I just got into a debate with an examiner and now that he has gone back to his "room" I need someone to determine if I have lost my mind or not.

Prior to Jan 1, 2004 - wasn't it the discretion of each bank to determine if they were going to report home improvement loans if not secured by the residence?

The examiner says no and I say yes...can you guys settle this? My HMDA Getting it Right for 2004 doesn't single out what the new provisions were. Thanks!

If you classify non-dwelling secured loans as home improvement, you should be reporting them. Optional reporting is for HELOCs.

Prior to 2004, a home improvement loan was reportable if classified as a HI loan on the Bank's books. Classifying could mean many things....codes, different color files, etc. I would think that a bank would not pick and choose. It's either your practice to report them or not report them. Could that be the problem? Did the examiners find that you were reporting some but not others?We reported all loans to improve a dwelling secured by a dwelling. We did not report unsecured home improvement loans. Our classification system came from the codes we assigned to the loans since we no longer keep paper files. So the 2004 rule really didn't change anything for us.

From page 10 of the 2003 GIR:

A home improvement loan is any loan to be used, at least in part, for repairing, rehabilitating, remodeling, or improving a dwelling (or the real property on which the dwelling is located) and that is carried on the institution’s books (or has otherwise been classified or coded) as a home improvement loan. The term applies to both secured and unsecured loans.

Home improvement loans have never been optional reporting. If they meet the definition, they are reportable.

In my past banking life, the bank I worked for always called them "personal loans" and refused to report them as home improvement because they did no want to be reporting more than they had to.

I know that the rules changes in 2004 requires all HI's to be recorded, but the examiners came across an application for a HI loan that did not have the monitoring information on it which was taken on 1/14/04. My point was that maybe they allowed the customer to fill out a regular consumer application instead of a real-estate application because it was so close to the date when the rules were changed that maybe it was just a simple oversight. ???

I don't know, I am reaching. Its just frustrating when you have a $3,000/unsecured HI loan and you are getting ready to get cited because it was on the wrong application form where the customer did not personally check all the little boxes themselves - basically the officer did it b/c the customer has been here for 20 years. It is recorded on the HMDA LAR, just that they "can't see where they customer filled it out". Sorry to vent, but you know what its like trying to defend everything the examiners come and throw at you.

The situation as I see it is that apparently this loan is for HI and is classified as HI.

What you are "arguing" with the examiner is something I have been arguing for several years with loan officers. If the loan is subject to HMDA reporting the GMI disclosure/collection form must be provided to the applicant for each applicable loan so that they have their choice of categories to choose or to choose they do not wish to furnish. Some rely on Reg. B's allowance to use previous collected GMI, however Reg. C really does not give such an allowance.

Basically if you do not provide the GMI disclosure required under Reg. C, you are not allowed to collect the GMI for Reg. C purposes, and if you don't provide the disclosure and don't collect GMI you have a violation, but if you do collect and report you also have a potential violation for collecting the GMI without providing the disclosure.

If you have the GMI completed by the applicant from a previous loan, you may try to fall back on the Reg. B allowance for previous collected GMI. However, what may compound this problem if it was a face to face application and the loan officer did not provide the disclosure.

I will also state that all do not agree with this interpretation, but Kirchman, HMDA Help (God help me), and my regional examiners (FDIC) do.

PS. Remember that Reg. B's allowance for collecting GMI applies to purchase money transaction for the principal dwelling and secured by the principal dwelling or the refinancing of the purchase money transaction, it does not allow GMI collection for HI purposes.