Collection Method Questions for HMDA

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Question:

This question has come up before but I have not seen a clear answer. If the application is NOT taken face to face, how should the collection method questions be answered for HMDA? Code 3 (NA) is only supposed to be for applications where the requirement to report the data does not apply to the covered loan. We would use code 3 on applications where it is an entity. Code 2 (not based on visual observation) would be the only choice that would make sense. What are your thoughts?

Answer:

This has been discussed many times in the HMDA forums. You are right that Code 3 (NA) is only to be used for applications made by an entity, but also when a loan is purchased. Otherwise, Code 1 or 2 should be used. If the application is not taken in person, Code 2 is the only logical choice and the correct answer.

Through discussions with the CFPB attorney's, they say they plan to clarify this issue, but have not done so yet.