Tweet
About a year ago, my bank became a HMDA (Home Mortgage Disclosure Act) -reporting bank. The basic upshot is that we have to do extra paperwork with each loan secured by a mortgage and email it to the main branch to be input on the mainframe. During training, it was drilled into our heads that, even if the loan wasn't secured by real estate, if it was for real estate purposes, it had to be reported for HMDA.
So, fast forward to this week. I have a customer come in and apply for an auto loan. In the purpose section, he put that it was for a down-payment on a house. After looking at his debt load and income, I had to turn him down. There was just no way he could afford the loan (much less the house he wanted).
So I did the adverse action (basically a letter saying why we declined the loan and where we got the information to base the decision on) and the HMDA reporting. Email it to the main branch. I get a call back saying I filled it out wrong.
CW: You need to mark it as a conventional mortgage and fill in the collateral type.
Me: But we're not using the house as collateral. It would have been secured by a vehicle.
CW: Let me check into that.
Calls me back a few minutes later.
CW: It's not HMDA reportable. A purchase only needs to be reported if it's secured by the real estate purchased.
Me: Ok...
CW: You can just rip that one up.
Seriously, that makes no sense. The point of HMDA is to make sure banks don't discriminate against whatever classes of borrowers. That's why they make us collect race, sex, income, and location data - to see if we turn down a particular group more often than others. If we're collecting data on any loans for the purchase of a home, this one should qualify.
We have to do HMDA for a home-improvement loan, even if it's not secured by the home, but not if it's a puchase.
It just doesn't make any sense.
So, fast forward to this week. I have a customer come in and apply for an auto loan. In the purpose section, he put that it was for a down-payment on a house. After looking at his debt load and income, I had to turn him down. There was just no way he could afford the loan (much less the house he wanted).
So I did the adverse action (basically a letter saying why we declined the loan and where we got the information to base the decision on) and the HMDA reporting. Email it to the main branch. I get a call back saying I filled it out wrong.
CW: You need to mark it as a conventional mortgage and fill in the collateral type.
Me: But we're not using the house as collateral. It would have been secured by a vehicle.
CW: Let me check into that.
Calls me back a few minutes later.
CW: It's not HMDA reportable. A purchase only needs to be reported if it's secured by the real estate purchased.
Me: Ok...
CW: You can just rip that one up.
Seriously, that makes no sense. The point of HMDA is to make sure banks don't discriminate against whatever classes of borrowers. That's why they make us collect race, sex, income, and location data - to see if we turn down a particular group more often than others. If we're collecting data on any loans for the purchase of a home, this one should qualify.
We have to do HMDA for a home-improvement loan, even if it's not secured by the home, but not if it's a puchase.
It just doesn't make any sense.