I have a question regarding HMDA reporting on home improvement loans that are not secured by a dwelling. When the regulation says that you report a home improvement loan "that is classified as a home improvement loan by the financial institution,” how is that classification made? Via the bank's Call Report? We very rarely have a home improvement loan and the last one we recorded on our LAR was secured by the dwelling. I'm just curious if the loan is not secured by the dwelling, how it is/would be or should be "classified" in order to report it.
HMDA is asking for literally any classification. One of the examples in the commentary even suggests that if a creditor puts all the home improvement loans in blue folders and this one is in a blue folder, that would be a home improvement loan. So, it really matters as to what the bank considers the loan purpose to be.
Home improvement loan.
Classification requirement for loans not secured by a lien on a dwelling. An institution has “classified” a loan that is not secured by a lien on a dwelling as a home improvement loan if it has entered the loan on its books as a home improvement loan, or has otherwise coded or identified the loan as a home improvement loan. For example, an institution that has booked a loan or reported it on a “call report” as a home improvement loan has classified it as a home improvement loan. An institution may also classify loans as home improvement loans in other ways (for example, by color-coding loan files).
Commentary to 1003.2
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