HMDA-reporting financial institutions are required to collect and report specific information regarding any applications (for a loan or line) that will be secured by a dwelling and for a specific HMDA purpose. These include dwelling-secured applications to:
While the first three are pretty self-explanatory (although there can still be exceptions and things to consider), the fourth is often the cause of confusion. You see, the “Other” purpose only applies to consumer-purpose, home equity loans and/or lines. For example, if someone applies for a dwelling-secured loan/line and they will use the proceeds to purchase a vehicle for their child, it is a HMDA-reportable transaction. If the proceeds will be used to purchase a vehicle for their business; however, it is not a HMDA-reportable transaction. Unfortunately, this doesn’t mean you can just ignore all applications for business purpose, home equity purposes. If those get refinanced later on down the road, they likely will be HMDA reportable as a Refinance.
David explains more in the video.
Published
2024/02/09