My bank owns a mortgage subsidiary and we have never elected to include their HMDA lending in our CRA assessments. I am doing some analysis now to determine if it would be advantageous for us to include affiliate lending.

12 CFR 345.22(c)(2)(i) states "no affiliate may claim a loan origination or loan purchase if another institution claims the same loan origination or purchase. I have a question that relates to this.

The mortgage subsidiary will, for certain loan types, originate and then sell a HMDA loan to the parent bank. Since the mortgage subsidiary has its own LAR, I read this as only count one transaction rather than the origination and the purchase (which, when we combine LARs for analysis purposes, would show up as 2 LAR entries). The mortgage subsidiary will originate and sell other loans to other, non-affiliated institutions. For these types of loans, would they be considered as claimed by another institution? The way I am thinking about this is that the mortgage company will sell to:
1. Us - the parent bank
2. Freddie Mac and Fannie Mae
3. Other non-affiliated banks

For CRA purposes, do I count HMDA loans that fall into groups 1 and 2 but not 3?

Constraints on the Consideration of Affiliate Lending

No affiliate may claim a loan origination or loan purchase if another institution claims the same loan origination or purchase.
However, an institution can count as a purchase a loan originated by an affiliate that the institution subsequently purchases, or count as an origination a loan later sold to an affiliate, provided the same loans are not sold several times to inflate their value for CRA purposes.
If an institution elects to have its supervisory agency consider loans within a particular lending category made by one or more of the institution’s affiliates in a particular assessment area(s), the institution must elect to have the agency consider all loans within that lending category in that particular assessment area(s) made by all of the institution’s affiliates.

Affiliate’s Home Mortgage Lending

If an institution elects to have an affiliate’s home mortgage lending considered in its CRA evaluation and the affiliate is a HMDA reporter, the institution must be prepared to identify those loans reported by its affiliate under 12 CFR part 1003 (Regulation C, implementing HMDA).
At its option, the institution may either provide examiners with the affiliate’s entire HMDA disclosure statement or just those portions covering the loans in its assessment area(s) that it is electing to have considered. If the affiliate is not required by HMDA to report home mortgage loans, the institution must provide sufficient data concerning the affiliate’s home mortgage loans to enable the examiners to apply the performance tests.