HMDA: Business Purpose Home Equity Loans

HMDA is a regulation that leaves very little room for error and the potential consequences are great. No one wants to scrub data and refile a HMDA LAR. When it comes to your HMDA data, it’s best to aim for perfection. This might include implementing some checks and balances along the way, such as periodically reviewing your data to ensure its accuracy. Some data fields are more challenging than others. Knowing some common tripwires can help you know where to direct your time and effort.

One area we still see financial institutions have issues with is reporting the Loan Purpose, specifically when it comes to the “Other” category. HMDA applies to dwelling-secured applications where the loan purpose is or will be to purchase, refinance, improve a dwelling or “Other”. We like to refer to “Other” as “consumer home equity”. Why? Because “Other” is the only option that depends on whether an application is primarily for consumer purposes vs. business purposes. In other words, the “Other” purpose is only used for a consumer-purpose, dwelling-secured application that is otherwise not to purchase, refinance or improve a dwelling. You do not report business-purpose, home equity applications for HMDA, but there is a catch you need to be aware of.

David explains more in the video.


HMDA Resources!

Published
2024/04/22
David Dickinson

David Dickinson

David’s banking career began as a field examiner for the FDIC in 1990. He later became a Compliance Officer and Loan Officer for a small bank. In 1993, he established Banker’s Compliance Consulting. Along with his amazingly talented Team, he has written numerous compliance articles for prestigious banking publications and has developed compliance seminars that Banker’s Compliance Consulting produces.

He is an expert in compliance regulations. He is also a motivational speaker and innovative educator. His quick wit and sense of humor transforms the usually tiring topic of compliance into an enjoyable educational experience. David is on the faculty of the American Bankers Association National Compliance Schools and has served on the faculty of the Center for Financial Training for many years. He also is a frequent speaker at the ABA’s Regulatory Compliance Conference. He is also a trainer for hundreds of webinars, is a Certified Regulatory Compliance Manager (CRCM) and has been a BankersOnline Guru for many years. The American Bankers Association honored David with their Distinguished Service Award in 2016.

David and his wife Karen have three adult children, four grandchildren (none of whom live at home!) and two cats (of which Dave is allergic … the cats, not the children!). They recently moved to an acreage outside of Lincoln, Nebraska where he gets to play with his tractor. When possible David can be found fishing, making sawdust in his shop, or playing the guitar and piano. He also enjoys leading worship at his church.

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