New HMDA Rules and Reporting Total Loan Costs and Fees

Issue/Inquiry

When are total costs and total loan costs and fees reportable under the new HMDA reporting rules going into effect on January 1, 2018?

Response Summary

The new HMDA-reporting rules require the total loan costs to be reported for loans subject to the Ability-to-Repay (“ATR”) requirements of Regulation Z for which a Closing Disclosure is required under the TRID rules of the regulation.

Response Detail

For covered loans subject to the ATR requirements of Regulation Z, the new HMDA reporting rules going into effect on January 1, 2018, require the following information to be reported:

• The amount of total loan costs, if the covered loan is subject to the requirement of a Closing Disclosure under the TRID rules of Regulation Z,
• The total points and fees charged in connection with the covered loan, expressed in dollars, if the covered loan is not subject to the requirement for a Closing Disclosure under the TRID rules and is not a purchased covered loan,. 12 CFR §1026.4(a)(17).

Loans subject to the ATR requirements of Regulation Z are generally consumer credit transactions secured by a dwelling. Loans excluded from the ATR requirements include home equity lines of credit, reverse mortgages, time shares, temporary financing of 12 months or less, or the construction phase of a construction-to-permanent financing that is 12 months or less. 12 CFR §1026.43(a),(c).

Financial institutions are not required to report the total loan costs for applications, or for transactions not subject to the ATR requirements of Regulation Z or the requirement for a Closing Disclosure under the TRID rules, such as open-end lines of credit, reverse mortgages, or loans or lines of credit made primarily for business or commercial purposes. In these cases, a financial institution complies by reporting that the requirement is not applicable to the transaction. Commentary, 1003.4(a)(17)(i) – 1.

In addition, financial institutions are not required to report the total points and fees for transactions not subject to the ATR rules of Regulation Z, such as open-end lines of credit, reverse mortgages, or loans or lines of credit made primarily for business or commercial purposes, or for applications or purchased covered loans. In these cases, a financial institution complies by reporting that the requirement is not applicable to the transaction. Commentary, 1003.4(a)(17)(ii) – 1.

This entry was posted on Tuesday, January 2nd, 2018 at 6:00 am.