We Don't Report HELOC's Under HMDA, However...

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Question:

If a bank has elected not to report HELOC's under HMDA then you do not have to collect the borrower's race, sex or ethnicity. What if a borrower completes an application and marks this information as it pertains to them, does it matter that you have this information in your loan file even though it is not required?

Answer:

If you don't report HELOCs then why does your application for this product ask for the Government Monitoring Information (GMI)? Since you have elected not to report HELOCs for HMDA purposes then you need to look to Reg B for guidance on the collection of the GMI. Reg B only allows the collection of GMI for applications to purchase or refinance the primary residence and that residence will secure the loan. In the case of open-end credit, you only collect if it is evident at the time of application if the credit will be for the purchase or refinance of the primary residence.

You have two issues with HELOCs under Reg B, collecting the GMI when you should not and not collecting when you should. If the information is inadvertently collected then Reg B will not treat it as a violation. However, if your application for this product asks for the information and your applicants are completing the information then you would have a hard time claiming you are inadvertently collecting the information. After all, you are giving the applicants a form requesting the information.

First published on BankersOnline.com 11/06/06