We have a HELOC to build a shop on a property purchased in 2022 reported on our LAR that used the appraised value of the property and that same value to calculate the CLTV. This is the property value used on the credit memo to calculate the CLTV. However, our procedures indicate that if the property was purchased less than three years ago, the value of the collateral to be used is the lesser of the purchase price or the appraised value. Our HMDA procedures additionally state if the value documented in the loan file is not the lesser of the two, the HMDA data is to be corrected "in accordance with the reporting guide". Since the lender incorrectly used the appraised value rather than the purchase price (which was the lesser value) in their analysis, would we report that value or the purchase price in accordance with our procedures?

"used the appraised value of the property and that same value to calculate the CLTV. This is the property value used on the credit memo to calculate the CLTV."

If that was the value that was used to approve the loan, that is what you would report. Now whether the use of that value was a violation of bank policy, that is a totally separate issue.