Presentation on theme: "HMDA / CRA Data Collection"— Presentation transcript:
1 HMDA / CRA Data Collection How to Correctly Identify and Report Loans
2 How to Correctly Identify and Report Loans HMDA Data CollectionHow to Correctly Identify and Report Loans
3 Purpose of Training –To provide a full understanding of how to correctly identify a HMDA reportable loan.To provide a full understanding of how to correctly identify a Non-HMDA reportable but CRA reportable loan.To provide a full understanding of how to correctly identity a “Community Development Loan”.To provide a full understanding of how to correctly report the following;HMDA applicable loansSmall Business LoansSmall Farm LoansCRE – Commercial Real Estate LoansCommunity Development Loans
4 Table of Contents – HMDA Purpose Small Business Loans Small Farm Loans Home PurchaseHome ImprovementRefinanceSmall Business LoansLess than or equal to $1 millionNOT secured by Residential Real EstateSmall Farm LoansAgricultural PurposeSecured by Farm landCRE – Commercial Real EstateSecured by Commercial Real EstateOver $1 millionCommunity Development LoansAffordable Housing – Primarily for LMI individualsCommunity Services – Primarily for LMI individualsEconomic DevelopmentRevitalization or Stabilization of LMI census tracts or areas targeted by government
5 Why and What For?There are two Federal regulations that govern the collection and reporting of HMDA loans and certain CRA loans;12 CFR 203; Regulation C; HMDA; Home Mortgage Disclosure Act12 CFR 228; Regulation BB; CRA; Community Reinvestment ActThe proper collection and reporting of loan data is “CRITICAL” because the government uses the data for many purposes including the distribution of loan data throughout the country, determination of loan trends, borrower characteristics and demographic data.Regulators can issue poor compliance ratings for non-compliance; and/orCivil Money Penalties for non-complianceCan you spell Cease and Desist? It is as bad as it soundsSignificant risk – Reputation Risk, Compliance Risk, Monetary Risk (Penalties)
6 Four Main Aspects That Lead To Success! Determine the loan purposeHome Purchase, Home Improvement, RefinanceSmall Business / Small Farm, Commercial Purpose, (CRE), Community DevelopmentDetermine the loan amountDollar amount applied forDollar amount grantedIdentity the borrowerIndividual / Business EntityFor Profit / Not For-ProfitIdentity the subject property / securityResidential Real EstateCommercial Real EstateMultifamily Housing – 5+ PropertiesMixed Use Property / Multiple PropertiesNon Real Estate Secured“The Golden Rule”
7 HMDA Purpose!To be reportable as a HMDA loan, the loan purpose must be for;Home PurchaseMust be for the purpose of “Home Purchase”Must be secured by a “Dwelling”Home ImprovementAny part of the proceeds used for “Home Improvement” purpose (renovate, rehabilitate, a dwelling or the real property on which the dwelling exists)May be secured or unsecured, *(different depending on Residential or Commercial loan)* Unsecured or non-real estate secured Home Improvement loans are only HMDA reportable if the institution classifies them as such on internal systems. Classification includes color-coding the files, using separate class or loan codes or call reporting codes. Since FB does not separately classify HI loans, they are not HMDA reportable unless secured by residential real estate, (dwelling or dwellings).RefinanceIncludes both Cash out and No Cash outMust replace an existing lien with a new lien, (not necessarily the same dwelling)
8 HMDA Purpose! Home Purchase Home Improvement Refinance Hierarchy of ReportingReport “Home Purchase” first, “Home Improvement” second and “Refinance” third –If a loan is both for Home Purchase and Home Improvement – Report as Home PurchaseIf a loan is a Refinance to do Home Improvements – Report as Home ImprovementIf loan is a Refinance for Cash out to purchase a second home – Report as Home PurchaseIncludes both “Owner” and “Non-Owner” occupied propertiesHome PurchaseHome ImprovementRefinance
9 Loans Exempt From HMDA Reporting – Loans on unimproved landUnless the financing includes the construction of a dwelling and is permanentConstruction Only Loans and other Temporary FinancingsIncludes builder / developer loansLoans made or purchased in a fiduciary capacityPurchase of an interest in a pool of mortgages, such as a participationPurchase solely of loan servicing rightsLoans acquired as part of a mergerThe acquisition of only a partial interest in a home purchase or home improvement loan – Consortium or Third party LoanUnless the bank is the lead bank in the participationPrequalification requestsAssumptionsIn addition, do not report Lines or Letters of Credit
10 HMDA LAR Information – Application # – Application Date – Unique identifying number for the applications received.Application Date –The date on which the loan request is made by an applicant and received by the BankMore specifically, the date on which the applicant has provided the Bank with enough information to START processing a loan requestMust be verifiable and documentedNot the LAF dateMay not be preceded by and other documented date in the loan file such as the Credit Report Date, Appraisal Date, Flood Cert Date, Proposal or Commitment Date.Application or Loan InformationApplication or Loan number(1)Date Application Received.(2)Loan Type(3)Property Type(4)Purpose(5)Owner Occupancy(6)1/1/201011/2/201021/3/20103
11 HMDA LAR Information – (Continued) It is imperative to determine up front whether or not a loan is HMDA reportable because you need certain information to properly collect and report required data on the LAR. Must document the Month, Day and Year of the application date.Loan Type –Indicate the loan application type;Code 1 Conventional, (any loan other than FHA, VA, FSA or RHS)Code 2 FHA insuredCode 3 VA GuaranteedCode 4 FSA/RHS LoanProperty Type –Indicate the property type;Code 1 1 – 4 family dwelling (other than manufactured housing)Code 2 Manufactured housing / Mobile HomesCode 3 Multifamily dwelling (5+ residential properties) *Use Code 1, not Code 3, for loans on individual condominium or cooperative unitsIf you cannot determine whether a loan or application relates to a manufactured home, use Code 1.* 5+ residential refers to units.
12 HMDA LAR Information – (Continued) Loan Purpose –Indicate the loan purpose;Code 1 Home PurchaseCode 2 Home ImprovementCode 3 RefinanceDo not report a refinancing if, under the loan agreement you were unconditionally obligated to refinance the obligation, or you were obligated to refinance the obligation subject to conditions within the borrower’s controlOwner Occupancy –Indicate the type of occupancy;Code 1 Owner Occupied as a principal dwellingCode 2 Not Owner Occupied as a principal dwellingCode 3 Not ApplicableFor purchase loans, use Code 1 unless the loan documents or application indicate that the property will not be occupied as a principal residence.Use Code for second homes or vacation homes, as well as for rental properties.Use Code 3 if the property to which the loan relates is a multifamily dwelling, (5 + units); is not located in a metropolitan area; or is located in a metropolitan area in which your institution has neither a home or branch office.
13 HMDA LAR Information – (Continued) Loan Amount –Enter the amount of the loan or application.Show the amount in thousands, rounding to the nearest thousand, (round $500 up to the next $1,000) For example – a loan for $167,300 should be entered as 167 and one for $15,500 as 16;For home purchase loan that you originated, enter the principal amount of the loan.For home purchase loans that you purchased, enter the unpaid principal balance of the loan at the time of the purchase.For home improvement loan, enter the entire amount of the loan regardless of the amount used for home improvement.For refinance loans, enter the total amount of the new loan.For a loan application that was denied or withdrawn, enter the amount applied for by the applicant.Loan ActionProperty LocationLoan Amt. in ,000’s(7)Pre-App.(8)Action Type(9)Action Date(10)MSA / MD(11)St. Code(12)CTY. Code(13)Census(14)6511/10/20102554009003461.254931/11/20106.5051/12/20102.
14 HMDA LAR Information – (Continued) Request for Pre-Approval –Indicate whether the application or loan involved a request for pre-approval of a home purchase loan;Code 1 Pre-Approval requestedCode 2 Pre-Approval not requestedCode 3 Not applicableEnter Code 2 if the institution has a covered pre-approval program but the applicant does not request pre-approval.Enter Code 3 if your institution does not have a pre-approval program.Enter Code 3 for applications for home improvement and refinancing and for purchased loans.Commercial Loans – always use Code 3 – Not ApplicableType of Action Taken –Indicate the type of action taken on the loan application;Code 1 Loan originatedCode 2 Application approved but not acceptedCode 3 Application deniedCode 4 Application withdrawnCode 5 File closed for incompletenessCode 6 Loan purchased by institutionCode 7 Pre-Approval request denied (not used in commercial lending)Code 8 Pre-Approval request approved but not accepted (not used in commercial lending)
15 HMDA LAR Information – (Continued) Use Code 1 for all originated loans.For loans where a counter offer is made and accepted by the applicant, enter Code 1. For loans where a counter offer is made and not accepted by the applicant or the applicant does not respond, use Code 3.Use Code 2 when the original loan request is approved but the applicant does not respond to a written letter of commitment. Use code 2 if applicant withdraws the application after written commitment provided. (DO NOT USE FOR PRE-APPROVAL REQUEST)For loan applications where the applicant expressly withdraws the application prior to a written commitment, use Code 4. (Do not use Code 4 if a request for pre-approval is withdrawn; Pre-approval requests that are withdrawn are NOT HMDA REPORTABLE)Use Code 5 if a written notice of incompleteness was sent to the applicant and the applicant did not respond to the request within the time frame noted in the request. (Do not use Code 5 if a request for pre-approval is incomplete; Pre-approval requests that are incomplete are NOT HMDA REPORTABLE)Date Action Taken –Enter the date on which the action was taken on the loan or application;For loans originated, enter the settlement or closing date.For purchased loans, enter the date the loan was purchased by the institution.For applications and pre-approvals denied, applications and pre-approvals approved but not accepted, and files closed for incompleteness, enter the date that the action was taken by the institution or the date the notice was sent to the applicant.For applications withdrawn, enter the date your received the applicant’s express withdrawal, or enter the date shown on the notification from the applicant.For pre-approvals that lead to a loan origination, enter the date of the origination.
16 HMDA LAR Information – (Continued) Property Location –Enter the MSA/MD (Metropolitan Statistical Area)Enter the State and County CodesEnter the Census Tract;MSA/MD – 5 digit codeState Code – 2 digit code / County Code – 3 digit codeCensus Tract – 6 digit code (xxxx.xx)Applicant Information –Ethnicity, Race, Gender and Gross IncomeIf the information is not provided by the applicant(s) in a face to face interview, the loan officer must complete all fields by visual observation. Applies only to individuals not business entities.Applicant InformationA = Applicant CA = Co-ApplicantEthnicityRaceSexGross INC.ACAApplicantCo-Applicant1251258250395
17 HMDA LAR Information – (Continued) Applicant / Co-Applicant Ethnicity –Indicate the ethnicity of the applicant and co-applicant;Code 1 Hispanic or LatinoCode 2 Non Hispanic or LatinoCode 3 Information not provided in a mail or telephone applicationCode 4 Not Applicable (Non natural person and business entities)Code 5 No Co-ApplicantApplicant / Co-Applicant Race –Indicate the race of the applicant and co-applicant;Code 1 American Indian or Alaskan nativeCode 2 AsianCode 3 Black or African AmericanCode 4 Native Hawaiian or Other Pacific IslanderCode 5 WhiteCode 6 Information Not provided by Applicant in mail, internet or telephone applicationCode 7 Not Applicable (non-natural persons and business entities)Code 8 No Co-ApplicantIf applicant selects more than one racial designation, enter all codes listed.Use code 4 (for ethnicity) and code 7 (for race) for “Not Applicable only when the applicant(s) are not natural persons or the information is not available.If there is more than one co-applicant, provide the required information only for the first co-applicant listed. If there are no co-applicant(s), use code 5 (for ethnicity) and code 8 (for race) for “no co-applicant” in the co-applicant column.
18 HMDA LAR Information – (Continued) Applicant / Co-Applicant Sex –Indicate the gender of the applicant and co-applicant;Code 1 MaleCode 2 FemaleCode 3 Information not provided in a mail, internet or telephone applicationCode 4 Not ApplicableCode 5 No Co-ApplicantUse code 4 for “not applicable” only when the applicant or co-applicant is not a natural person or when applicant or co-applicant information is not available.If there is more than one co-applicant, provide the required information only for the first co-applicant listed on the application form. If there are no co-applicants or co-borrowers, use code 5 for “no co-applicant” in the co-applicant column.Income –Enter the gross annual income that your institution relied on in making the credit decision;Round all dollar amounts to the nearest thousand, (round $500 up to the next $1,000).For loans on multifamily dwellings, enter “N/A”.If no income information is asked for or relied upon in making the credit decision, enter “N/A”If the applicant or co-applicant is not a natural person (Commercial Loans made to an entity), enter “N/A”
19 HMDA LAR Information – (Continued) Type of Purchase –Enter the applicable code to indicate whether a loan that your institution originated or purchased was then sold to a secondary market entity within the same calender year;Code 0 Loan was originated or was not sold in the calendar covered by the LARCode 1 Fannie MaeCode 2 Ginnie MaeCode 3 Freddie MacCode 4 Farmer MacCode 5 Private SecuritizationCode 6 Commercial Bank, Savings Bank or Savings AssociationCode 7 Life Insurance Company, Credit Union, Mortgage bank, or finance companyCode 8 Affiliate InstitutionCode 9 Other type of PurchaserUse Code 0 for applications that were denied, withdrawn or approved but not accepted by the applicant; and for files closed incomplete.Use Code 0 if you originated or purchased the loan and did not sell it during that same calendar year and sell it in a succeeding year.Use Code 2 if you conditionally assign a loan to Ginnie Mae in connection with a mortgage-backed security transactionUse Code 8 for loans sold to an institution affiliated with you, such as your subsidiary or a subsidiary of your parent corporation.
20 HMDA LAR Information – (Continued) Reasons For Denial –Indicate the reasons for denial. This filed is optional. You may indicate up to three reasons. Leave this column blank if the action taken on the application is not a denial;Code 1 Debt – to – income ratioCode 2 Employment HistoryCode 3 Credit HistoryCode 4 CollateralCode 5 Insufficient cash (down-payment, closing costs)Code 6 Unverifiable InformationCode 7 Credit Application IncompleteCode 8 OtherUse Code 0 for applications that were denied, withdrawn or approved but not accepted by the applicant; and for files closed incomplete.Use Code 0 if you originated or purchased the loan and did not sell it during that same calendar year and sell it in a succeeding year.Use Code 2 if you conditionally assign a loan to Ginnie Mae in connection with a mortgage-backed security transactionUse Code 8 for loans sold to an institution affiliated with you, such as your subsidiary or a subsidiary of your parent corporation.Rate Spread (HOEPA Loans only) –Enter “N/A” – This section is not applicable for Commercial loans. Only applicable if Regulation Z applies.
21 HMDA LAR Information – (Continued) HOEPA Status –Enter Code 2 – for “N/A”. Only applies to loans subject to Regulation Z.Lien Status –Enter the lien status for loans originated and for applications not originated;Code 1 Secured by first lienCode 2 Secured by secondary or subordinate lienCode 3 Not secured by a lienCode 4 Not applicable, (purchased loan)Use Codes 1 – 3 for loans that you originate, as well as for applications that do not result in an origination, (applications that are approved but not accepted, denied, withdrawn, or closed incomplete).Use Code 4 for loans that you purchase.
22 Mixed Use Properties and Multi-Purpose Loans – Mixed Use Property –A mixed use property is one that involves both “Residential” and “Commercial” real estate;Retail “Strip Mall” with multiple retail stores and residential rental apartments included in same structure.Residential single family or 1-4 family residence with business attached.Horse Farm with residential dwelling.Restaurant with residential rental or owner occupied residence above.For a mixed use property where both a commercial and residential purpose is evident, the loan is HMDA reportable if the total square footage used for residential purposes is greater than the square footage of the commercial usage.Where square footage is not available or is not conclusive in making a determination, use the gross revenues derived from the residential use verses the revenues for retail purpose.Multi-Purpose Loan –A loan secured by commercial and or residential real estate for both a commercial and or residential purpose;A refinance of a residential property to provide funds for home improvement.A refinance of a residential property to provide funds to purchase a business or investment property.A construction permanent loan to purchase and demolish a residential dwelling and construct a commercial building.A construction permanent loan to convert an existing residence into a business property.Remember the “Golden Rule”. If the purpose meets any of the three HMDA purpose tests, the loan is HMDA reportable.If the purpose is a commercial purpose and none of the three HMDA tests are positive, then the loan is not HMDA reportable.
23 HMDA Purpose Defined – Home Purchase – Home Improvement Loan – A loan secured by and made for the purpose of purchasing a dwelling; does not include a loan to purchase property used primarily for agricultural purposes even if the property includes a dwelling (may include a loan to purchase an apartment building made through a commercial lending department). The dwelling does not have to be the same dwelling.A residential structure located in a State, the District of Columbia or Puerto Rico; includes an individual condo unit, co-op unit, or mobile or manufactured home: refers to any dwelling not necessarily owned by the borrower.Home Improvement Loan –A loan secured by a lien on a dwelling that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or real property on which it is located (may include a loan to improve an apartment building made through a commercial lending department); andA non-dwelling secured loan that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located. IF CLASSIFED AS SUCHRefinance –A new obligation that satisfies and replaces an existing obligation by the same borrower in which both the existing obligation and the new obligation are secured by liens on dwellings. Whether or not cash out occurs is not relevant; the purpose of the refinance is not applicable; the lender need not have been the lender on the existing obligation.
24 Special Attention LAR Reporting Fields – Property Location –Security as an “Abundance of Caution” – Business purpose loans that include a refinance of residential property are HMDA reportable if the property is primary security or the FMV of the property exceeds 50% of the loan proceeds when not primary.Income –Government Monitoring –Subject Property Securing Loan:Address of the property to which the loan relatesOther Property Securing Loan:Report the property being used as security in the census data.Borrower is an individual:Report the borrowers’ income relied upon in making the credit decision in the income field.Borrower is an entity / Multifamily units:Report N/A in the income field.If Borrower is an individual:Report applicable codesIf borrower is an entity:Report - “ ”
25 “Sometimes Yes, Sometimes No!” There are a number of factors to consider, when determining if a loan is HMDA reportable. Sometimes, the slightest change in circumstance can change the determination. Remember to perform the “Golden Rule” test, account for exceptions and then make your determination;Construction Loans –Construction loans are generally not HMDA reportable unless the financing contains both the construction only and permanent component.Loans to purchase and quickly renovate a dwelling, “Splash and Dash”, where the proceeds of the sale will repay the loan are HMDA reportable.Construction loans to developers to build a residential development are not HMDA reportable unless the financing contains both construction and permanent financing.Construction loans to developers to build a residential development are HMDA reportable if there is an existing dwelling on the property and the financing is not temporary.Example – Builder A takes a construction loan to develop a 12 acre parcel of land and construct 12 residential homes on it – Loan is not HMDA ReportableExample – Builder A enters into an agreement with builder B to purchase a failed development project. Builder A takes a construction loan to purchase the existing parcel with 3 partially completed dwellings already on the property, to finish and construct 9 additional homes – Loan is HMDA reportable.
26 “Sometimes Yes, Sometimes No!” Mixed Use Property –The square footage and income or revenue tests for determining if a loan is HMDA reportable only apply if the commercial purpose and residential purpose are contained in the same structure.If the residential purpose is fulfilled by a separate structure on the same parcel, then the loan is HMDA reportable.Example – Commercial customer is purchasing a strip mall that contains 8 retail businesses on the first floor and apartments on the second floor. The square footage of the retail shops total of 10,000 sq feet and the total square footage of the apartments is 6,000 sq feet. Since the square footage of the retail space is greater than the residential use, the loan is not HMDA reportable.Example – In the same example, an additional 2 family residence is located on the property and is not attached to the other structure – Loan is HMDA reportable.Home Improvement Loans –Secured “Home Improvement” loans where any part of the proceeds are used to renovate, rehabilitate or improve the dwelling or the real property the dwelling is located on, are HMDA reportable.Unsecured “Home Improvement” loans are only reportable if the institution classifies the loan as a home improvement loan. Classification means – Classifying in separate category on call report; coding by color, tag or any other method the loan file differently then other loans; segregating the loan type from other loan files. For commercial loans, there is no current segregation or classification, therefore, unsecured HI loans are not HMDA reportable.
27 “Sometimes Yes, Sometimes No!” Transitory Residences –A loan to purchase, improve or refinance a “Transitory Residence” is not HMDA reportable because the residence is considered temporary in nature and whose occupants have principal residences elsewhere. Recreational vehicles such as boats or campers are not dwellings for purposes of HMDA.Transitory residences include the following;Hotels, Motels, College Dormitories and Sorority / Fraternity HousesHalf way houses & Church sheltersSubstance abuse homes and temporary residences for mental retardationNursing Homes, (if temporary)Timeshare Purchases (not technically owned by the borrower)Example – Commercial loan to a church or non-profit entity to finance the purchase of a group home as a temporary shelter for battered and wayward women – Not HMDA Reportable.If the residence is considered non temporary, then the loan is HMDA reportable;Permanent Assisted living residencesRetirement communities and living residencesChurch sponsored permanent housingExample – Commercial loan to a non-profit church or entity to finance the purchase of an assisted living and retirement group home for the elderly as permanent housing – HMDA reportable.
28 “Sometimes Yes, Sometimes No!” Modifications, Extensions and Consolidation Agreements –A loan modification or extension is not HMDA reportable unless a new note is written that replaces or retires another note, or the purpose meets the HMDA definitions and new money is extended.Example – A loan with a 5 year term and 20 year amortization matures with $100,000 outstanding balance. The loan is secured by a second mortgage on a 7 unit apartment building.The loan is renewed and extended for another 5 years –The transaction is not HMDA reportable because the transaction is not to purchase of improve a residential dwelling and the original dwelling secured loan I not being paid off.The loan is renewed and increased to $150,000 and the original note is not being paid off –If the additional $50M will be used to either purchase or improve a dwelling then the entire $150,000 loan would be HMD reportable as either a purchase or home improvement as dictated by the use of the proceeds.The original loan is replaced with a $150,000 loan and creates a new dwelling secured loan –Since the original loan is being satisfied / replaced and the original and new loans are both dwelling secured loans, the loan would be HMDA reportable as a refinance regardless of the additional $50M.The Application to replace and extend the loan to $150,000 is denied for DTI –Since the original loan was to be satisfied / replaced, and the original loan and applied for loan would both be both dwelling secured, the loan would be HMDA reportable as a denied refinance regardless of the additional $50M.
29 “Sometimes Yes, Sometimes No!” Temporary Financing versus Short Term Financing –Temporary financing does not mean the same thing as short term financing. A loan can be permanent financing but be short term, (6 Months). Similarly, a loan could be temporary but have a term of 24 months. Temporary means that the financing is meant to be taken out with another extension of credit and therefore is temporary in nature. Permanent means simply – “The only financing the borrower intends to take” that will not be paid from a new extension of credit.A borrower applies for a construction-only loan to build a residential development with a term of 18 months. The loan will have periodic interest only payments throughout the construction phase and the entire principal balance will be paid at the lesser of; 1) The end of the term; 2) The sale of individual units within the development –Since the application is for construction loan and not for the permanent financing phase of the project, the application is considered temporary financing and therefore is not HMDA reportable, even though in this case it is the only financing the borrower intends to take. It’s purpose is to build and sell units. The individual sales of units would yield a HMDA reportable loan for the lending institution when the units are sold.A borrower applies for a loan to repave the parking lot of a multifamily unit. The loan will be fully amortized over a period of 10 months with monthly payments of principal and interest payments.This is a short term application that is permanent financing and therefore is HMD applicable as a home improvement loan.
30 How to Correctly Identify and Report Loans CRA Data CollectionHow to Correctly Identify and Report Loans
31 CRA Reporting –Reporting of Commercial Loans on the CRA LAR is based on loan type and collateral not loan purpose. In addition, unlike HMDA LAR collection you only report originations.The CRA LAR contains only the following fields;Application NumberLoan Type (FED CRA Loan Purpose) / State CRA Loan TypeLoan AmountAction Taken TypeAction DateMSA/MD, State Code, County Code, Census TractGross Revenue CodeAffiliate Lending FlagFed CRA Type / State CRA Loan Type –Fed CRA; Based on loan type and type of securityState CRA; Based on loan type, purpose and security
32 Community Development CRA Reporting –Hierarchy of ReportingHMDASmall BusinessSmall FarmCRECommunity Development
33 Call Report Schedule RC – C Line Descriptions – Call Report Schedule RC – C Description1.Loans Secured by Real Estate1a.Construction, land development and other land loans – Includes loans secured by real estate made to finance land development preparatory to erecting new structures or the on-site construction of industrial, commercial, residential, or farm buildings. "Construction" includes construction of new structures, additions or alterations to existing structures and the demolition of existing structures to make way for new structures. Includes vacant land loans secure by real estate to acquire and develop undeveloped property. Excludes loans to finance construction and land development not secured by real estate.1b.Secured by Farmland including farm residential and improvements – Farmland includes all land known to be used or usable for agricultural purposes, such as crop and livestock production. Farmland includes grazing or pasture land. Excludes loans for farm property construction and land development.1c.Secured by 1 – 4 Family Residential Real Estate(1)Revolving, Open End Loans and Extended Under Lines of Credit(2)a. Closed End Loans Secured by First Liens; b. Closed End Loans Secured by Junior LiensSecured by 1 – 4 Family Residential properties. Includes non-farm property containing 1 – 4 dwelling units and 5 or more dwelling units if each is separated from other units by dividing walls extending from floor to roof. (Town-Houses). Includes condominium units, Mobile homes and mixed use property where the primary use is residential1d.Secured by Multifamily 5+ Residential Properties – Includes non-farm 5 or more dwelling units in structures including apartment buildings and apartment houses use primarily to accommodate households on a permanent basis.1e.Secured by Non Farm Non-Residential Properties – Secured by non-residential real estate including business and industrial properties, hotels, churches, hospitals, educational and charitable institutions, dormitories, clubs, associations, lodges, “Homes” for aged persons or orphans, golf courses, recreational facilities and similar properties4.Non Real Estate Secured Commercial and Industrial Loans to US Addresses4a.Loans made to businesses for commercial and industrial purpose, unsecured or non real estate recurred. Includes loans to finance capital expenditures, lines or credit, working capital and loans to finance equipment or non-real estate construction and letters of credit.
34 CRA Small Business Data Collection Grid – Purp :CRA Small Business Collection / Loan Purpose: (Call Report Schedule RC-C Line Codes)SBHMCDNC1.Loans Secured by Real Estate1a.Const:Interim Construction loan to a for-profit entity secured by residential real estate with a purpose consistent with the definition of community developmentXInterim Construction loan to a for-profit entity secured by residential real estate without purpose consistent with the definition of community development1b.Farm:Permanent loan to a for-profit entity secured by farmland with primary agricultural purpose1c.1 – 4 Fam. Res.:Open / Closed:Permanent loan < 1Mill. to a for-profit entity for multifamily real estate (rental property) with a primary purpose consistent with the definition of community development1d.Multi-Family 5+Permanent loan > 1 Mill. to a for-profit entity for multifamily real estate with a primary purpose consistent with the definition of community developmentPermanent loan to a for-profit entity for multifamily real estate without a primary purpose consistent with the definition of community developmentPermanent loan in any amount to a non-profit entity for multifamily real estate with a primary purpose consistent with the definition of community development1e.Non Farm /Non Res.:Permanent loan to a for-profit entity secured by nonresidential real estate and equal to or less than $ 1million.Permanent loan to a for-profit entity secured by nonresidential real estate and greater than $ 1 million with a primary purpose consistent with the definition of community developmentPermanent loan to a for-profit entity secured by nonresidential real estate and greater than $ 1 million without a primary purpose consistent with the definition of community development4.Non Real Estate Secured Commercial and Industrial Loans to US Addresses4a.C & I Loans:Loan to a for-profit entity not secured by real estate and equal to or less than $ 1 million.Loan to a for-profit entity not secured by real estate and greater than $ 1 million with a purpose consistent with the definition of community development.Loan to a for-profit entity not secured by real estate and greater than $ 1 million without a purpose consistent with the definition of community development
35 CRA Reporting of Commercial Loan Types – HMDA PurposePermanent loan < $ 1 million to a “for-profit” entity for multifamily real estate (rental property) with a primary purpose consistent with the definition of community developmentPermanent loan > $ 1 million to a “for-profit” entity for multifamily real estate (rental property) with a primary purpose consistent with the definition of community development *Permanent loan to a “for-profit” entity for multifamily real estate without a primary purpose consistent with the definition of community developmentPermanent loan in any amount to a “non-profit” entity for multifamily real estate with a primary purpose consistent with the definition of community development *Small Business LoansPermanent loan to a “For-Profit” entity, < $ 1million secured by non-residential real estatePermanent loan to a “For-Profit” entity, < $ 1 million and not secured by real estateSmall Farm LoansPermanent loan to a “For-Profit” entity secured by “Farmland” with primary agricultural purposeCRE – Commercial Real EstatePermanent loan to a “For-Profit” entity secured by commercial real estate and > $ 1 million, without a purpose consistent with the definition of “Community Development”* Loan is both HMDA Reportable and Community Development
36 CRA Reporting of Commercial Loan Types – (Continued) Community Development LoansInterim Construction loan to a “for-profit” entity secured by residential real estate with a purpose consistent with the definition of community developmentPermanent loan > $ 1 million to a “for-profit” entity for multifamily real estate (rental property) with a primary purpose consistent with the definition of community development *Permanent loan in any amount to a “non-profit” entity for multifamily real estate with a primary purpose consistent with the definition of community development *Permanent loan to a “for-profit” entity secured by non-residential real estate > $ 1 million with a primary purpose consistent with the definition of community developmentLoan to a “for-profit” entity not secured by real estate and greater than $ 1 million with a purpose consistent with the definition of community development.* Loan is both HMDA Reportable and Community Development
37 CRA LAR Reporting Codes – Application # –Unique identifying number or loan number of the originated loan.FED CRA Loan Type –Indicate the FED CRA purpose;Code 00 Not Fed CRA (HMDA Reportable and or Community Development Loan)Code 01 Small Business LoanCode 02 Farm LoanCode 03 Other Business LoanCode 09 Other Loan Data (Business purpose, letters of credit, construction loans)2a. State CRA Loan Type –Indicate the State CRA loan type;Code 01 Residential 1 – 4 FamilyCode 02 Residential 5 +Code 03 Housing RehabCode 04 Home ImprovementCode 05 Small BusinessCode 06 Farm LoanCode 07 Community DevelopmentCode 08 Commercial LoanCode 09 Consumer Loan (Not Used)Code 10 All Other
38 CRA LAR Reporting Codes – Loan Amount –Enter the amount of the loan or application.Show the amount in thousands, rounding to the nearest thousand, (round $500 up to the next $1,000) For example – a loan for $167,300 should be entered as 167 and one for $15,500 as 16.Action Taken –Use Code 1 – Loan Originated.Action Taken Date –The origination date of the loan.Property Location –Enter the MSA/MD (Metropolitan Statistical Area)Enter the State and County CodesEnter the Census Tract;MSA/MD – 5 digit codeState Code – 2 digit code / County Code – 3 digit codeCensus Tract – 6 digit code (xxxx.xx)
39 CRA LAR Reporting Codes – Gross Annual Revenue Code –Enter the gross annual revenue code for the business entity;Code 01 Less than or equal to $ 1 MillionCode 02 Over $ 1 MillionCode 03 Revenue information was not gathered or considered in the credit decisionCode 04 N/ARound all dollar amounts to the nearest thousand, (round $500 up to the next $1,000).If no income information is asked for or relied upon in making the credit decision, enter Code 3If the applicant or co-applicant is a natural person (Commercial Loans made to an individual), enter “N/A”Affiliate Lending Flag –Enter Code 01 – No affiliate
40 CRA Data Collection Worksheet – Must complete a worksheet for each loan whether or not originated.
41 HMDA Data Collection Worksheet – If loan is HMDA reportable, must complete a HMDA Data worksheetIf Section J of the CRA Data Collection sheet indicates that the loan is HMDA reportable as indicated by a check mark in either box “01”, “02” or “03”, then Section E box “00” must be checked.If box “00” in section E of the CRA data collection sheet indicates the loan is HMDA reportable, then HMDA Data Collection worksheet must be completed.
42 FED CRA Code Descriptions – FED CRA Loan Type –* Codes 04 – 08 are not used. They pertain to consumer lending.Code:Explanation:00Not FED CRA – Loans secured by 5+ Family real estate with CDL purpose are both HMDA reportable and Community Development loans.HMDA – Loan must be reported on the HMDA register.COMMUNITY DEVELOPMENT LOAN – In excess of $ 1 mill; Purpose consistent with definition of Community Development.01SMALL BUSINESS LOAN - $1 Million or Less. Includes Loans and Lines of Credit, Equipment, Commercial Real Estate, Auto or Truck loan to a business or to individual for business purpose. No houses or apartments as collateral. (LETTERS OF CREDIT are reported as 09)02FARM LOAN - Loan amount is $500,000 or Less. Collateral is farmland.03OTHER BUSINESS LOAN - Loan amount is $1Million or Less. Collateral is residential property (houses or apartments)04HOME EQUITY LOAN - Includes Equity Line, reverse mortgages, and any other Home Equity Loan that is NOT reported on HMDA05MOTOR VEHICLE LOAN - Includes New Car, Used Car, Motor Home, Trailers, and Boats for CONSUMERS06CREDIT CARD – for a bona-fide credit card. Overdraft lines, even if they come with a Debit Card, are Type 08.07OTHER SECURED – For any consumer loan that does not fit any other category and we have collateral08OTHER UNSECURED – Overdraft Lines are reported here. ALSO any other Unsecured loan for consumer purpose.09OTHER LOAN DATA – Business purpose loans and Construction Loans over $1 Million; Letters of Credit; construction loans under $1 Million that are NOT Community Development.
43 State CRA Code Descriptions – State CRA Loan Type –* Codes 08 – 09 are not used. They pertain to consumer lending.Code:Explanation:01Residential 1 – 4 – Residential 1-4 family dwellings02Residential Multifamily housing units, apartments03Housing Rehab – N/A (Used for special purpose Federally approved Housing Rehabilitation projects)04Home Improvement – Not used in Commercial lending, Consumer Lending field05Small Business Loan – Loans NOT secured by residential real estate in the amount of $1 million or less.06Farm Loan – Made to an agricultural entity secured by farmland < $500,00007Community Development – Specific purpose must benefit predominately LMI individuals and the loan cannot be reportable in any other category unless 5+ residential properties.08Commercial Loan – Commercial Loans that are not small business loans, and or not secured by 1 – 4 family or 5+ Residential Real Estate.09Consumer Loan – N/A, Not used for commercial loans. Consumer lending field10All Other – N/A NOT USED
44 Miscellaneous Descriptions – Data Sheet Sections –E:Explanation:00Not FED CRA – HMDA Reportable Loan and or Community Development Loan01Small Business Loan – Report only loans listed on Schedule RC-C lines 1e and 4a, that are $1 million or less02Farm Loan – Loans to small farms including agricultural or equestrian purposes where the collateral is farm land03Other Business Loan – Report loans in amounts of $ 1 million or less where the collateral is residential property ANDNOT HMDA REPORTABLE04 – 08NOT USED – Consumer Loan Codes09Business Purpose Loans not reportable elsewhere in an amount in excess of $1 million, construction loans over, equal or less than $ 1million, including construction loans and letters of credit and loans under $1 million that are NOT Community Development LoansE:Explanation: (Continued)01, 02, 03, 09Report address of the main business facility or where the loan proceeds will be used such as a branch office, new location,…Comm. DevelopmentReport address where the community benefit will take place such as project location or agency’s address.5+ Properties:5+ Properties that have the primary purpose of LMI benefit are both HMDA and CDL reportable. Use % or # of rental units to determine primary CDL purpose. LMI benefit must be > than non-LMI.Reporting Order:A loan is HMDA reportable first, Small Business reportable second, CRE reportable third and CDL reportable last.For Profit Entity:CDL loans to for profit entities are only reportable in amounts > than $1 Mill.Non-Profit Entity:CDL loans to non-profit entities are reportable in any amount if not already reportable as Small Business or CRE or HMDA excluding 5+ LMI properties as indicated below in section “D”.
45 Miscellaneous Descriptions – Data Sheet Sections –* Enterprise Zones, (EZ) do not have the same boundaries that Census Tracts do. A census tract may contain only a portion of an EZ zone or vice versa. you must check street address location against Census Maps to determine if the property is located in a designated EZ-Zone.G:Connecticut EZ-Zone Census Tracts If Applicable:BRIST4061, Portions of , – *SOUTHPortions of; , , – *PLAINPortions of – *NBRITPortions of , , , , *H / I:Geo-Code Information and Property Location:HMDAIf the loan is secured by the subject property, report the property to which the loan relates.If the loan is secured by another property, report the property being used as security.CommercialCommercial Purpose Non-HMDA loans – Property Location follows where the proceeds are used
46 Internal Process – Responsibility of ALL Personnel – It is the responsibility of all personnel to ensure that each loan application is properly identified and coded correctly on both the CRA and HMDA LAR if applicable.Process to include dual review to verify the integrity of data.Use the following steps to ensure compliance;Step 1 Identify the loan request; document the application date. *Step 2 Determine the applicability of HMDA / Community DevelopmentStep 3 Complete the CRA Data collection sheet and HMDA collection sheet if applicableStep 4 Update the CRA and HMDA Data sheets as applicable throughout the processing of the loanStep 5 HMDA Reportable loans must be tracked and data recorded on all originated and non originated applicationsStep 6 CRA only loans only need to track originationsStep 7 Internal Loan documentation is criticalStep 8 CLA’s responsible for verification of data from data collection sheetsStep 9 Commercial Servicing and Review Administrator responsible for input and second verification of data fields on CRA and HMDA LAR.Step 10 Quarterly Scrub performed on all reported loans and sample of non-reported loans.Step 11 Quarterly tie out of aggregate loan totals from call report schedule RC-C to trial balance reports.Remember the “Golden Rule” ??
47 Four Main Aspects That Lead To Success! Determine the loan purposeHome Purchase, Home Improvement, RefinanceSmall Business / Small Farm, Commercial Purpose, (CRE), Community DevelopmentDetermine the loan amountDollar amount applied forDollar amount grantedIdentity the borrowerIndividual / Business EntityFor Profit / Not For-ProfitIdentity the subject property / securityResidential Real EstateCommercial Real EstateMultifamily Housing – 5+ PropertiesMixed Use Property / Multiple PropertiesNon Real Estate Secured“The Golden Rule”
48 Document, Document, Document…….. Documentation is key to success –Include full description of purpose and collateral in loan write-upsMust document required information for non-originated HMDA applicable loansProvide specific Community Development purpose when appropriateUpdate and verify Data Collection sheets often during the processing of the requestVerify final entries on Data Collection Sheets after loan consummationWatch your Dates –Can’t have application date of 3/1/10 in the file if the credit report date is 2/20/10!When an applicant withdraws a loan request, document it I writingFor files closed incomplete, document your efforts to obtain missing informationCommunity Development Loans –Provide specific Community Development purpose in write-upProvide information on what target group receives benefit of loan (LMI)Community Development Service –Determine if donation is CRA qualified before you authorize itStipulate that donation must be used for CRA qualified purpose when madeObtain purpose letter or letter of intent