2(p). However, if the borrower obtains a new $50,000
closed-end mortgage loan that satisfies and replaces an existing
$30,000 loan secured only by a personal guarantee, the new $50,000
loan is not a refinancing under § 1003.2(p). See §
1003.4(a)(3) and related commentary for guidance about how to
report the loan purpose of such transactions, if they are not
otherwise excluded under § 1003.3(c).
4. Same borrower. Section 1003.2(p) provides that, even
if all of the other requirements of § 1003.2(p) are met, a
closed-end mortgage loan or an open-end line of credit is not a
refinancing unless the same borrower undertakes both the existing
and the new obligation(s). Under § 1003.2(p), the “same borrower”
undertakes both the existing and the new obligation(s) even if only
one borrower is the same on both obligations. For example, assume
that an existing closed-end mortgage loan (obligation X) is
satisfied and replaced by a new closed-end mortgage loan
(obligation Y). If borrowers A and B both are obligated on
obligation X, and only borrower B is obligated on obligation Y,
then obligation Y is a refinancing under § 1003.2(p), assuming the
other requirements of § 1003.2(p) are met, because borrower B is
obligated on both transactions. On the other hand, if only borrower
A is obligated on obligation X, and only borrower B is obligated on
obligation Y, then obligation Y is not a refinancing under §
1003.2(p). For example, assume that two spouses are divorcing. If
both spouses are obligated on obligation X, but only one spouse is
obligated on obligation Y, then obligation Y is a refinancing under
§ 1003.2(p), assuming the other requirements of § 1003.2(p) are
met. On the other hand, if only spouse A is obligated on obligation
X, and only spouse B is obligated on obligation Y, then obligation
Y is not a refinancing under § 1003.2(p). See § 1003.4(a)(3)
and related commentary for guidance about how to report the loan
purpose of such transactions, if they are not otherwise excluded
under § 1003.3(c).
5. Two or more debt obligations. Section 1003.2(p)
provides that, to be a refinancing, a new debt obligation must
satisfy and replace an existing debt obligation. Where two or more
new obligations replace an existing obligation, each new obligation
is a refinancing if, taken together, the new obligations satisfy
the existing obligation. Similarly, where one new obligation
replaces two or more existing obligations, the new obligation is a
refinancing if it satisfies each of the existing obligations.
6. Multiple-purpose loans. A closed-end mortgage loan or
an open-end line of credit may be used for multiple purposes. For
example, a closed-end mortgage loan that is a refinancing under §
1003.2(p) may also be a home improvement loan under § 1003.2(i) and
be used for other purposes if the refinancing is a cash-out
refinancing and the funds will be used both for home improvement
and to pay college tuition. Such a transaction is a
multiple-purpose loan. Comment 4(a)(3)-3 provides details about how
to report multiple-purpose covered loans.
Section 1003.3 - Exempt Institutions and Excluded and Partially
Exempt Transactions 3(c) Excluded Transactions Paragraph 3(c)(1)
1. Financial institution acting in a fiduciary capacity.
Section 1003.3(c)(1) provides that a closed-end mortgage loan or an
open-end line of credit originated or purchased by a financial
institution acting in a fiduciary capacity is an excluded
transaction. A financial institution acts in a fiduciary capacity
if, for example, the financial institution acts as a trustee.
Paragraph 3(c)(2)
1. Loan or line of credit secured by a lien on unimproved
land. Section 1003.3(c)(2) provides that a closed-end mortgage
loan or an open-end line of credit secured by a lien on unimproved
land is an excluded transaction. A loan or line of credit is
secured by a lien on unimproved land if the loan or line of credit
is secured by vacant or unimproved property, unless the 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. A loan or line of credit that is not excludable under §
1003.3(c)(2) nevertheless may be excluded, for example, as
temporary financing under § 1003.3(c)(3).
Paragraph 3(c)(3)
1. Temporary financing. Section 1003.3(c)(3) provides
that closed-end mortgage loans or open-end lines of credit obtained
for temporary financing are excluded transactions. A loan or line
of credit is considered temporary financing and excluded under §
1003.3(c)(3) if the loan or line of credit is designed to be
replaced by separate permanent financing extended by any financial
institution to the same borrower at a later time. For example:
i. Lender A extends credit in the form of a bridge or swing loan
to finance a borrower's down payment on a home purchase. The
borrower pays off the bridge or swing loan with funds from the sale
of his or her existing home and obtains permanent financing for his
or her new home from Lender A or from another lender. The bridge or
swing loan is excluded as temporary financing under §
1003.3(c)(3).
ii. Lender A extends credit to a borrower to finance
construction of a dwelling. The borrower will obtain a new
extension of credit for permanent financing for the dwelling,
either from Lender A or from another lender, and either through a
refinancing of the initial construction loan or a separate loan.
The initial construction loan is excluded as temporary financing
under § 1003.3(c)(3).
iii. Assume the same scenario as in comment 3(c)(3)-1.ii, except
that the initial construction loan is, or may be, renewed one or
more times before the separate permanent financing is obtained. The
initial construction loan, including any renewal thereof, is
excluded as temporary financing under § 1003.3(c)(3).
iv. Lender A extends credit to finance construction of a
dwelling. The loan automatically will convert to permanent
financing extended to the same borrower with Lender A once the
construction phase is complete. Under § 1003.3(c)(3), the loan is
not designed to be replaced by separate permanent financing
extended to the same borrower, and therefore the temporary
financing exclusion does not apply. See also comment
2(j)-3.
v. Lender A originates a loan with a nine-month term to enable
an investor to purchase a home, renovate it, and re-sell it before
the term expires. Under § 1003.3(c)(3), the loan is not designed to
be replaced by separate permanent financing extended to the same
borrower, and therefore the temporary financing exclusion does not
apply. Such a transaction is not temporary financing under §
1003.3(c)(3) merely because its term is short.
2. Loan or line of credit to construct a dwelling for
sale. A construction-only loan or line of credit is considered
temporary financing and excluded under § 1003.3(c)(3) if the loan
or line of credit is extended to a person exclusively to construct
a dwelling for sale. See comment 3(c)(3)-1.ii through .iv for
examples of the reporting requirement for construction loans that
are not extended to a person exclusively to construct a dwelling
for sale.
Paragraph 3(c)(4)
1. Purchase of an interest in a pool of loans. Section
1003.3(c)(4) provides that the purchase of an interest in a pool of
closed-end mortgage loans or open-end lines of credit is an
excluded transaction. The purchase of an interest in a pool of
loans or lines of credit includes, for example,
mortgage-participation certificates, mortgage-backed securities, or
real estate mortgage investment conduits.
Paragraph 3(c)(6)
1. Mergers and acquisitions. Section 1003.3(c)(6)
provides that the purchase of closed-end mortgage loans or open-end
lines of credit as part of a merger or acquisition, or as part of
the acquisition of all of the assets and liabilities of a branch
office, are excluded transactions. If a financial institution
acquires loans or lines of credit in bulk from another institution
(for example, from the receiver for a failed institution), but no
merger or acquisition of an institution, or acquisition of a branch
office, is involved and no other exclusion applies, the acquired
loans or lines of credit are covered loans and are reported as
described in comment 4(a)-1.iii.
Paragraph 3(c)(8)
1. Partial interest. Section 1003.3(c)(8) provides that
the purchase of a partial interest in a closed-end mortgage loan or
an open-end line of credit is an excluded transaction. If an
institution acquires only a partial interest in a loan or line of
credit, the institution does not report the transaction even if the
institution participated in the underwriting and origination of the
loan or line of credit. If an institution acquires a 100 percent
interest in a loan or line of credit, the transaction is not
excluded under § 1003.3(c)(8).
Paragraph 3(c)(9)
1. Loan or line of credit used primarily for agricultural
purposes. Section 1003.3(c)(9) provides that an institution
does not report a closed-end mortgage loan or an open-end line of
credit used primarily for agricultural purposes. A loan or line of
credit is used primarily for agricultural purposes if its funds
will be used primarily for agricultural purposes, or if the loan or
line of credit is secured by a dwelling that is located on real
property that is used primarily for agricultural purposes
(e.g., a farm). An institution may refer to comment 3(a)-8
in the official interpretations of Regulation Z, 12 CFR part 1026,
supplement I, for guidance on what is an agricultural purpose. An
institution may use any reasonable standard to determine the
primary use of the property. An institution may select the standard
to apply on a case-by-case basis.
Paragraph 3(c)(10)
1. General. Section 1003.3(c)(10) provides a special rule
for reporting a closed-end mortgage loan or an open-end line of
credit that is or will be made primarily for a business or
commercial purpose. If an institution determines that a closed-end
mortgage loan or an open-end line of credit primarily is for a
business or commercial purpose, then the loan or line of credit is
a covered loan only if it is a home improvement loan under §
1003.2(i), a home purchase loan under § 1003.2(j), or a refinancing
under § 1003.2(p) and no other exclusion applies. Section
1003.3(c)(10) does not categorically exclude all business- or
commercial-purpose loans and lines of credit from coverage.
2. Primary purpose. An institution must determine in each
case if a closed-end mortgage loan or an open-end line of credit
primarily is for a business or commercial purpose. 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 related commentary,
then the loan or line of credit also is deemed to be primarily for
a business or commercial purpose under § 1003.3(c)(10).
3. Examples - covered business- or commercial-purpose
transactions. The following are examples of closed-end mortgage
loans and open-end lines of credit that are not excluded from
reporting under § 1003.3(c)(10) because, although they primarily
are for a business or commercial purpose, they also meet the
definition of a home improvement loan under § 1003.2(i), a home
purchase loan under § 1003.2(j), or a refinancing under §
1003.2(p):
i. A closed-end mortgage loan or an open-end line of credit to
purchase or to improve a multifamily dwelling or a single-family
investment property, or a refinancing of a closed-end mortgage loan
or an open-end line of credit secured by a multifamily dwelling or
a single-family investment property;
ii. A closed-end mortgage loan or an open-end line of credit to
improve a doctor's office or a daycare center that is located in a
dwelling other than a multifamily dwelling; and
iii. A closed-end mortgage loan or an open-end line of credit to
a corporation, if the funds from the loan or line of credit will be
used to purchase or to improve a dwelling, or if the transaction is
a refinancing.
4. Examples - excluded business- or commercial-purpose
transactions. The following are examples of closed-end mortgage
loans and open-end lines of credit that are not covered loans
because they primarily are for a business or commercial purpose,
but they do not meet the definition of a home improvement loan
under § 1003.2(i), a home purchase loan under § 1003.2(j), or a
refinancing under § 1003.2(p):
i. A closed-end mortgage loan or an open-end line of credit
whose funds will be used primarily to improve or expand a business,
for example to renovate a family restaurant that is not located in
a dwelling, or to purchase a warehouse, business equipment, or
inventory;
ii. A closed-end mortgage loan or an open-end line of credit to
a corporation whose funds will be used primarily for business
purposes, such as to purchase inventory; and
iii. A closed-end mortgage loan or an open-end line of credit
whose funds will be used primarily for business or commercial
purposes other than home purchase, home improvement, or
refinancing, even if the loan or line of credit is
cross-collateralized by a covered loan.
Paragraph 3(c)(11)
1. General. Section 1003.3(c)(11) provides that a
closed-end mortgage loan is an excluded transaction if a financial
institution originated fewer than 100 closed-end mortgage loans in
either of the two preceding calendar years. For example, assume
that a bank is a financial institution in 2021 under § 1003.2(g)
because it originated 600 open-end lines of credit in 2019, 650
open-end lines of credit in 2020, and met all of the other
requirements under § 1003.2(g)(1). Also assume that the bank
originated 75 and 90 closed-end mortgage loans in 2019 and 2020,
respectively. The open-end lines of credit that the bank originated
or purchased, or for which it received applications, during 2021
are covered loans and must be reported, unless they otherwise are
excluded transactions under § 1003.3(c). However, the closed-end
mortgage loans that the bank originated or purchased, or for which
it received applications, during 2021 are excluded transactions
under § 1003.3(c)(11) and need not be reported. See comments 4(a)-2
through -4 for guidance about the activities that constitute an
origination.
2. Optional reporting. A financial institution may report
applications for, originations of, or purchases of closed-end
mortgage loans that are excluded transactions because the financial
institution originated fewer than 100 closed-end mortgage loans in
either of the two preceding calendar years. However, a financial
institution that chooses to report such excluded applications for,
originations of, or purchases of closed-end mortgage loans must
report all such applications for closed-end mortgage loans that it
receives, closed-end mortgage loans that it originates, and
closed-end mortgage loans that it purchases that otherwise would be
covered loans for a given calendar year. Note that applications
which remain pending at the end of a calendar year are not
reported, as described in comment 4(a)(8)(i)-14. An institution
that was a financial institution as of January 1, 2020 but is not a
financial institution on July 1, 2020 because it originated fewer
than 100 closed-end mortgage loans in 2018 or 2019 is not required
in 2021 to report, but may report, applications for, originations
of, or purchases of closed-end mortgage loans for calendar year
2020 that are excluded transactions because the institution
originated fewer than 100 closed-end mortgage loans in 2018 or
2019. However, an institution that was a financial institution as
of January 1, 2020 and chooses to report such excluded applications
for, originations of, or purchases of closed-end mortgage loans in
2021 must report all such applications for closed-end mortgage
loans that it receives, closed-end mortgage loans that it
originates, and closed-end mortgage loans that it purchases that
otherwise would be covered loans for all of calendar year 2020.
Paragraph 3(c)(12)
1. General. Section 1003.3(c)(12) provides that an
open-end line of credit is an excluded transaction if a financial
institution originated fewer than 500 open-end lines of credit in
either of the two preceding calendar years. For example, assume
that a bank is a financial institution in 2020 under § 1003.2(g)
because it originated 50 closed-end mortgage loans in 2018, 75
closed-end mortgage loans in 2019, and met all of the other
requirements under § 1003.2(g)(1). Also assume that the bank
originated 75 and 85 open-end lines of credit in 2018 and 2019,
respectively. The closed-end mortgage loans that the bank
originated or purchased, or for which it received applications,
during 2020 are covered loans and must be reported, unless they
otherwise are excluded transactions under § 1003.3(c). However, the
open-end lines of credit that the bank originated or purchased, or
for which it received applications, during 2020 are excluded
transactions under § 1003.3(c)(12) and need not be reported. See
comments 4(a)-2 through -4 for guidance about the activities that
constitute an origination.
2. Optional reporting. A financial institution may report
applications for, originations of, or purchases of open-end lines
of credit that are excluded transactions because the financial
institution originated fewer than 500 open-end lines of credit in
either of the two preceding calendar years. However, a financial
institution that chooses to report such excluded applications for,
originations of, or purchases of open-end lines of credit must
report all such applications for open-end lines of credit which it
receives, open-end lines of credit that it originates, and open-end
lines of credit that it purchases that otherwise would be covered
loans for a given calendar year. Note that applications which
remain pending at the end of a calendar year are not reported, as
described in comment 4(a)(8)(i)-14.
Paragraph 3(c)(13)
1. New funds extended before consolidation. Section
1003.3(c)(13) provides an exclusion for 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 State
consolidation, extension, and modification agreement classified as
a supplemental mortgage under New York Tax Law section 255 (New
York CEMA) and for which final action is taken on both transactions
within the same calendar year. The excluded transaction provides or
proposes to provide funds that are not part of any existing debt
obligation of the borrower and that are then consolidated or
proposed to be consolidated with an existing debt obligation or
obligations as part of the supplemental mortgage. The new funds are
reported only insofar as they form part of the total amount of the
reported New York CEMA, and not as a separate amount. This
exclusion applies only if, at the time the transaction that
provided new funds was originated, the financial institution
intended to consolidate the loan into a New York CEMA. 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. The § 1003.3(c)(13) exclusion
does not apply to similar preliminary transactions that provide or
propose to provide new funds to be consolidated not pursuant to New
York Tax Law section 255 but under some other law in a transaction
that is not an extension of credit. For example, assume a financial
institution extends new funds to a consumer in a preliminary
transaction that is then consolidated as part of a consolidation,
extension and modification agreement pursuant to the law of a State
other than New York. If the preliminary extension of new funds is a
covered loan, it must be reported. If the consolidation, extension
and modification agreement pursuant to the law of a State other
than New York is not an extension of credit pursuant to Regulation
C, it may not be reported. For discussion of how to report a
cash-out refinancing, see comment 4(a)(3)-2.
3(d) Partially Exempt Transactions
1. Merger or acquisition - application of partial exemption
thresholds to surviving or newly formed institution. After a
merger or acquisition, the surviving or newly formed institution
falls below the loan threshold described in § 1003.3(d)(2) or (3)
if it, considering the combined lending activity of the surviving
or newly formed institution and the merged or acquired institutions
or acquired branches, falls below the loan threshold described in §
1003.3(d)(2) or (3). For example, A and B merge. The surviving or
newly formed institution falls below the loan threshold described
in § 1003.3(d)(2) if the surviving or newly formed institution, A,
and B originated a combined total of fewer than 500 closed-end
mortgage loans that are not excluded from this part pursuant to §
1003.3(c)(1) through (10) or (c)(13) in each of the two preceding
calendar years. Comment 3(d)-3 discusses eligibility for partial
exemptions during the calendar year of a merger.
2. Merger or acquisition - Community Reinvestment Act
examination history. After a merger or acquisition, the
surviving or newly formed institution is deemed to be ineligible
for the partial exemptions pursuant to § 1003.3(d)(6) if either it
or any of the merged or acquired institutions received a rating of
“needs to improve record of meeting community credit needs” during
each of its two most recent examinations or a rating of
“substantial noncompliance in meeting community credit needs” on
its most recent examination under section 807(b)(2) of the
Community Reinvestment Act of 1977 (12 U.S.C. 2906(b)(2)). Comment
3(d)-3.iii discusses eligibility for partial exemptions during the
calendar year of a merger when an institution that is eligible for
a partial exemption merges with an institution that is ineligible
for the partial exemption (including, for example, an institution
that is ineligible for the partial exemptions pursuant to §
1003.3(d)(6)) and the surviving or newly formed institution is
ineligible for the partial exemption.
3. Merger or acquisition - applicability of partial
exemptions during calendar year of merger or acquisition. The
scenarios described below illustrate the applicability of partial
exemptions under § 1003.3(d) during the calendar year of a merger
or acquisition. For purposes of these illustrations, “institution”
means a financial institution, as defined in § 1003.2(g), that is
not exempt from reporting under § 1003.3(a). Although the scenarios
below refer to the partial exemption for closed-end mortgage loans
under § 1003.3(d)(2), the same principles apply with respect to the
partial exemption for open-end lines of credit under §
1003.3(d)(3).
i. Assume two institutions that are eligible for the partial
exemption for closed-end mortgage loans merge and the surviving or
newly formed institution meets all of the requirements for the
partial exemption. The partial exemption for closed-end mortgage
loans applies for the calendar year of the merger.
ii. Assume two institutions that are eligible for the partial
exemption for closed-end mortgage loans merge and the surviving or
newly formed institution does not meet the requirements for the
partial exemption. Collection of optional data for closed-end
mortgage loans is permitted but not required for the calendar year
of the merger (even though the merger creates an institution that
does not meet the requirements for the partial exemption for
closed-end mortgage loans). When a branch office of an institution
that is eligible for the partial exemption is acquired by another
institution that is eligible for the partial exemption, and the
acquisition results in an institution that is not eligible for the
partial exemption, data collection for closed-end mortgage loans is
permitted but not required for the calendar year of the
acquisition.
iii. Assume an institution that is eligible for the partial
exemption for closed-end mortgage loans merges with an institution
that is ineligible for the partial exemption and the surviving or
newly formed institution is ineligible for the partial exemption.
For the calendar year of the merger, collection of optional data as
defined in § 1003.3(d)(1)(iii) for closed-end mortgage loans is
required for covered loans and applications handled in the offices
of the merged institution that was previously ineligible for the
partial exemption. For the calendar year of the merger, collection
of optional data for closed-end mortgage loans is permitted but not
required for covered loans and applications handled in the offices
of the merged institution that was previously eligible for the
partial exemption. When an institution that is ineligible for the
partial exemption for closed-end mortgage loans acquires a branch
office of an institution that is eligible for the partial
exemption, collection of optional data for closed-end mortgage
loans is permitted but not required for covered loans and
applications handled by the acquired branch office for the calendar
year of the acquisition.
iv. Assume an institution that is eligible for the partial
exemption for closed-end mortgage loans merges with an institution
that is ineligible for the partial exemption and the surviving or
newly formed institution is eligible for the partial exemption. For
the calendar year of the merger, collection of optional data for
closed-end mortgage loans is required for covered loans and
applications handled in the offices of the previously ineligible
institution that took place prior to the merger. After the merger
date, collection of optional data for closed-end mortgage loans is
permitted but not required for covered loans and applications
handled in the offices of the institution that was previously
ineligible for the partial exemption. When an institution remains
eligible for the partial exemption for closed-end mortgage loans
after acquiring a branch office of an institution that is
ineligible for the partial exemption, collection of optional data
for closed-end mortgage loans is required for transactions of the
acquired branch office that take place prior to the acquisition.
Collection of optional data for closed-end mortgage loans by the
acquired branch office is permitted but not required for
transactions taking place in the remainder of the calendar year
after the acquisition.
4. Originations. Whether applications for covered loans
that an insured depository institution or insured credit union
receives, covered loans that it originates, or covered loans that
it purchases are partially exempt transactions under § 1003.3(d)
depends, in part, on whether the institution originated fewer than
500 closed-end mortgage loans that are not excluded from this part
pursuant to § 1003.3(c)(1) through (10) or (c)(13) in each of the
two preceding calendar years or fewer than 500 open-end lines of
credit that are not excluded from this part pursuant to §
1003.3(c)(1) through (10) in each of the two preceding calendar
years. See comments 4(a)-2 through -4 for guidance about the
activities that constitute an origination for purposes of §
1003.3(d).
5. Affiliates. A financial institution that is not itself
an insured credit union or an insured depository institution as
defined in § 1003.3(d)(1)(i) and (ii) is not eligible for the
partial exemptions under § 1003.3(d)(1) through (3), even if it is
owned by or affiliated with an insured credit union or an insured
depository institution. For example, an institution that is a
subsidiary of an insured credit union or insured depository
institution may not claim a partial exemption under § 1003.3(d) for
its closed-end mortgage loans unless the subsidiary institution
itself:
i. Is an insured credit union or insured depository
institution,
ii. In each of the two preceding calendar years originated fewer
than 500 closed-end mortgage loans that are not excluded from this
part pursuant to § 1003.3(c)(1) through (10) or (c)(13), and
iii. If the subsidiary is an insured depository institution, had
not received as of the preceding December 31 a rating of “needs to
improve record of meeting community credit needs” during each of
its two most recent examinations or a rating of “substantial
noncompliance in meeting community credit needs” on its most recent
examination under section 807(b)(2) of the Community Reinvestment
Act of 1977 (12 U.S.C. 2906(b)(2)).
Paragraph 3(d)(1)(iii)
1. Optional data. The definition of optional data in §
1003.3(d)(1)(iii) identifies the data that are covered by the
partial exemptions for certain transactions of insured depository
institutions and insured credit unions under § 1003.3(d). If a
transaction is not partially exempt under § 1003.3(d)(2) or (3), a
financial institution must collect, record, and report optional
data as otherwise required under this part.
Paragraph 3(d)(2)
1. General. Section 1003.3(d)(2) provides that, except as
provided in § 1003.3(d)(6), an insured depository institution or
insured credit union that, in each of the two preceding calendar
years, originated fewer than 500 closed-end mortgage loans that are
not excluded from this part pursuant to § 1003.3(c)(1) through (10)
or (c)(13) is not required to collect, record, or report optional
data as defined in § 1003.3(d)(1)(iii) for applications for
closed-end mortgage loans that it receives, closed-end mortgage
loans that it originates, and closed-end mortgage loans that it
purchases. For example, assume that an insured credit union is a
financial institution in 2020 under § 1003.2(g) and originated, in
2018 and 2019 respectively, 100 and 200 closed-end mortgage loans
that are not excluded from this part pursuant to § 1003.3(c)(1)
through (10) or (c)(13). The closed-end mortgage loans that the
insured credit union originated or purchased, or for which it
received applications, during 2020 are not excluded transactions
under § 1003.3(c)(11). However, due to the partial exemption in §
1003.3(d)(2), the insured credit union is not required to collect,
record, or report optional data as defined in § 1003.3(d)(1)(iii)
for the closed-end mortgage loans that it originated or purchased,
or for which it received applications, for which final action is
taken during 2020. See comments 4(a)-2 through -4 for guidance
about the activities that constitute an origination.
Paragraph 3(d)(3)
1. General. Section 1003.3(d)(3) provides that, except as
provided in § 1003.3(d)(6), an insured depository institution or
insured credit union that, in each of the two preceding calendar
years, originated fewer than 500 open-end lines of credit that are
not excluded from this part pursuant to § 1003.3(c)(1) through (10)
is not required to collect, record, or report optional data as
defined in § 1003.3(d)(1)(iii) for applications for open-end lines
of credit that it receives, open-end lines of credit that it
originates, and open-end lines of credit that it purchases. See §
1003.3(c)(12) and comments 3(c)(12)-1 and -2, which provide an
exclusion for certain open-end lines of credit from this part and
permit voluntary reporting of such transactions under certain
circumstances. See also comments 4(a)-2 through -4 for guidance
about the activities that constitute an origination.
Paragraph 3(d)(4)
1. General. Section 1003.3(d)(4) provides that an insured
depository institution or insured credit union may collect, record,
and report optional data as defined in § 1003.3(d)(1)(iii) for a
partially exempt transaction as though the institution were
required to do so, provided that, if an institution voluntarily
reports any data pursuant to any of the seven paragraphs identified
in § 1003.3(d)(4)(i) and (ii) (§ 1003.4(a)(9)(i) and (a)(15), (16),
(17), (27), (33), and (35)), it also must report all other data for
the covered loan or application that would be required by that
applicable paragraph if the transaction were not partially exempt.
For example, an insured depository institution or insured credit
union may voluntarily report the existence of a balloon payment for
a partially exempt transaction pursuant to § 1003.4(a)(27), but, if
it does so, it must also report all other data for the transaction
that would be required by § 1003.4(a)(27) if the transaction were
not partially exempt (i.e., whether the transaction has
interest-only payments, negative amortization, or other
non-amortizing features).
2. Partially exempt transactions within the same
loan/application register. A financial institution may collect,
record, and report optional data for some partially exempt
transactions under § 1003.3(d) in the manner specified in §
1003.3(d)(4), even if it does not collect, record, and report
optional data for other partially exempt transactions under §
1003.3(d).
3. Exempt or not applicable. i. If a financial
institution would otherwise report that a transaction is partially
exempt pursuant to § 1003.3(d) and a particular requirement to
report optional data is not applicable to the transaction, the
insured depository institution or insured credit union complies
with the particular requirement by reporting either that the
transaction is exempt from the requirement or that the requirement
is not applicable. For example, assume that an insured depository
institution or insured credit union originates a partially exempt
reverse mortgage. The requirement to report lender credits is not
applicable to reverse mortgages, as comment 4(a)(20)-1 explains.
Accordingly, the institution could report either exempt or not
applicable for lender credits for the reverse mortgage
transaction.
ii. An institution is considered as reporting data in a data
field for purposes of § 1003.3(d)(4)(i) and (ii) when it reports
not applicable for that data field for a partially exempt
transaction. For example, assume an insured depository institution
or insured credit union originates a covered loan that is eligible
for a partial exemption and is made primarily for business or
commercial purposes. The requirement to report total loan costs or
total points and fees is not applicable to loans made primarily for
business or commercial purposes, as comments 4(a)(17)(i)-1 and
(ii)-1 explain. The institution can report not applicable for both
total loan costs and total points and fees, or it can report exempt
for both total loan costs and total points and fees for the loan.
Pursuant to § 1003.3(d)(4)(ii), the institution is not permitted to
report not applicable for total loan costs and report exempt for
total points and fees for the business or commercial purpose
loan.
Paragraph 3(d)(4)(i)
1. State. Section 1003.3(d)(4)(i) provides that if an
institution eligible for a partial exemption under § 1003.3(d)(2)
or (3) reports the street address, city name, or Zip Code for a
partially exempt transaction pursuant to § 1003.4(a)(9)(i), it
reports all data that would be required by § 1003.4(a)(9)(i) if the
transaction were not partially exempt, including the State. An
insured depository institution or insured credit union that reports
the State pursuant to § 1003.4(a)(9)(ii) or comment 4(a)(9)(ii)-1
for a partially exempt transaction without reporting any other data
required by § 1003.4(a)(9)(i) is not required to report the street
address, city name, or Zip Code pursuant to § 1003.4(a)(9)(i).
Paragraph 3(d)(5)
1. NULI - uniqueness. For a partially exempt transaction
under § 1003.3(d), a financial institution may report a ULI or a
NULI. Section 1003.3(d)(5)(ii) requires an insured depository
institution or insured credit union that assigns a NULI to a
covered loan or application to ensure that the character sequence
it assigns is unique within the institution's annual
loan/application register in which it appears. A financial
institution should assign only one NULI to any particular covered
loan or application within each annual loan/application register,
and each NULI should correspond to a single application and ensuing
loan within the annual loan/application register in which the NULI
appears in the case that the application is approved and a loan is
originated. A financial institution may use a NULI more than once
within an annual loan/application register only if the NULI refers
to the same loan or application or a loan that ensues from an
application referred to elsewhere in the annual loan/application
register. Refinancings or applications for refinancing that are
included in same annual loan/application register as the loan that
is being refinanced should be assigned a different NULI than the
loan that is being refinanced. An insured depository institution or
insured credit union with multiple branches must ensure that its
branches do not use the same NULI to refer to multiple covered
loans or applications within the institution's same annual
loan/application register.
2. NULI - privacy. Section 1003.3(d)(5)(iii) prohibits an
insured depository institution or insured credit union from
including information in the NULI that could be used to directly
identify the applicant or borrower. Information that could be used
to directly identify the applicant or borrower includes, but is not
limited to, the applicant's or borrower's name, date of birth,
Social Security number, official government-issued driver's license
or identification number, alien registration number, government
passport number, or employer or taxpayer identification number.
Paragraph 3(d)(6)
1. Preceding calendar year. Section 1003.3(d)(6) refers
to the preceding December 31, which means the December 31 preceding
the current calendar year. For example, in 2020, the preceding
December 31 is December 31, 2019. Assume that, as of December 31,
2019, an insured depository institution received ratings of “needs
to improve record of meeting community credit needs” during its two
most recent examinations under section 807(b)(2) of the Community
Reinvestment Act (12 U.S.C. 2906(b)(2)) in 2018 and 2014.
Accordingly, in 2020, the insured depository institution's
transactions are not partially exempt pursuant to § 1003.3(d).
Section 1003.4 - Compilation of Reportable Data 4(a) Data Format
and Itemization
1. General. Except as otherwise provided in § 1003.3, §
1003.4(a) describes a financial institution's obligation to collect
data on applications it received, on covered loans that it
originated, and on covered loans that it purchased during the
calendar year covered by the loan/application register.
i. A financial institution reports these data even if the
covered loans were subsequently sold by the institution.
ii. A financial institution reports data for applications that
did not result in an origination but on which actions were taken -
for example, an application that the institution denied, that it
approved but that was not accepted, that it closed for
incompleteness, or that the applicant withdrew during the calendar
year covered by the loan/application register. A financial
institution is required to report data regarding requests under a
preapproval program (as defined in § 1003.2(b)(2)) only if the
preapproval request is denied, results in the origination of a home
purchase loan, or was approved but not accepted.
iii. If a financial institution acquires covered loans in bulk
from another institution (for example, from the receiver for a
failed institution), but no merger or acquisition of an
institution, or acquisition of a branch office, is involved, the
acquiring financial institution reports the covered loans as
purchased loans.
iv. A financial institution reports the data for an application
on the loan/application register for the calendar year during which
the application was acted upon even if the institution received the
application in a previous calendar year.
2. Originations and applications involving more than one
institution. Section 1003.4(a) requires a financial institution
to collect certain information regarding applications for covered
loans that it receives and regarding covered loans that it
originates. The following provides guidance on how to report
originations and applications involving more than one institution.
The discussion below assumes that all of the parties are financial
institutions as defined by § 1003.2(g). The same principles apply
if any of the parties is not a financial institution. Comment
4(a)-3 provides examples of transactions involving more than one
institution, and comment 4(a)-4 discusses how to report actions
taken by agents.
i. Only one financial institution reports each originated
covered loan as an origination. If more than one institution was
involved in the origination of a covered loan, the financial
institution that made the credit decision approving the application
before closing or account opening reports the loan as an
origination. It is not relevant whether the loan closed or, in the
case of an application, would have closed in the institution's
name. If more than one institution approved an application prior to
closing or account opening and one of those institutions purchased
the loan after closing, the institution that purchased the loan
after closing reports the loan as an origination. If a financial
institution reports a transaction as an origination, it reports all
of the information required for originations, even if the covered
loan was not initially payable to the financial institution that is
reporting the covered loan as an origination.
ii. In the case of an application for a covered loan 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. It is not
relevant whether the financial institution received the application
from the applicant or from another institution, such as a broker,
or whether another financial institution also reviewed and reported
an action taken on the same application.
3. Examples - originations and applications involving more
than one institution. The following scenarios illustrate how an
institution reports a particular application or covered loan. The
illustrations assume that all of the parties are financial
institutions as defined by § 1003.2(g). However, the same
principles apply if any of the parties is not a financial
institution.
i. Financial Institution A received an application for a covered
loan from an applicant and forwarded that application to Financial
Institution B. Financial Institution B reviewed the application and
approved the loan prior to closing. The loan closed in Financial
Institution A's name. Financial Institution B purchased the loan
from Financial Institution A after closing. Financial Institution B
was not acting as Financial Institution A's agent. Since Financial
Institution B made the credit decision prior to closing, Financial
Institution B reports the transaction as an origination, not as a
purchase. Financial Institution A does not report the
transaction.
ii. Financial Institution A received an application for a
covered loan from an applicant and forwarded that application to
Financial Institution B. Financial Institution B reviewed the
application before the loan would have closed, but the application
did not result in an origination because Financial Institution B
denied the application. Financial Institution B was not acting as
Financial Institution A's agent. Since Financial Institution B made
the credit decision, Financial Institution B reports the
application as a denial. Financial Institution A does not report
the application. If, under the same facts, the application was
withdrawn before Financial Institution B made a credit decision,
Financial Institution B would report the application as withdrawn
and Financial Institution A would not report the application.
iii. Financial Institution A received an application for a
covered loan from an applicant and approved the application before
closing the loan in its name. Financial Institution A was not
acting as Financial Institution B's agent. Financial Institution B
purchased the covered loan from Financial Institution A. Financial
Institution B did not review the application before closing.
Financial Institution A reports the loan as an origination.
Financial Institution B reports the loan as a purchase.
iv. Financial Institution A received an application for a
covered loan from an applicant. If approved, the loan would have
closed in Financial Institution B's name. Financial Institution A
denied the application without sending it to Financial Institution
B for approval. Financial Institution A was not acting as Financial
Institution B's agent. Since Financial Institution A made the
credit decision before the loan would have closed, Financial
Institution A reports the application. Financial Institution B does
not report the application.
v. Financial Institution A reviewed an application and made the
credit decision to approve a covered loan using the underwriting
criteria provided by a third party (e.g., another financial
institution, Fannie Mae, or Freddie Mac). The third party did not
review the application and did not make a credit decision prior to
closing. Financial Institution A was not acting as the third
party's agent. Financial Institution A reports the application or
origination. If the third party purchased the loan and is subject
to Regulation C, the third party reports the loan as a purchase
whether or not the third party reviewed the loan after closing.
Assume the same facts, except that Financial Institution A approved
the application, and the applicant chose not to accept the loan
from Financial Institution A. Financial Institution A reports the
application as approved but not accepted and the third party,
assuming the third party is subject to Regulation C, does not
report the application.
vi. Financial Institution A reviewed and made the credit
decision on an application based on the criteria of a third-party
insurer or guarantor (for example, a government or private insurer
or guarantor). Financial Institution A reports the action taken on
the application.
vii. Financial Institution A received an application for a
covered loan and forwarded it to Financial Institutions B and C.
Financial Institution A made a credit decision, acting as Financial
Institution D's agent, and approved the application. The applicant
did not accept the loan from Financial Institution D. Financial
Institution D reports the application as approved but not accepted.
Financial Institution A does not report the application. Financial
Institution B made a credit decision, approving the application,
the applicant accepted the offer of credit from Financial
Institution B, and credit was extended. Financial Institution B
reports the origination. Financial Institution C made a credit
decision and denied the application. Financial Institution C
reports the application as denied.
4. Agents. If a financial institution made the credit
decision on a covered loan or application through the actions of an
agent, the institution reports the application or origination.
State law determines whether one party is the agent of another. For
example, acting as Financial Institution A's agent, Financial
Institution B approved an application prior to closing and a
covered loan was originated. Financial Institution A reports the
loan as an origination.
5. Purchased loans. i. A financial institution is
required to collect data regarding covered loans it purchases. For
purposes of § 1003.4(a), a purchase includes a repurchase of a
covered loan, regardless of whether the institution chose to
repurchase the covered loan or was required to repurchase the
covered loan because of a contractual obligation and regardless of
whether the repurchase occurs within the same calendar year that
the covered loan was originated or in a different calendar year.
For example, assume that Financial Institution A originates or
purchases a covered loan and then sells it to Financial Institution
B, who later requires Financial Institution A to repurchase the
covered loan pursuant to the relevant contractual obligations.
Financial Institution B reports the purchase from Financial
Institution A, assuming it is a financial institution as defined
under § 1003.2(g). Financial Institution A reports the repurchase
from Financial Institution B as a purchase.
ii. In contrast, for purposes of § 1003.4(a), 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 originating financial institution is
obligated to repurchase the covered loan for sale to a subsequent
investor. Such agreements, often referred to as “repurchase
agreements,” are sometimes employed as functional equivalents of
warehouse lines of credit. Under these agreements, the interim
funder or warehouse creditor acquires legal title to the covered
loan, subject to an obligation of the originating institution to
repurchase at a future date, rather than taking a security interest
in the covered loan as under the terms of a more conventional
warehouse line of credit. To illustrate, assume Financial
Institution A has an interim funding agreement with Financial
Institution B to enable Financial Institution B to originate loans.
Assume further that Financial Institution B originates a covered
loan and that, pursuant to this agreement, Financial Institution A
takes a temporary transfer of the covered loan until Financial
Institution B arranges for the sale of the covered loan to a
subsequent investor and that Financial Institution B repurchases
the covered loan to enable it to complete the sale to the
subsequent investor (alternatively, Financial Institution A may
transfer the covered loan directly to the subsequent investor at
Financial Institution B's direction, pursuant to the interim
funding agreement). The subsequent investor could be, for example,
a financial institution or other entity that intends to hold the
loan in portfolio, a GSE or other securitizer, or a financial
institution or other entity that intends to package and sell
multiple loans to a GSE or other securitizer. In this example, the
temporary transfer of the covered loan from Financial Institution B
to Financial Institution A is not a purchase, and any subsequent
transfer back to Financial Institution B for delivery to the
subsequent investor is not a purchase, for purposes of § 1003.4(a).
Financial Institution B reports the origination of the covered loan
as well as its sale to the subsequent investor. If the subsequent
investor is a financial institution under § 1003.2(g), it reports a
purchase of the covered loan pursuant to § 1003.4(a), regardless of
whether it acquired the covered loan from Financial Institution B
or directly from Financial Institution A.
Section 1003.4 - Compilation of Reportable Data Paragraph
4(a)(1)(i)
1. ULI - uniqueness. Section 1003.4(a)(1)(i)(B)(2)
requires a financial institution that assigns a universal loan
identifier (ULI) to each covered loan or application (except as
provided in § 1003.4(a)(1)(i)(D) and (E)) to ensure that the
character sequence it assigns is unique within the institution and
used only for the covered loan or application. A financial
institution should assign only one ULI to any particular covered
loan or application, and each ULI should correspond to a single
application and ensuing loan in the case that the application is
approved and a loan is originated. A financial institution may use
a ULI that was reported previously to refer only to the same loan
or application for which the ULI was used previously or a loan that
ensues from an application for which the ULI was used previously. A
financial institution may not report an application for a covered
loan in 2030 using the same ULI that was reported for a covered
loan that was originated in 2020. Similarly, refinancings or
applications for refinancing should be assigned a different ULI
than the loan that is being refinanced. A financial institution
with multiple branches must ensure that its branches do not use the
same ULI to refer to multiple covered loans or applications.
2. ULI - privacy. Section 1003.4(a)(1)(i)(B)(3)
prohibits a financial institution from including information that
could be used to directly identify the applicant or borrower in the
identifier that it assigns for the application or covered loan of
the applicant or borrower. Information that could be used to
directly identify the applicant or borrower includes, but is not
limited to, the applicant's or borrower's name, date of birth,
Social Security number, official government-issued driver's license
or identification number, alien registration number, government
passport number, or employer or taxpayer identification number.
3. ULI - purchased covered loan. If a financial
institution has previously assigned a covered loan with a ULI or
reported a covered loan with a ULI under this part, a financial
institution that purchases that covered loan must report the same
ULI that was previously assigned or reported unless the purchase of
the covered loan is a partially exempt transaction under §
1003.3(d). For example, if a financial institution that submits an
annual loan/application register pursuant to § 1003.5(a)(1)(i)
originates a covered loan that is purchased by a financial
institution that also submits an annual loan/application register
pursuant to § 1003.5(a)(1)(i), the financial institution that
purchases the covered loan must report the purchase of the covered
loan using the same ULI that was reported by the originating
financial institution if the purchase is not a partially exempt
transaction. If a financial institution that originates a covered
loan has previously assigned the covered loan with a ULI under this
part but has not yet reported the covered loan, a financial
institution that purchases that covered loan must report the same
ULI that was previously assigned if the purchase is not a partially
exempt transaction. For example, if a financial institution that
submits an annual loan/application register pursuant to §
1003.5(a)(1)(i) (Institution A) originates a covered loan that is
purchased by a financial institution that submits a quarterly
loan/application register pursuant to § 1003.5(a)(1)(ii)
(Institution B) and Institution A assigned a ULI to the loan, then
unless the purchase is a partially exempt transaction Institution B
must report the ULI that was assigned by Institution A on
Institution B's quarterly loan/application register pursuant to §
1003.5(a)(1)(ii), even though Institution A has not yet submitted
its annual loan/application register pursuant to § 1003.5(a)(1)(i).
A financial institution that purchases a covered loan and is
ineligible for a partial exemption with respect to the purchased
covered loan must assign it a ULI pursuant to § 1003.4(a)(1)(i) and
report it pursuant to § 1003.5(a)(1)(i) or (ii), whichever is
applicable, if the covered loan was not assigned a ULI by the
financial institution that originated the loan because, for
example, the loan was originated prior to January 1, 2018, the loan
was originated by an institution not required to report under this
part, or the loan was assigned a non-universal loan identifier
(NULI) under § 1003.3(d)(5) rather than a ULI by the loan
originator.
4. ULI - reinstated or reconsidered application. A
financial institution may, at its option, report a ULI previously
reported under this part if, during the same calendar year, an
applicant asks the institution to reinstate a counteroffer that the
applicant previously did not accept or asks the financial
institution to reconsider an application that was previously
denied, withdrawn, or closed for incompleteness. For example, if a
financial institution reports a denied application in its
second-quarter 2020 data submission, pursuant to §
1003.5(a)(1)(ii), but then reconsiders the application, resulting
in an origination in the third quarter of 2020, the financial
institution may report the origination in its third-quarter 2020
data submission using the same ULI that was reported for the denied
application in its second-quarter 2020 data submission, so long as
the financial institution treats the origination as the same
transaction for reporting. However, a financial institution may not
use a ULI previously reported if it reinstates or reconsiders an
application that was reported in a prior calendar year. For
example, if a financial institution reports a denied application
that is not partially exempt in its fourth-quarter 2020 data
submission, pursuant to § 1003.5(a)(1)(ii), but then reconsiders
the application, resulting in an origination that is not partially
exempt in the first quarter of 2021, the financial institution
reports a denied application under the original ULI in its
fourth-quarter 2020 data submission and an origination with a
different ULI in its first-quarter 2021 data submission, pursuant
to § 1003.5(a)(1)(ii).
5. ULI - check digit. Section 1003.4(a)(1)(i)(C) requires
that the two right-most characters in the ULI represent the check
digit. Appendix C prescribes the requirements for generating a
check digit and validating a ULI.
6. NULI. For a partially exempt transaction under §
1003.3(d), a financial institution may report a ULI or a NULI. See
§ 1003.3(d)(5) and comments 3(d)(5)-1 and -2 for guidance on the
NULI.
Paragraph 4(a)(1)(ii)
1. Application date - consistency. Section
1003.4(a)(1)(ii) requires that, in reporting the date of
application, a financial institution report the date it received
the application, as defined under § 1003.2(b), or the date shown on
the application form. Although a financial institution need not
choose the same approach for its entire HMDA submission, it should
be generally consistent (such as by routinely using one approach
within a particular division of the institution or for a category
of loans). If the financial institution chooses to report the date
shown on the application form and the institution retains multiple
versions of the application form, the institution reports the date
shown on the first application form satisfying the application
definition provided under § 1003.2(b).
2. Application date - indirect application. For an
application that was not submitted directly to the financial
institution, the institution may report the date the application
was received by the party that initially received the application,
the date the application was received by the institution, or the
date shown on the application form. Although an institution need
not choose the same approach for its entire HMDA submission, it
should be generally consistent (such as by routinely using one
approach within a particular division of the institution or for a
category of loans).
3. Application date - reinstated application. If, within
the same calendar year, an applicant asks a financial institution
to reinstate a counteroffer that the applicant previously did not
accept (or asks the institution to reconsider an application that
was denied, withdrawn, or closed for incompleteness), the
institution may treat that request as the continuation of the
earlier transaction using the same ULI or NULI or as a new
transaction with a new ULI or NULI. If the institution treats the
request for reinstatement or reconsideration as a new transaction,
it reports the date of the request as the application date. If the
institution does not treat the request for reinstatement or
reconsideration as a new transaction, it reports the original
application date.
Paragraph 4(a)(2)
1. Loan type - general. If a covered loan is not, or in
the case of an application would not have been, insured by the
Federal Housing Administration, guaranteed by the Department of
Veterans Affairs, or guaranteed by the Rural Housing Service or the
Farm Service Agency, an institution complies with § 1003.4(a)(2) by
reporting the covered loan as not insured or guaranteed by the
Federal Housing Administration, Department of Veterans Affairs,
Rural Housing Service, or Farm Service Agency.
Paragraph 4(a)(3)
1. Purpose - statement of applicant. A financial
institution may rely on the oral or written statement of an
applicant regarding the proposed use of covered loan proceeds. For
example, a lender could use a check-box or a purpose line on a loan
application to determine whether the applicant intends to use
covered loan proceeds for home improvement purposes. If an
applicant provides no statement as to the proposed use of covered
loan proceeds and the covered loan is not a home purchase loan,
cash-out refinancing, or refinancing, a financial institution
reports the covered loan as for a purpose other than home purchase,
home improvement, refinancing, or cash-out refinancing for purposes
of § 1003.4(a)(3).
2. Purpose - refinancing and cash-out refinancing.
Section 1003.4(a)(3) requires a financial institution to report
whether a covered loan is, or an application is for, a refinancing
or a cash-out refinancing. A financial institution reports a
covered loan or an application as a cash-out refinancing if it is a
refinancing as defined by § 1003.2(p) and the institution
considered it to be a cash-out refinancing in processing the
application or setting the terms (such as the interest rate or
origination charges) under its guidelines or an investor's
guidelines. For example:
i. Assume a financial institution considers an application for 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. Assume also that under the
investor's guidelines, the applicant qualifies for the loan product
and the financial institution approves the application, originates
the covered loan, and sets the terms of the covered loan consistent
with the loan product. In this example, the financial institution
would report the covered loan as a cash-out refinancing for
purposes of § 1003.4(a)(3).
ii. Assume a financial institution does not consider an
application for a covered loan to be a cash-out refinancing under
its own guidelines because the amount of cash received by the
borrower does not exceed a certain threshold. Assume also that the
institution approves the application, originates the covered loan,
and sets the terms of the covered loan consistent with its own
guidelines applicable to refinancings other than cash-out
refinancings. In this example, the financial institution would
report the covered loan as a refinancing for purposes of §
1003.4(a)(3).
iii. Assume a financial institution does not distinguish between
a cash-out refinancing and a refinancing under its own guidelines,
and sets the terms of all refinancings without regard to the amount
of cash received by the borrower at closing or account opening, and
does not offer loan products under investor guidelines. In this
example, the financial institution reports all covered loans and
applications for covered loans that are defined by § 1003.2(p) as
refinancings for purposes of § 1003.4(a)(3).
3. Purpose - multiple-purpose loan. Section 1003.4(a)(3)
requires a financial institution to report the purpose of a covered
loan or application. If a covered loan is a home purchase loan as
well as a home improvement loan, a refinancing, or a cash-out
refinancing, an institution complies with § 1003.4(a)(3) by
reporting the loan as a home purchase loan. If a covered loan is a
home improvement loan as well as a refinancing or cash-out
refinancing, but the covered loan is not a home purchase loan, an
institution complies with § 1003.4(a)(3) by reporting the covered
loan as a refinancing or a cash-out refinancing, as appropriate. If
a covered loan is a refinancing or cash-out refinancing as well as
for another purpose, such as for the purpose of paying educational
expenses, but the covered loan is not a home purchase loan, an
institution complies with § 1003.4(a)(3) by reporting the covered
loan as a refinancing or a cash-out refinancing, as appropriate.
See comment 4(a)(3)-2. If a covered loan is a home
improvement loan as well as for another purpose, but the covered
loan is not a home purchase loan, a refinancing, or cash-out
refinancing, an institution complies with § 1003.4(a)(3) by
reporting the covered loan as a home improvement loan. See
comment 2(i)-1.
4. Purpose - other. 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 complies with § 1003.4(a)(3) by reporting the covered
loan or application as for a purpose other than home purchase, home
improvement, refinancing, or cash-out refinancing. For example, if
a covered loan is for the purpose of paying educational expenses,
the financial institution complies with § 1003.4(a)(3) by reporting
the covered loan as for a purpose other than home purchase, home
improvement, refinancing, or cash-out refinancing. Section
1003.4(a)(3) also requires an institution to report a covered loan
or application as for a purpose other than home purchase, home
improvement, refinancing, or cash-out refinancing if it is a
refinancing but, under the terms of the agreement, the financial
institution was unconditionally obligated to refinance the
obligation subject to conditions within the borrower's control.
5. Purpose - business or commercial purpose loans. If a
covered loan primarily is for a business or commercial purpose as
described in § 1003.3(c)(10) and comment 3(c)(10)-2 and is a home
purchase loan, home improvement loan, or a refinancing, §
1003.4(a)(3) requires the financial institution to report the
applicable loan purpose. If a loan primarily is for a business or
commercial purpose but is not a home purchase loan, home
improvement loan, or a refinancing, the loan is an excluded
transaction under § 1003.3(c)(10).
6. Purpose - purchased loans. For purchased covered loans
where origination took place prior to January 1, 2018, a financial
institution complies with § 1003.4(a)(3) by reporting that the
requirement is not applicable.
Paragraph 4(a)(4)
1. Request under a preapproval program. Section
1003.4(a)(4) requires a financial institution to report whether an
application or covered loan involved a request for a preapproval of
a home purchase loan under a preapproval program as defined by §
1003.2(b)(2). If an application or covered loan did not involve a
request for a preapproval of a home purchase loan under a
preapproval program as defined by § 1003.2(b)(2), a financial
institution complies with § 1003.4(a)(4) by reporting that the
application or covered loan did not involve such a request,
regardless of whether the institution has such a program and the
applicant did not apply through that program or the institution
does not have a preapproval program as defined by §
1003.2(b)(2).
2. Scope of requirement. A financial institution reports
that the application or covered loan did not involve a preapproval
request for a purchased covered loan; an application or covered
loan for any purpose other than a home purchase loan; an
application for a home purchase loan or a covered loan that is a
home purchase loan secured by a multifamily dwelling; an
application or covered loan that is an open-end line of credit or a
reverse mortgage; or an application that is denied, withdrawn by
the applicant, or closed for incompleteness.
Paragraph 4(a)(5)
1. Modular homes and prefabricated components. Covered
loans or applications related to modular homes should be reported
with a construction method of site-built, regardless of whether
they are on-frame or off-frame modular homes. Modular homes comply
with local or other recognized buildings codes rather than
standards established by the National Manufactured Housing
Construction and Safety Standards Act, 42 U.S.C. 5401 et
seq. Modular homes are not required to have HUD Certification
Labels under 24 CFR 3280.11 or data plates under 24 CFR 3280.5.
Modular homes may have a certification from a State licensing
agency that documents compliance with State or other applicable
building codes. On-frame modular homes are constructed on permanent
metal chassis similar to those used in manufactured homes. The
chassis are not removed on site and are secured to the foundation.
Off-frame modular homes typically have floor construction similar
to the construction of other site-built homes, and the construction
typically includes wooden floor joists and does not include
permanent metal chassis. Dwellings built using prefabricated
components assembled at the dwelling's permanent site should also
be reported with a construction method of site-built.
2. Multifamily dwelling. For a covered loan or an
application for a covered loan related to a multifamily dwelling,
the financial institution should report the construction method as
site-built unless the multifamily dwelling is a manufactured home
community, in which case the financial institution should report
the construction method as manufactured home.
3. Multiple properties. See comment 4(a)(9)-2 regarding
transactions involving multiple properties with more than one
property taken as security.
Paragraph 4(a)(6)
1. Multiple properties. See comment 4(a)(9)-2 regarding
transactions involving multiple properties with more than one
property taken as security.
2. Principal residence. Section 1003.4(a)(6) requires a
financial institution to identify whether the property to which the
covered loan or application relates is or will be used as a
residence that the applicant or borrower physically occupies and
uses, or will occupy and use, as his or her principal residence.
For purposes of § 1003.4(a)(6), an applicant or borrower can have
only one principal residence at a time. Thus, a vacation or other
second home would not be a principal residence. However, if an
applicant or borrower buys or builds a new dwelling that will
become the applicant's or borrower's principal residence within a
year or upon the completion of construction, the new dwelling is
considered the principal residence for purposes of applying this
definition to a particular transaction.
3. Second residences. Section 1003.4(a)(6) requires a
financial institution to identify whether the property to which the
loan or application relates is or will be used as a second
residence. For purposes of § 1003.4(a)(6), a property is a second
residence of an applicant or borrower if the property is or will be
occupied by the applicant or borrower for a portion of the year and
is not the applicant's or borrower's principal residence. For
example, if a person purchases a property, occupies the property
for a portion of the year, and rents the property for the remainder
of the year, the property is a second residence for purposes of §
1003.4(a)(6). Similarly, if a couple occupies a property near their
place of employment on weekdays, but the couple returns to their
principal residence on weekends, the property near the couple's
place of employment is a second residence for purposes of §
1003.4(a)(6).
4. Investment properties. Section 1003.4(a)(6) requires a
financial institution to identify whether the property to which the
covered loan or application relates is or will be used as an
investment property. For purposes of § 1003.4(a)(6), a property is
an investment property if the borrower does not, or the applicant
will not, occupy the property. For example, if a person purchases a
property, does not occupy the property, and generates income by
renting the property, the property is an investment property for
purposes of § 1003.4(a)(6). Similarly, if a person purchases a
property, does not occupy the property, and does not generate
income by renting the property, but intends to generate income by
selling the property, the property is an investment property for
purposes of § 1003.4(a)(6). Section 1003.4(a)(6) requires a
financial institution to identify a property as an investment
property if the borrower or applicant does not or will not occupy
the property, even if the borrower or applicant does not consider
the property as owned for investment purposes. For example, if a
corporation purchases a property that is a dwelling under §
1003.2(f), that it does not occupy, but that is for the long-term
residential use of its employees, the property is an investment
property for purposes of § 1003.4(a)(6), even if the corporation
considers the property as owned for business purposes rather than
investment purposes, does not generate income by renting the
property, and does not intend to generate income by selling the
property at some point in time. If the property is for transitory
use by employees, the property would not be considered a dwelling
under § 1003.2(f). See comment 2(f)-3.
5. Purchased covered loans. For purchased covered loans,
a financial institution may report principal residence unless the
loan documents or application indicate that the property will not
be occupied as a principal residence.
Paragraph 4(a)(7)
1. Covered loan amount - counteroffer. If an applicant
accepts a counteroffer for an amount different from the amount for
which the applicant applied, the financial institution reports the
covered loan amount granted. If an applicant does not accept a
counteroffer or fails to respond, the institution reports the
amount initially requested.
2. Covered loan amount - application approved but not
accepted or preapproval request approved but not accepted. A
financial institution reports the covered loan amount that was
approved.
3. Covered loan amount - preapproval request denied,
application denied, closed for incompleteness or withdrawn. For
a preapproval request that was denied, and for an application that
was denied, closed for incompleteness, or withdrawn, a financial
institution reports the amount for which the applicant applied.
4. Covered loan amount - multiple-purpose loan. A
financial institution reports the entire amount of the covered
loan, even if only a part of the proceeds is intended for home
purchase, home improvement, or refinancing.
5. Covered loan amount - closed-end mortgage loan. For a
closed-end mortgage loan, other than a purchased loan, an
assumption, or a reverse mortgage, a financial institution reports
the amount to be repaid as disclosed on the legal obligation. For a
purchased closed-end mortgage loan or an assumption of a closed-end
mortgage loan, a financial institution reports the unpaid principal
balance at the time of purchase or assumption.
6. Covered loan amount - open-end line of credit. For an
open-end line of credit, a financial institution reports the entire
amount of credit available to the borrower under the terms of the
open-end plan, including a purchased open-end line of credit and an
assumption of an open-end line of credit, but not for a reverse
mortgage open-end line of credit.
7. Covered loan amount - refinancing. For a refinancing,
a financial institution reports the amount of credit extended under
the terms of the new debt obligation.
8. Covered loan amount - home improvement loan. A
financial institution reports the entire amount of a home
improvement loan, even if only a part of the proceeds is intended
for home improvement.
9. Covered loan amount - non-federally insured reverse
mortgage. A financial institution reports the initial principal
limit of a non-federally insured reverse mortgage as set forth in §
1003.4(a)(7)(iii).
Paragraph 4(a)(8)(i)
1. Action taken - covered loan originated. A financial
institution reports that the covered loan was originated if the
financial institution made a credit decision approving the
application before closing or account opening and that credit
decision results in an extension of credit. The same is true for an
application that began as a request for a preapproval that
subsequently results in a covered loan being originated. See
comments 4(a)-2 through -4 for guidance on transactions in which
more than one institution is involved.
2. Action taken - covered loan purchased. A financial
institution reports that the covered loan was purchased if the
covered loan was purchased by the financial institution after
closing or account opening and the financial institution did not
make a credit decision on the application prior to closing or
account opening, or if the financial institution did make a credit
decision on the application prior to closing or account opening,
but is repurchasing the loan from another entity that the loan was
sold to. See comment 4(a)-5. See comments 4(a)-2
through -4 for guidance on transactions in which more than one
financial institution is involved.
3. Action taken - application approved but not accepted.
A financial institution reports application approved but not
accepted if the financial institution made a credit decision
approving the application before closing or account opening,
subject solely to outstanding conditions that are customary
commitment or closing conditions, but the applicant or the party
that initially received the application fails to respond to the
financial institution's approval within the specified time, or the
closed-end mortgage loan was not otherwise consummated or the
account was not otherwise opened. See comment
4(a)(8)(i)-13.
4. Action taken - application denied. A financial
institution reports that the application was denied if it made a
credit decision denying the application before an applicant
withdraws the application or the file is closed for incompleteness.
See comments 4(a)-2 through -4 for guidance on transactions
in which more than one institution is involved.
5. Action taken - application withdrawn. A financial
institution reports that the application was withdrawn when the
application is expressly withdrawn by the applicant before the
financial institution makes a credit decision denying the
application, before the financial institution makes a credit
decision approving the application, or before the file is closed
for incompleteness. A financial institution also reports
application withdrawn if the financial institution provides a
conditional approval specifying underwriting or creditworthiness
conditions, pursuant to comment 4(a)(8)(i)-13, and the application
is expressly withdrawn by the applicant before the applicant
satisfies all specified underwriting or creditworthiness
conditions. A preapproval request that is withdrawn is not
reportable under HMDA. See § 1003.4(a).
6. Action taken - file closed for incompleteness. A
financial institution reports that the file was closed for
incompleteness if the financial institution sent a written notice
of incompleteness under Regulation B, 12 CFR 1002.9(c)(2), and the
applicant did not respond to the request for additional information
within the period of time specified in the notice before the
applicant satisfies all underwriting or creditworthiness
conditions. See comment 4(a)(8)(i)-13. If a financial
institution then provides a notification of adverse action on the
basis of incompleteness under Regulation B, 12 CFR 1002.9(c)(1)(i),
the financial institution may report the action taken as either
file closed for incompleteness or application denied. A preapproval
request that is closed for incompleteness is not reportable under
HMDA. See § 1003.4(a) and comment 4(a)-1.ii.
7. Action taken - preapproval request denied. A financial
institution reports that the preapproval request was denied if the
application was a request for a preapproval under a preapproval
program as defined in § 1003.2(b)(2) and the institution made a
credit decision denying the preapproval request.
8. Action taken - preapproval request approved but not
accepted. A financial institution reports that the preapproval
request was approved but not accepted if the application was a
request for a preapproval under a preapproval program as defined in
§ 1003.2(b)(2) and the institution made a credit decision approving
the preapproval request but the application did not result in a
covered loan originated by the financial institution.
9. Action taken - counteroffers. If a financial
institution makes a counteroffer to lend on terms different from
the applicant's initial request (for example, for a shorter loan
maturity, with a different interest rate, or in a different amount)
and the applicant declines to proceed with the counteroffer or
fails to respond, the institution reports the action taken as a
denial on the original terms requested by the applicant. If the
applicant agrees to proceed with consideration of the financial
institution's counteroffer, the financial institution reports the
action taken as the disposition of the application based on the
terms of the counteroffer. For example, assume a financial
institution makes a counteroffer, the applicant agrees to proceed
with the terms of the counteroffer, and the financial institution
then makes a credit decision approving the application conditional
on satisfying underwriting or creditworthiness conditions, and the
applicant expressly withdraws before satisfying all underwriting or
creditworthiness conditions and before the institution denies the
application or closes the file for incompleteness. The financial
institution reports the action taken as application withdrawn in
accordance with comment 4(a)(8)(i)-13.i. Similarly, assume a
financial institution makes a counteroffer, the applicant agrees to
proceed with consideration of the counteroffer, and the financial
institution provides a conditional approval stating the conditions
to be met to originate the counteroffer. The financial institution
reports the action taken on the application in accordance with
comment 4(a)(8)(i)-13 regarding conditional approvals.
10. Action taken - rescinded transactions. If a borrower
rescinds a transaction after closing and before a financial
institution is required to submit its loan/application register
containing the information for the transaction under § 1003.5(a),
the institution reports the transaction as an application that was
approved but not accepted.
11. Action taken - purchased covered loans. An
institution reports the covered loans that it purchased during the
calendar year. An institution does not report the covered loans
that it declined to purchase, unless, as discussed in comments
4(a)-2 through -4, the institution reviewed the application prior
to closing, in which case it reports the application or covered
loan according to comments 4(a)-2 through -4.
12. Action taken - repurchased covered loans. See comment
4(a)-5 regarding reporting requirements when a covered loan is
repurchased by the originating financial institution.
13. Action taken - conditional approvals. If an
institution issues an approval other than a commitment pursuant to
a preapproval program as defined under § 1003.2(b)(2), and that
approval is subject to the applicant meeting certain conditions,
the institution reports the action taken as provided below
dependent on whether the conditions are solely customary commitment
or closing conditions or if the conditions include any underwriting
or creditworthiness conditions.
i. Action taken examples. If the approval is conditioned
on satisfying underwriting or creditworthiness conditions and they
are not met, the institution reports the action taken as a denial.
If, however, the conditions involve submitting additional
information about underwriting or creditworthiness that the
institution needs to make the credit decision, and the institution
has sent a written notice of incompleteness under Regulation B, 12
CFR 1002.9(c)(2), and the applicant did not respond within the
period of time specified in the notice, the institution reports the
action taken as file closed for incompleteness. See comment
4(a)(8)(i)-6. If the conditions are solely customary commitment or
closing conditions and the conditions are not met, the institution
reports the action taken as approved but not accepted. If all the
conditions (underwriting, creditworthiness, or customary commitment
or closing conditions) are satisfied and the institution agrees to
extend credit but the covered loan is not originated, the
institution reports the action taken as application approved but
not accepted. If the applicant expressly withdraws before
satisfying all underwriting or creditworthiness conditions and
before the institution denies the application or closes the file
for incompleteness, the institution reports the action taken as
application withdrawn. If all underwriting and creditworthiness
conditions have been met, and the outstanding conditions are solely
customary commitment or closing conditions and the applicant
expressly withdraws before the covered loan is originated, the
institution reports the action taken as application approved but
not accepted.
ii. Customary commitment or closing conditions. Customary
commitment or closing conditions include, for example: A
clear-title requirement, an acceptable property survey, acceptable
title insurance binder, clear termite inspection, a subordination
agreement from another lienholder, and, where the applicant plans
to use the proceeds from the sale of one home to purchase another,
a settlement statement showing adequate proceeds from the sale.
iii. Underwriting or creditworthiness conditions.
Underwriting or creditworthiness conditions include, for example:
Conditions that constitute a counter-offer, such as a demand for a
higher down-payment; satisfactory debt-to-income or loan-to-value
ratios, a determination of need for private mortgage insurance, or
a satisfactory appraisal requirement; or verification or
confirmation, in whatever form the institution requires, that the
applicant meets underwriting conditions concerning applicant
creditworthiness, including documentation or verification of income
or assets.
14. Action taken - pending applications. An institution
does not report any covered loan application still pending at the
end of the calendar year; it reports that application on its
loan/application register for the year in which final action is
taken.
Paragraph 4(a)(8)(ii)
1. Action taken date - general. A financial institution
reports the date of the action taken.
2. Action taken date - applications denied and files closed
for incompleteness. For applications, including requests for a
preapproval, that are denied or for files closed for
incompleteness, the financial institution reports either the date
the action was taken or the date the notice was sent to the
applicant.
3. Action taken date - application withdrawn. For
applications withdrawn, the financial institution may report the
date the express withdrawal was received or the date shown on the
notification form in the case of a written withdrawal.
4. Action taken date - approved but not accepted. For a
covered loan approved by an institution but not accepted by the
applicant, the institution reports any reasonable date, such as the
approval date, the deadline for accepting the offer, or the date
the file was closed. Although an institution need not choose the
same approach for its entire HMDA submission, it should be
generally consistent (such as by routinely using one approach
within a particular division of the institution or for a category
of covered loans).
5. Action taken date - originations. For covered loan
originations, including a preapproval request that leads to an
origination by the financial institution, an institution generally
reports the closing or account opening date. For covered loan
originations that an institution acquires from a party that
initially received the application, the institution reports either
the closing or account opening date, or the date the institution
acquired the covered loan from the party that initially received
the application. If the disbursement of funds takes place on a date
later than the closing or account opening date, the institution may
use the date of initial disbursement. For a construction/permanent
covered loan, the institution reports either the closing or account
opening date, or the date the covered loan converts to the
permanent financing. Although an institution need not choose the
same approach for its entire HMDA submission, it should be
generally consistent (such as by routinely using one approach
within a particular division of the institution or for a category
of covered loans). Notwithstanding this flexibility regarding the
use of the closing or account opening date in connection with
reporting the date action was taken, the institution must report
the origination as occurring in the year in which the origination
goes to closing or the account is opened.
6. Action taken date - loan purchased. For covered loans
purchased, a financial institution reports the date of
purchase.
Paragraph 4(a)(9)
1. Multiple properties with one property taken as
security. If a covered loan is related to more than one
property, but only one property is taken as security (or, in the
case of an application, proposed to be taken as security), a
financial institution reports the information required by §
1003.4(a)(9) for the property taken as or proposed to be taken as
security. A financial institution does not report the information
required by § 1003.4(a)(9) for the property or properties related
to the loan that are not taken as or proposed to be taken as
security. For example, if a covered loan is secured by property A,
and the proceeds are used to purchase or rehabilitate (or to
refinance home purchase or home improvement loans related to)
property B, the institution reports the information required by §
1003.4(a)(9) for property A and does not report the information
required by § 1003.4(a)(9) for property B.
2. Multiple properties with more than one property taken as
security. If more than one property is taken or, in the case of
an application, proposed to be taken as security for a single
covered loan, a financial institution reports the covered loan or
application in a single entry on its loan/application register and
provides the information required by § 1003.4(a)(9) for one of the
properties taken as security that contains a dwelling. A financial
institution does not report information about the other properties
taken as security. If an institution is required to report specific
information about the property identified in § 1003.4(a)(9), the
institution reports the information that relates to the property
identified in § 1003.4(a)(9) (or, if the transaction is partially
exempt under § 1003.3(d) and no data are reported pursuant to §
1003.4(a)(9), the property that the institution would have
identified in § 1003.4(a)(9) if the transaction were not partially
exempt). For example, Financial Institution A originated a covered
loan that is secured by both property A and property B, each of
which contains a dwelling. Financial Institution A reports the loan
as one entry on its loan/application register, reporting the
information required by § 1003.4(a)(9) for either property A or
property B. If Financial Institution A elects to report the
information required by § 1003.4(a)(9) about property A, Financial
Institution A also reports the information required by §
1003.4(a)(5), (6), (14), (29), and (30) related to property A. For
aspects of the entries that do not refer to the property identified
in § 1003.4(a)(9) (i.e., § 1003.4(a)(1) through (4), (7),
(8), (10) through (13), (15) through (28), and (31) through (38)),
Financial Institution A reports the information applicable to the
covered loan or application and not information that relates only
to the property identified in § 1003.4(a)(9).
3. Multifamily dwellings. A single multifamily dwelling
may have more than one postal address. For example, three apartment
buildings, each with a different street address, comprise a single
multifamily dwelling that secures a covered loan. For the purposes
of § 1003.4(a)(9), a financial institution reports the information
required by § 1003.4(a)(9) in the same manner described in comment
4(a)(9)-2.
4. Loans purchased from another institution. The
requirement to report the property location information required by
§ 1003.4(a)(9) applies not only to applications and originations
but also to purchased covered loans.
5. Manufactured home. If the site of a manufactured home
has not been identified, a financial institution complies by
reporting that the information required by § 1003.4(a)(9) is not
applicable.
Paragraph 4(a)(9)(i)
1. General. Except for partially exempt transactions
under § 1003.3(d), § 1003.4(a)(9)(i) requires a financial
institution to report the property address of the location of the
property securing a covered loan or, in the case of an application,
proposed to secure a covered loan. The address should correspond to
the property identified on the legal obligation related to the
covered loan. For applications that did not result in an
origination, the address should correspond to the location of the
property proposed to secure the loan as identified by the
applicant. For example, assume a loan is secured by a property
located at 123 Main Street, and the applicant's or borrower's
mailing address is a post office box. The financial institution
should not report the post office box, and should report 123 Main
Street.
2. Property address - format. A financial institution
complies with the requirements in § 1003.4(a)(9)(i) by reporting
the following information about the physical location of the
property securing the loan.
i. Street address. When reporting the street address of
the property, a financial institution complies by including, as
applicable, the primary address number, the predirectional, the
street name, street prefixes and/or suffixes, the postdirectional,
the secondary address identifier, and the secondary address, as
applicable. For example, 100 N Main ST Apt 1.
ii. City name. A financial institution complies by
reporting the name of the city in which the property is
located.
iii. State name. A financial institution complies by
reporting the two letter State code for the State in which the
property is located, using the U.S. Postal Service official State
abbreviations.
iv. Zip Code. A financial institution complies by
reporting the five or nine digit Zip Code in which the property is
located.
3. Property address - not applicable. A financial
institution complies with § 1003.4(a)(9)(i) by reporting that the
requirement is not applicable if the property address of the
property securing the covered loan is not known. For example, if
the property did not have a property address at closing or if the
applicant did not provide the property address of the property to
the financial institution before the application was denied,
withdrawn, or closed for incompleteness, the financial institution
complies with § 1003.4(a)(9)(i) by reporting that the requirement
is not applicable.
Paragraph 4(a)(9)(ii)
1. Optional reporting. Section 1003.4(a)(9)(ii) requires
a financial institution to report the State, county, and census
tract of the property securing the covered loan or, in the case of
an application, proposed to secure the covered loan if the property
is located in an MSA or MD in which the financial institution has a
home or branch office or if the institution is subject to §
1003.4(e). Section 1003.4(a)(9)(ii)(C) further limits the
requirement to report census tract to covered loans secured by or
applications proposed to be secured by properties located in
counties with a population of more than 30,000 according to the
most recent decennial census conducted by the U.S. Census Bureau.
For transactions for which State, county, or census tract reporting
is not required under § 1003.4(a)(9)(ii) or (e), financial
institutions may report that the requirement is not applicable, or
they may voluntarily report the State, county, or census tract
information.
Paragraph 4(a)(9)(ii)(A)
1. Applications - State not provided. When reporting an
application, a financial institution complies with §
1003.4(a)(9)(ii)(A) by reporting that the requirement is not
applicable if the State in which the property is located was not
known before the application was denied, withdrawn, or closed for
incompleteness.
Paragraph 4(a)(9)(ii)(B)
1. General. A financial institution complies by reporting
the five-digit Federal Information Processing Standards (FIPS)
numerical county code.
2. Applications - county not provided. When reporting an
application, a financial institution complies with §
1003.4(a)(9)(ii)(B) by reporting that the requirement is not
applicable if the county in which the property is located was not
known before the application was denied, withdrawn, or closed for
incompleteness.
Paragraph 4(a)(9)(ii)(C)
1. General. Census tract numbers are defined by the U.S.
Census Bureau. A financial institution complies with §
1003.4(a)(9)(ii)(C) if it uses the boundaries and codes in effect
on January 1 of the calendar year covered by the loan/application
register that it is reporting.
2. Applications - census tract not provided. When
reporting an application, a financial institution complies with §
1003.4(a)(9)(ii)(C) by reporting that the requirement is not
applicable if the census tract in which the property is located was
not known before the application was denied, withdrawn, or closed
for incompleteness.
Paragraph 4(a)(10)(i)
1. Applicant data - general. Refer to appendix B to this
part for instructions on collection of an applicant's ethnicity,
race, and sex.
2. Transition rule for applicant data collected prior to
January 1, 2018. If a financial institution receives an
application prior to January 1, 2018, but final action is taken on
or after January 1, 2018, the financial institution complies with §
1003.4(a)(10)(i) and (b) if it collects the information in
accordance with the requirements in effect at the time the
information was collected. For example, if a financial institution
receives an application on November 15, 2017, collects the
applicant's ethnicity, race, and sex in accordance with the
instructions in effect on that date, and takes final action on the
application on January 5, 2018, the financial institution has
complied with the requirements of § 1003.4(a)(10)(i) and (b), even
though those instructions changed after the information was
collected but before the date of final action. However, if, in this
example, the financial institution collected the applicant's
ethnicity, race, and sex on or after January 1, 2018, §
1003.4(a)(10)(i) and (b) requires the financial institution to
collect the information in accordance with the amended
instructions.
Paragraph 4(a)(10)(ii)
1. Applicant data - completion by financial institution.
A financial institution complies with § 1003.4(a)(10)(ii) by
reporting the applicant's age, as of the application date under §
1003.4(a)(1)(ii), as the number of whole years derived from the
date of birth as shown on the application form. For example, if an
applicant provides a date of birth of 01/15/1970 on the application
form that the financial institution receives on 01/14/2015, the
institution reports 44 as the applicant's age.
2. Applicant data - co-applicant. If there are no
co-applicants, the financial institution reports that there is no
co-applicant. If there is more than one co-applicant, the financial
institution reports the age only for the first co-applicant listed
on the application form. A co-applicant may provide an absent
co-applicant's age on behalf of the absent co-applicant.
3. Applicant data - purchased loan. A financial
institution complies with § 1003.4(a)(10)(ii) by reporting that the
requirement is not applicable when reporting a purchased loan for
which the institution chooses not to report the age.
4. Applicant data - non-natural person. A financial
institution complies with § 1003.4(a)(10)(ii) by reporting that the
requirement is not applicable if the applicant or co-applicant is
not a natural person (for example, a corporation, partnership, or
trust). For example, for a transaction involving a trust, a
financial institution reports that the requirement to report the
applicant's age is not applicable if the trust is the applicant. On
the other hand, if the applicant is a natural person, and is the
beneficiary of a trust, a financial institution reports the
applicant's age.
5. Applicant data - guarantor. For purposes of §
1003.4(a)(10)(ii), if a covered loan or application includes a
guarantor, a financial institution does not report the guarantor's
age.
Paragraph 4(a)(10)(iii)
1. Income data - income relied on. When a financial
institution evaluates income as part of a credit decision, it
reports the gross annual income relied on in making the credit
decision. For example, if an institution relies on an applicant's
salary to compute a debt-to-income ratio but also relies on the
applicant's annual bonus to evaluate creditworthiness, the
institution reports the salary and the bonus to the extent relied
upon. If an institution relies on only a portion of an applicant's
income in its determination, it does not report that portion of
income not relied on. For example, if an institution, pursuant to
lender and investor guidelines, does not rely on an applicant's
commission income because it has been earned for less than 12
months, the institution does not include the applicant's commission
income in the income reported. Likewise, if an institution relies
on the verified gross income of the applicant in making the credit
decision, then the institution reports the verified gross income.
Similarly, if an institution relies on the income of a cosigner to
evaluate creditworthiness, the institution includes the cosigner's
income to the extent relied upon. An institution, however, does not
include the income of a guarantor who is only secondarily
liable.
2. Income data - co-applicant. If two persons jointly
apply for a covered loan and both list income on the application,
but the financial institution relies on the income of only one
applicant in evaluating creditworthiness, the institution reports
only the income relied on.
3. Income data - loan to employee. A financial
institution complies with § 1003.4(a)(10)(iii) by reporting that
the requirement is not applicable for a covered loan to, or an
application from, its employee to protect the employee's privacy,
even though the institution relied on the employee's income in
making the credit decision.
4. Income data - assets. A financial institution does not
include as income amounts considered in making a credit decision
based on factors that an institution relies on in addition to
income, such as amounts derived from underwriting calculations of
the potential annuitization or depletion of an applicant's
remaining assets. Actual distributions from retirement accounts or
other assets that are relied on by the financial institution as
income should be reported as income. The interpretation of income
in this paragraph does not affect § 1003.4(a)(23), which requires,
except for purchased covered loans, the collection of the ratio of
the applicant's or borrower's total monthly debt to the total
monthly income relied on in making the credit decision.
5. Income data - credit decision not made. Section
1003.4(a)(10)(iii) requires a financial institution to report the
gross annual income relied on in processing the application if a
credit decision was not made. For example, assume an institution
received an application that included an applicant's self-reported
income, but the application was withdrawn before a credit decision
that would have considered income was made. The financial
institution reports the income information relied on in processing
the application at the time that the application was withdrawn or
the file was closed for incompleteness.
6. Income data - credit decision not requiring consideration
of income. A financial institution complies with §
1003.4(a)(10)(iii) by reporting that the requirement is not
applicable if the application did not or would not have required a
credit decision that considered income under the financial
institution's policies and procedures. For example, if the
financial institution's policies and procedures do not consider
income for a streamlined refinance program, the institution reports
that the requirement is not applicable, even if the institution
received income information from the applicant.
7. Income data - non-natural person. A financial
institution reports that the requirement is not applicable when the
applicant or co-applicant is not a natural person (e.g., a
corporation, partnership, or trust). For example, for a transaction
involving a trust, a financial institution reports that the
requirement to report income data is not applicable if the trust is
the applicant. On the other hand, if the applicant is a natural
person, and is the beneficiary of a trust, a financial institution
is required to report the information described in §
1003.4(a)(10)(iii).
8. Income data - multifamily properties. A financial
institution complies with § 1003.4(a)(10)(iii) by reporting that
the requirement is not applicable when the covered loan is secured
by, or application is proposed to be secured by, a multifamily
dwelling.
9. Income data - purchased loans. A financial institution
complies with § 1003.4(a)(10)(iii) by reporting that the
requirement is not applicable when reporting a purchased covered
loan for which the institution chooses not to report the
income.
10. Income data - rounding. A financial institution
complies by reporting the dollar amount of the income in thousands,
rounded to the nearest thousand ($500 rounds up to the next
$1,000). For example, $35,500 is reported as 36.
Paragraph 4(a)(11)
1. Type of purchaser - loan-participation interests sold to
more than one entity. A financial institution that originates a
covered loan, and then sells it to more than one entity, reports
the “type of purchaser” based on the entity purchasing the greatest
interest, if any. For purposes of § 1003.4(a)(11), if a financial
institution sells some interest or interests in a covered loan but
retains a majority interest in that loan, it does not report the
sale.
2. Type of purchaser - swapped covered loans. Covered
loans “swapped” for mortgage-backed securities are to be treated as
sales; the purchaser is the entity receiving the covered loans that
are swapped.
3. Type of purchaser - affiliate institution. For
purposes of complying with § 1003.4(a)(11), the term “affiliate”
means any company that controls, is controlled by, or is under
common control with, another company, as set forth in the Bank
Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).
4. Type of purchaser - private securitizations. A
financial institution that knows or reasonably believes that the
covered loan it is selling will be securitized by the entity
purchasing the covered loan, other than by one of the
government-sponsored enterprises, reports the purchasing entity
type as a private securitizer regardless of the type or affiliation
of the purchasing entity. Knowledge or reasonable belief could, for
example, be based on the purchase agreement or other related
documents, the financial institution's previous transactions with
the purchaser, or the purchaser's role as a securitizer (such as an
investment bank). If a financial institution selling a covered loan
does not know or reasonably believe that the purchaser will
securitize the loan, and the seller knows that the purchaser
frequently holds or disposes of loans by means other than
securitization, then the financial institution should report the
covered loan as purchased by, as appropriate, a commercial bank,
savings bank, savings association, life insurance company, credit
union, mortgage company, finance company, affiliate institution, or
other type of purchaser.
5. Type of purchaser - mortgage company. For purposes of
complying with § 1003.4(a)(11), a mortgage company means a
nondepository institution that purchases covered loans and
typically originates such loans. A mortgage company might be an
affiliate or a subsidiary of a bank holding company or thrift
holding company, or it might be an independent mortgage company.
Regardless, a financial institution reports the purchasing entity
type as a mortgage company, unless the mortgage company is an
affiliate of the seller institution, in which case the seller
institution should report the loan as purchased by an affiliate
institution.
6. Purchases by subsidiaries. A financial institution
that sells a covered loan to its subsidiary that is a commercial
bank, savings bank, or savings association, should report the
covered loan as purchased by a commercial bank, savings bank, or
savings association. A financial institution that sells a covered
loan to its subsidiary that is a life insurance company, should
report the covered loan as purchased by a life insurance company. A
financial institution that sells a covered loan to its subsidiary
that is a credit union, mortgage company, or finance company,
should report the covered loan as purchased by a credit union,
mortgage company, or finance company. If the subsidiary that
purchases the covered loan is not a commercial bank, savings bank,
savings association, life insurance company, credit union, mortgage
company, or finance company, the seller institution should report
the loan as purchased by other type of purchaser. The financial
institution should report the covered loan as purchased by an
affiliate institution when the subsidiary is an affiliate of the
seller institution.
7. Type of purchaser - bank holding company or thrift holding
company. When a financial institution sells a covered loan to a
bank holding company or thrift holding company (rather than to one
of its subsidiaries), it should report the loan as purchased by
other type of purchaser, unless the bank holding company or thrift
holding company is an affiliate of the seller institution, in which
case the seller institution should report the loan as purchased by
an affiliate institution.
8. Repurchased covered loans. See comment 4(a)-5
regarding reporting requirements when a covered loan is repurchased
by the originating financial institution.
9. Type of purchaser - quarterly recording. For purposes
of recording the type of purchaser within 30 calendar days after
the end of the calendar quarter pursuant to § 1003.4(f), a
financial institution records that the requirement is not
applicable if the institution originated or purchased a covered
loan and did not sell it during the calendar quarter for which the
institution is recording the data. If the financial institution
sells the covered loan in a subsequent quarter of the same calendar
year, the financial institution records the type of purchaser on
its loan/application register for the quarter in which the covered
loan was sold. If a financial institution sells the covered loan in
a succeeding year, the financial institution should not record the
sale.
10. Type of purchaser - not applicable. A financial
institution reports that the requirement is not applicable for
applications that were denied, withdrawn, closed for incompleteness
or approved but not accepted by the applicant; and for preapproval
requests that were denied or approved but not accepted by the
applicant. A financial institution also reports that the
requirement is not applicable if the institution originated or
purchased a covered loan and did not sell it during that same
calendar year.
Paragraph 4(a)(12)
1. Average prime offer rate. Average prime offer rates
are annual percentage rates derived from average interest rates and
other loan pricing terms offered to borrowers by a set of creditors
for mortgage loans that have low-risk pricing characteristics.
Other loan pricing terms may include commonly used indices,
margins, and initial fixed-rate periods for variable-rate
transactions. Relevant pricing characteristics may include a
consumer's credit history and transaction characteristics such as
the loan-to-value ratio, owner-occupant status, and purpose of the
transaction. To obtain average prime offer rates, the Bureau uses
creditor data by transaction type.
2. Bureau tables. The Bureau publishes tables of current
and historic average prime offer rates by transaction type on the
FFIEC's website (http://www.ffiec.gov/hmda) and the Bureau's
website (https://www.consumerfinance.gov). The Bureau
calculates an annual percentage rate, consistent with Regulation Z
(see 12 CFR 1026.22 and 12 CFR part 1026, appendix J), for
each transaction type for which pricing terms are available from
the creditor data described in comment 4(a)(12)-1. The Bureau uses
loan pricing terms available in the creditor data and other
information to estimate annual percentage rates for other types of
transactions for which the creditor data are limited or not
available. The Bureau publishes on the FFIEC's website and the
Bureau's website the methodology it uses to arrive at these
estimates. A financial institution may either use the average prime
offer rates published by the Bureau or determine average prime
offer rates itself by employing the methodology published on the
FFIEC's website and the Bureau's website. A financial institution
that determines average prime offer rates itself, however, is
responsible for correctly determining the rates in accordance with
the published methodology.
3. Rate spread calculation - annual percentage rate. The
requirements of § 1003.4(a)(12)(i) refer to the covered loan's
annual percentage rate. For closed-end mortgage loans, a financial
institution complies with § 1003.4(a)(12)(i) by relying on the
annual percentage rate for the covered loan, as calculated and
disclosed pursuant to Regulation Z, 12 CFR 1026.18 or 1026.38. For
open-end lines of credit, a financial institution complies with §
1003.4(a)(12)(i) by relying on the annual percentage rate for the
covered loan, as calculated and disclosed pursuant to Regulation Z,
12 CFR 1026.6. If multiple annual percentage rates are calculated
and disclosed pursuant to Regulation Z, 12 CFR 1026.6, a financial
institution relies on the annual percentage rate in effect at the
time of account opening. If an open-end line of credit has a
variable-rate feature and a fixed-rate and -term payment option
during the draw period, a financial institution relies on the
annual percentage rate in effect at the time of account opening
under the variable-rate feature, which would be a discounted
initial rate if one is offered under the variable-rate feature. See
comment 4(a)(12)-8 for guidance regarding the annual percentage
rate a financial institution relies on in the case of an
application or preapproval request that was approved but not
accepted.
4. Rate spread calculation - comparable transaction. The
rate spread calculation in § 1003.4(a)(12)(i) is defined by
reference to a comparable transaction, which is determined
according to the covered loan's amortization type (i.e.,
fixed- or variable-rate) and loan term. For covered loans that are
open-end lines of credit, § 1003.4(a)(12)(i) requires a financial
institution to identify the most closely comparable closed-end
transaction. The tables of average prime offer rates published by
the Bureau (see comment 4(a)(12)-2) provide additional detail about
how to identify the comparable transaction.
i. Fixed-rate transactions. For fixed-rate covered loans,
the term for identifying the comparable transaction is the
transaction's maturity (i.e., the period until the last
payment will be due under the closed-end mortgage loan contract or
open-end line of credit agreement). If an open-end credit plan has
a fixed rate but no definite plan length, a financial institution
complies with § 1003.4(a)(12)(i) by using a 30-year fixed-rate loan
as the most closely comparable closed-end transaction. Financial
institutions may refer to the table on the FFIEC website entitled
“Average Prime Offer Rates-Fixed” when identifying a comparable
fixed-rate transaction.
ii. Variable-rate transactions. For variable-rate covered
loans, the term for identifying the comparable transaction is the
initial, fixed-rate period (i.e., the period until the first
scheduled rate adjustment). For example, five years is the relevant
term for a variable-rate transaction with a five-year, fixed-rate
introductory period that is amortized over thirty years. Financial
institutions may refer to the table on the FFIEC website entitled
“Average Prime Offer Rates-Variable” when identifying a comparable
variable-rate transaction. If an open-end line of credit has a
variable rate and an optional, fixed-rate feature, a financial
institution uses the rate table for variable-rate transactions.
iii. Term not in whole years. When a covered loan's term
to maturity (or, for a variable-rate transaction, the initial
fixed-rate period) is not in whole years, the financial institution
uses the number of whole years closest to the actual loan term or,
if the actual loan term is exactly halfway between two whole years,
by using the shorter loan term. For example, for a loan term of ten
years and three months, the relevant term is ten years; for a loan
term of ten years and nine months, the relevant term is 11 years;
for a loan term of ten years and six months, the relevant term is
ten years. If a loan term includes an odd number of days, in
addition to an odd number of months, the financial institution
rounds to the nearest whole month, or rounds down if the number of
odd days is exactly halfway between two months. The financial
institution rounds to one year any covered loan with a term shorter
than six months, including variable-rate covered loans with no
initial, fixed-rate periods. For example, if an open-end covered
loan has a rate that varies according to an index plus a margin,
with no introductory, fixed-rate period, the transaction term is
one year.
iv. Amortization period longer than loan term. If the
amortization period of a covered loan is longer than the term of
the transaction to maturity, § 1003.4(a)(12)(i) requires a
financial institution to use the loan term to determine the
applicable average prime offer rate. For example, assume a
financial institution originates a closed-end, fixed-rate loan that
has a term to maturity of five years and a thirty-year amortization
period that results in a balloon payment. The financial institution
complies with § 1003.4(a)(12)(i) by using the five-year loan
term.
5. Rate-set date. The relevant date to use to determine
the average prime offer rate for a comparable transaction is the
date on which the interest rate was set by the financial
institution for the final time before final action is taken
(i.e., the application was approved but not accepted or the
covered loan was originated).
i. Rate-lock agreement. If an interest rate is set
pursuant to a “lock-in” agreement between the financial institution
and the borrower, then the date on which the agreement fixes the
interest rate is the date the rate was set. Except as provided in
comment 4(a)(12)-5.ii, if a rate is reset after a lock-in agreement
is executed (for example, because the borrower exercises a
float-down option or the agreement expires), then the relevant date
is the date the financial institution exercises discretion in
setting the rate for the final time before final action is taken.
The same rule applies when a rate-lock agreement is extended and
the rate is reset at the same rate, regardless of whether market
rates have increased, decreased, or remained the same since the
initial rate was set. If no lock-in agreement is executed, then the
relevant date is the date on which the institution sets the rate
for the final time before final action is taken.
ii. Change in loan program. If a financial institution
issues a rate-lock commitment under one loan program, the borrower
subsequently changes to another program that is subject to
different pricing terms, and the financial institution changes the
rate promised to the borrower under the rate-lock commitment
accordingly, the rate-set date is the date of the program change.
However, if the financial institution changes the promised rate to
the rate that would have been available to the borrower under the
new program on the date of the original rate-lock commitment, then
that is the date the rate is set, provided the financial
institution consistently follows that practice in all such cases or
the original rate-lock agreement so provided. For example, assume
that a borrower locks a rate of 2.5 percent on June 1 for a
30-year, variable-rate loan with a five-year, fixed-rate
introductory period. On June 15, the borrower decides to switch to
a 30-year, fixed-rate loan, and the rate available to the borrower
for that product on June 15 is 4.0 percent. On June 1, the 30-year,
fixed-rate loan would have been available to the borrower at a rate
of 3.5 percent. If the financial institution offers the borrower
the 3.5 percent rate (i.e., the rate that would have been
available to the borrower for the fixed-rate product on June 1, the
date of the original rate-lock) because the original agreement so
provided or because the financial institution consistently follows
that practice for borrowers who change loan programs, then the
financial institution should use June 1 as the rate-set date. In
all other cases, the financial institution should use June 15 as
the rate-set date.
iii. Brokered loans. When a financial institution has
reporting responsibility for an application for a covered loan that
it received from a broker, as discussed in comment 4(a)-2
(e.g., because the financial institution makes a credit
decision prior to closing or account opening), the rate-set date is
the last date the financial institution set the rate with the
broker, not the date the broker set the borrower's rate.
6. Compare the annual percentage rate to the average prime
offer rate. Section 1003.4(a)(12)(i) requires a financial
institution to compare the covered loan's annual percentage rate to
the most recently available average prime offer rate that was in
effect for the comparable transaction as of the rate-set date. For
purposes of § 1003.4(a)(12)(i), the most recently available rate
means the average prime offer rate set forth in the applicable
table with the most recent effective date as of the date the
interest rate was set. However, § 1003.4(a)(12)(i) does not permit
a financial institution to use an average prime offer rate before
its effective date.
7. Rate spread - scope of requirement. If the covered
loan is an assumption, reverse mortgage, a purchased loan, or is
not subject to Regulation Z, 12 CFR part 1026, a financial
institution complies with § 1003.4(a)(12) by reporting that the
requirement is not applicable. If the application did not result in
an origination for a reason other than the application was approved
but not accepted by the applicant, a financial institution complies
with § 1003.4(a)(12) by reporting that the requirement is not
applicable. For partially exempt transactions under § 1003.3(d), an
insured depository institution or insured credit union is not
required to report the rate spread. See § 1003.3(d) and
related commentary.
8. Application or preapproval request approved but not
accepted. In the case of an application or preapproval request
that was approved but not accepted, § 1003.4(a)(12) requires a
financial institution to report the applicable rate spread. In such
cases, the financial institution would provide early disclosures
under Regulation Z, 12 CFR 1026.18 or 1026.37 (for closed-end
mortgage loans), or 1026.40 (for open-end lines of credit), but
might never provide any subsequent disclosures. In such cases where
no subsequent disclosures are provided, a financial institution
complies with § 1003.4(a)(12)(i) by relying on the annual
percentage rate for the application or preapproval request, as
calculated and disclosed pursuant to Regulation Z, 12 CFR 1026.18
or 1026.37 (for closed-end mortgage loans), or 1026.40 (for
open-end lines of credit), as applicable. For transactions subject
to Regulation C for which no disclosures under Regulation Z are
required, a financial institution complies with § 1003.4(a)(12)(i)
by reporting that the requirement is not applicable.
9. Corrected disclosures. In the case of a covered loan
or an application that was approved but not accepted, if the annual
percentage rate changes because a financial institution provides a
corrected version of the disclosures required under Regulation Z,
12 CFR 1026.19(a), pursuant to 12 CFR 1026.19(a)(2), under 12 CFR
1026.19(f), pursuant to 12 CFR 1026.19(f)(2), or under 12 CFR
1026.6(a), the financial institution complies with §
1003.4(a)(12)(i) by comparing the corrected and disclosed annual
percentage rate to the most recently available average prime offer
rate that was in effect for a comparable transaction as of the
rate-set date, provided that the corrected disclosure was provided
to the borrower prior to the end of the reporting period in which
final action is taken. For purposes of § 1003.4(a)(12), the date
the corrected disclosure was provided to the borrower is the date
the disclosure was mailed or delivered to the borrower in person;
the financial institution's method of delivery does not affect the
date provided. For example, where a financial institution provides
a corrected version of the disclosures required under 12 CFR
1026.19(f), pursuant to 12 CFR 1026.19(f)(2), the date provided is
the date disclosed pursuant to Regulation Z, 12 CFR
1026.38(a)(3)(i). The provision of a corrected disclosure does not
affect how a financial institution determines the rate-set date.
See comment 4(a)(12)-5. For example:
i. In the case of a financial institution's annual
loan/application register submission made pursuant to §
1003.5(a)(1)(i), if the financial institution provides a corrected
disclosure pursuant to Regulation Z, 12 CFR 1026.19(f)(2)(v), that
reflects a corrected annual percentage rate, the financial
institution reports the difference between the corrected annual
percentage rate and the most recently available average prime offer
rate that was in effect for a comparable transaction as of the
rate-set date only if the corrected disclosure was provided to the
borrower prior to the end of the calendar year in which final
action is taken.
ii. In the case of a financial institution's quarterly
submission made pursuant to § 1003.5(a)(1)(ii), if the financial
institution provides a corrected disclosure pursuant to Regulation
Z, 12 CFR 1026.19(f)(2)(v), that reflects a corrected annual
percentage rate, the financial institution reports the difference
between the corrected annual percentage rate and the most recently
available average prime offer rate that was in effect for a
comparable transaction as of the rate-set date only if the
corrected disclosure was provided to the borrower prior to the end
of the quarter in which final action is taken. The financial
institution does not report the difference between the corrected
annual percentage rate and the most recently available average
prime offer rate that was in effect for a comparable transaction as
of the rate-set date if the corrected disclosure was provided to
the borrower after the end of the quarter in which final action is
taken, even if the corrected disclosure was provided to the
borrower prior to the deadline for timely submission of the
financial institution's quarterly data. However, the financial
institution reports the difference between the corrected annual
percentage rate and the most recently available average prime offer
rate that was in effect for a comparable transaction as of the
rate-set date on its annual loan/application register, provided
that the corrected disclosure was provided to the borrower prior to
the end of the calendar year in which final action is taken.
Paragraph 4(a)(13)
1. HOEPA status - not applicable. If the covered loan is
not subject to the Home Ownership and Equity Protection Act of
1994, as implemented in Regulation Z, 12 CFR 1026.32, a financial
institution complies with § 1003.4(a)(13) by reporting that the
requirement is not applicable. If an application did not result in
an origination, a financial institution complies with §
1003.4(a)(13) by reporting that the requirement is not
applicable.
Paragraph 4(a)(14)
1. Determining lien status for applications and covered loans
originated and purchased.
i. Financial institutions are required to report lien status for
covered loans they originate and purchase and applications that do
not result in originations (preapproval requests that are approved
but not accepted, preapproval requests that are denied,
applications that are approved but not accepted, denied, withdrawn,
or closed for incompleteness). For covered loans purchased by a
financial institution, lien status is determined by reference to
the best information readily available to the financial institution
at the time of purchase. For covered loans that a financial
institution originates and applications that do not result in
originations, lien status is determined by reference to the best
information readily available to the financial institution at the
time final action is taken and to the financial institution's own
procedures. Thus, financial institutions may rely on the title
search they routinely perform as part of their underwriting
procedures - for example, for home purchase loans. Regulation C
does not require financial institutions to perform title searches
solely to comply with HMDA reporting requirements. Financial
institutions may rely on other information that is readily
available to them at the time final action is taken and that they
reasonably believe is accurate, such as the applicant's statement
on the application or the applicant's credit report. For example,
where the applicant indicates on the application that there is a
mortgage on the property or where the applicant's credit report
shows that the applicant has a mortgage - and that mortgage will
not be paid off as part of the transaction - the financial
institution may assume that the loan it originates is secured by a
subordinate lien. If the same application did not result in an
origination - for example, because the application was denied or
withdrawn - the financial institution would report the application
as an application for a subordinate-lien loan.
ii. Financial institutions may also consider their established
procedures when determining lien status for applications that do
not result in originations. For example, assume an applicant
applies to a financial institution to refinance a $100,000 first
mortgage; the applicant also has an open-end line of credit for
$20,000. If the financial institution's practice in such a case is
to ensure that it will have first-lien position - through a
subordination agreement with the holder of the lien securing the
open-end line of credit - then the financial institution should
report the application as an application for a first-lien covered
loan.
2. Multiple properties. See comment 4(a)(9)-2 regarding
transactions involving multiple properties with more than one
property taken as security.
Paragraph 4(a)(15)
1. Credit score - relied on. Except for purchased covered
loans and partially exempt transactions under § 1003.3(d), §
1003.4(a)(15) requires a financial institution to report the credit
score or scores relied on in making the credit decision and
information about the scoring model used to generate each score. A
financial institution relies on a credit score in making the credit
decision if the credit score was a factor in the credit decision
even if it was not a dispositive factor. For example, if a credit
score is one of multiple factors in a financial institution's
credit decision, the financial institution has relied on the credit
score even if the financial institution denies the application
because one or more underwriting requirements other than the credit
score are not satisfied.
2. Credit score - multiple credit scores. When a
financial institution obtains or creates two or more credit scores
for a single applicant or borrower but relies on only one score in
making the credit decision (for example, by relying on the lowest,
highest, most recent, or average of all of the scores), the
financial institution complies with § 1003.4(a)(15) by reporting
that credit score and information about the scoring model used.
When a financial institution uses more than one credit scoring
model and combines the scores into a composite credit score that it
relies on, the financial institution reports that score and reports
that more than one credit scoring model was used. When a financial
institution obtains or creates two or more credit scores for an
applicant or borrower and relies on multiple scores for the
applicant or borrower in making the credit decision (for example,
by relying on a scoring grid that considers each of the scores
obtained or created for the applicant or borrower without combining
the scores into a composite score), § 1003.4(a)(15) requires the
financial institution to report one of the credit scores for the
applicant or borrower that was relied on in making the credit
decision. In choosing which credit score to report in this
circumstance, a financial institution need not use the same
approach for its entire HMDA submission, but it should be generally
consistent (such as by routinely using one approach within a
particular division of the institution or for a category of covered
loans). In instances such as these, the financial institution
should report the name and version of the credit scoring model for
the score reported.
3. Credit score - multiple applicants or borrowers. In a
transaction involving two or more applicants or borrowers for whom
the financial institution obtains or creates a single credit score
and relies on that credit score in making the credit decision for
the transaction, the institution complies with § 1003.4(a)(15) by
reporting that credit score for the applicant and reporting that
the requirement is not applicable for the first co-applicant or, at
the financial institution's discretion, by reporting that credit
score for the first co-applicant and reporting that the requirement
is not applicable for the applicant. Otherwise, a financial
institution complies with § 1003.4(a)(15) by reporting a credit
score for the applicant that it relied on in making the credit
decision, if any, and a credit score for the first co-applicant
that it relied on in making the credit decision, if any. To
illustrate, assume a transaction involves one applicant and one
co-applicant and that the financial institution obtains or creates
two credit scores for the applicant and two credit scores for the
co-applicant. Assume further that the financial institution relies
on a single credit score that is the lowest, highest, most recent,
or average of all of the credit scores obtained or created to make
the credit decision for the transaction. The financial institution
complies with § 1003.4(a)(15) by reporting that credit score and
information about the scoring model used for the applicant and
reporting that the requirement is not applicable for the first
co-applicant or, at the financial institution's discretion, by
reporting the data for the first co-applicant and reporting that
the requirement is not applicable for the applicant. Alternatively,
assume a transaction involves one applicant and one co-applicant
and that the financial institution obtains or creates three credit
scores for the applicant and three credit scores for the
co-applicant. Assume further that the financial institution relies
on the middle credit score for the applicant and the middle credit
score for the co-applicant to make the credit decision for the
transaction. The financial institution complies with §
1003.4(a)(15) by reporting both the middle score for the applicant
and the middle score for the co-applicant.
4. Transactions for which no credit decision was made. If
a file was closed for incompleteness or the application was
withdrawn before a credit decision was made, the financial
institution complies with § 1003.4(a)(15) by reporting that the
requirement is not applicable, even if the financial institution
had obtained or created a credit score for the applicant or
co-applicant. For example, if a file is closed for incompleteness
and is so reported in accordance with § 1003.4(a)(8), the financial
institution complies with § 1003.4(a)(15) by reporting that the
requirement is not applicable, even if the financial institution
had obtained or created a credit score for the applicant or
co-applicant. Similarly, if an application was withdrawn by the
applicant before a credit decision was made and is so reported in
accordance with § 1003.4(a)(8), the financial institution complies
with § 1003.4(a)(15) by reporting that the requirement is not
applicable, even if the financial institution had obtained or
created a credit score for the applicant or co-applicant.
5. Transactions for which no credit score was relied on.
If a financial institution makes a credit decision without relying
on a credit score for the applicant or borrower, the financial
institution complies with § 1003.4(a)(15) by reporting that the
requirement is not applicable.
6. Purchased covered loan. A financial institution
complies with § 1003.4(a)(15) by reporting that the requirement is
not applicable when the covered loan is a purchased covered
loan.
7. Non-natural person. When the applicant and
co-applicant, if applicable, are not natural persons, a financial
institution complies with § 1003.4(a)(15) by reporting that the
requirement is not applicable.
Paragraph 4(a)(16)
1. Reason for denial - general. A financial institution
complies with § 1003.4(a)(16) by reporting the principal reason or
reasons it denied the application, indicating up to four reasons.
The financial institution should report only the principal reason
or reasons it denied the application, even if there are fewer than
four reasons. For example, if a financial institution denies the
application because of the applicant's credit history and
debt-to-income ratio, the financial institution need only report
these two principal reasons. The reasons reported must be specific
and accurately describe the principal reason or reasons the
financial institution denied the application.
2. Reason for denial - preapproval request denied.
Section 1003.4(a)(16) requires a financial institution to report
the principal reason or reasons it denied the application. A
request for a preapproval under a preapproval program as defined by
§ 1003.2(b)(2) is an application. If a financial institution denies
a preapproval request, the financial institution complies with §
1003.4(a)(16) by reporting the reason or reasons it denied the
preapproval request.
3. Reason for denial - adverse action model form or similar
form. If a financial institution chooses to provide the
applicant the reason or reasons it denied the application using the
model form contained in appendix C to Regulation B (Form C-1,
Sample Notice of Action Taken and Statement of Reasons) or a
similar form, § 1003.4(a)(16) requires the financial institution to
report the reason or reasons that were specified on the form by the
financial institution, which includes reporting the “Other” reason
or reasons that were specified on the form by the financial
institution, if applicable. If a financial institution chooses to
provide a disclosure of the applicant's right to a statement of
specific reasons using the model form contained in appendix C to
Regulation B (Form C-5, Sample Disclosure of Right to Request
Specific Reasons for Credit Denial) or a similar form, or chooses
to provide the denial reason or reasons orally under Regulation B,
12 CFR 1002.9(a)(2)(ii), the financial institution complies with §
1003.4(a)(16) by entering the principal reason or reasons it denied
the application.
4. Reason for denial - scope of requirement. A financial
institution complies with § 1003.4(a)(16) by reporting that the
requirement is not applicable if the action taken on the
application, pursuant to § 1003.4(a)(8), is not a denial. For
example, a financial institution complies with § 1003.4(a)(16) by
reporting that the requirement is not applicable if the loan is
originated or purchased by the financial institution, or the
application or preapproval request was approved but not accepted,
or the application was withdrawn before a credit decision was made,
or the file was closed for incompleteness. For partially exempt
transactions under § 1003.3(d), an insured depository institution
or insured credit union is not required to report the principal
reason or reasons it denied an application. See § 1003.3(d)
and related commentary.
Paragraph 4(a)(17)(i)
1. Total loan costs - scope of requirement. Section
1003.4(a)(17)(i) does not require financial institutions to report
the total loan costs for applications, or for transactions not
subject to Regulation Z, 12 CFR 1026.43(c), and 12 CFR 1026.19(f),
such as open-end lines of credit, reverse mortgages, or loans or
lines of credit made primarily for business or commercial purposes.
In these cases, a financial institution complies with §
1003.4(a)(17)(i) by reporting that the requirement is not
applicable to the transaction. For partially exempt transactions
under § 1003.3(d), an insured depository institution or insured
credit union is not required to report the total loan costs.
See § 1003.3(d) and related commentary.
2. Purchased loans - applications received prior to the
integrated disclosure effective date. For purchased covered
loans subject to this reporting requirement for which applications
were received by the selling entity prior to the effective date of
Regulation Z, 12 CFR 1026.19(f), a financial institution complies
with § 1003.4(a)(17)(i) by reporting that the requirement is not
applicable to the transaction.
3. Corrected disclosures. If the amount of total loan
costs changes because a financial institution provides a corrected
version of the disclosures required under Regulation Z, 12 CFR
1026.19(f), pursuant to 12 CFR 1026.19(f)(2), the financial
institution complies with § 1003.4(a)(17)(i) by reporting the
corrected amount, provided that the corrected disclosure was
provided to the borrower prior to the end of the reporting period
in which closing occurs. For purposes of § 1003.4(a)(17)(i), the
date the corrected disclosure was provided to the borrower is the
date disclosed pursuant to Regulation Z, 12 CFR 1026.38(a)(3)(i).
For example:
i. In the case of a financial institution's annual
loan/application register submission made pursuant to §
1003.5(a)(1)(i), if the financial institution provides a corrected
disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution
reports the corrected amount of total loan costs only if the
corrected disclosure was provided to the borrower prior to the end
of the calendar year in which closing occurs.
ii. In the case of a financial institution's quarterly
submission made pursuant to § 1003.5(a)(1)(ii), if the financial
institution provides a corrected disclosure to the borrower to
reflect a refund made pursuant to Regulation Z, 12 CFR
1026.19(f)(2)(v), the financial institution reports the corrected
amount of total loan costs only if the corrected disclosure was
provided to the borrower prior to the end of the quarter in which
closing occurs. The financial institution does not report the
corrected amount of total loan costs in its quarterly submission if
the corrected disclosure was provided to the borrower after the end
of the quarter in which closing occurs, even if the corrected
disclosure was provided to the borrower prior to the deadline for
timely submission of the financial institution's quarterly data.
However, the financial institution reports the corrected amount of
total loan costs on its annual loan/application register, provided
that the corrected disclosure was provided to the borrower prior to
the end of the calendar year in which closing occurs.
Paragraph 4(a)(17)(ii)
1. Total points and fees - scope of requirement. Section
1003.4(a)(17)(ii) does not require financial institutions to report
the total points and fees for transactions not subject to
Regulation Z, 12 CFR 1026.43(c), such as open-end lines of credit,
reverse mortgages, or loans or lines of credit made primarily for
business or commercial purposes, or for applications or purchased
covered loans. In these cases, a financial institution complies
with § 1003.4(a)(17)(ii) by reporting that the requirement is not
applicable to the transaction. For partially exempt transactions
under § 1003.3(d), an insured depository institution or insured
credit union is not required to report the total points and fees.
See § 1003.3(d) and related commentary.
2. Total points and fees cure mechanism. For covered
loans subject to this reporting requirement, if a financial
institution determines that the transaction's total points and fees
exceeded the applicable limit and cures the overage pursuant to
Regulation Z, 12 CFR 1026.43(e)(3)(iii) and (iv), a financial
institution complies with § 1003.4(a)(17)(ii) by reporting the
correct amount of total points and fees, provided that the cure was
effected during the same reporting period in which closing
occurred. For example, in the case of a financial institution's
quarterly submission, the financial institution reports the revised
amount of total points and fees only if it cured the overage prior
to the end of the quarter in which closing occurred. The financial
institution does not report the revised amount of total points and
fees in its quarterly submission if it cured the overage after the
end of the quarter, even if the cure was effected prior to the
deadline for timely submission of the financial institution's
quarterly data. However, the financial institution reports the
revised amount of total points and fees on its annual
loan/application register.
Paragraph 4(a)(18)
1. Origination charges - scope of requirement. Section
1003.4(a)(18) does not require financial institutions to report the
total borrower-paid origination charges for applications, or for
transactions not subject to Regulation Z, 12 CFR 1026.19(f), such
as open-end lines of credit, reverse mortgages, or loans or lines
of credit made primarily for business or commercial purposes. In
these cases, a financial institution complies with § 1003.4(a)(18)
by reporting that the requirement is not applicable to the
transaction. For partially exempt transactions under § 1003.3(d),
an insured depository institution or insured credit union is not
required to report the total borrower-paid origination charges.
See § 1003.3(d) and related commentary.
2. Purchased loans - applications received prior to the
integrated disclosure effective date. For purchased covered
loans subject to this reporting requirement for which applications
were received by the selling entity prior to the effective date of
Regulation Z, 12 CFR 1026.19(f), a financial institution complies
with § 1003.4(a)(18) by reporting that the requirement is not
applicable to the transaction.
3. Corrected disclosures. If the total amount of
borrower-paid origination charges changes because a financial
institution provides a corrected version of the disclosures
required under Regulation Z, 12 CFR 1026.19(f), pursuant to 12 CFR
1026.19(f)(2), the financial institution complies with §
1003.4(a)(18) by reporting the corrected amount, provided that the
corrected disclosure was provided to the borrower prior to the end
of the reporting period in which closing occurs. For purposes of §
1003.4(a)(18), the date the corrected disclosure was provided to
the borrower is the date disclosed pursuant to Regulation Z, 12 CFR
1026.38(a)(3)(i). For example:
i. In the case of a financial institution's annual
loan/application register submission made pursuant to §
1003.5(a)(1)(i), if the financial institution provides a corrected
disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution
reports the corrected amount of borrower-paid origination charges
only if the corrected disclosure was provided to the borrower prior
to the end of the calendar year in which closing occurs.
ii. In the case of a financial institution's quarterly
submission made pursuant to § 1003.5(a)(1)(ii), if the financial
institution provides a corrected disclosure to the borrower to
reflect a refund made pursuant to Regulation Z, 12 CFR
1026.19(f)(2)(v), the financial institution reports the corrected
amount of borrower-paid origination charges only if the corrected
disclosure was provided to the borrower prior to the end of the
quarter in which closing occurs. The financial institution does not
report the corrected amount of borrower-paid origination charges in
its quarterly submission if the corrected disclosure was provided
to the borrower after the end of the quarter in which closing
occurs, even if the corrected disclosure was provided to the
borrower prior to the deadline for timely submission of the
financial institution's quarterly data. However, the financial
institution reports the corrected amount of borrower-paid
origination charges on its annual loan/application register,
provided that the corrected disclosure was provided to the borrower
prior to the end of the calendar year in which closing occurs.
Paragraph 4(a)(19)
1. Discount points - scope of requirement. Section
1003.4(a)(19) does not require financial institutions to report the
discount points for applications, or for transactions not subject
to Regulation Z, 12 CFR 1026.19(f), such as open-end lines of
credit, reverse mortgages, or loans or lines of credit made
primarily for business or commercial purposes. In these cases, a
financial institution complies with § 1003.4(a)(19) by reporting
that the requirement is not applicable to the transaction. For
partially exempt transactions under § 1003.3(d), an insured
depository institution or insured credit union is not required to
report the discount points. See § 1003.3(d) and related
commentary.
2. Purchased loans - applications received prior to the
integrated disclosure effective date. For purchased covered
loans subject to this reporting requirement for which applications
were received by the selling entity prior to the effective date of
Regulation Z, 12 CFR 1026.19(f), a financial institution complies
with § 1003.4(a)(19) by reporting that the requirement is not
applicable to the transaction.
3. Corrected disclosures. If the amount of discount
points changes because a financial institution provides a corrected
version of the disclosures required under Regulation Z, 12 CFR
1026.19(f), pursuant to 12 CFR 1026.19(f)(2), the financial
institution complies with § 1003.4(a)(19) by reporting the
corrected amount, provided that the corrected disclosure was
provided to the borrower prior to the end of the reporting period
in which closing occurs. For purposes of § 1003.4(a)(19), the date
the corrected disclosure was provided to the borrower is the date
disclosed pursuant to Regulation Z, 12 CFR 1026.38(a)(3)(i). For
example:
i. In the case of a financial institution's annual
loan/application register submission made pursuant to §
1003.5(a)(1)(i), if the financial institution provides a corrected
disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution
reports the corrected amount of discount points only if the
corrected disclosure was provided to the borrower prior to the end
of the calendar year in which closing occurred.
ii. In the case of a financial institution's quarterly
submission made pursuant to § 1003.5(a)(1)(ii), if the financial
institution provides a corrected disclosure to the borrower to
reflect a refund made pursuant to Regulation Z, 12 CFR
1026.19(f)(2)(v), the financial institution reports the corrected
amount of discount points only if the corrected disclosure was
provided to the borrower prior to the end of the quarter in which
closing occurred. The financial institution does not report the
corrected amount of discount points in its quarterly submission if
the corrected disclosure was provided to the borrower after the end
of the quarter in which closing occurred, even if the corrected
disclosure was provided to the borrower prior to the deadline for
timely submission of the financial institution's quarterly data.
However, the financial institution reports the corrected amount of
discount points on its annual loan/application register, provided
that the corrected disclosure was provided to the borrower prior to
the end of the calendar year in which closing occurred.
Paragraph 4(a)(20)
1. Lender credits - scope of requirement. Section
1003.4(a)(20) does not require financial institutions to report
lender credits for applications, or for transactions not subject to
Regulation Z, 12 CFR 1026.19(f), such as open-end lines of credit,
reverse mortgages, or loans or lines of credit made primarily for
business or commercial purposes. In these cases, a financial
institution complies with § 1003.4(a)(20) by reporting that the
requirement is not applicable to the transaction. For partially
exempt transactions under § 1003.3(d), an insured depository
institution or insured credit union is not required to report
lender credits. See § 1003.3(d) and related commentary.
2. Purchased loans - applications received prior to the
integrated disclosure effective date. For purchased covered
loans subject to this reporting requirement for which applications
were received by the selling entity prior to the effective date of
Regulation Z, 12 CFR 1026.19(f), a financial institution complies
with § 1003.4(a)(20) by reporting that the requirement is not
applicable to the transaction.
3. Corrected disclosures. If the amount of lender credits
changes because a financial institution provides a corrected
version of the disclosures required under Regulation Z, 12 CFR
1026.19(f), pursuant to 12 CFR 1026.19(f)(2), the financial
institution complies with § 1003.4(a)(20) by reporting the
corrected amount, provided that the corrected disclosure was
provided to the borrower prior to the end of the reporting period
in which closing occurred. For purposes of § 1003.4(a)(20), the
date the corrected disclosure was provided to the borrower is the
date disclosed pursuant to Regulation Z, 12 CFR 1026.38(a)(3)(i).
For example:
i. In the case of a financial institution's annual
loan/application register submission made pursuant to §
1003.5(a)(1)(i), if the financial institution provides a corrected
disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution
reports the corrected amount of lender credits only if the
corrected disclosure was provided to the borrower prior to the end
of the calendar year in which closing occurred.
ii. In the case of a financial institution's quarterly
submission made pursuant to § 1003.5(a)(1)(ii), if the financial
institution provides a corrected disclosure to the borrower to
reflect a refund made pursuant to Regulation Z, 12 CFR
1026.19(f)(2)(v), the financial institution reports the corrected
amount of lender credits only if the corrected disclosure was
provided to the borrower prior to the end of the quarter in which
closing occurred. The financial institution does not report the
corrected amount of lender credits in its quarterly submission if
the corrected disclosure was provided to the borrower after the end
of the quarter in which closing occurred, even if the corrected
disclosure was provided to the borrower prior to the deadline for
timely submission of the financial institution's quarterly data.
However, the financial institution reports the corrected amount of
lender credits on its annual loan/application register, provided
that the corrected disclosure was provided to the borrower prior to
the end of the calendar year in which closing occurred.
Paragraph 4(a)(21)
1. Interest rate - disclosures. Except for partially
exempt transactions under § 1003.3(d), § 1003.4(a)(21) requires a
financial institution to identify the interest rate applicable to
the approved application, or to the covered loan at closing or
account opening. For covered loans or applications subject to the
integrated mortgage disclosure requirements of Regulation Z, 12 CFR
1026.19(e) and (f), a financial institution complies with §
1003.4(a)(21) by reporting the interest rate disclosed on the
applicable disclosure. For covered loans or approved applications
for which disclosures were provided pursuant to both the early and
the final disclosure requirements in Regulation Z, 12 CFR
1026.19(e) and (f), a financial institution reports the interest
rate disclosed pursuant to 12 CFR 1026.19(f). A financial
institution may rely on the definitions and commentary to the
sections of Regulation Z relevant to the disclosure of the interest
rate pursuant to 12 CFR 1026.19(e) or (f). If a financial
institution provides a revised or corrected version of the
disclosures required under Regulation Z, 12 CFR 1026.19(e) or (f),
pursuant to 12 CFR 1026.19(e)(3)(iv) or (f)(2), as applicable, the
financial institution complies with § 1003.4(a)(21) by reporting
the interest rate on the revised or corrected disclosure, provided
that the revised or corrected disclosure was provided to the
borrower prior to the end of the reporting period in which final
action is taken. For purposes of § 1003.4(a)(21), the date the
revised or corrected disclosure was provided to the borrower is the
date disclosed pursuant to Regulation Z, 12 CFR 1026.37(a)(4) or
1026.38(a)(3)(i), as applicable.
2. Applications. In the case of an application, §
1003.4(a)(21) requires a financial institution to report the
applicable interest rate only if the application has been approved
by the financial institution but not accepted by the borrower. In
such cases, a financial institution reports the interest rate
applicable at the time that the application was approved by the
financial institution. A financial institution may report the
interest rate appearing on the disclosure provided pursuant to 12
CFR 1026.19(e) or (f) if such disclosure accurately reflects the
interest rate at the time the application was approved. For
applications that have been denied or withdrawn, or files closed
for incompleteness, a financial institution reports that no
interest rate was applicable to the application.
3. Adjustable rate - interest rate unknown. Except as
provided in comment 4(a)(21)-1, for adjustable-rate covered loans
or applications, if the interest rate is unknown at the time that
the application was approved, or at closing or account opening, a
financial institution reports the fully-indexed rate based on the
index applicable to the covered loan or application. For purposes
of § 1003.4(a)(21), the fully-indexed rate is the index value and
margin at the time that the application was approved, or, for
covered loans, at closing or account opening.
Paragraph 4(a)(22)
1. Prepayment penalty term - scope of requirement.
Section 1003.4(a)(22) does not require financial institutions to
report the term of any prepayment penalty for transactions not
subject to Regulation Z, 12 CFR part 1026, such as loans or lines
of credit made primarily for business or commercial purposes, or
for reverse mortgages or purchased covered loans. In these cases, a
financial institution complies with § 1003.4(a)(22) by reporting
that the requirement is not applicable to the transaction. For
partially exempt transactions under § 1003.3(d), an insured
depository institution or insured credit union is not required to
report the term of any prepayment penalty. See § 1003.3(d)
and related commentary.
2. Transactions for which no prepayment penalty exists.
For covered loans or applications that have no prepayment penalty,
a financial institution complies with § 1003.4(a)(22) by reporting
that the requirement is not applicable to the transaction. A
financial institution may rely on the definitions and commentary to
Regulation Z, 12 CFR 1026.32(b)(6)(i) or (ii) in determining
whether the terms of a transaction contain a prepayment
penalty.
Paragraph 4(a)(23)
1. General. For covered loans that are not purchased
covered loans and that are not partially exempt under § 1003.3(d),
§ 1003.4(a)(23) requires a financial institution to report the
ratio of the applicant's or borrower's total monthly debt to total
monthly income (debt-to-income ratio) relied on in making the
credit decision. For example, if a financial institution calculated
the applicant's or borrower's debt-to-income ratio twice - once
according to the financial institution's own requirements and once
according to the requirements of a secondary market investor - and
the financial institution relied on the debt-to-income ratio
calculated according to the secondary market investor's
requirements in making the credit decision, § 1003.4(a)(23)
requires the financial institution to report the debt-to-income
ratio calculated according to the requirements of the secondary
market investor.
2. Transactions for which a debt-to-income ratio was one of
multiple factors. A financial institution relies on the ratio
of the applicant's or borrower's total monthly debt to total
monthly income (debt-to-income ratio) in making the credit decision
if the debt-to-income ratio was a factor in the credit decision
even if it was not a dispositive factor. For example, if the
debt-to-income ratio was one of multiple factors in a financial
institution's credit decision, the financial institution has relied
on the debt-to-income ratio and complies with § 1003.4(a)(23) by
reporting the debt-to-income ratio, even if the financial
institution denied the application because one or more underwriting
requirements other than the debt-to-income ratio were not
satisfied.
3. Transactions for which no credit decision was made. If
a file was closed for incompleteness, or if an application was
withdrawn before a credit decision was made, a financial
institution complies with § 1003.4(a)(23) by reporting that the
requirement is not applicable, even if the financial institution
had calculated the ratio of the applicant's total monthly debt to
total monthly income (debt-to-income ratio). For example, if a file
was closed for incompleteness and was so reported in accordance
with § 1003.4(a)(8), the financial institution complies with §
1003.4(a)(23) by reporting that the requirement is not applicable,
even if the financial institution had calculated the applicant's
debt-to-income ratio. Similarly, if an application was withdrawn by
the applicant before a credit decision was made, the financial
institution complies with § 1003.4(a)(23) by reporting that the
requirement is not applicable, even if the financial institution
had calculated the applicant's debt-to-income ratio.
4. Transactions for which no debt-to-income ratio was relied
on. Section 1003.4(a)(23) does not require a financial
institution to calculate the ratio of an applicant's or borrower's
total monthly debt to total monthly income (debt-to-income ratio),
nor does it require a financial institution to rely on an
applicant's or borrower's debt-to-income ratio in making a credit
decision. If a financial institution made a credit decision without
relying on the applicant's or borrower's debt-to-income ratio, the
financial institution complies with § 1003.4(a)(23) by reporting
that the requirement is not applicable since no debt-to-income
ratio was relied on in connection with the credit decision.
5. Non-natural person. A financial institution complies
with § 1003.4(a)(23) by reporting that the requirement is not
applicable when the applicant and co-applicant, if applicable, are
not natural persons.
6. Multifamily dwellings. A financial institution
complies with § 1003.4(a)(23) by reporting that the requirement is
not applicable for a covered loan secured by, or an application
proposed to be secured by, a multifamily dwelling.
7. Purchased covered loans. A financial institution
complies with § 1003.4(a)(23) by reporting that the requirement is
not applicable when reporting a purchased covered loan.
Paragraph 4(a)(24)
1. General. Except for purchased covered loans and
partially exempt transactions under § 1003.3(d), § 1003.4(a)(24)
requires a financial institution to report the ratio of the total
amount of debt secured by the property to the value of the property
(combined loan-to-value ratio) relied on in making the credit
decision. For example, if a financial institution calculated a
combined loan-to-value ratio twice - once according to the
financial institution's own requirements and once according to the
requirements of a secondary market investor - and the financial
institution relied on the combined loan-to-value ratio calculated
according to the secondary market investor's requirements in making
the credit decision, § 1003.4(a)(24) requires the financial
institution to report the combined loan-to-value ratio calculated
according to the requirements of the secondary market investor.
2. Transactions for which a combined loan-to-value ratio was
one of multiple factors. A financial institution relies on the
ratio of the total amount of debt secured by the property to the
value of the property (combined loan-to-value ratio) in making the
credit decision if the combined loan-to-value ratio was a factor in
the credit decision, even if it was not a dispositive factor. For
example, if the combined loan-to-value ratio is one of multiple
factors in a financial institution's credit decision, the financial
institution has relied on the combined loan-to-value ratio and
complies with § 1003.4(a)(24) by reporting the combined
loan-to-value ratio, even if the financial institution denies the
application because one or more underwriting requirements other
than the combined loan-to-value ratio are not satisfied.
3. Transactions for which no credit decision was made. If
a file was closed for incompleteness, or if an application was
withdrawn before a credit decision was made, a financial
institution complies with § 1003.4(a)(24) by reporting that the
requirement is not applicable, even if the financial institution
had calculated the ratio of the total amount of debt secured by the
property to the value of the property (combined loan-to-value
ratio). For example, if a file is closed for incompleteness and is
so reported in accordance with § 1003.4(a)(8), the financial
institution complies with § 1003.4(a)(24) by reporting that the
requirement is not applicable, even if the financial institution
had calculated a combined loan-to-value ratio. Similarly, if an
application was withdrawn by the applicant before a credit decision
was made and is so reported in accordance with § 1003.4(a)(8), the
financial institution complies with § 1003.4(a)(24) by reporting
that the requirement is not applicable, even if the financial
institution had calculated a combined loan-to-value ratio.
4. Transactions for which no combined loan-to-value ratio was
relied on. Section 1003.4(a)(24) does not require a financial
institution to calculate the ratio of the total amount of debt
secured by the property to the value of the property (combined
loan-to-value ratio), nor does it require a financial institution
to rely on a combined loan-to-value ratio in making a credit
decision. If a financial institution makes a credit decision
without relying on a combined loan-to-value ratio, the financial
institution complies with § 1003.4(a)(24) by reporting that the
requirement is not applicable since no combined loan-to-value ratio
was relied on in making the credit decision.
5. Purchased covered loan. A financial institution
complies with § 1003.4(a)(24) by reporting that the requirement is
not applicable when the covered loan is a purchased covered
loan.
6. Property. A financial institution reports the combined
loan-to-value ratio relied on in making the credit decision,
regardless of which property or properties it used in the combined
loan-to-value ratio calculation. The property used in the combined
loan-to-value ratio calculation does not need to be the property
identified in § 1003.4(a)(9) and may include more than one property
and non-real property. For example, if a financial institution
originated a covered loan for the purchase of a multifamily
dwelling, the loan was secured by the multifamily dwelling and by
non-real property, such as securities, and the financial
institution used the multifamily dwelling and the non-real property
to calculate the combined loan-to-value ratio that it relied on in
making the credit decision, § 1003.4(a)(24) requires the financial
institution to report the relied upon ratio. Section 1003.4(a)(24)
does not require a financial institution to use a particular
combined loan-to-value ratio calculation method but instead
requires financial institutions to report the combined
loan-to-value ratio relied on in making the credit decision.
Paragraph 4(a)(25)
1. Amortization and maturity. For a fully amortizing
covered loan, the number of months after which the legal obligation
matures is the number of months in the amortization schedule,
ending with the final payment. Some covered loans do not fully
amortize during the maturity term, such as covered loans with a
balloon payment; such loans should still be reported using the
maturity term rather than the amortization term, even in the case
of covered loans that mature before fully amortizing but have reset
options. For example, a 30-year fully amortizing covered loan would
be reported with a term of “360,” while a five year balloon covered
loan would be reported with a loan term of “60.”
2. Non-monthly repayment periods. If a covered loan or
application includes a schedule with repayment periods measured in
a unit of time other than months, the financial institution should
report the covered loan or application term using an equivalent
number of whole months without regard for any remainder.
3. Purchased loans. For a covered loan that was
purchased, a financial institution reports the number of months
after which the legal obligation matures as measured from the
covered loan's origination.
4. Open-end line of credit. For an open-end line of
credit with a definite term, a financial institution reports the
number of months from origination until the account termination
date, including both the draw and repayment period.
5. Loan term - scope of requirement. For a covered loan
or application without a definite term, such as a reverse mortgage,
a financial institution complies with § 1003.4(a)(25) by reporting
that the requirement is not applicable. For partially exempt
transactions under § 1003.3(d), an insured depository institution
or insured credit union is not required to report the loan term.
See § 1003.3(d) and related commentary.
Paragraph 4(a)(26)
1. Types of introductory rates. Except for partially
exempt transactions under § 1003.3(d), § 1003.4(a)(26) requires a
financial institution to report the number of months, or proposed
number of months in the case of an application, from closing or
account opening until the first date the interest rate may change.
For example, assume an open-end line of credit contains an
introductory or “teaser” interest rate for two months after the
date of account opening, after which the interest rate may adjust.
In this example, the financial institution complies with §
1003.4(a)(26) by reporting the number of months as “2.” Section
1003.4(a)(26) requires a financial institution to report the number
of months based on when the first interest rate adjustment may
occur, even if an interest rate adjustment is not required to occur
at that time and even if the rates that will apply, or the periods
for which they will apply, are not known at closing or account
opening. For example, if a closed-end mortgage loan with a 30-year
term has an adjustable-rate product with an introductory interest
rate for the first 60 months, after which the interest rate is
permitted, but not required to vary, according to the terms of an
index rate, the financial institution complies with § 1003.4(a)(26)
by reporting the number of months as “60.” Similarly, if a
closed-end mortgage loan with a 30-year term is a step-rate product
with an introductory interest rate for the first 24 months, after
which the interest rate will increase to a different known interest
rate for the next 36 months, the financial institution complies
with § 1003.4(a)(26) by reporting the number of months as “24.”
2. Preferred rates. Section 1003.4(a)(26) does not
require reporting of introductory interest rate periods based on
preferred rates unless the terms of the legal obligation provide
that the preferred rate will expire at a certain defined date.
Preferred rates include terms of the legal obligation that provide
that the initial underlying rate is fixed but that it may increase
or decrease upon the occurrence of some future event, such as an
employee leaving the employ of the financial institution, the
borrower closing an existing deposit account with the financial
institution, or the borrower revoking an election to make automated
payments. In these cases, because it is not known at the time of
closing or account opening whether the future event will occur, and
if so, when it will occur, § 1003.4(a)(26) does not require
reporting of an introductory interest rate period.
3. Loan or application with a fixed rate. A financial
institution complies with § 1003.4(a)(26) by reporting that the
requirement is not applicable for a covered loan with a fixed rate
or an application for a covered loan with a fixed rate.
4. Purchased loan. A financial institution complies with
§ 1003.4(a)(26) by reporting that requirement is not applicable
when the covered loan is a purchased covered loan with a fixed
rate.
5. Non-monthly introductory periods. If a covered loan or
application includes an introductory interest rate period measured
in a unit of time other than months, the financial institution
complies with § 1003.4(a)(26) by reporting the introductory
interest rate period for the covered loan or application using an
equivalent number of whole months without regard for any remainder.
For example, assume an open-end line of credit contains an
introductory interest rate for 50 days after the date of account
opening, after which the interest rate may adjust. In this example,
the financial institution complies with § 1003.4(a)(26) by
reporting the number of months as “1.” The financial institution
must report one month for any introductory interest rate period
that totals less than one whole month.
Paragraph 4(a)(27)
1. General. Except for partially exempt transactions
under § 1003.3(d), § 1003.4(a)(27) requires reporting of
contractual features that would allow payments other than fully
amortizing payments. Section 1003.4(a)(27) defines the contractual
features by reference to Regulation Z, 12 CFR part 1026, but
without regard to whether the covered loan is consumer credit, as
defined in § 1026.2(a)(12), is extended by a creditor, as defined
in § 1026.2(a)(17), or is extended to a consumer, as defined in §
1026.2(a)(11), and without regard to whether the property is a
dwelling as defined in § 1026.2(a)(19). For example, assume that a
financial institution originates a business-purpose transaction
that is exempt from Regulation Z pursuant to 12 CFR 1026.3(a)(1),
to finance the purchase of a multifamily dwelling, and that there
is a balloon payment, as defined by Regulation Z, 12 CFR
1026.18(s)(5)(i), at the end of the loan term. The multifamily
dwelling is a dwelling under § 1003.2(f), but not under Regulation
Z, 12 CFR 1026.2(a)(19). In this example, the financial institution
should report the business-purpose transaction as having a balloon
payment under § 1003.4(a)(27)(i), assuming the other requirements
of this part are met. Aside from these distinctions, financial
institutions may rely on the definitions and related commentary
provided in the appropriate sections of Regulation Z referenced in
§ 1003.4(a)(27) of this part in determining whether the contractual
feature should be reported.
Paragraph 4(a)(28)
1. General. Except for partially exempt transactions
under § 1003.3(d), § 1003.4(a)(28) requires a financial institution
to report the property value relied on in making the credit
decision. For example, if the institution relies on an appraisal or
other valuation for the property in calculating the loan-to-value
ratio, it reports that value; if the institution relies on the
purchase price of the property in calculating the loan-to-value
ratio, it reports that value.
2. Multiple property values. When a financial institution
obtains two or more valuations of the property securing or proposed
to secure the covered loan, the financial institution complies with
§ 1003.4(a)(28) by reporting the value relied on in making the
credit decision. For example, when a financial institution obtains
an appraisal, an automated valuation model report, and a broker
price opinion with different values for the property, it reports
the value relied on in making the credit decision. Section §
1003.4(a)(28) does not require a financial institution to use a
particular property valuation method, but instead requires a
financial institution to report the valuation relied on in making
the credit decision.
3. Transactions for which no credit decision was made. If
a file was closed for incompleteness or the application was
withdrawn before a credit decision was made, the financial
institution complies with § 1003.4(a)(28) by reporting that the
requirement is not applicable, even if the financial institution
had obtained a property value. For example, if a file is closed for
incompleteness and is so reported in accordance with §
1003.4(a)(8), the financial institution complies with §
1003.4(a)(28) by reporting that the requirement is not applicable,
even if the financial institution had obtained a property value.
Similarly, if an application was withdrawn by the applicant before
a credit decision was made and is so reported in accordance with §
1003.4(a)(8), the financial institution complies with §
1003.4(a)(28) by reporting that the requirement is not applicable,
even if the financial institution had obtained a property
value.
4. Transactions for which no property value was relied
on. Section 1003.4(a)(28) does not require a financial
institution to obtain a property valuation, nor does it require a
financial institution to rely on a property value in making a
credit decision. If a financial institution makes a credit decision
without relying on a property value, the financial institution
complies with § 1003.4(a)(28) by reporting that the requirement is
not applicable since no property value was relied on in making the
credit decision.
Paragraph 4(a)(29)
1. Classification under State law. A financial
institution should report a covered loan that is or would have been
secured only by a manufactured home but not the land on which it is
sited as secured by a manufactured home and not land, even if the
manufactured home is considered real property under applicable
State law.
2. Manufactured home community. A manufactured home
community that is a multifamily dwelling is not considered a
manufactured home for purposes of § 1003.4(a)(29).
3. Multiple properties. See comment 4(a)(9)-2 regarding
transactions involving multiple properties with more than one
property taken as security.
4. Scope of requirement. A financial institution reports
that the requirement is not applicable for a covered loan where the
dwelling related to the property identified in § 1003.4(a)(9) is
not a manufactured home. For partially exempt transactions under §
1003.3(d), an insured depository institution or insured credit
union is not required to report the information specified in §
1003.4(a)(29). See § 1003.3(d) and related commentary.
Paragraph 4(a)(30)
1. Indirect land ownership. Indirect land ownership can
occur when the applicant or borrower is or will be a member of a
resident-owned community structured as a housing cooperative in
which the occupants own an entity that holds the underlying land of
the manufactured home community. In such communities, the applicant
or borrower may still have a lease and pay rent for the lot on
which his or her manufactured home is or will be located, but the
property interest type for such an arrangement should be reported
as indirect ownership if the applicant is or will be a member of
the cooperative that owns the underlying land of the manufactured
home community. If an applicant resides or will reside in such a
community but is not a member, the property interest type should be
reported as a paid leasehold.
2. Leasehold interest. A leasehold interest could be
formalized in a lease with a defined term and specified rent
payments, or could arise as a tenancy at will through permission of
a land owner without any written, formal arrangement. For example,
assume a borrower will locate the manufactured home in a
manufactured home community, has a written lease for a lot in that
park, and the lease specifies rent payments. In this example, a
financial institution complies with § 1003.4(a)(30) by reporting a
paid leasehold. However, if instead the borrower will locate the
manufactured home on land owned by a family member without a
written lease and with no agreement as to rent payments, a
financial institution complies with § 1003.4(a)(30) by reporting an
unpaid leasehold.
3. Multiple properties. See comment 4(a)(9)-2 regarding
transactions involving multiple properties with more than one
property taken as security.
4. Manufactured home community. A manufactured home
community that is a multifamily dwelling is not considered a
manufactured home for purposes of § 1003.4(a)(30).
5. Direct ownership. An applicant or borrower has a
direct ownership interest in the land on which the dwelling is or
is to be located when it has a more than possessory real property
ownership interest in the land such as fee simple ownership.
6. Scope of requirement. A financial institution reports
that the requirement is not applicable for a covered loan where the
dwelling related to the property identified in § 1003.4(a)(9) is
not a manufactured home. For partially exempt transactions under §
1003.3(d), an insured depository institution or insured credit
union is not required to report the information specified in §
1003.4(a)(30). See § 1003.3(d) and related commentary.
Paragraph 4(a)(31)
1. Multiple properties. See comment 4(a)(9)-2 regarding
transactions involving multiple properties with more than one
property taken as security.
2. Manufactured home community. For an application or
covered loan secured by a manufactured home community, the
financial institution should include in the number of individual
dwelling units the total number of manufactured home sites that
secure the loan and are available for occupancy, regardless of
whether the sites are currently occupied or have manufactured homes
currently attached. A financial institution may include in the
number of individual dwelling units other units such as
recreational vehicle pads, manager apartments, rental apartments,
site-built homes or other rentable space that are ancillary to the
operation of the secured property if it considers such units under
its underwriting guidelines or the guidelines of an investor, or if
it tracks the number of such units for its own internal purposes.
For a loan secured by a single manufactured home that is or will be
located in a manufactured home community, the financial institution
should report one individual dwelling unit.
3. Condominium and cooperative projects. For a covered
loan secured by a condominium or cooperative property, the
financial institution reports the total number of individual
dwelling units securing the covered loan or proposed to secure the
covered loan in the case of an application. For example:
i. Assume that a loan is secured by the entirety of a
cooperative property. The financial institution would report the
number of individual dwelling units in the cooperative
property.
ii. Assume that a covered loan is secured by 30 individual
dwelling units in a condominium property that contains 100
individual dwelling units and that the loan is not exempt from
Regulation C under § 1003.3(c)(3). The financial institution
reports 30 individual dwelling units.
4. Best information available. A financial institution
may rely on the best information readily available to the financial
institution at the time final action is taken and on the financial
institution's own procedures in reporting the information required
by § 1003.4(a)(31). Information readily available could include,
for example, information provided by an applicant that the
financial institution reasonably believes, information contained in
a property valuation or inspection, or information obtained from
public records.
Paragraph 4(a)(32)
1. Affordable housing income restrictions. For purposes
of § 1003.4(a)(32), affordable housing income-restricted units are
individual dwelling units that have restrictions based on the
income level of occupants pursuant to restrictive covenants
encumbering the property. Such income levels are frequently
expressed as a percentage of area median income by household size
as established by the U.S. Department of Housing and Urban
Development or another agency responsible for implementing the
applicable affordable housing program. Such restrictions are
frequently part of compliance with programs that provide public
funds, special tax treatment, or density bonuses to encourage
development or preservation of affordable housing. Such
restrictions are frequently evidenced by a use agreement,
regulatory agreement, land use restriction agreement, housing
assistance payments contract, or similar agreement. Rent control or
rent stabilization laws, and the acceptance by the owner or manager
of a multifamily dwelling of Housing Choice Vouchers (24 CFR part
982) or other similar forms of portable housing assistance that are
tied to an occupant and not an individual dwelling unit, are not
affordable housing income-restricted dwelling units for purposes of
§ 1003.4(a)(32).
2. Federal affordable housing sources. Examples of
Federal programs and funding sources that may result in individual
dwelling units that are reportable under § 1003.4(a)(32) include,
but are not limited to:
i. Affordable housing programs pursuant to Section 8 of the
United States Housing Act of 1937 (42 U.S.C. 1437f);
ii. Public housing (42 U.S.C. 1437a(b)(6));
iii. The HOME Investment Partnerships program (24 CFR part
92);
iv. The Community Development Block Grant program (24 CFR part
570);
v. Multifamily tax subsidy project funding through tax-exempt
bonds or tax credits (26 U.S.C. 42; 26 U.S.C. 142(d));
vi. Project-based vouchers (24 CFR part 983);
vii. Federal Home Loan Bank affordable housing program funding
(12 CFR part 1291); and
viii. Rural Housing Service multifamily housing loans and grants
(7 CFR part 3560).
3. State and local government affordable housing sources.
Examples of State and local sources that may result in individual
dwelling units that are reportable under § 1003.4(a)(32) include,
but are not limited to: State or local administration of Federal
funds or programs; State or local funding programs for affordable
housing or rental assistance, including programs operated by
independent public authorities; inclusionary zoning laws; and tax
abatement or tax increment financing contingent on affordable
housing requirements.
4. Multiple properties. See comment 4(a)(9)-2 regarding
transactions involving multiple properties with more than one
property taken as security.
5. Best information available. A financial institution
may rely on the best information readily available to the financial
institution at the time final action is taken and on the financial
institution's own procedures in reporting the information required
by § 1003.4(a)(32). Information readily available could include,
for example, information provided by an applicant that the
financial institution reasonably believes, information contained in
a property valuation or inspection, or information obtained from
public records.
6. Scope of requirement. A financial institution reports
that the requirement is not applicable if the property securing the
covered loan or, in the case of an application, proposed to secure
the covered loan is not a multifamily dwelling. For partially
exempt transactions under § 1003.3(d), an insured depository
institution or insured credit union is not required to report the
information specified in § 1003.4(a)(32). See § 1003.3(d)
and related commentary.
Paragraph 4(a)(33)
1. Agents. If a financial institution is reporting
actions taken by its agent consistent with comment 4(a)-4, the
agent is not considered the financial institution for the purposes
of § 1003.4(a)(33). For example, assume that an applicant submitted
an application to Financial Institution A, and Financial
Institution A made the credit decision acting as Financial
Institution B's agent under State law. A covered loan was
originated and the obligation arising from a covered loan was
initially payable to Financial Institution A. Financial Institution
B purchased the loan. Financial Institution B reports the
origination and not the purchase, and indicates that the
application was not submitted directly to the financial institution
and that the transaction was not initially payable to the financial
institution.
Paragraph 4(a)(33)(i)
1. General. Except for partially exempt transactions
under § 1003.3(d), § 1003.4(a)(33)(i) requires a financial
institution to indicate whether the applicant or borrower submitted
the application directly to the financial institution that is
reporting the covered loan or application. The following scenarios
demonstrate whether an application was submitted directly to the
financial institution that is reporting the covered loan or
application.
i. The application was submitted directly to the financial
institution if the mortgage loan originator identified pursuant to
§ 1003.4(a)(34) was an employee of the reporting financial
institution when the originator performed the origination
activities for the covered loan or application that is being
reported.
ii. The application was also submitted directly to the financial
institution reporting the covered loan or application if the
reporting financial institution directed the applicant to a
third-party agent (e.g., a credit union service
organization) that performed loan origination activities on behalf
of the financial institution and did not assist the applicant with
applying for covered loans with other institutions.
iii. If an applicant contacted and completed an application with
a broker or correspondent that forwarded the application to a
financial institution for approval, an application was not
submitted to the financial institution.
Paragraph 4(a)(33)(ii)
1. General. Except for partially exempt transactions
under § 1003.3(d), § 1003.4(a)(33)(ii) requires financial
institutions to report whether the obligation arising from a
covered loan was or, in the case of an application, would have been
initially payable to the institution. An obligation is initially
payable to the institution if the obligation is initially payable
either on the face of the note or contract to the financial
institution that is reporting the covered loan or application. For
example, if a financial institution reported an origination of a
covered loan that it approved prior to closing, that closed in the
name of a third-party, such as a correspondent lender, and that the
financial institution purchased after closing, the covered loan was
not initially payable to the financial institution.
2. Applications. A financial institution complies with §
1003.4(a)(33)(ii) by reporting that the requirement is not
applicable if the institution had not determined whether the
covered loan would have been initially payable to the institution
reporting the application when the application was withdrawn,
denied, or closed for incompleteness.
Paragraph 4(a)(34)
1. NMLSR ID. Except for partially exempt transactions
under § 1003.3(d), § 1003.4(a)(34) requires a financial institution
to report the Nationwide Mortgage Licensing System and Registry
unique identifier (NMLSR ID) for the mortgage loan originator, as
defined in Regulation G, 12 CFR 1007.102, or Regulation H, 12 CFR
1008.23, as applicable. The NMLSR ID is a unique number or other
identifier generally assigned to individuals registered or licensed
through NMLSR to provide loan originating services. For more
information, see the Secure and Fair Enforcement for Mortgage
Licensing Act of 2008, title V of the Housing and Economic Recovery
Act of 2008 (S.A.F.E. Act), 12 U.S.C. 5101 et seq., and its
implementing regulations (12 CFR part 1007 and 12 CFR part
1008).
2. Mortgage loan originator without NMLSR ID. An NMLSR ID
for the mortgage loan originator is not required by § 1003.4(a)(34)
to be reported by a financial institution if the mortgage loan
originator is not required to obtain and has not been assigned an
NMLSR ID. For example, certain individual mortgage loan originators
may not be required to obtain an NMLSR ID for the particular
transaction being reported by the financial institution, such as a
commercial loan. However, some mortgage loan originators may have
obtained an NMLSR ID even if they are not required to obtain one
for that particular transaction. If a mortgage loan originator has
been assigned an NMLSR ID, a financial institution complies with §
1003.4(a)(34) by reporting the mortgage loan originator's NMLSR ID
regardless of whether the mortgage loan originator is required to
obtain an NMLSR ID for the particular transaction being reported by
the financial institution. In the event that the mortgage loan
originator is not required to obtain and has not been assigned an
NMLSR ID, a financial institution complies with § 1003.4(a)(34) by
reporting that the requirement is not applicable.
3. Multiple mortgage loan originators. If more than one
individual associated with a covered loan or application meets the
definition of a mortgage loan originator, as defined in Regulation
G, 12 CFR 1007.102, or Regulation H, 12 CFR 1008.23, a financial
institution complies with § 1003.4(a)(34) by reporting the NMLSR ID
of the individual mortgage loan originator with primary
responsibility for the transaction as of the date of action taken
pursuant to § 1003.4(a)(8)(ii). A financial institution that
establishes and follows a reasonable, written policy for
determining which individual mortgage loan originator has primary
responsibility for the reported transaction as of the date of
action taken complies with § 1003.4(a)(34).
4. Purchased loans. If a financial institution purchases
a covered loan that satisfies the coverage criteria of Regulation
Z, 12 CFR 1026.36(g), and that was originated prior to January 10,
2014, the financial institution complies with § 1003.4(a)(34) by
reporting that the requirement is not applicable. In addition, if a
financial institution purchases a covered loan that does not
satisfy the coverage criteria of Regulation Z, 12 CFR 1026.36(g),
and that was originated prior to January 1, 2018, the financial
institution complies with § 1003.4(a)(34) by reporting that the
requirement is not applicable. Purchasers of both such types of
covered loans may report the NMLSR ID.
Paragraph 4(a)(35)
1. Automated underwriting system data - general. Except
for purchased covered loans and partially exempt transactions under
§ 1003.3(d), § 1003.4(a)(35) requires a financial institution to
report the name of the automated underwriting system (AUS) used by
the financial institution to evaluate the application and the
result generated by that AUS. The following scenarios illustrate
when a financial institution reports the name of the AUS used by
the financial institution to evaluate the application and the
result generated by that AUS.
i. A financial institution that uses an AUS, as defined in §
1003.4(a)(35)(ii), to evaluate an application, must report the name
of the AUS used by the financial institution to evaluate the
application and the result generated by that system, regardless of
whether the AUS was used in its underwriting process. For example,
if a financial institution uses an AUS to evaluate an application
prior to submitting the application through its underwriting
process, the financial institution complies with § 1003.4(a)(35) by
reporting the name of the AUS it used to evaluate the application
and the result generated by that system.
ii. A financial institution that uses an AUS, as defined in §
1003.4(a)(35)(ii), to evaluate an application, must report the name
of the AUS it used to evaluate the application and the result
generated by that system, regardless of whether the financial
institution intends to hold the covered loan in its portfolio or
sell the covered loan. For example, if a financial institution uses
an AUS developed by a securitizer to evaluate an application and
intends to sell the covered loan to that securitizer but ultimately
does not sell the covered loan and instead holds the covered loan
in its portfolio, the financial institution complies with §
1003.4(a)(35) by reporting the name of the securitizer's AUS that
the institution used to evaluate the application and the result
generated by that system. Similarly, if a financial institution
uses an AUS developed by a securitizer to evaluate an application
to determine whether to originate the covered loan but does not
intend to sell the covered loan to that securitizer and instead
holds the covered loan in its portfolio, the financial institution
complies with § 1003.4(a)(35) by reporting the name of the
securitizer's AUS that the institution used to evaluate the
application and the result generated by that system.
iii. A financial institution that uses an AUS, as defined in §
1003.4(a)(35)(ii), that is developed by a securitizer to evaluate
an application, must report the name of the AUS it used to evaluate
the application and the result generated by that system, regardless
of whether the securitizer intends to hold the covered loan it
purchased from the financial institution in its portfolio or
securitize the covered loan. For example, if a financial
institution uses an AUS developed by a securitizer to evaluate an
application and the financial institution sells the covered loan to
that securitizer but the securitizer holds the covered loan it
purchased in its portfolio, the financial institution complies with
§ 1003.4(a)(35) by reporting the name of the securitizer's AUS that
the institution used to evaluate the application and the result
generated by that system.
iv. A financial institution, which is also a securitizer, that
uses its own AUS, as defined in § 1003.4(a)(35)(ii), to evaluate an
application, must report the name of the AUS it used to evaluate
the application and the result generated by that system, regardless
of whether the financial institution intends to hold the covered
loan it originates in its portfolio, purchase the covered loan, or
securitize the covered loan. For example, if a financial
institution, which is also a securitizer, has developed its own AUS
and uses that AUS to evaluate an application that it intends to
originate and hold in its portfolio and not purchase or securitize
the covered loan, the financial institution complies with §
1003.4(a)(35) by reporting the name of its AUS that it used to
evaluate the application and the result generated by that
system.
2. Definition of automated underwriting system. A
financial institution must report the information required by §
1003.4(a)(35)(i) if the financial institution uses an automated
underwriting system (AUS), as defined in § 1003.4(a)(35)(ii), to
evaluate an application. To be covered by the definition in §
1003.4(a)(35)(ii), a system must be an electronic tool that has
been developed by a securitizer, Federal government insurer, or a
Federal government guarantor of closed-end mortgage loans or
open-end lines of credit. A person is a securitizer, Federal
government insurer, or Federal government guarantor of closed-end
mortgage loans or open-end lines of credit, respectively, if it has
securitized, provided Federal government insurance, or provided a
Federal government guarantee for a closed-end mortgage loan or
open-end line of credit at any point in time. A person may be a
securitizer, Federal government insurer, or Federal government
guarantor of closed-end mortgage loans or open-end lines of credit,
respectively, for purposes of § 1003.4(a)(35) even if it is not
actively securitizing, insuring, or guaranteeing closed-end
mortgage loans or open-end lines of credit at the time a financial
institution uses the AUS to evaluate an application. Where the
person that developed the electronic tool has never been a
securitizer, Federal government insurer, or Federal government
guarantor of closed-end mortgage loans or open-end lines of credit,
respectively, at the time a financial institution uses the tool to
evaluate an application, the financial institution complies with §
1003.4(a)(35) by reporting that the requirement is not applicable
because an AUS was not used to evaluate the application. If a
financial institution has developed its own proprietary system that
it uses to evaluate an application and the financial institution is
also a securitizer, then the financial institution complies with §
1003.4(a)(35) by reporting the name of that system and the result
generated by that system. On the other hand, if a financial
institution has developed its own proprietary system that it uses
to evaluate an application and the financial institution is not a
securitizer, then the financial institution is not required by §
1003.4(a)(35) to report the use of that system and the result
generated by that system. In addition, for an AUS to be covered by
the definition in § 1003.4(a)(35)(ii), the system must provide a
result regarding both the credit risk of the applicant and the
eligibility of the covered loan to be originated, purchased,
insured, or guaranteed by the securitizer, Federal government
insurer, or Federal government guarantor that developed the system
being used to evaluate the application. For example, if a system is
an electronic tool that provides a determination of the eligibility
of the covered loan to be originated, purchased, insured, or
guaranteed by the securitizer, Federal government insurer, or
Federal government guarantor that developed the system being used
by a financial institution to evaluate the application, but the
system does not also provide an assessment of the creditworthiness
of the applicant - such as an evaluation of the applicant's income,
debt, and credit history - then that system does not qualify as an
AUS, as defined in § 1003.4(a)(35)(ii). A financial institution
that uses a system that is not an AUS, as defined in §
1003.4(a)(35)(ii), to evaluate an application does not report the
information required by § 1003.4(a)(35)(i).
3. Reporting automated underwriting system data - multiple
results. When a financial institution uses one or more
automated underwriting systems (AUS) to evaluate the application
and the system or systems generate two or more results, the
financial institution complies with § 1003.4(a)(35) by reporting,
except for purchased covered loans, the name of the AUS used by the
financial institution to evaluate the application and the result
generated by that AUS as determined by the following principles. To
determine what AUS (or AUSs) and result (or results) to report
under § 1003.4(a)(35), a financial institution follows each of the
principles that is applicable to the application in question, in
the order in which they are set forth below.
i. If a financial institution obtains two or more AUS results
and the AUS generating one of those results corresponds to the loan
type reported pursuant to § 1003.4(a)(2), the financial institution
complies with § 1003.4(a)(35) by reporting that AUS name and
result. For example, if a financial institution evaluates an
application using the Federal Housing Administration's (FHA)
Technology Open to Approved Lenders (TOTAL) Scorecard and
subsequently evaluates the application with an AUS used to
determine eligibility for a non-FHA loan, but ultimately originates
an FHA loan, the financial institution complies with §
1003.4(a)(35) by reporting TOTAL Scorecard and the result generated
by that system. If a financial institution obtains two or more AUS
results and more than one of those AUS results is generated by a
system that corresponds to the loan type reported pursuant to §
1003.4(a)(2), the financial institution identifies which AUS result
should be reported by following the principle set forth below in
comment 4(a)(35)-3.ii.
ii. If a financial institution obtains two or more AUS results
and the AUS generating one of those results corresponds to the
purchaser, insurer, or guarantor, if any, the financial institution
complies with § 1003.4(a)(35) by reporting that AUS name and
result. For example, if a financial institution evaluates an
application with the AUS of Securitizer A and subsequently
evaluates the application with the AUS of Securitizer B, but the
financial institution ultimately originates a covered loan that it
sells within the same calendar year to Securitizer A, the financial
institution complies with § 1003.4(a)(35) by reporting the name of
Securitizer A's AUS and the result generated by that system. If a
financial institution obtains two or more AUS results and more than
one of those AUS results is generated by a system that corresponds
to the purchaser, insurer, or guarantor, if any, the financial
institution identifies which AUS result should be reported by
following the principle set forth below in comment
4(a)(35)-3.iii.
iii. If a financial institution obtains two or more AUS results
and none of the systems generating those results correspond to the
purchaser, insurer, or guarantor, if any, or the financial
institution is following this principle because more than one AUS
result is generated by a system that corresponds to either the loan
type or the purchaser, insurer, or guarantor, the financial
institution complies with § 1003.4(a)(35) by reporting the AUS
result generated closest in time to the credit decision and the
name of the AUS that generated that result. For example, if a
financial institution evaluates an application with the AUS of
Securitizer A, subsequently again evaluates the application with
Securitizer A's AUS, the financial institution complies with §
1003.4(a)(35) by reporting the name of Securitizer A's AUS and the
second AUS result. Similarly, if a financial institution obtains a
result from an AUS that requires the financial institution to
underwrite the loan manually, but the financial institution
subsequently processes the application through a different AUS that
also generates a result, the financial institution complies with §
1003.4(a)(35) by reporting the name of the second AUS that it used
to evaluate the application and the AUS result generated by that
system.
iv. If a financial institution obtains two or more AUS results
at the same time and the principles in comment 4(a)(35)-3.i through
.iii do not apply, the financial institution complies with §
1003.4(a)(35) by reporting the name of all of the AUSs used by the
financial institution to evaluate the application and the results
generated by each of those systems. For example, if a financial
institution simultaneously evaluates an application with the AUS of
Securitizer A and the AUS of Securitizer B, the financial
institution complies with § 1003.4(a)(35) by reporting the name of
both Securitizer A's AUS and Securitizer B's AUS and the results
generated by each of those systems. In any event, however, the
financial institution does not report more than five AUSs and five
results. If more than five AUSs and five results meet the criteria
in this principle, the financial institution complies with §
1003.4(a)(35) by choosing any five among them to report.
4. Transactions for which an automated underwriting system
was not used to evaluate the application. Section 1003.4(a)(35)
does not require a financial institution to evaluate an application
using an automated underwriting system (AUS), as defined in §
1003.4(a)(35)(ii). For example, if a financial institution only
manually underwrites an application and does not use an AUS to
evaluate the application, the financial institution complies with §
1003.4(a)(35) by reporting that the requirement is not applicable
since an AUS was not used to evaluate the application.
5. Purchased covered loan. A financial institution
complies with § 1003.4(a)(35) by reporting that the requirement is
not applicable when the covered loan is a purchased covered
loan.
6. Non-natural person. When the applicant and
co-applicant, if applicable, are not natural persons, a financial
institution complies with § 1003.4(a)(35) by reporting that the
requirement is not applicable.
7. Determination of securitizer, Federal government insurer,
or Federal government guarantor. Section 1003.4(a)(35)(ii)
provides that an “automated underwriting system” means an
electronic tool developed by a securitizer, Federal government
insurer, or Federal government guarantor of closed-end mortgage
loans or open-end lines of credit that provides a result regarding
the credit risk of the applicant and whether the covered loan is
eligible to be originated, purchased, insured, or guaranteed by
that securitizer, Federal government insurer, or Federal government
guarantor. A person is a securitizer, Federal government insurer,
or Federal government guarantor of closed-end mortgage loans or
open-end lines of credit, respectively, if it has ever securitized,
insured, or guaranteed a closed-end mortgage loan or open-end line
of credit. If a financial institution knows or reasonably believes
that the system it is using to evaluate an application is an
electronic tool that has been developed by a securitizer, Federal
government insurer, or Federal government guarantor of closed-end
mortgage loans or open-end lines of credit, then the financial
institution complies with § 1003.4(a)(35) by reporting the name of
that system and the result generated by that system. Knowledge or
reasonable belief could, for example, be based on a sales agreement
or other related documents, the financial institution's previous
transactions or relationship with the developer of the electronic
tool, or representations made by the developer of the electronic
tool demonstrating that the developer of the electronic tool is a
securitizer, Federal government insurer, or Federal government
guarantor of closed-end mortgage loans or open-end lines of credit.
If a financial institution does not know or reasonably believe that
the system it is using to evaluate an application is an electronic
tool that has been developed by a securitizer, Federal government
insurer, or Federal government guarantor of closed-end mortgage
loans or open-end lines of credit, the financial institution
complies with § 1003.4(a)(35) by reporting that the requirement is
not applicable, provided that the financial institution maintains
procedures reasonably adapted to determine whether the electronic
tool it is using to evaluate an application meets the definition in
§ 1003.4(a)(35)(ii). Reasonably adapted procedures include
attempting to determine with reasonable frequency, such as
annually, whether the developer of the electronic tool is a
securitizer, Federal government insurer, or Federal government
guarantor of closed-end mortgage loans or open-end lines of credit.
For example:
i. In the course of renewing an annual sales agreement the
developer of the electronic tool represents to the financial
institution that it has never been a securitizer, Federal
government insurer, or Federal government guarantor of closed-end
mortgage loans or open-end lines of credit. On this basis, the
financial institution does not know or reasonably believe that the
system it is using to evaluate an application is an electronic tool
that has been developed by a securitizer, Federal government
insurer, or Federal government guarantor of closed-end mortgage
loans or open-end lines of credit and complies with § 1003.4(a)(35)
by reporting that the requirement is not applicable.
ii. Based on their previous transactions a financial institution
is aware that the developer of the electronic tool it is using to
evaluate an application has securitized a closed-end mortgage loan
or open-end line of credit in the past. On this basis, the
financial institution knows or reasonably believes that the
developer of the electronic tool is a securitizer and complies with
§ 1003.4(a)(35) by reporting the name of that system and the result
generated by that system.
Paragraph 4(a)(37)
1. Open-end line of credit. Except for partially exempt
transactions under § 1003.3(d), § 1003.4(a)(37) requires a
financial institution to identify whether the covered loan or the
application is for an open-end line of credit. See comments 2(o)-1
and -2 for a discussion of open-end line of credit and extension of
credit.
Paragraph 4(a)(38)
1. Primary purpose. Except for partially exempt
transactions under § 1003.3(d), § 1003.4(a)(38) requires a
financial institution to identify whether the covered loan is, or
the application is for a covered loan that will be, made primarily
for a business or commercial purpose. See comment 3(c)(10)-2 for a
discussion of how to determine the primary purpose of the
transaction and the standard applicable to a financial
institution's determination of the primary purpose of the
transaction. See comments 3(c)(10)-3 and 4 for examples of excluded
and reportable business- or commercial-purpose transactions.
4(f) Quarterly Recording of Data
1. General. Section 1003.4(f) requires a financial
institution to record the data collected pursuant to § 1003.4 on a
loan/application register within 30 calendar days after the end of
the calendar quarter in which final action is taken. Section
1003.4(f) does not require a financial institution to record data
on a single loan/application register on a quarterly basis. Rather,
for purposes of § 1003.4(f), a financial institution may record
data on a single loan/application register or separately for
different branches or different loan types (such as home purchase
or home improvement loans, or loans on multifamily dwellings).
2. Agency requirements. Certain State or Federal
regulations may require a financial institution to record its data
more frequently than is required under Regulation C.
3. Form of quarterly records. A financial institution may
maintain the records required by § 1003.4(f) in electronic or any
other format, provided the institution can make the information
available to its regulatory agency in a timely manner upon
request.
Section 1003.5 - Disclosure and Reporting 5(a) Reporting to Agency
1. Quarterly reporting - coverage. i. Section
1003.5(a)(1)(ii) requires that, within 60 calendar days after the
end of each calendar quarter except the fourth quarter, a financial
institution that reported for the preceding calendar year at least
60,000 covered loans and applications, combined, excluding
purchased covered loans, must submit its loan/application register
containing all data required to be recorded for that quarter
pursuant to § 1003.4(f). For example, if for calendar year 2019
Financial Institution A reports 60,000 covered loans, excluding
purchased covered loans, it must comply with § 1003.5(a)(1)(ii) in
calendar year 2020. Similarly, if for calendar year 2019 Financial
Institution A reports 20,000 applications and 40,000 covered loans,
combined, excluding purchased covered loans, it must comply with §
1003.5(a)(1)(ii) in calendar year 2020. If for calendar year 2020
Financial Institution A reports fewer than 60,000 covered loans and
applications, combined, excluding purchased covered loans, it is
not required to comply with § 1003.5(a)(1)(ii) in calendar year
2021.
ii. In the calendar year of a merger or acquisition, the
surviving or newly formed financial institution is required to
comply with § 1003.5(a)(1)(ii), effective the date of the merger or
acquisition, if a combined total of at least 60,000 covered loans
and applications, combined, excluding purchased covered loans, is
reported for the preceding calendar year by or for the surviving or
newly formed financial institution and each financial institution
or branch office merged or acquired. For example, Financial
Institution A and Financial Institution B merge to form Financial
Institution C in 2020. Financial Institution A reports 40,000
covered loans and applications, combined, excluding purchased
covered loans, for 2019. Financial Institution B reports 21,000
covered loans and applications, combined, excluding purchased
covered loans, for 2019. Financial Institution C is required to
comply with § 1003.5(a)(1)(ii) effective the date of the merger.
Similarly, for example, Financial Institution A acquires a branch
office of Financial Institution B in 2020. Financial Institution A
reports 58,000 covered loans and applications, combined, excluding
purchased covered loans, for 2019. Financial Institution B reports
3,000 covered loans and applications, combined, excluding purchased
covered loans, for 2019 for the branch office acquired by Financial
Institution A. Financial Institution A is required to comply with §
1003.5(a)(1)(ii) in 2020 effective the date of the branch
acquisition.
iii. In the calendar year following a merger or acquisition, the
surviving or newly formed financial institution is required to
comply with § 1003.5(a)(1)(ii) if a combined total of at least
60,000 covered loans and applications, combined, excluding
purchased covered loans, is reported for the preceding calendar
year by or for the surviving or newly formed financial institution
and each financial institution or branch office merged or acquired.
For example, Financial Institution A and Financial Institution B
merge to form Financial Institution C in 2019. Financial
Institution C reports 21,000 covered loans and applications,
combined, excluding purchased covered loans, each for Financial
Institution A, B, and C for 2019, for a combined total of 63,000
covered loans and applications reported, excluding purchased
covered loans. Financial Institution C is required to comply with §
1003.5(a)(1)(ii) in 2020. Similarly, for example, Financial
Institution A acquires a branch office of Financial Institution B
in 2019. Financial Institution A reports 58,000 covered loans and
applications, combined, excluding purchased covered loans, for
2019. Financial Institution A or B reports 3,000 covered loans and
applications, combined, excluding purchased covered loans, for 2019
for the branch office acquired by Financial Institution A.
Financial Institution A is required to comply with §
1003.5(a)(1)(ii) in 2020.
2. Change in appropriate Federal agency. If the
appropriate Federal agency for a financial institution changes (as
a consequence of a merger or a change in the institution's charter,
for example), the institution must identify its new appropriate
Federal agency in its annual submission of data pursuant to §
1003.5(a)(1)(i) for the year of the change. For example, if an
institution's appropriate Federal agency changes in February 2018,
it must identify its new appropriate Federal agency beginning with
the annual submission of its 2018 data by March 1, 2019 pursuant to
§ 1003.5(a)(1)(i). For an institution required to comply with §
1003.5(a)(1)(ii), the institution also must identify its new
appropriate Federal agency in its quarterly submission of data
pursuant to § 1003.5(a)(1)(ii) beginning with its submission for
the quarter of the change, unless the change occurs during the
fourth quarter. For example, if the appropriate Federal agency for
an institution required to comply with § 1003.5(a)(1)(ii) changes
during February 2020, the institution must identify its new
appropriate Federal agency beginning with its quarterly submission
pursuant to § 1003.5(a)(1)(ii) for the first quarter of 2020. If
the appropriate Federal agency for an institution required to
comply with § 1003.5(a)(1)(ii) changes during December 2020, the
institution must identify its new appropriate Federal agency
beginning with the annual submission of its 2020 data by March 1,
2021 pursuant to § 1003.5(a)(1)(i).
3. Subsidiaries. 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
institution that is greater than 50 percent.
4. Retention. A financial institution may satisfy the
requirement under § 1003.5(a)(1)(i) that it retain a copy of its
submitted annual loan/application register for three years by
retaining a copy of the annual loan/application register in either
electronic or paper form.
5. Federal Taxpayer Identification Number. Section
1003.5(a)(3) requires a financial institution to provide its
Federal Taxpayer Identification Number with its data submission. If
a financial institution obtains a new Federal Taxpayer
Identification Number, it should provide the new number in its
subsequent data submission. For example, if two financial
institutions that previously reported HMDA data under this part
merge and the surviving institution retained its Legal Entity
Identifier but obtained a new Federal Taxpayer Identification
Number, then the surviving institution should report the new
Federal Taxpayer Identification Number with its HMDA data
submission.
5(b) Disclosure Statement
1. Business day. For purposes of § 1003.5(b), a business
day is any calendar day other than a Saturday, Sunday, or legal
public holiday.
2. Format of notice. A financial institution may make the
written notice required under § 1003.5(b)(2) available in paper or
electronic form.
3. Notice - suggested text. A financial institution may
use any text that meets the requirements of § 1003.5(b)(2). The
following language is suggested but is not required:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are
available online for review. The data show geographic distribution
of loans and applications; ethnicity, race, sex, age, and income of
applicants and borrowers; and information about loan approvals and
denials. These data are available online at the Consumer Financial
Protection Bureau's Web site
(www.consumerfinance.gov/hmda). HMDA data for many other
financial institutions are also available at this Web site.
4. Combined notice. A financial institution may use the
same notice to satisfy the requirements of both § 1003.5(b)(2) and
§ 1003.5(c).
5(c) Modified loan/application Register
1. Format of notice. A financial institution may make the
written notice required under § 1003.5(c)(1) available in paper or
electronic form.
2. Notice - suggested text. A financial institution may
use any text that meets the requirements of § 1003.5(c)(1). The
following language is suggested but is not required:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are
available online for review. The data show geographic distribution
of loans and applications; ethnicity, race, sex, age, and income of
applicants and borrowers; and information about loan approvals and
denials. These data are available online at the Consumer Financial
Protection Bureau's Web site
(www.consumerfinance.gov/hmda). HMDA data for many other
financial institutions are also available at this Web site.
3. Combined notice. A financial institution may use the
same notice to satisfy the requirements of both § 1003.5(c) and §
1003.5(b)(2).
5(e) Posted Notice of Availability of Data
1. Posted notice - suggested text. A financial
institution may post any text that meets the requirements of §
1003.5(e). The Bureau or other appropriate Federal agency for a
financial institution may provide a notice that the institution can
post to inform the public of the availability of its HMDA data, or
an institution may create its own notice. The following language is
suggested but is not required:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are
available online for review. The data show geographic distribution
of loans and applications; ethnicity, race, sex, age, and income of
applicants and borrowers; and information about loan approvals and
denials. HMDA data for many other financial institutions are also
available online. For more information, visit the Consumer
Financial Protection Bureau's Web site
(www.consumerfinance.gov/hmda).
Section 1003.6 - Enforcement 6(b) Bona Fide Errors
1. Information from third parties. Section 1003.6(b)
provides that an error in compiling or recording data for a covered
loan or application is not a violation of the Act or this part if
the error was unintentional and occurred despite the maintenance of
procedures reasonably adapted to avoid such an error. A financial
institution that obtains the required data, such as
property-location information, from third parties is responsible
for ensuring that the information reported pursuant to § 1003.5 is
correct. See comment 6(b)-2 concerning obtaining census tract
information from a geocoding tool that the Bureau makes available
on its Web site.
2. Information from the Bureau. Section 1003.6(b)(2)
provides that an incorrect entry for census tract number is deemed
a bona fide error, and is not a violation of the Act or this part,
provided that the financial institution maintains procedures
reasonably adapted to avoid an error. Obtaining the census tract
numbers for covered loans and applications from a geocoding tool
available on the Bureau's Web site that identifies the census tract
of a property using property addresses entered by users is an
example of a procedure reasonably adapted to avoid errors under §
1003.6(b)(2). Accordingly, a census tract error is not a violation
of the Act or this part if the financial institution obtained the
census tract number from the geocoding tool on the Bureau's Web
site. However, a financial institution's failure to provide the
correct census tract number for a covered loan or application on
its loan/application register, as required by § 1003.4(a)(9)(ii)(C)
or (e), because the geocoding tool on the Bureau's Web site did not
provide a census tract number for the property address entered by
the financial institution is not excused as a bona fide error. In
addition, a census tract error caused by a financial institution
entering an inaccurate property address into the geocoding tool on
the Bureau's Web site is not excused as a bona fide error.
[80 FR 66317, 66339, Oct. 28, 2015, as amended at 82 FR 43136,
43145, Sept. 13, 2017; 82 FR 61146, Dec. 27, 2017; 84 FR 514, Jan.
31, 2019; 84 FR 57981, Oct. 29, 2019; 84 FR 69994, Dec. 20, 2019;
85 FR 28404, May 12, 2020; 85 FR 83410, Dec. 22, 2020]
[80 FR
66314, Oct. 28, 2015, as amended at 82 FR 43133, Sept. 13, 2017]