Are you a lender or creditor who has heard of the Home Mortgage Disclosure Act (HMDA) report but are still unaware of what is considered HMDA reportable? Well, fret no more, because in this article we will break down everything that you need to know. HMDA plays a significant role in ensuring that lenders and creditors report information about their mortgage loan applications and originations to the appropriate agencies. These agencies include the Federal Reserve Board, the Consumer Financial Protection Bureau, and the Department of Housing and Urban Development (HUD).
So, what exactly is considered HMDA reportable? For one, lenders and creditors are required to collect and report on certain data points from every mortgage loan application and originations. This includes the type and purpose of the loan, the amount of the loan, the type of action taken on the application, the borrower’s race and ethnicity, gender, and age, among others. Failure to properly report or collect this information can result in penalties and even legal action against the lender or creditor.
In general, HMDA helps to promote fair lending practices and ensure that consumers are not being discriminated against based on their race, gender, age, or other factors. By requiring lenders and creditors to report on this data, authorities can analyze and assess whether any unfair practices are taking place. Additionally, by knowing what is considered HMDA reportable, lenders and creditors can appropriately track their lending practices and ensure that they are in compliance with the law.
HMDA Overview
The Home Mortgage Disclosure Act (HMDA) is a federal law that requires certain financial institutions to collect and report data about their mortgage lending activities. HMDA was enacted in 1975 as a response to concerns about lending practices that may have resulted in discriminatory or unfair lending practices.
HMDA requires financial institutions to report data on the race, ethnicity, gender, and income of mortgage applicants, as well as the type of loan obtained, the loan amount, the interest rate, and the geographic location of the property. This information is used to identify and prevent discriminatory or predatory lending practices. The Consumer Financial Protection Bureau (CFPB) is responsible for enforcing HMDA.
What is considered HMDA reportable?
- All closed-end mortgages secured by a first lien on a dwelling, including home purchase loans, refinances, and home equity loans.
- All open-end lines of credit secured by a first lien on a dwelling.
- Mortgage loans that were applied for but not originated.
- All purchased loans and assumptions of HMDA reportable loans.
When do HMDA reports need to be filed?
HMDA reports are due annually by March 1st for the previous calendar year’s activity. For example, reports for activity in 2021 are due by March 1, 2022. Financial institutions must also make their HMDA data available to the public by March 31st of each year.
HMDA Data Elements
The following table outlines the data fields that financial institutions are required to report under HMDA:
| Data Field | Description |
|---|---|
| Loan Application or Loan Number | Unique identifier for the loan application or loan |
| Loan Type | Indicates the type of loan being applied for or originated |
| Property Type | Indicates the type of property being purchased or refinanced |
| Lien Status | Indicates whether the loan is secured by a first or subordinate lien |
| Income | Reported in bands based on the amount of income provided on the application |
| Loan Amount | The amount of the loan |
| Action Taken | Indicates whether the loan application was approved, denied, withdrawn, or originated |
| Rate Spread | The difference between the interest rate on the loan and the average prime offer rate for a comparable transaction |
| Property Location | Indicates the geographic location of the property |
| Race and Ethnicity | Indicates the race and ethnicity of the loan applicant |
| Gender | Indicates the gender of the loan applicant |
Financial institutions are required to collect and report all of the data fields listed above, as well as other information, when applicable.
Types of Financial Institutions Required to Report HMDA Data
Under the Home Mortgage Disclosure Act (HMDA), certain financial institutions are required to report data to their regulator, including information on applicants, the loan amount, the property location and other related data. These reports allow regulators to monitor lending practices and identify possible discrimination. There are specific types of financial institutions that must report HMDA data.
Types of Financial Institutions Required to Report HMDA Data
- Banks and credit unions: Any bank or credit union that meets the regulatory definition of a financial institution must report HMDA data. This includes state-chartered banks, national banks, and credit unions of any size.
- Mortgage bankers: Any company that makes or purchases loans with the intention of selling them to the secondary market is considered a mortgage banker. These institutions must report HMDA data regardless of whether they hold the loans in their portfolio or sell them.
- Independent mortgage companies: These institutions originate loans but do not hold them in their portfolio; instead, they sell the loans to another institution. If they meet the regulatory definition of a financial institution, they must report HMDA data.
Types of Financial Institutions Required to Report HMDA Data
In addition to the types of companies listed above, there are other requirements for HMDA reporting. Any entity that meets the definition of a financial institution and has assets above a certain threshold must report. For 2020, the threshold was $47 million in assets. Additionally, any institution that has originated at least one home purchase loan or refinancing that is secured by a first lien on a 1-to-4 unit dwelling is required to report.
It’s important to note that HMDA requirements can change over time, so it’s important for financial institutions to stay up-to-date with their reporting obligations. Failure to comply with HMDA reporting requirements can result in significant penalties and legal actions.
Types of Financial Institutions Required to Report HMDA Data
Below is a summary of the types of financial institutions required to report HMDA data:
| Type of Institution | Reporting Requirement |
|---|---|
| Banks and credit unions | Any institution meeting the definition of a financial institution |
| Mortgage bankers | Any institution that makes or purchases loans for the purpose of selling to secondary market |
| Independent mortgage companies | Any institution that originates loans for sale |
In addition, any institution that meets the definition of a financial institution and has assets above the required threshold must also report HMDA data.
HMDA Data Collection Process
The Home Mortgage Disclosure Act (HMDA) requires financial institutions to report and disclose data related to mortgage lending. This data reporting is used to help determine if lenders are serving the housing needs of their communities and to identify potential discriminatory practices. HMDA data must be collected and reported annually, and it covers a wide range of information related to the mortgage lending process.
What is Considered HMDA Reportable?
- Applications for home purchase loans, home improvement loans, and refinancing loans
- Denials of any of the above loan types
- Loan originations, including the loan amount, interest rate, loan type, and loan purpose
- Loan purchases, including the loan amount, interest rate, loan type, and loan purpose
- Pre-approvals, including the loan amount, interest rate, loan type, and loan purpose
- Loan sales, including the loan amount, interest rate, loan type, and loan purpose
Data Collection Process
The HMDA data collection process involves gathering the required data and reporting it to the Federal Financial Institutions Examination Council (FFIEC). This data is then used by government agencies, lenders, and consumer groups to help monitor and evaluate lending practices and trends. The data is collected using the HMDA Loan Application Register (LAR), which is a form that includes all of the required data elements.
The data collected through HMDA also includes demographic information about the borrower and the property, including the borrower’s race, ethnicity, sex, age, and income, as well as the property location and type. This demographic data is used to evaluate whether lenders are serving the housing needs of all segments of their communities.
HMDA LAR Data Elements
| Data Element | Description |
|---|---|
| Loan Type | The type of loan being applied for or originated |
| Loan Purpose | The reason for the loan (e.g., home purchase, home improvement, refinancing) |
| Loan Amount | The amount of the loan being applied for or originated |
| Loan Terms | The terms of the loan, including the interest rate and duration |
| Borrower Information | Demographic information about the borrower, including race, ethnicity, sex, age, and income |
| Property Information | Information about the property being purchased or refinanced, including the property type and location |
In summary, the HMDA data collection process is an important tool for identifying potential discriminatory lending practices and ensuring that lenders are serving the housing needs of all segments of their communities. By collecting and reporting the required data elements, financial institutions can help ensure that they are in compliance with the law and are providing equal access to mortgage credit for all borrowers.
HMDA Reportable Transactions
Home Mortgage Disclosure Act (HMDA) is a federal law that requires lenders to collect and report data on residential mortgage loan applications and originations. This information is used by regulators to monitor and enforce fair lending practices and to identify emerging trends in the housing market. HMDA reportable transactions include:
- Purchase Loans
- Refinancing Loans
- Home Improvement Loans
- Home Equity Loans and Lines of Credit (HELOCs)
Refinancing Loans
A refinancing loan is a loan used to pay off an existing mortgage loan. A refinancing loan is reportable if it is secured by a one-to-four family dwelling and is not a reverse mortgage or a temporary financing. A refinancing loan is also reportable if it results in a cash-out to the borrower or if it is a non-amortizing loan. The lender must collect and report data on the borrower’s ethnicity, race, gender, and income. If the property securing the loan is located in a metropolitan area, the lender must also report the property’s location and the loan’s pricing information.
Home Equity Loans and Lines of Credit (HELOCs)
A home equity loan or line of credit is a loan that uses the borrower’s home as collateral. These loans are reportable if they are secured by a one-to-four family dwelling and are not used for purchasing or refinancing the dwelling. The lender must collect and report data on the borrower’s ethnicity, race, gender, and income. If the property securing the loan is located in a metropolitan area, the lender must also report the property’s location and the loan’s pricing information.
Home Improvement Loans
A home improvement loan is a loan that is used to make repairs or improvements to a borrower’s home. These loans are reportable if they are secured by a one-to-four family dwelling and are not used for purchasing or refinancing the dwelling. The lender must collect and report data on the borrower’s ethnicity, race, gender, and income. If the property securing the loan is located in a metropolitan area, the lender must also report the property’s location and the loan’s pricing information.
Purchase Loans
A purchase loan is a loan used to purchase a home. These loans are reportable if they are secured by a one-to-four family dwelling and if the property is the borrower’s primary residence or second home. The lender must collect and report data on the borrower’s ethnicity, race, gender, and income. If the property securing the loan is located in a metropolitan area, the lender must also report the property’s location and the loan’s pricing information.
| Loan Type | Reportable Data Fields |
|---|---|
| Purchase Loans | Loan amount, property location, property type, loan purpose, race, ethnicity, gender, and income of borrower |
| Refinancing Loans | Loan amount, property location, property type, loan purpose, race, ethnicity, gender, and income of borrower |
| Home Improvement Loans | Loan amount, property location, property type, loan purpose, race, ethnicity, gender, and income of borrower |
| Home Equity Loans and HELOCs | Loan amount, property location, property type, loan purpose, race, ethnicity, gender, and income of borrower |
Overall, lenders must be diligent in collecting and reporting accurate data on all HMDA reportable transactions. By doing so, they not only comply with federal law, but also promote transparency and accountability in the housing market.
HMDA Reporting Thresholds
In order to determine if a particular financial institution is required to submit a HMDA report, there are certain reporting thresholds that must be met. These thresholds are based on the number of covered loans, applications, and preapprovals that were originated or purchased during the previous calendar year.
- 25 or more covered closed-end mortgage loans
- 100 or more covered open-end lines of credit
- 500 or more covered loans or applications (combined) for each of the two preceding calendar years
If an institution meets or exceeds any one of these thresholds, they are required to submit a HMDA report.
Covered Loans
Covered loans are those that meet the following criteria:
- secured by a dwelling (including refinances)
- made for the purpose of purchasing, refinancing, or improving a dwelling
- not intended for business purposes
Covered loans can be either closed-end or open-end, and they may be originated by the financial institution or purchased.
If a financial institution only originates or purchases a small number of covered loans, they may still be exempt from reporting if they do not meet any of the reporting thresholds.
Covered Applications
In addition to covered loans, financial institutions must report on covered applications. A covered application is an application for credit that meets the following criteria:
- submitted for the purpose of purchasing, refinancing, or improving a dwelling
- under the institution’s underwriting standards, there is a reasonable expectation of approval
- not withdrawn by the applicant prior to a credit decision
Covered applications can also be either closed-end or open-end, and they do not have to result in a covered loan in order to be reportable.
HMDA Reportable Data
If a financial institution meets the reporting thresholds and has covered loans and/or applications, they must collect and report a wide variety of data under HMDA regulations. This includes, but is not limited to:
| Data Field | Description |
|---|---|
| Property Address | The street address of the property securing the loan or application |
| Action Taken | Indicates whether the loan or application was approved, denied, or withdrawn, among other options |
| Loan Amount | The amount of the loan or the requested amount for an application |
| Income | The reported income of the applicant or borrower |
| Race, Ethnicity, and Gender | Information about the applicant or borrower’s race, ethnicity, and gender |
Financial institutions should be sure to familiarize themselves with all of the data fields required under HMDA regulations in order to ensure accurate and complete reporting.
Consequences for Failing to File or Reporting Errors
When it comes to filing HMDA reports, there are strict guidelines that need to be followed. Failure to do so can result in consequences that can be detrimental to your organization. Below are some of the consequences of failing to file or reporting errors.
- Penalties: Failing to file can result in significant monetary penalties. The Consumer Financial Protection Bureau (CFPB) has the authority to issue civil money penalties up to $1 million per day for each violation of HMDA reporting requirements.
- Damage to Reputation: Failing to file or reporting errors could result in a negative public perception of your organization. This could lead to a loss of customers, partners, and investors.
- Legal Action: Failure to comply with HMDA regulations can lead to legal action against your organization. This could lead to costly settlements and legal fees.
HMDA Filing Requirements
It is important to understand the HMDA filing requirements to ensure compliance and avoid consequences. The HMDA reporting requirements include:
- Reporting on all covered loans: HMDA requires lenders to report on all covered loans, which include home purchase loans, home improvement loans, and refinancing loans.
- Minimum filing requirements: There are minimum filing requirements for lenders based on the number of covered loans they originated in the previous year. Failure to meet these requirements could result in penalties and legal action.
- Accuracy of data: HMDA requires lenders to report accurate and complete data on each covered loan. Errors or omissions in the data could result in penalties and legal action.
Reporting Errors
Reporting errors can happen, but it is important to correct them as soon as possible to avoid penalties and legal action. If an error is discovered, the lender should submit a corrected report to the CFPB as soon as possible.
If a lender is unable to determine if there is an error, they should consult with their legal team or a HMDA expert to review their data and determine if corrections are necessary.
HMDA Enforcement Actions
The CFPB has the authority to take enforcement actions against lenders who fail to comply with HMDA regulations. These actions may include:
| Enforcement Action | Description |
|---|---|
| Civil Money Penalties | The CFPB can issue civil money penalties up to $1 million per day for each violation of HMDA reporting requirements. |
| Legal Action | The CFPB has the authority to take legal action against non-compliant lenders. This could lead to costly settlements and legal fees. |
| Public Disclosure | The CFPB can publicly disclose the enforcement actions taken against non-compliant lenders, which could harm their reputation and lead to a loss of customers and partners. |
It is important for lenders to take HMDA reporting requirements seriously to avoid the consequences of non-compliance. Seeking the guidance of HMDA experts and the use of reliable reporting technologies can help ensure accurate and timely reporting.
HMDA Data Privacy and Security Measures
When it comes to HMDA reportable information, data privacy and security measures are of utmost importance to financial institutions. These measures ensure that sensitive customer information is protected and not misused or mishandled in any way.
Best Practices for Data Privacy and Security
- Implement strong password policies and multi-factor authentication for access to sensitive data.
- Ensure that all software and hardware systems are up-to-date with the latest security patches and upgrades.
- Use encryption to protect sensitive information in transit and at rest.
HMDA Data Security Incident Response Plan
Financial institutions should have a plan in place in case of a data security incident. This plan should include:
- Steps to identify and contain the incident
- Notification procedures for affected parties, including customers and regulators
- Procedures for ongoing monitoring and risk assessment after resolution of the incident
HMDA Reportable Information
Financial institutions must report the following information under the HMDA:
| Data Point | Description |
|---|---|
| Loan or application type | Indicates whether the HMDA reportable transaction is a loan or an application for a loan. |
| Property location | Address of the property securing the loan or to which the application relates. |
| Borrower information | Name, race or ethnicity, sex, and age of primary borrower. |
| Loan terms | Interest rate, loan amount, term, and other information about the loan itself. |
| Disposition | Outcome of the application or loan. |
Financial institutions should take all necessary precautions to ensure that this information is kept secure and protected from unauthorized access or disclosure.
FAQs: What is Considered HMDA Reportable?
Q: What is HMDA?
A: HMDA stands for Home Mortgage Disclosure Act, a federal law that requires certain financial institutions to report data about their mortgage lending activities.
Q: Which financial institutions are subject to HMDA reporting?
A: Generally, banks, savings associations, credit unions, and other mortgage lenders that meet certain criteria are subject to HMDA reporting. However, certain institutions may be exempt if they don’t meet the threshold criteria.
Q: What types of mortgage loans are reportable?
A: In general, mortgages secured by a property located in the United States that are made for the purpose of purchasing or improving the property are reportable. This includes first-lien mortgages, subordinate-lien mortgages, and home improvement loans.
Q: Is refinancing reportable under HMDA?
A: Yes, refinancing is reportable if it meets the criteria mentioned in the previous answer. However, if the refinanced loan is not secured by the same property, then it is not reportable.
Q: What data is required to be reported under HMDA?
A: Detailed information about each mortgage loan application and loan originations, such as the borrower’s race, ethnicity, sex, and income, among other things.
Q: What is the threshold for triggering HMDA reporting?
A: Institutions are required to report HMDA data if they originate at least 25 covered mortgage loans during a calendar year and meet certain other criteria.
Q: When is the HMDA data due?
A: The HMDA data is usually due to be submitted to the relevant regulatory agency by March 1st of the year following the calendar year in which the covered mortgage loans were originated.
Closing Thoughts
Now that you have a better understanding of what is considered HMDA reportable, you can ensure that your financial institution is compliant with the law. Remember to keep track of all covered mortgages that your institution originates and report the required data to the relevant regulatory agency on time. Thanks for reading and visit us again later for more finance-related articles!