HMDA Reporting When Facts Unknown

Answered by:

Question:

My bank does mainly commercial lending. We have a couple of 'refinance' scenarios that we have questions on. We had a loan approved in 2010 - the purpose was refinance business debt and my bank was taking a subordinate lien position on the principal's residence. After the bank's approval the borrower did not approve our terms and my lending officer did no further investigation so I do not know if the loan we were paying off was secured by a lien on their personal residence or not to know if it falls under HMDA. How do we make the determination as to if it is HMDA or not?

Answer:

Check to see if the lender did a lien search on the residence. Reviewing that and the credit report on the owner (if that was obtained) will help you to determine if there was a lien on the real estate and might help determine if it was for business purposes or a traditional residential mortgage. Otherwise, the lender needs to contact the former applicant to ask. Staff need to be trained to obtained required information up front.

First published on BankersOnline.com 4/25/11