Are you aware of which loans are excluded from HMDA reporting? Home Mortgage Disclosure Act (HMDA) is a law enforced by the federal government to keep track of mortgage lending practices and ensure compliance to non-discriminatory policies. However, not all loans fall under the parameters of HMDA reporting.
For instance, loans taken for commercial purposes, like buying or renovating a commercial property, are not required to be reported under HMDA. Similarly, loans on unimproved land or vacant plots are also out of the reporting range. These types of loans are targeted towards commercial properties and are not meant for residential purposes, hence, they are exempted from reporting.
Additionally, there are some other types of mortgage loans which do not require HMDA reporting. Loans taken out for agricultural or farming purposes, mobile homes, and finance for timeshare properties are some common examples that are not covered under HMDA reporting. While these loans may still hold significance for the borrower, there is a separate regulation in place for such properties. It is important to keep abreast of the excluded loans, so that you can take appropriate action for the loans that do require reporting.
Types of loans covered under HMDA reporting
HMDA or the Home Mortgage Disclosure Act is a federal law that requires lenders to provide information about the home loans they originated or purchased the previous year. The law aims to provide transparency in lending practices and combat discriminatory practices in mortgage lending. Here are the types of loans covered under HMDA reporting:
- Home purchase and refinance loans secured by a dwelling
- Home improvement loans secured by a dwelling
- Home equity loans or lines of credit secured by a dwelling
- Reverse mortgages
It’s important to note that not all home loans are covered by HMDA reporting. Here are some loans that are excluded:
| Loan type | Exclusion |
|---|---|
| Loans for commercial purposes | Excluded as they are not intended for residential purposes |
| Loans for agricultural purposes | Excluded as they are not intended for residential purposes |
| Loans for investment purposes | Excluded as they are not intended for the borrower’s own residential use |
| Manufactured home loans not secured by real estate | Excluded as they are not considered a dwelling |
By excluding certain types of loans from HMDA reporting, the law focuses on the loans that are most significant to the housing market and most likely to impact fair lending practices.
Overview of HMDA reporting requirements
The Home Mortgage Disclosure Act (HMDA) requires certain financial institutions to maintain, report, and publicly disclose data about mortgage lending activity. The primary purpose of HMDA reporting is to identify any potential discriminatory lending practices and ensure mortgage lending is meeting the credit needs of all communities. HMDA reporting applies to mortgage loan applications that meet certain criteria, including the purpose of the loan, the type of loan, and the location of the property.
Loans excluded from HMDA reporting
- Business purpose loans: Loans that are primarily for a business purpose are not subject to HMDA reporting. These may include loans for rental properties, commercial properties, or other business-related purposes.
- Temporary financing: Loans with terms of 12 months or less are excluded from HMDA reporting. This may include bridge loans or other short-term financing options.
- Reverse mortgages: Reverse mortgages are not subject to HMDA reporting. These types of loans are only offered to homeowners age 62 or older and allow them to convert their home equity into cash.
HMDA reporting requirements for covered lenders
Financial institutions that meet certain criteria are required to collect and report HMDA data. The following institutions are considered covered lenders:
- Banks, credit unions, and other financial institutions that originate mortgage loans
- Mortgage lending subsidiaries of federally regulated institutions
- Mortgage lending affiliates of federally regulated institutions that are operating in separate offices
HMDA data reporting requirements
Financial institutions that are required to report HMDA data must submit an annual report to the Consumer Financial Protection Bureau (CFPB). This report includes information about the institution, the number and types of loan applications received, and the loan application outcomes. The HMDA report must also include borrower demographics, such as ethnicity, race, and gender, to identify any potential discriminatory lending practices. The CFPB will then publish this data on their website to ensure public access and transparency.
| Data Field | Description |
|---|---|
| Property address | Address of the property to be mortgaged or used as collateral |
| Loan amount | The amount the applicant requested to borrow |
| Loan type | Type of mortgage being applied for |
| Purpose | The intended use of the loan |
| Occupancy status | Whether or not the property will be owner-occupied or not |
The HMDA reporting requirements are critical in ensuring fair and equal access to mortgages for all communities. By reporting data about mortgage lending activity, financial institutions can be held accountable for any potential discriminatory practices and work towards creating a more inclusive lending environment.
HMDA Reporting Exemptions for Small Lenders
One of the most significant aspects of the Home Mortgage Disclosure Act (HMDA) is the reporting requirement for certain loans. However, small lenders are not held to the same degree of accountability as larger players in the market. Below are some of the HMDA reporting exemptions for small lenders:
- Small volume loan providers: If a lender has originated fewer than 100 closed-end mortgages or open-end lines of credit in each of the two preceding calendar years, they are exempt from HMDA reporting.
- Low asset size: Institutions with less than $47 million in assets are also exempt from HMDA reporting.
- Small Business Administration (SBA) loans: If a loan is guaranteed by the SBA, it does not have to be reported under HMDA. This exemption is only applicable to lenders who are SBA-approved and participating in the agency’s programs.
It is important to note that even if a lender falls into one or more of these categories, they may still be required to report data under the HMDA if they meet certain other criteria. For example, if the lender is acting as a correspondent for another lender that is required to report, they will be obligated to submit HMDA data for the loans they originate.
Types of Loans Excluded From HMDA Reporting
In addition to exemptions based on lender size and loan volume, certain types of loans are also excluded from HMDA reporting:
- Loans on nonresidential properties: HMDA only applies to residential properties, so loans made for commercial or agricultural purposes are not subject to reporting.
- Purchase of unimproved land: If a loan is made for the purchase of unimproved land, it is excluded from HMDA reporting.
- Temporary financing: Loans made to bridge financing gaps during construction are not reportable under HMDA as long as they are intended to be replaced by permanent financing.
Exclusions Based on Loan Characteristics
HMDA has also established some exclusions based on loan characteristics. For example, loans that fall under one of the following categories are not covered by HMDA:
| Loan Category | Exclusion Criteria |
|---|---|
| Reverse mortgages | Loans that allow senior citizens to withdraw equity from their homes are not subject to HMDA reporting requirements. |
| Loans secured by mobile homes | Loans made for mobile homes that are not affixed to a permanent foundation are excluded from HMDA reporting. |
| Home equity lines of credit (HELOCs) | HELOCs that are not secured by a dwelling or the principal residence are not subject to HMDA reporting. |
Overall, there are several types of loans that are excluded from HMDA reporting, as well as exemptions for small lenders. However, it is important to understand that these exclusions and exemptions do not release lenders from their fair lending obligations and may not always apply in certain circumstances.
HMDA Reporting Exemptions for Certain Loan Types
Under the Home Mortgage Disclosure Act (HMDA), certain types of loans are excluded from being reported. These exemptions have been put in place to help reduce reporting burden on financial institutions, while ensuring that the data collected is still valuable in identifying lending patterns and potential discrimination.
One of the most significant HMDA reporting exemptions is for loan types that are not secured by real estate. These loans are excluded because they do not fall under the scope of the HMDA’s coverage of mortgage lending activity.
Exemptions for Certain Loan Types
- Non-real estate secured loans: Loans that are not secured by real estate are not subject to HMDA requirements. This includes personal loans, car loans, and credit cards.
- Business or commercial purpose loans: Any loan that is made for a business or commercial purpose is not considered a home purchase loan and therefore not covered under HMDA. This exemption applies even if the property securing the loan may also be used as a residence.
- Temporary financing: Loans that are used to provide temporary financing but that will be replaced by permanent financing are also excluded. For example, bridge loans or construction loans that will be refinanced with a regular mortgage would not need to be reported under HMDA.
Reporting Thresholds for HMDA
There are also certain reporting thresholds that must be met for loans to be considered covered. For example, a financial institution would only be required to report data on closed-end mortgage loans if they originated, purchased, or sold at least 25 such loans in the preceding two calendar years. For open-end lines of credit, the threshold is 500.
| Loan Type | Reporting Threshold |
|---|---|
| Closed-end Mortgage Loans | 25 loans originated, purchased, or sold in preceding two calendar years |
| Open-end Lines of Credit | 500 lines of credit originated, purchased, or sold in preceding two calendar years |
By understanding these exemptions and reporting thresholds, financial institutions can better ensure that they are complying with HMDA requirements, while minimizing reporting burden on themselves.
HMDA Reporting Exemptions for Certain Loan Amounts
Under the Home Mortgage Disclosure Act (HMDA), certain loans are exempted from reporting requirements. These exceptions are established to reduce the regulatory burden on smaller lenders who do not produce a large volume of loans. In particular, thresholds are applied to loan amounts and numbers that banks originate and therefore dictate whether they are required to report to the HMDA about these loans. There are several types of loans that banks are exempt from reporting under HMDA, such as:
- Loans that are below the minimum threshold for reporting.
- Loans that fall under the limited coverage provisions.
- Loans made to non-natural persons.
- Purchased loans that are not home-purchase loans.
- Agriculture and commercial-purpose loans.
The most common exemption from HMDA reporting is for loans that fall below certain thresholds of loan amounts. If the institution has less than a certain number of loans to report, it is not required to report any loans to the government.
The table below represents the excluded loan amount thresholds for reporting purposes:
| Reporting Year | Loan Threshold (1) | Loan Threshold (2) |
|---|---|---|
| 2018-2019 | $46,000 or Less | $47,000 – $57,000 |
| 2020-2022 | $48,600 or Less | $49,700 – $60,300 |
In summary, a bank or mortgage lender may be eligible for an exemption from HMDA reporting requirements if they originate fewer loans than specified in the thresholds or if their transactions are outside of the scope of HMDA coverage. Understanding these thresholds and considerations can help institutions avoid the penalties that result from non-reporting or inaccurate reporting.
HMDA Reporting Exemptions for Certain Lenders
The Home Mortgage Disclosure Act (HMDA) requires certain lenders to disclose data about the mortgage loans they originate or purchase. However, not all lenders are required to report. Some lenders are exempt from HMDA reporting requirements, depending on several factors. These factors include:
- The number of loans originated or purchased by the lender;
- The total value of loans originated or purchased; and
- The type of lender.
Exemption for Low-Volume Lenders
Small-volume lenders, such as credit unions and community banks, are less likely to be subject to HMDA reporting requirements. A lender is considered a “low-volume lender” if they fall below the following thresholds:
- 25 or fewer closed-end mortgage loans in each of the two preceding calendar years;
- 100 or fewer open-end lines of credit in each of the two preceding calendar years;
- The lender originated or purchased fewer than 500 closed-end or open-end loans in the preceding calendar year; and
- The lender’s assets fall below a certain threshold, which is adjusted for inflation each year. For 2021, that threshold is $47 million.
Exemption for Certain Types of Lenders
Non-depository lenders, such as mortgage brokers, are not generally subject to HMDA reporting requirements, unless they meet certain criteria. To be subject to HMDA reporting requirements, a non-depository lender must be a “financial institution,” which is defined by HMDA as an organization that:
- Is organized under a law of the United States or any state;
- Has its principal place of business in the United States; and
- Is engaged in the business of making home loans.
Exemption for Certain Types of Loans
Not all loans are subject to HMDA reporting requirements. The following types of loans are generally excluded from HMDA reporting:
| Type of Loan | Description |
|---|---|
| Loans on unimproved land | Loans for the purchase of unimproved land, unless the lender intends to or has made improvements to the property. |
| Temporary financing | Loans that are expected to be replaced by permanent financing. |
| Business or commercial purpose loans | Loans primarily for a business or commercial purpose. |
| Investment property loans | Loans made to finance the acquisition or improvement of property that is not the borrower’s principal residence. |
| Loans below a certain threshold | Loans that are below a certain dollar amount, which is adjusted for inflation each year. For 2021, that amount is $28,100. |
Understanding which loans are excluded from HMDA reporting is critical for ensuring compliance with the law. Lenders should carefully review the HMDA reporting requirements and seek guidance from legal or compliance experts as needed to ensure they are compliant with the law.
Impact of HMDA reporting on fair lending practices
The Home Mortgage Disclosure Act (HMDA) requires lenders to report data on home loans to help regulators enforce fair lending rules and identify areas of discrimination in mortgage lending.
The reporting of this data has a direct impact on fair lending practices, as it allows regulators to identify any trends or patterns that could point to discriminatory lending practices. The data can then be used to identify areas where lenders may be discriminating against certain populations, such as racial or ethnic minorities.
Loans excluded from HMDA reporting
- Home equity lines of credit (HELOCs)
- Reverse mortgages
- Loans for the maintenance or improvement of existing properties
- Loans secured by mobile homes, boats, or trailers
- Loans for the purchase of recreational property or secondary homes
- Loans with a value below the current HMDA reporting threshold
- Business or commercial loans
These loans are excluded from HMDA reporting as they are not considered to be traditional home purchase loans. Lenders may still collect data on these loans for internal purposes but are not required to report it to regulators.
HMDA reporting requirements
For home purchase loans that meet the HMDA reporting threshold, lenders are required to report data such as the applicant’s race, ethnicity, and gender, as well as the property’s location, type, and value. This data can then be used to identify any disparities in lending practices or any neighborhoods that may be under-served by mortgage lenders.
| Reporting Year | Loan Amount Threshold |
|---|---|
| 2021 | $64,200 |
| 2020 | $60,000 |
| 2019 | $57,200 |
| 2018 | $52,600 |
The HMDA reporting requirements are designed to promote transparency and accountability in mortgage lending and to help ensure that all borrowers have fair access to credit.
What Loans are Excluded from HMDA Reporting?
Q: What types of loans are excluded from HMDA reporting?
A: Loans made for commercial purposes, agricultural purposes, or to purchase or improve vacant land that is not intended for residential use are excluded from HMDA reporting.
Q: Are government-backed loans excluded from HMDA reporting?
A: No, government-backed loans, such as FHA, VA, and USDA loans, are included in HMDA reporting.
Q: Are loans made to trusts or estates excluded from HMDA reporting?
A: Yes, loans made to trusts or estates are excluded from HMDA reporting.
Q: Are loans made to corporate entities excluded from HMDA reporting?
A: Yes, loans made to corporate entities are excluded from HMDA reporting.
Q: Do loans made for home renovations or improvements need to be reported under HMDA?
A: Yes, loans made for home renovations or improvements are still required to be reported under HMDA.
Q: Are loans made to purchase mobile homes excluded from HMDA reporting?
A: No, loans made to purchase mobile homes that are classified as real property are included in HMDA reporting.
Q: Are loans made to purchase rental properties excluded from HMDA reporting?
A: No, loans made to purchase rental properties intended for residential use are included in HMDA reporting.
Closing Thoughts: Thanks for Reading!
We hope this article provided helpful information on what loans are excluded from HMDA reporting. Remember, loans made for commercial, agricultural, or vacant land not intended for residential use are excluded from HMDA reporting, along with loans to trusts, estates, and corporate entities. Government-backed loans and loans made for home renovations or improvements are still required to be reported. Thanks for reading, and don’t forget to check back later for more informative articles.