12 Cfr 1003 Hmda

Bur. of Consumer Financial Protection

§ 1003.2

1. Inadvertent errors. Inadvertent errors include, but are not limited to, clerical mistake, calculation error, computer malfunction, and printing error. An error of legal
judgment is not an inadvertent error under
the regulation.
2. Correction of error. For inadvertent errors
that occur under §§ 1002.12 and 1002.13, this
section requires that they be corrected prospectively.

ment and Budget (OMB) under 44
U.S.C. 3501 et seq. and have been assigned OMB numbers for institutions
reporting data to the Office of the
Comptroller of the Currency (1557–0159),
the Federal Deposit Insurance Corporation (3064–0046), the Federal Reserve
System (7100–0247), the Department of
Housing and Urban Development (HUD)
(2502–0529), the National Credit Union
Administration (3133–0166), and the Bureau of Consumer Financial Protection
(3170–0008).
(b) Purpose. (1) This part implements
the Home Mortgage Disclosure Act,
which is intended to provide the public
with loan data that can be used:
(i) To help determine whether financial institutions are serving the housing needs of their communities;
(ii) To assist public officials in distributing public-sector investment so
as to attract private investment to
areas where it is needed; and
(iii) To assist in identifying possible
discriminatory lending patterns and
enforcing antidiscrimination statutes.
(2) Neither the act nor this part is intended to encourage unsound lending
practices or the allocation of credit.
(c) Scope. This part applies to financial
institutions
as
defined
in
§ 1003.2(g). This part requires a financial institution to submit data to the
appropriate Federal agency for the financial institution as defined in
§ 1003.5(a)(4), and to disclose certain
data to the public, about covered loans
for which the financial institution receives applications, or that it originates or purchases, and that are secured by a dwelling located in a State
of the United States of America, the
District of Columbia, or the Commonwealth of Puerto Rico.

APPENDIX C—SAMPLE NOTIFICATION FORMS
1. Form C–9. If not otherwise provided
under other applicable disclosure requirements, creditors may design their own form,
add to, or modify the model form to reflect
their individual policies and procedures. For
example, a creditor may want to add:
i. A telephone number that applicants may
call to leave their name and the address to
which a copy of the appraisal or other written valuation should be sent.
ii. A notice of the cost the applicant will
be required to pay the creditor for the appraisal or other valuation
[76 FR 79445, Dec. 21, 2011, as amended at 78
FR 7248, Jan. 31, 2013; 82 FR 45695, Oct. 2,
2017]

PART 1003—HOME MORTGAGE
DISCLOSURE (REGULATION C)
Sec.
1003.1 Authority, purpose, and scope.
1003.2 Definitions.
1003.3 Exempt institutions and excluded and
partially exempt transactions.
1003.4 Compilation of reportable data.
1003.5 Disclosure and reporting.
1003.6 Enforcement.
APPENDIX A TO PART 1003 [RESERVED]
APPENDIX B TO PART 1003—FORM AND INSTRUCTIONS FOR DATA COLLECTION ON
ETHNICITY, RACE, AND SEX
APPENDIX C TO PART 1003—PROCEDURES FOR
GENERATING A CHECK DIGIT AND VALIDATING A ULI
SUPPLEMENT I TO PART 1003—OFFICIAL INTERPRETATIONS

AUTHORITY: 12 U.S.C. 2803, 2804, 2805, 5512,
5581.

[76 FR 78468, Dec. 19, 2011, as amended at 80
FR 66308, Oct. 28, 2015]

kpayne on VMOFRWIN702 with $$_JOB

SOURCE: 76 FR 78468, Dec. 19, 2011, unless
otherwise noted.

§ 1003.2 Definitions.
In this part:
(a) Act means the Home Mortgage
Disclosure Act (HMDA) (12 U.S.C. 2801
et seq.), as amended.
(b) Application—(1) In general. Application means an oral or written request for a covered loan that is made in
accordance with procedures used by a
financial institution for the type of
credit requested.

§ 1003.1 Authority, purpose, and scope.
(a) Authority. This part, known as
Regulation C, is issued by the Bureau
of Consumer Financial Protection (Bureau) pursuant to the Home Mortgage
Disclosure Act (HMDA) (12 U.S.C. 2801
et seq.,) as amended. The informationcollection requirements have been approved by the U.S. Office of Manage-

67

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00077

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

§ 1003.2

12 CFR Ch. X (1–1–20 Edition)

(2) Preapproval programs. A request
for preapproval for a home purchase
loan, other than a home purchase loan
that will be an open-end line of credit,
a reverse mortgage, or secured by a
multifamily dwelling, is an application
under this section if the request is reviewed under a program in which the
financial institution, after a comprehensive analysis of the creditworthiness of the applicant, issues a
written commitment to the applicant
valid for a designated period of time to
extend a home purchase loan up to a
specified amount. The written commitment may not be subject to conditions
other than:
(i) Conditions that require the identification of a suitable property;
(ii) Conditions that require that no
material change has occurred in the
applicant’s financial condition or creditworthiness prior to closing; and
(iii) Limited conditions that are not
related to the financial condition or
creditworthiness of the applicant that
the financial institution ordinarily attaches to a traditional home mortgage
application.
(c) Branch office means:
(1) Any office of a bank, savings association, or credit union that is considered a branch by the Federal or State
supervisory agency applicable to that
institution, excluding automated teller
machines and other free-standing electronic terminals; and
(2) Any office of a for-profit mortgage-lending institution (other than a
bank, savings association, or credit
union) that takes applications from the
public for covered loans. A for-profit
mortgage-lending institution (other
than a bank, savings association, or
credit union) is also deemed to have a
branch office in an MSA or in an MD,
if, in the preceding calendar year, it received applications for, originated, or
purchased five or more covered loans
related to property located in that
MSA or MD, respectively.
(d) Closed-end mortgage loan means an
extension of credit that is secured by a
lien on a dwelling and that is not an
open-end line of credit under paragraph
(o) of this section.
(e) Covered loan means a closed-end
mortgage loan or an open-end line of

credit that is not an excluded transaction under § 1003.3(c).
(f) Dwelling means a residential
structure, whether or not attached to
real property. The term includes but is
not limited to a detached home, an individual condominium or cooperative
unit, a manufactured home or other
factory-built home, or a multifamily
residential structure or community.
(g) Financial institution means a depository financial institution or a nondepository financial institution, where:
(1) Depository financial institution
means a bank, savings association, or
credit union that:
(i) On the preceding December 31 had
assets in excess of the asset threshold
established and published annually by
the Bureau for coverage by the Act,
based on the year-to-year change in the
average of the Consumer Price Index
for Urban Wage Earners and Clerical
Workers, not seasonally adjusted, for
each twelve month period ending in
November, with rounding to the nearest million;
(ii) On the preceding December 31,
had a home or branch office in an MSA;
(iii) In the preceding calendar year,
originated at least one home purchase
loan or refinancing of a home purchase
loan, secured by a first lien on a oneto four-unit dwelling;
(iv) Meets one or more of the following two criteria:
(A) The institution is federally insured or regulated; or
(B) Any loan referred to in paragraph
(g)(1)(iii) of this section was insured,
guaranteed, or supplemented by a Federal agency, or was intended by the institution for sale to the Federal National Mortgage Association or the
Federal Home Loan Mortgage Corporation; and
(v) Meets at least one of the following criteria:
(A) In each of the two preceding calendar years, originated at least 25
closed-end mortgage loans that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (13); or
(B) In each of the two preceding calendar years, originated at least 500
open-end lines of credit that are not excluded from this part pursuant to
§ 1003.3(c)(1) through (10); and

68

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00078

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

§ 1003.2

(2) Nondepository financial institution
means a for-profit mortgage-lending
institution (other than a bank, savings
association, or credit union) that:
(i) On the preceding December 31, had
a home or branch office in an MSA; and
(ii) Meets at least one of the following criteria:
(A) In each of the two preceding calendar years, originated at least 25
closed-end mortgage loans that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (13); or
(B) In each of the two preceding calendar years, originated at least 500
open-end lines of credit that are not excluded from this part pursuant to
§ 1003.3(c)(1) through (10).
(h) [Reserved]
(i) Home improvement loan means a
closed-end mortgage loan or an openend line of credit that is for the purpose, in whole or in part, of repairing,
rehabilitating, remodeling, or improving a dwelling or the real property on
which the dwelling is located.
(j) Home purchase loan means a
closed-end mortgage loan or an openend line of credit that is for the purpose, in whole or in part, of purchasing
a dwelling.
(k) Loan/Application Register means
both the record of information required
to be collected pursuant to § 1003.4 and
the record submitted annually or quarterly, as applicable, pursuant to
§ 1003.5(a).
(l) Manufactured home means any residential structure as defined under regulations of the U.S. Department of
Housing and Urban Development establishing manufactured home construction and safety standards (24 CFR
3280.2). For purposes of § 1003.4(a)(5), the
term also includes a multifamily dwelling that is a manufactured home community.
(m) Metropolitan Statistical Area
(MSA) and Metropolitan Division (MD).
(1) Metropolitan Statistical Area or MSA
means a Metropolitan Statistical Area
as defined by the U.S. Office of Management and Budget.
(2) Metropolitan Division (MD) means
a Metropolitan Division of an MSA, as
defined by the U.S. Office of Management and Budget.
(n) Multifamily dwelling means a
dwelling, regardless of construction

method, that contains five or more individual dwelling units.
(o) Open-end line of credit means an
extension of credit that:
(1) Is secured by a lien on a dwelling;
and
(2) Is an open-end credit plan as defined in Regulation Z, 12 CFR
1026.2(a)(20), but without regard to
whether the credit is consumer credit,
as defined in § 1026.2(a)(12), is extended
by
a
creditor,
as
defined
in
§ 1026.2(a)(17), or is extended to a consumer, as defined in § 1026.2(a)(11).
(p) Refinancing means a closed-end
mortgage loan or an open-end line of
credit in which a new, dwelling-secured
debt obligation satisfies and replaces
an existing, dwelling-secured debt obligation by the same borrower.
(q) Reverse mortgage means a closedend mortgage loan or an open-end line
of credit that is a reverse mortgage
transaction as defined in Regulation Z,
12 CFR 1026.33(a), but without regard to
whether the security interest is created in a principal dwelling.
[80 FR 66308, Oct. 28, 2015, as amended at 82
FR 43132, Sept. 13, 2017; 84 FR 57980, Oct. 29,
2019]
EFFECTIVE DATE NOTE: At 84 FR 58003, Oct.
29, 2019, § 1003.2 was amended by revising
paragraphs (g)(1)(v)(B) and (g)(2)(ii)(B), effective Jan. 1, 2022. For the convenience of the
user, the revised text is set forth as follows:
§ 1003.2

*

Definitions.

*

*

*

(g) * * *
(1) * * *
(v) * * *
(B) In each of the two preceding calendar
years, originated at least 100 open-end lines
of credit that are not excluded from this part
pursuant to § 1003.3(c)(1) through (10); and
(2) * * *
(ii) * * *
(B) In each of the two preceding calendar
years, originated at least 100 open-end lines
of credit that are not excluded from this part
pursuant to § 1003.3(c)(1) through (10).

*

*

*

*

69

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00079

*

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

*

kpayne on VMOFRWIN702 with $$_JOB

§ 1003.3

12 CFR Ch. X (1–1–20 Edition)
(8) The purchase of a partial interest
in a closed-end mortgage loan or openend line of credit;
(9) A closed-end mortgage loan or
open-end line of credit used primarily
for agricultural purposes;
(10) A closed-end mortgage loan or
open-end line of credit that is or will be
made primarily for a business or commercial purpose, unless the closed-end
mortgage loan or open-end line of credit is a home improvement loan under
§ 1003.2(i), a home purchase loan under
§ 1003.2(j), or a refinancing under
§ 1003.2(p);
(11) A closed-end mortgage loan, if
the financial institution originated
fewer than 25 closed-end mortgage
loans in either of the two preceding
calendar years; a financial institution
may collect, record, report, and disclose information, as described in
§§ 1003.4 and 1003.5, for such an excluded
closed-end mortgage loan as though it
were a covered loan, provided that the
financial institution complies with
such requirements for all applications
for closed-end mortgage loans that it
receives, closed-end mortgage loans
that it originates, and closed-end mortgage loans that it purchases that otherwise would have been covered loans
during the calendar year during which
final action is taken on the excluded
closed-end mortgage loan;
(12) An open-end line of credit, if the
financial institution originated fewer
than 500 open-end lines of credit in either of the two preceding calendar
years; a financial institution may collect, record, report, and disclose information, as described in §§ 1003.4 and
1003.5, for such an excluded open-end
line of credit as though it were a covered loan, provided that the financial
institution complies with such requirements for all applications for open-end
lines of credit that it receives, openend lines of credit that it originates,
and open-end lines of credit that it purchases that otherwise would have been
covered loans during the calendar year
during which final action is taken on
the excluded open-end line of credit; or
(13) A transaction that provided or,
in the case of an application, proposed
to provide new funds to the applicant

§ 1003.3 Exempt institutions and excluded and partially exempt transactions.
(a) Exemption based on state law. (1) A
state-chartered or state-licensed financial institution is exempt from the requirements of this part if the Bureau
determines that the institution is subject to a state disclosure law that contains requirements substantially similar to those imposed by this part and
that contains adequate provisions for
enforcement.
(2) Any state, state-chartered or
state-licensed financial institution, or
association of such institutions, may
apply to the Bureau for an exemption
under paragraph (a) of this section.
(3) An institution that is exempt
under paragraph (a) of this section
shall use the disclosure form required
by its state law and shall submit the
data required by that law to its state
supervisory agency for purposes of aggregation.
(b) Loss of exemption. An institution
losing a state-law exemption under
paragraph (a) of this section shall comply with this part beginning with the
calendar year following the year for
which it last reported loan data under
the state disclosure law.
(c) Excluded transactions. The requirements of this part do not apply to:
(1) A closed-end mortgage loan or
open-end line of credit originated or
purchased by a financial institution
acting in a fiduciary capacity;
(2) A closed-end mortgage loan or
open-end line of credit secured by a
lien on unimproved land;
(3) Temporary financing;
(4) The purchase of an interest in a
pool of closed-end mortgage loans or
open-end lines of credit;
(5) The purchase solely of the right to
service closed-end mortgage loans or
open-end lines of credit;
(6) The purchase of closed-end mortgage loans or open-end lines of credit
as part of a merger or acquisition, or as
part of the acquisition of all of the assets and liabilities of a branch office as
defined in § 1003.2(c);
(7) A closed-end mortgage loan or
open-end line of credit, or an application for a closed-end mortgage loan or
open-end line of credit, for which the
total dollar amount is less than $500;

70

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00080

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

§ 1003.3

or borrower in advance of being consolidated in a New York State consolidation, extension, and modification
agreement classified as a supplemental
mortgage under New York Tax Law
section 255; the transaction is excluded
only if final action on the consolidation was taken in the same calendar
year as final action on the new funds
transaction.
(d) Partially exempt transactions. (1)
For purposes of this paragraph (d), the
following definitions apply:
(i) Insured credit union means an insured credit union as defined in section
101 of the Federal Credit Union Act (12
U.S.C. 1752).
(ii) Insured depository institution
means an insured depository institution as defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C.
1813).
(iii) Optional data means the data
identified in § 1003.4(a)(1)(i), (a)(9)(i),
and (a)(12), (15) through (30), and (32)
through (38).
(iv) Partially exempt transaction means
a covered loan or application that is
partially exempt under paragraph (d)(2)
or (3) of this section.
(2) Except as provided in paragraph
(d)(6) of this section, an insured depository institution or insured credit union
that, in each of the two preceding calendar years, originated fewer than 500
closed-end mortgage loans that are not
excluded from this part pursuant to
paragraphs (c)(1) through (10) or paragraph (c)(13) of this section is not required to collect, record, or report optional data as defined in paragraph
(d)(1)(iii) of this section for applications for closed-end mortgage loans
that it receives, closed-end mortgage
loans that it originates, and closed-end
mortgage loans that it purchases.
(3) Except as provided in paragraph
(d)(6) of this section, an insured depository institution or insured credit union
that, in each of the two preceding calendar years, originated fewer than 500
open-end lines of credit that are not excluded from this part pursuant to paragraphs (c)(1) through (10) of this section is not required to collect, record,
or report optional data as defined in
paragraph (d)(1)(iii) of this section for
applications for open-end lines of credit that it receives, open-end lines of

credit that it originates, and open-end
lines of credit that it purchases.
(4) A financial institution eligible for
a partial exemption under paragraph
(d)(2) or (3) of this section may collect,
record, and report optional data as defined in paragraph (d)(1)(iii) of this section for a partially exempt transaction
as though the institution were required
to do so, provided that:
(i) If the institution reports the
street address, city name, or Zip Code
for the property securing a covered
loan, or in the case of an application,
proposed to secure a covered loan pursuant to § 1003.4(a)(9)(i), it reports all
data that would be required by
§ 1003.4(a)(9)(i) if the transaction were
not partially exempt;
(ii) If the institution reports any
data for the transaction pursuant to
§ 1003.4(a)(15), (16), (17), (27), (33), or (35),
it reports all data that would be required by § 1003.4(a)(15), (16), (17), (27),
(33), or (35), respectively, if the transaction were not partially exempt.
(5) If, pursuant to paragraph (d)(2) or
(3) of this section, a financial institution does not report a universal loan
identifier
(ULI)
pursuant
to
§ 1003.4(a)(1)(i) for an application for a
covered loan that it receives, a covered
loan that it originates, or a covered
loan that it purchases, the financial institution shall assign and report a nonuniversal loan identifier (NULI). The
NULI must be composed of up to 22
characters to identify the covered loan
or application, which:
(i) May be letters, numerals, or a
combination of letters and numerals;
(ii) Must be unique within the annual
loan/application register in which the
covered loan or application is included;
and
(iii) Must not include any information that could be used to directly
identify the applicant or borrower.
(6) Paragraphs (d)(2) and (3) of this
section do not apply to an insured depository institution that, as of the preceding December 31, had received a rating of ‘‘needs to improve record of
meeting community credit needs’’ during each of its two most recent examinations or a rating of ‘‘substantial noncompliance in meeting community
credit needs’’ on its most recent examination under section 807(b)(2) of the

71

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00081

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

§ 1003.4

12 CFR Ch. X (1–1–20 Edition)

Community Reinvestment Act of 1977
(12 U.S.C. 2906(b)(2)).

used to identify and retrieve the covered loan or application file. Except for
a purchased covered loan or application described in paragraphs (a)(1)(i)(D)
and (E) of this section or a partially exempt transaction for which a NULI is
assigned and reported under § 1003.3(d),
the financial institution shall assign
and report a ULI that:
(A) Begins with the financial institution’s Legal Entity Identifier (LEI)
that is issued by:
(1) A utility endorsed by the LEI
Regulatory Oversight Committee; or
(2) A utility endorsed or otherwise
governed by the Global LEI Foundation (GLEIF) (or any successor of the
GLEIF) after the GLEIF assumes operational governance of the global LEI
system.
(B) Follows the LEI with up to 23 additional characters to identify the covered loan or application, which:
(1) May be letters, numerals, or a
combination of letters and numerals;
(2) Must be unique within the financial institution; and
(3) Must not include any information
that could be used to directly identify
the applicant or borrower; and
(C) Ends with a two-character check
digit, as prescribed in appendix C to
this part.
(D) For a purchased covered loan
that any financial institution has previously assigned or reported with a ULI
under this part, the financial institution that purchases the covered loan
must use the ULI that was assigned or
previously reported for the covered
loan.
(E) For an application that was previously reported with a ULI under this
part and that results in an origination
during the same calendar year that is
reported in a subsequent reporting period pursuant to § 1003.5(a)(1)(ii), the financial institution may report the
same ULI for the origination that was
previously reported for the application.
(ii) Except for purchased covered
loans, the date the application was received or the date shown on the application form.
(2) Whether the covered loan is, or in
the case of an application would have
been, insured by the Federal Housing

[76 FR 78468, Dec. 19, 2011, as amended at 80
FR 66309, Oct. 28, 2015; 82 FR 43132, Sept. 13,
2017; 84 FR 57980, Oct. 29, 2019]
EFFECTIVE DATE NOTE: At 84 FR 58003, Oct.
29, 2019, § 1003.3 was amended by revising
paragraph (c)(12), effective Jan. 1, 2022. For
the convenience of the user, the revised text
is set forth as follows:
§ 1003.3 Exempt institutions and excluded
and partially exempt transactions.

*

*

*

*

*

(c) * * *
(12) An open-end line of credit, if the financial institution originated fewer than 100
open-end lines of credit in either of the two
preceding calendar years; a financial institution may collect, record, report, and disclose
information, as described in §§ 1003.4 and
1003.5, for such an excluded open-end line of
credit as though it were a covered loan, provided that the financial institution complies
with such requirements for all applications
for open-end lines of credit that it receives,
open-end lines of credit that it originates,
and open-end lines of credit that it purchases
that otherwise would have been covered
loans during the calendar year during which
final action is taken on the excluded openend line of credit; or

kpayne on VMOFRWIN702 with $$_JOB

*

*

*

*

*

§ 1003.4 Compilation
of
reportable
data.
(a) Data format and itemization. A financial institution shall collect data
regarding applications for covered
loans that it receives, covered loans
that it originates, and covered loans
that it purchases for each calendar
year. A financial institution shall collect data regarding requests under a
preapproval program, as defined in
§ 1003.2(b)(2), only if the preapproval request is denied, is approved by the financial institution but not accepted by
the applicant, or results in the origination of a home purchase loan. Except
as provided in § 1003.3(d), the data collected shall include the following
items:
(1)(i) A universal loan identifier
(ULI) or, for a partially exempt transaction under § 1003.3(d), either a ULI or
a non-universal loan identifier (NULI)
as described in § 1003.3(d)(5) for the covered loan or application that can be

72

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00082

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

§ 1003.4

Administration, guaranteed by the Department of Veterans Affairs, or guaranteed by the Rural Housing Service or
the Farm Service Agency.
(3) Whether the covered loan is, or
the application is for, a home purchase
loan, a home improvement loan, a refinancing, a cash-out refinancing, or for
a purpose other than home purchase,
home improvement, refinancing, or
cash-out refinancing.
(4) Whether the application or covered loan involved a request for a
preapproval of a home purchase loan
under a preapproval program.
(5) Whether the construction method
for the dwelling related to the property
identified in paragraph (a)(9) of this
section is site-built or a manufactured
home.
(6) Whether the property identified in
paragraph (a)(9) of this section is or
will be used by the applicant or borrower as a principal residence, as a second residence, or as an investment
property.
(7) The amount of the covered loan or
the amount applied for, as applicable.
(i) For a closed-end mortgage loan,
other than a purchased loan, an assumption, or a reverse mortgage, the
amount to be repaid as disclosed on the
legal obligation. For a purchased
closed-end mortgage loan or an assumption of a closed-end mortgage
loan, the unpaid principal balance at
the time of purchase or assumption.
(ii) For an open-end line of credit,
other than a reverse mortgage openend line of credit, the amount of credit
available to the borrower under the
terms of the plan.
(iii) For a reverse mortgage, the initial principal limit, as determined pursuant to section 255 of the National
Housing Act (12 U.S.C. 1715z–20) and implementing regulations and mortgagee
letters issued by the U.S. Department
of Housing and Urban Development.
(8) The following information about
the financial institution’s action:
(i) The action taken by the financial
institution, recorded as one of the following:
(A) Whether a covered loan was originated or purchased;
(B) Whether an application for a covered loan that did not result in the
origination of a covered loan was ap-

proved but not accepted, denied, withdrawn by the applicant, or closed for
incompleteness; and
(C) Whether a preapproval request
that did not result in the origination of
a home purchase loan was denied or approved but not accepted.
(ii) The date of the action taken by
the financial institution.
(9) The following information about
the location of the property securing
the covered loan or, in the case of an
application, proposed to secure the covered loan:
(i) The property address; and
(ii) If the property is located in an
MSA or MD in which the financial institution has a home or branch office,
or if the institution is subject to paragraph (e) of this section, the location of
the property by:
(A) State;
(B) County; and
(C) Census tract if the property is located in a county with a population of
more than 30,000 according to the most
recent decennial census conducted by
the U.S. Census Bureau.
(10) The following information about
the applicant or borrower:
(i) Ethnicity, race, and sex, and
whether this information was collected
on the basis of visual observation or
surname;
(ii) Age; and
(iii) Except for covered loans or applications for which the credit decision
did not consider or would not have considered income, the gross annual income relied on in making the credit decision or, if a credit decision was not
made, the gross annual income relied
on in processing the application.
(11) The type of entity purchasing a
covered loan that the financial institution originates or purchases and then
sells within the same calendar year.
(12)(i) For covered loans and applications that are approved but not accepted, and that are subject to Regulation
Z, 12 CFR part 1026, other than assumptions, purchased covered loans, and reverse mortgages, the difference between the covered loan’s annual percentage rate and the average prime
offer rate for a comparable transaction
as of the date the interest rate is set.

73

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00083

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

§ 1003.4

12 CFR Ch. X (1–1–20 Edition)

(ii) ‘‘Average prime offer rate’’ means
an annual percentage rate that is derived from average interest rates and
other loan pricing terms currently offered to consumers by a set of creditors
for mortgage loans that have low-risk
pricing characteristics. The Bureau
publishes tables of average prime offer
rates by transaction type at least
weekly and also publishes the methodology it uses to derive these rates.
(13) For covered loans subject to the
Home Ownership and Equity Protection Act of 1994, as implemented in
Regulation Z, 12 CFR 1026.32, whether
the covered loan is a high-cost mortgage under Regulation Z, 12 CFR
1026.32(a).
(14) The lien status (first or subordinate lien) of the property identified
under paragraph (a)(9) of this section.
(15)(i) Except for purchased covered
loans, the credit score or scores relied
on in making the credit decision and
the name and version of the scoring
model used to generate each credit
score.
(ii) For purposes of this paragraph
(a)(15), ‘‘credit score’’ has the meaning
set forth in 15 U.S.C. 1681g(f)(2)(A).
(16) The principal reason or reasons
the financial institution denied the application, if applicable.
(17) For covered loans subject to Regulation Z, 12 CFR 1026.43(c), the following information:
(i) If a disclosure is provided for the
covered loan pursuant to Regulation Z,
12 CFR 1026.19(f), the amount of total
loan costs, as disclosed pursuant to
Regulation Z, 12 CFR 1026.38(f)(4); or
(ii) If the covered loan is not subject
to the disclosure requirements in Regulation Z, 12 CFR 1026.19(f), and is not a
purchased covered loan, the total
points and fees charged in connection
with the covered loan, expressed in dollars and calculated pursuant to Regulation Z, 12 CFR 1026.32(b)(1).
(18) For covered loans subject to the
disclosure requirements in Regulation
Z, 12 CFR 1026.19(f), the total of all
itemized amounts that are designated
borrower-paid at or before closing, as
disclosed pursuant to Regulation Z, 12
CFR 1026.38(f)(1).
(19) For covered loans subject to the
disclosure requirements in Regulation
Z, 12 CFR 1026.19(f), the points paid to

the creditor to reduce the interest rate,
expressed in dollars, as described in
Regulation Z, 12 CFR 1026.37(f)(1)(i),
and disclosed pursuant to Regulation
Z, 12 CFR 1026.38(f)(1).
(20) For covered loans subject to the
disclosure requirements in Regulation
Z, 12 CFR 1026.19(f), the amount of
lender credits, as disclosed pursuant to
Regulation Z, 12 CFR 1026.38(h)(3).
(21) The interest rate applicable to
the approved application, or to the covered loan at closing or account opening.
(22) For covered loans or applications
subject to Regulation Z, 12 CFR part
1026, other than reverse mortgages or
purchased covered loans, the term in
months of any prepayment penalty, as
defined in Regulation Z, 12 CFR
1026.32(b)(6)(i) or (ii), as applicable.
(23) Except for purchased covered
loans, the ratio of the applicant’s or
borrower’s total monthly debt to the
total monthly income relied on in
making the credit decision.
(24) Except for purchased covered
loans, the ratio of the total amount of
debt secured by the property to the
value of the property relied on in making the credit decision.
(25) The scheduled number of months
after which the legal obligation will
mature or terminate or would have matured or terminated.
(26) The number of months, or proposed number of months in the case of
an application, until the first date the
interest rate may change after closing
or account opening.
(27) Whether the contractual terms
include or would have included any of
the following:
(i) A balloon payment as defined in
Regulation Z, 12 CFR 1026.18(s)(5)(i);
(ii) Interest-only payments as defined
in
Regulation
Z,
12
CFR
1026.18(s)(7)(iv);
(iii) A contractual term that would
cause the covered loan to be a negative
amortization loan as defined in Regulation Z, 12 CFR 1026.18(s)(7)(v); or
(iv) Any other contractual term that
would allow for payments other than
fully amortizing payments, as defined
in Regulation Z, 12 CFR 1026.43(b)(2),
during the loan term, other than the
contractual terms described in this
paragraph (a)(27)(i), (ii), and (iii).

74

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00084

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

§ 1003.4

(28) The value of the property securing the covered loan or, in the case of
an application, proposed to secure the
covered loan relied on in making the
credit decision.
(29) If the dwelling related to the
property identified in paragraph (a)(9)
of this section is a manufactured home
and not a multifamily dwelling, whether the covered loan is, or in the case of
an application would have been, secured by a manufactured home and
land, or by a manufactured home and
not land.
(30) If the dwelling related to the
property identified in paragraph (a)(9)
of this section is a manufactured home
and not a multifamily dwelling, whether the applicant or borrower:
(i) Owns the land on which it is or
will be located or, in the case of an application, did or would have owned the
land on which it would have been located, through a direct or indirect ownership interest; or
(ii) Leases or, in the case of an application, leases or would have leased the
land through a paid or unpaid leasehold.
(31) The number of individual dwelling units related to the property securing the covered loan or, in the case of
an application, proposed to secure the
covered loan.
(32) If the property securing the covered loan or, in the case of an application, proposed to secure the covered
loan includes a multifamily dwelling,
the number of individual dwelling units
related to the property that are income-restricted pursuant to Federal,
State, or local affordable housing programs.
(33) Except for purchased covered
loans, the following information about
the application channel of the covered
loan or application:
(i) Whether the applicant or borrower
submitted the application for the covered loan directly to the financial institution; and
(ii) Whether the obligation arising
from the covered loan was, or in the
case of an application, would have been
initially payable to the financial institution.
(34) For a covered loan or application, the unique identifier assigned by
the Nationwide Mortgage Licensing

System and Registry for the mortgage
loan originator, as defined in Regulation G, 12 CFR 1007.102, or Regulation
H, 12 CFR 1008.23, as applicable.
(35)(i) Except for purchased covered
loans, the name of the automated underwriting system used by the financial institution to evaluate the application and the result generated by that
automated underwriting system.
(ii) For purposes of this paragraph
(a)(35), an ‘‘automated underwriting
system’’ means an electronic tool developed by a securitizer, Federal government insurer, or Federal government guarantor of closed-end mortgage
loans or open-end lines of credit that
provides a result regarding the credit
risk of the applicant and whether the
covered loan is eligible to be originated, purchased, insured, or guaranteed by that securitizer, Federal government insurer, or Federal government guarantor. A person is a
securitizer, Federal government insurer, or Federal government guarantor of closed-end mortgage loans or
open-end lines of credit, respectively, if
it has ever securitized, provided Federal government insurance, or provided
a Federal government guarantee for a
closed-end mortgage loan or open-end
line of credit.
(36) Whether the covered loan is, or
the application is for, a reverse mortgage.
(37) Whether the covered loan is, or
the application is for, an open-end line
of credit.
(38) Whether the covered loan is, or
the application is for a covered loan
that will be, made primarily for a business or commercial purpose.
(b) Collection of data on ethnicity, race,
sex, age, and income. (1) A financial institution shall collect data about the
ethnicity, race, and sex of the applicant or borrower as prescribed in appendix B to this part.
(2) Ethnicity, race, sex, age, and income data may but need not be collected for covered loans purchased by a
financial institution.
(c)–(d) [Reserved]
(e) Data reporting for banks and savings associations that are required to report data on small business, small farm,
and community development lending

75

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00085

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

§ 1003.5

12 CFR Ch. X (1–1–20 Edition)

under CRA. Banks and savings associations that are required to report data
on small business, small farm, and
community development lending under
regulations that implement the Community Reinvestment Act of 1977 (12
U.S.C. 2901 et seq.) shall also collect the
information required by paragraph
(a)(9)(ii) of this section for property located outside MSAs and MDs in which
the institution has a home or branch
office, or outside any MSA.
(f) Quarterly recording of data. A financial institution shall record the
data collected pursuant to this section
on a loan/application register within 30
calendar days after the end of the calendar quarter in which final action is
taken (such as origination or purchase
of a covered loan, sale of a covered loan
in the same calendar year it is originated or purchased, or denial or withdrawal of an application).

stitution shall submit its quarterly
loan/application register pursuant to
this paragraph (a)(1)(ii) in electronic
format at the address identified by the
appropriate Federal agency for the institution.
(iii) When the last day for submission
of data prescribed under this paragraph
(a)(1) falls on a Saturday or Sunday, a
submission shall be considered timely
if it is submitted on the next succeeding Monday.
(2) A financial institution that is a
subsidiary of a bank or savings association shall complete a separate loan/application register. The subsidiary shall
submit the loan/application register,
directly or through its parent, to the
appropriate Federal agency for the subsidiary’s parent at the address identified by the agency.
(3) A financial institution shall provide with its submission:
(i) Its name;
(ii) The calendar year the data submission covers pursuant to paragraph
(a)(1)(i) of this section or calendar
quarter and year the data submission
covers pursuant to paragraph (a)(1)(ii)
of this section;
(iii) The name and contact information of a person who may be contacted
with questions about the institution’s
submission;
(iv) Its appropriate Federal agency;
(v) The total number of entries contained in the submission;
(vi) Its Federal Taxpayer Identification number; and
(vii) Its Legal Entity Identifier (LEI)
as described in § 1003.4(a)(1)(i)(A).
(4) For purposes of paragraph (a) of
this section, ‘‘appropriate Federal
agency’’ means the appropriate agency
for the financial institution as determined pursuant to section 304(h)(2) of
the Home Mortgage Disclosure Act (12
U.S.C. 2803(h)(2)) or, with respect to a
financial institution subject to the Bureau’s supervisory authority under section 1025(a) of the Consumer Financial
Protection Act of 2010 (12 U.S.C.
5515(a)), the Bureau.
(5) Procedures for the submission of
data pursuant to paragraph (a) of this
section
are
available
at
www.consumerfinance.gov/hmda.

kpayne on VMOFRWIN702 with $$_JOB

[80 FR 66310, Oct. 28, 2015, as amended at 82
FR 43132, Sept. 13, 2017; 84 FR 57981, Oct. 29,
2019]

§ 1003.5 Disclosure and reporting.
(a) Reporting to agency—(1)(i) Annual
reporting. By March 1 following the calendar year for which data are collected
and recorded as required by § 1003.4, a
financial institution shall submit its
annual loan/application register in
electronic format to the appropriate
Federal agency at the address identified by such agency. An authorized representative of the financial institution
with knowledge of the data submitted
shall certify to the accuracy and completeness of data submitted pursuant
to this paragraph (a)(1)(i). The financial institution shall retain a copy of
its annual loan/application register
submitted pursuant to this paragraph
(a)(1)(i) for its records for at least three
years.
(ii) Quarterly reporting. Within 60 calendar days after the end of each calendar quarter except the fourth quarter, a financial institution that reported for the preceding calendar year
at least 60,000 covered loans and applications, combined, excluding purchased
covered loans, shall submit to the appropriate Federal agency its loan/application register containing all data required to be recorded for that quarter
pursuant to § 1003.4(f). The financial in-

76

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00086

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

§ 1003.6

(b) Disclosure statement. (1) The Federal Financial Institutions Examination Council (FFIEC) will make available a disclosure statement based on
the data each financial institution submits for the preceding calendar year
pursuant to paragraph (a)(1)(i) of this
section.
(2) No later than three business days
after receiving notice from the FFIEC
that a financial institution’s disclosure
statement is available, the financial
institution shall make available to the
public upon request at its home office,
and each branch office physically located in each MSA and each MD, a
written notice that clearly conveys
that the institution’s disclosure statement may be obtained on the Bureau’s
Web site at www.consumerfinance.gov/
hmda.
(c) Modified loan/application register.
(1) A financial institution shall make
available to the public upon request at
its home office, and each branch office
physically located in each MSA and
each MD, a written notice that clearly
conveys that the institution’s loan/application register, as modified by the
Bureau to protect applicant and borrower privacy, may be obtained on the
Bureau’s
Web
site
at
www.consumerfinance.gov/hmda.
(2) A financial institution shall make
available the notice required by paragraph (c)(1) of this section following
the calendar year for which the data
are collected.
(d) Availability of written notices. (1) A
financial institution shall make the
notice required by paragraph (c) of this
section available to the public for a period of three years and the notice required by paragraph (b)(2) of this section available to the public for a period
of five years. An institution shall make
these notices available during the
hours the office is normally open to the
public for business.
(2) A financial institution may make
available to the public, at its discretion and in addition to the written notices required by paragraphs (b)(2) or
(c)(1) of this section, as applicable, its
disclosure statement or its loan/application register, as modified by the Bureau to protect applicant and borrower
privacy. A financial institution may
impose a reasonable fee for any cost in-

curred in providing or reproducing
these data.
(e) Posted notice of availability of data.
A financial institution shall post a general notice about the availability of its
HMDA data in the lobby of its home office and of each branch office physically located in each MSA and each
MD. This notice must clearly convey
that the institution’s HMDA data is
available on the Bureau’s Web site at
www.consumerfinance.gov/hmda.
(f) Aggregated data. Using data submitted by financial institutions pursuant to paragraph (a)(1)(i) of this section, the FFIEC will make available
aggregate data for each MSA and MD,
showing lending patterns by property
location, age of housing stock, and income level, sex, ethnicity, and race.
[80 FR 66312, Oct. 28, 2015, as amended at 80
FR 66313, Oct. 28, 2015; 82 FR 43145, Sept. 13,
2017]

§ 1003.6

Enforcement.

(a) Administrative enforcement. A violation of the Act or this part is subject
to administrative sanctions as provided
in section 305 of the Act (12 U.S.C.
2804), including the imposition of civil
money penalties, where applicable.
Compliance is enforced by the agencies
listed in section 305 of the Act.
(b) Bona fide errors. (1) An error in
compiling or recording data for a covered loan or application is not a violation of the Act or this part if the error
was unintentional and occurred despite
the maintenance of procedures reasonably adapted to avoid such an error.
(2) An incorrect entry for a census
tract number is deemed a bona fide
error, and is not a violation of the Act
or this part, provided that the financial
institution maintains procedures reasonably adapted to avoid such an error.
(c) Quarterly recording and reporting.
(1) If a financial institution makes a
good-faith effort to record all data required to be recorded pursuant to
§ 1003.4(f) fully and accurately within 30
calendar days after the end of each calendar quarter, and some data are nevertheless inaccurate or incomplete, the
inaccuracy or omission is not a violation of the Act or this part provided
that the institution corrects or completes the data prior to submitting its

77

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00087

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31

Pt. 1003, App. B

12 CFR Ch. X (1–1–20 Edition)
5. If there are no co-applicants, you must
report that there is no co-applicant. If there
is more than one co-applicant, you must provide the ethnicity, race, and sex only for the
first co-applicant listed on the collection
form. A co-applicant may provide an absent
co-applicant’s ethnicity, race, and sex on behalf of the absent co-applicant. If the information is not provided for an absent co-applicant, you must report ‘‘information not
provided by applicant in mail, internet, or
telephone application’’ for the absent co-applicant.
6. When you purchase a covered loan and
you choose not to report the applicant’s or
co-applicant’s ethnicity, race, and sex, you
must report that the requirement is not applicable.
7. You must report that the requirement to
report the applicant’s or co-applicant’s ethnicity, race, and sex is not applicable when
the applicant or co-applicant is not a natural
person (for example, a corporation, partnership, or trust). For example, for a transaction involving a trust, you must report
that the requirement to report the applicant’s ethnicity, race, and sex is not applicable if the trust is the applicant. On the other
hand, if the applicant is a natural person,
and is the beneficiary of a trust, you must
report the applicant’s ethnicity, race, and
sex.
8. You must report the ethnicity, race, and
sex of an applicant as provided by the applicant. For example, if an applicant selects the
‘‘Asian’’ box the institution reports ‘‘Asian’’
for the race of the applicant. Only an applicant may self-identify as being of a particular Hispanic or Latino subcategory
(Mexican, Puerto Rican, Cuban, Other Hispanic or Latino) or of a particular Asian subcategory (Asian Indian, Chinese, Filipino,
Japanese, Korean, Vietnamese, Other Asian)
or of a particular Native Hawaiian or Other
Pacific Islander subcategory (Native Hawaiian, Guamanian or Chamorro, Samoan,
Other Pacific Islander) or of a particular
American Indian or Alaska Native enrolled
or principal tribe. An applicant may select
an ethnicity or race subcategory even if the
applicant does not select an aggregate ethnicity or aggregate race category. For example, if an applicant selects only the ‘‘Mexican’’ box, the institution reports ‘‘Mexican’’
for the ethnicity of the applicant but does
not also report ‘‘Hispanic or Latino.’’
9. You must offer the applicant the option
of selecting more than one ethnicity or race.
If an applicant selects more than one ethnicity or race, you must report each selected
designation, subject to the limits described
below.
i. Ethnicity—Aggregate categories and subcategories. There are two aggregate ethnicity

annual loan/application register pursuant to § 1003.5(a)(1)(i).
(2) If a financial institution required
to comply with § 1003.5(a)(1)(ii) makes a
good-faith effort to report all data required to be reported pursuant to
§ 1003.5(a)(1)(ii) fully and accurately
within 60 calendar days after the end of
each calendar quarter, and some data
are nevertheless inaccurate or incomplete, the inaccuracy or omission is not
a violation of the Act or this part provided that the institution corrects or
completes the data prior to submitting
its annual loan/application register
pursuant to § 1003.5(a)(1)(i).
[80 FR 66313, Oct. 28, 2015, as amended at 82
FR 43145, 43146, Sept. 13, 2017]

APPENDIX A TO PART 1003 [RESERVED]

kpayne on VMOFRWIN702 with $$_JOB

APPENDIX B TO PART 1003—FORM AND
INSTRUCTIONS FOR DATA COLLECTION
ON ETHNICITY, RACE, AND SEX
You may list questions regarding the ethnicity, race, and sex of the applicant on your
loan application form, or on a separate form
that refers to the application. (See the sample data collection form below for model language.)
1. You must ask the applicant for this information (but you cannot require the applicant to provide it) whether the application is
taken in person, by mail or telephone, or on
the internet. For applications taken by telephone, you must state the information in the
collection form orally, except for that information which pertains uniquely to applications taken in writing, for example, the
italicized language in the sample data collection form.
2. Inform the applicant that Federal law
requires this information to be collected in
order to protect consumers and to monitor
compliance with Federal statutes that prohibit discrimination against applicants on
these bases. Inform the applicant that if the
information is not provided where the application is taken in person, you are required to
note the information on the basis of visual
observation or surname.
3. If you accept an application through
electronic media with a video component,
you must treat the application as taken in
person. If you accept an application through
electronic media without a video component
(for example, facsimile), you must treat the
application as accepted by mail.
4. For purposes of § 1003.4(a)(10)(i), if a covered loan or application includes a guarantor, you do not report the guarantor’s ethnicity, race, and sex.

78

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00088

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, App. B

categories: Hispanic or Latino; and Not Hispanic or Latino. The Hispanic or Latino category has four subcategories: Mexican; Puerto Rican; Cuban; and Other Hispanic or
Latino. You must report every aggregate
ethnicity category selected by the applicant.
If the applicant also selects one or more ethnicity subcategories, you must report each
ethnicity subcategory selected by the applicant, except that you must not report more
than a total of five aggregate ethnicity categories and ethnicity subcategories combined. For example, if the applicant selects
both aggregate ethnicity categories and also
selects all four ethnicity subcategories, you
must report Hispanic or Latino, Not Hispanic or Latino, and any three, at your option, of the four ethnicity subcategories selected by the applicant. To determine how to
report the Other Hispanic or Latino ethnicity subcategory for purposes of the fiveethnicity maximum, see paragraph 9.ii
below.
ii. Ethnicity—Other subcategories. An applicant may select the Other Hispanic or
Latino ethnicity subcategory, an applicant
may provide a particular Hispanic or Latino
ethnicity not listed in the standard subcategories, or an applicant may do both. If the
applicant provides only a particular Hispanic
or Latino ethnicity in the space provided,
you are permitted, but are not required, to
report Other Hispanic or Latino in addition
to reporting the particular Hispanic or
Latino ethnicity provided by the applicant.
For example, if an applicant provides only
‘‘Dominican,’’ you should report ‘‘Dominican.’’ You are permitted, but not required, to
report Other Hispanic or Latino as well. If an
applicant selects the Other Hispanic or
Latino ethnicity subcategory and also provides a particular Hispanic or Latino ethnicity not listed in the standard subcategories, you must report both the selection
of Other Hispanic or Latino and the additional information provided by the applicant, subject to the five-ethnicity maximum.
For purposes of the maximum of five reportable ethnicity categories and ethnicity subcategories combined, as set forth in paragraph 9.i, the Other Hispanic or Latino subcategory and additional information provided by the applicant together constitute
only one selection. For example, if the applicant selects Other Hispanic or Latino and
enters ‘‘Dominican’’ in the space provided,
Other Hispanic or Latino and ‘‘Dominican’’
are considered one selection. Similarly, if
the applicant only enters ‘‘Dominican’’ in
the space provided and you report both ‘‘Dominican’’ and Other Hispanic or Latino as
permitted by this paragraph 9.ii, the reported items together are considered one selection.
iii. Race—Aggregate categories and subcategories. There are five aggregate race categories: American Indian or Alaska Native;

Asian; Black or African American; Native
Hawaiian or Other Pacific Islander; and
White. The Asian and the Native Hawaiian
or Other Pacific Islander aggregate categories have seven and four subcategories,
respectively. The Asian race subcategories
are: Asian Indian; Chinese; Filipino; Japanese; Korean; Vietnamese; and Other Asian.
The Native Hawaiian or Other Pacific Islander race subcategories are: Native Hawaiian; Guamanian or Chamorro; Samoan; and
Other Pacific Islander. You must report
every aggregate race category selected by
the applicant. If the applicant also selects
one or more race subcategories, you must report each race subcategory selected by the
applicant, except that you must not report
more than a total of five aggregate race categories and race subcategories combined.
For example, if the applicant selects all five
aggregate race categories and also selects
some race subcategories, you report only the
five aggregate race categories. On the other
hand, if the applicant selects the White,
Asian, and Native Hawaiian or Other Pacific
Islander aggregate race categories, and the
applicant also selects the Korean, Vietnamese, and Samoan race subcategories, you
must report White, Asian, Native Hawaiian
or Other Pacific Islander, and any two, at
your option, of the three race subcategories
selected by the applicant. In this example,
you must report White, Asian, and Native
Hawaiian or Other Pacific Islander, and in
addition you must report (at your option) either Korean and Vietnamese, Korean and Samoan, or Vietnamese and Samoan. To determine how to report an Other race subcategory and the American Indian or Alaska
Native category for purposes of the five-race
maximum, see paragraphs 9.iv and 9.v below.
iv. Race—Other subcategories. An applicant
may select the Other Asian race subcategory
or the Other Pacific Islander race subcategory, an applicant may provide a particular Asian race or Pacific Islander race
not listed in the standard subcategories, or
an applicant may do both. If the applicant
provides only a particular Asian race or Pacific Islander race in the space provided, you
are permitted, but are not required, to report
Other Asian or Other Pacific Islander, as applicable, in addition to reporting the particular Asian race or Pacific Islander race
provided by the applicant. For example, if an
applicant provides only ‘‘Hmong,’’ you
should report ‘‘Hmong.’’ You are permitted,
but not required, to report Other Asian as
well. If an applicant selects the Other Asian
race or the Other Pacific Islander race subcategory and provides a particular Asian
race or Pacific Islander race not listed in the
standard subcategories, you must report
both the selection of Other Asian or Other
Pacific Islander, as applicable, and the additional information provided by the applicant, subject to the five-race maximum. For

79

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00089

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, App. B

12 CFR Ch. X (1–1–20 Edition)
and then collect the applicant’s ethnicity,
race, and sex on the basis of visual observation or surname. You must report whether
the applicant’s ethnicity, race, and sex was
collected on the basis of visual observation
or surname. When you collect an applicant’s
ethnicity, race, and sex on the basis of visual
observation or surname, you must select
from the following aggregate categories:
Ethnicity (Hispanic or Latino; not Hispanic
or Latino); race (American Indian or Alaska
Native; Asian; Black or African American;
Native Hawaiian or Other Pacific Islander;
White); sex (male; female).
11. If the applicant declines to answer
these questions by checking the ‘‘I do not
wish to provide this information’’ box on an
application that is taken by mail or on the
internet, or declines to provide this information by stating orally that he or she does not
wish to provide this information on an application that is taken by telephone, you must
report ‘‘information not provided by applicant in mail, internet, or telephone application.’’
12. If the applicant begins an application
by mail, internet, or telephone, and does not
provide the requested information on the application but does not check or select the ‘‘I
do not wish to provide this information’’ box
on the application, and the applicant meets
in person with you to complete the application, you must request the applicant’s ethnicity, race, and sex. If the applicant does
not provide the requested information during
the in-person meeting, you must collect the
information on the basis of visual observation or surname. If the meeting occurs after
the application process is complete, for example, at closing or account opening, you
are not required to obtain the applicant’s
ethnicity, race, and sex.
13. When an applicant provides the requested information for some but not all
fields, you report the information that was
provided by the applicant, whether partial or
complete. If an applicant provides partial or
complete information on ethnicity, race, and
sex and also checks the ‘‘I do not wish to
provide this information’’ box on an application that is taken by mail or on the internet,
or makes that selection when applying by
telephone, you must report the information
on ethnicity, race, and sex that was provided
by the applicant.

kpayne on VMOFRWIN702 with $$_JOB

purposes of the maximum of five reportable
race categories and race subcategories combined, as set forth in paragraph 9.iii, the
Other race subcategory and additional information provided by the applicant together
constitute only one selection. Thus, using
the same facts in the example offered in
paragraph 9.iii above, if the applicant also
selects Other Asian and enters ‘‘Thai’’ in the
space provided, Other Asian and Thai are
considered one selection. Similarly, if the
applicant enters only ‘‘Thai’’ in the space
provided and you report both ‘‘Thai’’ and
Other Asian as permitted by this paragraph
9.iv, the reported items together are considered one selection. In the same example, you
must report any two (at your option) of the
four race subcategories selected by the applicant, Korean, Vietnamese, Other Asian-Thai,
and Samoan, in addition to the three aggregate race categories selected by the applicant.
v. Race—American Indian or Alaska Native
category. An applicant may select the American Indian or Alaska Native race category,
an applicant may provide a particular American Indian or Alaska Native enrolled or
principal tribe, or an applicant may do both.
If the applicant provides only a particular
American Indian or Alaska Native enrolled
or principal tribe in the space provided, you
are permitted, but are not required, to report
American Indian or Alaska Native in addition to reporting the particular American Indian or Alaska Native enrolled or principal
tribe provided by the applicant. For example,
if an applicant provides only ‘‘Navajo,’’ you
should report ‘‘Navajo.’’ You are permitted,
but not required, to report American Indian
or Alaska Native as well. If an applicant selects the American Indian or Alaska Native
race category and also provides a particular
American Indian or Alaska Native enrolled
or principal tribe, you must report both the
selection of American Indian or Alaska Native and the additional information provided
by the applicant. For purposes of the maximum of five reportable race categories and
race subcategories combined, as set forth in
paragraph 9.iii, the American Indian or Alaska Native category and additional information provided by the applicant together constitute only one selection.
10. If the applicant chooses not to provide
the information for an application taken in
person, note this fact on the collection form

80

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00090

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, App. B

81

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00091

Fmt 8010

Sfmt 8006

Q:\12\12V8.TXT

PC31

Er13se17.000

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, App. C

12 CFR Ch. X (1–1–20 Edition)
Step 2: After converting the combined
string of characters to all numeric values,
append two zeros to the rightmost positions.
Step 3: Apply the mathematical function
mod = (n,97) where n = the number obtained
in step 2 above and 97 is the divisor.
Alternatively, to calculate without using
the modulus operator, divide the numbers in
step 2 above by 97. Truncate the remainder
to three digits and multiply it by 97. Round
the result to the nearest whole number.
Step 4: Subtract the result in step 3 from
98. If the result is one digit, add a leading 0
to make it two digits.
Step 5: The two digits in the result from
step 4 is the check digit. Append the resulting check digit to the rightmost position in
the combined string of characters described
in step 1 above to generate the ULI.

[80 FR 66314, Oct. 28, 2015, as amended at 82
FR 43133, Sept. 13, 2017]

APPENDIX C TO PART 1003—PROCEDURES
FOR GENERATING A CHECK DIGIT AND
VALIDATING A ULI
The check digit for the Universal Loan
Identifier (ULI) pursuant to § 1003.4(a)(1)(i)(C)
is calculated using the ISO/IEC 7064, MOD 97–
10 as it appears on the International Standard ISO/IEC 7064:2003, which is published by
the International Organization for Standardization (ISO).
©ISO. This material is reproduced from
ISO/IEC 7064:2003 with permission of the
American National Standards Institute
(ANSI) on behalf of ISO. All rights reserved.
GENERATING A CHECK DIGIT

EXAMPLE

Step 1: Starting with the leftmost character in the string that consists of the combination of the Legal Entity Identifier (LEI)
pursuant to § 1003.4(a)(1)(i)(A) and the additional characters identifying the covered
loan
or
application
pursuant
to
§ 1003.4(a)(1)(i)(B), replace each alphabetic
character with numbers in accordance with
Table I below to obtain all numeric values in
the string.

For example, assume the LEI for a financial institution is 10Bx939c5543TqA1144M and
the financial institution assigned the following string of characters to identify the
covered loan: 999143X. The combined string
of
characters
is
10Bx939c5543
TqA1144M999143X.
Step 1: Starting with the leftmost character in the combined string of characters,
replace each alphabetic character with numbers in accordance with Table I above to obtain all numeric values in the string. The result is 10113393912554329261011442299914333.
Step 2: Append two zeros to the rightmost
positions in the combined string. The result
is 1011339391255432926101144229991433300.
Step 3: Apply the mathematical function
mod = (n,97) where n = the number obtained
in step 2 above and 97 is the divisor. The result is 60.
Alternatively, to calculate without using
the modulus operator, divide the numbers in
step 2 above by 97. The result is 10426179
29129312294946332267952920.618556701030928.
Truncate the remainder to three digits,
which is .618, and multiply it by 97. The result is 59.946. Round this result to the nearest whole number, which is 60.
Step 4: Subtract the result in step 3 from
98. The result is 38.
Step 5: The two digits in the result from
step 4 is the check digit. Append the check
digit to the rightmost positions in the combined string of characters that consists of
the LEI and the string of characters assigned
by the financial institution to identify the
covered loan to obtain the ULI. In this example, the ULI would be 10Bx939c5543T
qA1144M999143X38.

kpayne on VMOFRWIN702 with $$_JOB

TABLE I—ALPHABETIC TO NUMERIC
CONVERSION TABLE
The alphabetic characters are not case-sensitive and each letter, whether it is capitalized or in lower-case, is equal to the same
value as each letter illustrates in the conversion table. For example, A and a are each
equal to 10.
A = 10
B = 11
C = 12
D = 13
E = 14
F = 15
G = 16
H = 17
I = 18
J = 19
K = 20
L = 21
M = 22
N = 23
O = 24
P = 25
Q = 26
R = 27
S = 28
T = 29
U = 30
V = 31
W = 32
X = 33
Y = 34
Z = 35

VALIDATING A ULI
To determine whether the ULI contains a
transcription error using the check digit calculation, the procedures are described below.

82

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00092

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

Step 1: Starting with the leftmost character in the ULI, replace each alphabetic
character with numbers in accordance with
Table I above to obtain all numeric values in
the string.
Step 2: Apply the mathematical function
mod=(n,97) where n=the number obtained in
step 1 above and 97 is the divisor.
Step 3: If the result is 1, the ULI does not
contain transcription errors.

cation register, even though these requests
may constitute applications under Regulation B for purposes of adverse action notices.
3. Requests for preapproval. To be a
preapproval
program
as
defined
in
§ 1003.2(b)(2), the written commitment issued
under the program must result from a comprehensive review of the creditworthiness of
the applicant, including such verification of
income, resources, and other matters as is
typically done by the institution as part of
its normal credit evaluation program. In addition to conditions involving the identification of a suitable property and verification
that no material change has occurred in the
applicant’s financial condition or creditworthiness, the written commitment may be
subject only to other conditions (unrelated
to the financial condition or creditworthiness of the applicant) that the lender ordinarily attaches to a traditional home mortgage application approval. These conditions
are limited to conditions such as requiring
an acceptable title insurance binder or a certificate indicating clear termite inspection,
and, in the case where the applicant plans to
use the proceeds from the sale of the applicant’s present home to purchase a new home,
a settlement statement showing adequate
proceeds from the sale of the present home.
Regardless of its name, a program that satisfies the definition of a preapproval program
in § 1003.2(b)(2) is a preapproval program for
purposes of Regulation C. Conversely, a program that a financial institution describes
as a ‘‘preapproval program’’ that does not
satisfy the requirements of § 1003.2(b)(2) is
not a preapproval program for purposes of
Regulation C. If a financial institution does
not regularly use the procedures specified in
§ 1003.2(b)(2), but instead considers requests
for preapprovals on an ad hoc basis, the financial institution need not treat ad hoc requests as part of a preapproval program for
purposes of Regulation C. A financial institution should, however, be generally consistent in following uniform procedures for
considering such ad hoc requests.

EXAMPLE
For example, the ULI assigned to a covered
loan is 10Bx939c5543TqA1144M999143X38.
Step 1: Starting with the leftmost character in the ULI, replace each alphabetic
character with numbers in accordance with
Table I above to obtain all numeric values in
the string. The result is 1011339391255
432926101144229991433338.
Step 2: Apply the mathematical function
mod=(n,97) where n is the number obtained
in step 1 above and 97 is the divisor.
Step 3: The result is 1. The ULI does not
contain transcription errors.
[80 FR 66316, Oct. 28, 2015, as amended at 82
FR 43135, Sept. 13, 2017]

SUPPLEMENT I TO PART 1003—OFFICIAL
INTERPRETATIONS
Introduction
1. Status. The commentary in this supplement is the vehicle by which the Bureau of
Consumer Financial Protection issues formal interpretations of Regulation C (12 CFR
part 1003).
Section 1003.2—Definitions

kpayne on VMOFRWIN702 with $$_JOB

2(b) Application
1. Consistency with Regulation B. Bureau interpretations that appear in the official commentary to Regulation B (Equal Credit Opportunity Act, 12 CFR part 1002, Supplement
I) are generally applicable to the definition
of application under Regulation C. However,
under Regulation C the definition of an application does not include prequalification
requests.
2. Prequalification. A prequalification request is a request by a prospective loan applicant
(other
than
a
request
for
preapproval) for a preliminary determination on whether the prospective loan applicant would likely qualify for credit under an
institution’s standards, or for a determination on the amount of credit for which the
prospective applicant would likely qualify.
Some institutions evaluate prequalification
requests through a procedure that is separate from the institution’s normal loan application process; others use the same process. In either case, Regulation C does not require
an
institution
to
report
prequalification requests on the loan/appli-

2(c) Branch Office
Paragraph 2(c)(1)
1. Credit unions. For purposes of Regulation
C, a ‘‘branch’’ of a credit union is any office
where member accounts are established or
loans are made, whether or not the office has
been approved as a branch by a Federal or
State agency. (See 12 U.S.C. 1752.)
2. Bank, savings association, or credit unions.
A branch office of a bank, savings association, or credit union does not include a loanproduction office if the loan-production office is not considered a branch by the Federal or State supervisory authority applicable to that institution. A branch office also
does not include the office of an affiliate or

83

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00093

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

of a third party, such as a third-party
broker.

of credit under § 1003.2(d). Comments 2(i)–1,
2(j)–5, and 2(p)–2 clarify whether such transactions are home improvement loans, home
purchase loans, or refinancings, respectively.
Section 1003.3(c)(13) provides an exclusion
from the reporting requirement for a preliminary transaction providing or, in the
case of an application, proposing to provide
new funds to the borrower in advance of
being consolidated within the same calendar
year into a supplemental mortgage under
New York Tax Law section 255. See comment
3(c)(13)–1 concerning how to report a supplemental mortgage under New York Tax Law
section 255 in this situation.

Paragraph 2(c)(2)
1. General. A branch office of a for-profit
mortgage lending institution, other than a
bank savings association or credit union,
does not include the office of an affiliate or
of a third party, such as a third-party
broker.

kpayne on VMOFRWIN702 with $$_JOB

2(d) Closed-end Mortgage Loan
1. Dwelling-secured. Section 1003.2(d) defines
a closed-end mortgage loan as an extension
of credit that is secured by a lien on a dwelling and that is not an open-end line of credit
under § 1003.2(o). Thus, for example, a loan to
purchase a dwelling and secured only by a
personal guarantee is not a closed-end mortgage loan because it is not dwelling-secured.
2. Extension of credit. Under § 1003.2(d), a
dwelling-secured loan is not a closed-end
mortgage loan unless it involves an extension of credit. For example, some transactions completed pursuant to installment
sales contracts, such as some land contracts,
depending on the facts and circumstances,
may or may not involve extensions of credit
rendering the transactions closed-end mortgage loans. In general, extension of credit
under § 1003.2(d) refers to the granting of
credit only pursuant to a new debt obligation. Thus, except as described in comments
2(d)–2.i and .ii, if a transaction modifies, renews, extends, or amends the terms of an existing debt obligation, but the existing debt
obligation is not satisfied and replaced, the
transaction is not a closed-end mortgage
loan under § 1003.2(d) because there has been
no new extension of credit. The phrase extension of credit thus is defined differently
under Regulation C than under Regulation
B, 12 CFR part 1002.
i. Assumptions. For purposes of Regulation
C, an assumption is a transaction in which
an institution enters into a written agreement accepting a new borrower in place of an
existing borrower as the obligor on an existing debt obligation. For purposes of Regulation C, assumptions include successor-in-interest transactions, in which an individual
succeeds the prior owner as the property
owner and then assumes the existing debt secured by the property. Under § 1003.2(d), assumptions are extensions of credit even if
the new borrower merely assumes the existing debt obligation and no new debt obligation is created. See also comment 2(j)–5.
ii. New York State consolidation, extension,
and modification agreements. A transaction
completed pursuant to a New York State
consolidation, extension, and modification
agreement and classified as a supplemental
mortgage under New York Tax Law section
255, such that the borrower owes reduced or
no mortgage recording taxes, is an extension

2(f) Dwelling
1. General. The definition of a dwelling is
not limited to the principal or other residence of the applicant or borrower, and thus
includes vacation or second homes and investment properties.
2. Multifamily residential structures and communities. A dwelling also includes a multifamily residential structure or community
such as an apartment, condominium, cooperative building or housing complex, or a manufactured home community. A loan related
to a manufactured home community is secured by a dwelling for purposes of § 1003.2(f)
even if it is not secured by any individual
manufactured homes, but only by the land
that constitutes the manufactured home
community including sites for manufactured
homes. However, a loan related to a multifamily residential structure or community
that is not a manufactured home community
is not secured by a dwelling for purposes of
§ 1003.2(f) if it is not secured by any individual dwelling units and is, for example, instead secured only by property that only includes common areas, or is secured only by
an assignment of rents or dues.
3. Exclusions. Recreational vehicles, including boats, campers, travel trailers, and park
model recreational vehicles, are not considered dwellings for purposes of § 1003.2(f), regardless of whether they are used as residences. Houseboats, floating homes, and mobile homes constructed before June 15, 1976,
are also excluded, regardless of whether they
are used as residences. Also excluded are
transitory residences such as hotels, hospitals, college dormitories, and recreational
vehicle parks, and structures originally designed as dwellings but used exclusively for
commercial purposes, such as homes converted to daycare facilities or professional
offices.
4. Mixed-use properties. A property used for
both residential and commercial purposes,
such as a building containing apartment
units and retail space, is a dwelling if the
property’s primary use is residential. An institution may use any reasonable standard

84

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00094

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

to determine the primary use of the property, such as by square footage or by the income generated. An institution may select
the standard to apply on a case-by-case
basis.
5. Properties with service and medical components. For purposes of § 1003.2(f), a property
used for both long-term housing and to provide related services, such as assisted living
for senior citizens or supportive housing for
persons with disabilities, is a dwelling and
does not have a non-residential purpose
merely because the property is used for both
housing and to provide services. However,
transitory residences that are used to provide such services are not dwellings. See
comment 2(f)–3. Properties that are used to
provide medical care, such as skilled nursing, rehabilitation, or long-term medical
care, also are not dwellings. See comment
2(f)–3. If a property that is used for both
long-term housing and to provide related
services also is used to provide medical care,
the property is a dwelling if its primary use
is residential. An institution may use any
reasonable standard to determine the property’s primary use, such as by square footage, income generated, or number of beds or
units allocated for each use. An institution
may select the standard to apply on a caseby-case basis.

or acquired branches, satisfies the criteria
included in § 1003.2(g). For example, A and B
merge. The surviving or newly formed institution meets the loan threshold described in
§ 1003.2(g)(1)(v)(B) if the surviving or newly
formed institution, A, and B originated a
combined total of at least 500 open-end lines
of credit in each of the two preceding calendar years. Likewise, the surviving or
newly formed institution meets the assetsize threshold in § 1003.2(g)(1)(i) if its assets
and the combined assets of A and B on December 31 of the preceding calendar year exceeded
the
threshold
described
in
§ 1003.2(g)(1)(i). Comment 2(g)–4 discusses a financial institution’s responsibilities during
the calendar year of a merger.
4. Merger or acquisition—coverage for calendar year of merger or acquisition. The scenarios described below illustrate a financial
institution’s responsibilities for the calendar
year of a merger or acquisition. For purposes
of these illustrations, a ‘‘covered institution’’ means a financial institution, as defined in § 1003.2(g), that is not exempt from
reporting under § 1003.3(a), and ‘‘an institution that is not covered’’ means either an institution that is not a financial institution,
as defined in § 1003.2(g), or an institution that
is exempt from reporting under § 1003.3(a).
i. Two institutions that are not covered
merge. The surviving or newly formed institution meets all of the requirements necessary to be a covered institution. No data
collection is required for the calendar year
of the merger (even though the merger creates an institution that meets all of the requirements necessary to be a covered institution). When a branch office of an institution that is not covered is acquired by another institution that is not covered, and the
acquisition results in a covered institution,
no data collection is required for the calendar year of the acquisition.
ii. A covered institution and an institution
that is not covered merge. The covered institution is the surviving institution, or a new
covered institution is formed. For the calendar year of the merger, data collection is
required for covered loans and applications
handled in the offices of the merged institution that was previously covered and is optional for covered loans and applications
handled in offices of the merged institution
that was previously not covered. When a covered institution acquires a branch office of
an institution that is not covered, data collection is optional for covered loans and applications handled by the acquired branch office for the calendar year of the acquisition.
iii. A covered institution and an institution that is not covered merge. The institution that is not covered is the surviving institution, or a new institution that is not
covered is formed. For the calendar year of
the merger, data collection is required for

kpayne on VMOFRWIN702 with $$_JOB

2(g) Financial Institution
1. Preceding calendar year and preceding December 31. The definition of financial institution refers both to the preceding calendar
year and the preceding December 31. These
terms refer to the calendar year and the December 31 preceding the current calendar
year. For example, in 2019, the preceding calendar year is 2018 and the preceding December 31 is December 31, 2018. Accordingly, in
2019, Financial Institution A satisfies the
asset-size
threshold
described
in
§ 1003.2(g)(1)(i) if its assets exceeded the
threshold specified in comment 2(g)–2 on December 31, 2018. Likewise, in 2020, Financial
Institution A does not meet the loan-volume
test described in § 1003.2(g)(1)(v)(A) if it originated fewer than 25 closed-end mortgage
loans during either 2018 or 2019.
2. Adjustment of exemption threshold for
banks, savings associations, and credit unions.
For data collection in 2020, the asset-size exemption threshold is $47 million. Banks, savings associations, and credit unions with assets at or below $47 million as of December
31, 2019, are exempt from collecting data for
2020.
3. Merger or acquisition—coverage of surviving or newly formed institution. After a
merger or acquisition, the surviving or
newly formed institution is a financial institution under § 1003.2(g) if it, considering the
combined assets, location, and lending activity of the surviving or newly formed institution and the merged or acquired institutions

85

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00095

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

kpayne on VMOFRWIN702 with $$_JOB

covered loans and applications handled in offices of the previously covered institution
that took place prior to the merger. After
the merger date, data collection is optional
for covered loans and applications handled in
the offices of the institution that was previously covered. When an institution remains not covered after acquiring a branch
office of a covered institution, data collection is required for transactions of the acquired branch office that take place prior to
the acquisition. Data collection by the acquired branch office is optional for transactions taking place in the remainder of the
calendar year after the acquisition.
iv. Two covered institutions merge. The
surviving or newly formed institution is a
covered institution. Data collection is required for the entire calendar year of the
merger. The surviving or newly formed institution files either a consolidated submission
or separate submissions for that calendar
year. When a covered institution acquires a
branch office of a covered institution, data
collection is required for the entire calendar
year of the merger. Data for the acquired
branch office may be submitted by either institution.
5. Originations. Whether an institution is a
financial institution depends in part on
whether the institution originated at least 25
closed-end mortgage loans in each of the two
preceding calendar years or at least 500 openend lines of credit in each of the two preceding calendar years. Comments 4(a)–2
through –4 discuss whether activities with
respect to a particular closed-end mortgage
loan or open-end line of credit constitute an
origination for purposes of § 1003.2(g).
6. Branches of foreign banks—treated as
banks. A Federal branch or a State-licensed
or insured branch of a foreign bank that
meets the definition of a ‘‘bank’’ under section 3(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(a)) is a bank for the purposes of § 1003.2(g).
7. Branches and offices of foreign banks and
other entities—treated as nondepository financial institutions. A Federal agency, State-licensed agency, State-licensed uninsured
branch of a foreign bank, commercial lending company owned or controlled by a foreign bank, or entity operating under section
25 or 25A of the Federal Reserve Act, 12
U.S.C. 601 and 611 (Edge Act and agreement
corporations) may not meet the definition of
‘‘bank’’ under the Federal Deposit Insurance
Act and may thereby fail to satisfy the definition of a depository financial institution
under § 1003.2(g)(1). An entity is nonetheless a
financial institution if it meets the definition of nondepository financial institution
under § 1003.2(g)(2).

loan or an open-end line of credit that is for
the purpose, in whole or in part, of repairing,
rehabilitating, remodeling, or improving a
dwelling or the real property on which the
dwelling is located. For example, a closedend mortgage loan obtained to repair a
dwelling by replacing a roof is a home improvement loan under § 1003.2(i). A loan or
line of credit is a home improvement loan
even if only a part of the purpose is for repairing, rehabilitating, remodeling, or improving a dwelling. For example, an open-end
line of credit obtained in part to remodel a
kitchen and in part to pay college tuition is
a home improvement loan under § 1003.2(i).
Similarly, for example, a loan that is completed pursuant to a New York State consolidation, extension, and modification agreement and that is classified as a supplemental
mortgage under New York Tax Law section
255, such that the borrower owes reduced or
no mortgage recording taxes, is a home improvement loan if any of the loan’s funds are
for home improvement purposes. See also
comment 2(d)–2.ii.
2. Improvements to real property. Home improvements include improvements both to a
dwelling and to the real property on which
the dwelling is located (for example, installation of a swimming pool, construction of a
garage, or landscaping).
3. Commercial and other loans. A home improvement loan may include a closed-end
mortgage loan or an open-end line of credit
originated outside an institution’s residential mortgage lending division, such as a
loan or line of credit to improve an apartment building originated in the commercial
loan department.
4. Mixed-use property. A closed-end mortgage loan or an open-end line of credit to improve a multifamily dwelling used for residential and commercial purposes (for example, a building containing apartment units
and retail space), or the real property on
which such a dwelling is located, is a home
improvement loan if the loan’s proceeds are
used either to improve the entire property
(for example, to replace the heating system),
or if the proceeds are used primarily to improve the residential portion of the property.
An institution may use any reasonable
standard to determine the primary use of the
loan proceeds. An institution may select the
standard to apply on a case-by-case basis.
See comment 3(c)(10)–3.ii for guidance on
loans to improve primarily the commercial
portion of a dwelling other than a multifamily dwelling.
5. Multiple-purpose loans. A closed-end
mortgage loan or an open-end line of credit
may be used for multiple purposes. For example, a closed-end mortgage loan that is a
home improvement loan under § 1003.2(i) may
also be a refinancing under § 1003.2(p) if the
transaction is a cash-out refinancing and the
funds will be used to improve a home. Such

2(i) Home Improvement Loan
1. General. Section 1003.2(i) defines a home
improvement loan as a closed-end mortgage

86

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00096

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

a transaction is a multiple-purpose loan.
Comment 4(a)(3)–3 provides details about
how to report multiple-purpose covered
loans.
6. Statement of borrower. In determining
whether a closed-end mortgage loan or an
open-end line of credit, or an application for
a closed-end mortgage loan or an open-end
line of credit, is for home improvement purposes, an institution may rely on the applicant’s or borrower’s stated purpose(s) for the
loan or line of credit at the time the application is received or the credit decision is
made. An institution need not confirm that
the borrower actually uses any of the funds
for the stated purpose(s).

rower’s purchase of the dwelling securing the
existing obligation, if the resulting obligation is a closed-end mortgage loan or an
open-end line of credit. A transaction in
which borrower B finances the purchase of
borrower A’s dwelling by assuming borrower
A’s existing debt obligation and that is completed pursuant to a New York State consolidation, extension, and modification agreement and is classified as a supplemental
mortgage under New York Tax Law section
255, such that the borrower owes reduced or
no mortgage recording taxes, is an assumption and a home purchase loan. See comment
2(d)–2.ii. On the other hand, a transaction in
which borrower B, a successor-in-interest,
assumes borrower A’s existing debt obligation only after acquiring title to borrower
A’s dwelling is not a home purchase loan because borrower B did not assume the debt obligation for the purpose of purchasing a
dwelling. See § 1003.4(a)(3) and comment
4(a)(3)–4 for guidance about how to report
covered loans that are not home improvement loans, home purchase loans, or
refinancings.
6. Multiple-purpose loans. A closed-end
mortgage loan or an open-end line of credit
may be used for multiple purposes. For example, a closed-end mortgage loan that is a
home purchase loan under § 1003.2(j) may also
be a home improvement loan under § 1003.2(i)
and a refinancing under § 1003.2(p) if the
transaction is a cash-out refinancing and the
funds will be used to purchase and improve a
dwelling. Such a transaction is a multiplepurpose loan. Comment 4(a)(3)–3 provides details about how to report multiple-purpose
covered loans.

kpayne on VMOFRWIN702 with $$_JOB

2(j) Home Purchase Loan
1. Multiple properties. A home purchase loan
includes a closed-end mortgage loan or an
open-end line of credit secured by one dwelling and used to purchase another dwelling.
For example, if a person obtains a home-equity loan or a reverse mortgage secured by
dwelling A to purchase dwelling B, the homeequity loan or the reverse mortgage is a
home purchase loan under § 1003.2(j).
2. Commercial and other loans. A home purchase loan may include a closed-end mortgage loan or an open-end line of credit originated outside an institution’s residential
mortgage lending division, such as a loan or
line of credit to purchase an apartment
building originated in the commercial loan
department.
3. Construction and permanent financing. A
home purchase loan includes both a combined construction/permanent loan or line of
credit, and the separate permanent financing
that replaces a construction-only loan or
line of credit for the same borrower at a
later time. A home purchase loan does not
include a construction-only loan or line of
credit that is designed to be replaced by separate permanent financing extended by any
financial institution to the same borrower at
a later time or that is extended to a person
exclusively to construct a dwelling for sale,
which are excluded from Regulation C as
temporary financing under § 1003.3(c)(3).
Comments 3(c)(3)–1 and –2 provide additional
details about transactions that are excluded
as temporary financing.
4. Second mortgages that finance the
downpayments on first mortgages. If an institution making a first mortgage loan to a home
purchaser also makes a second mortgage
loan or line of credit to the same purchaser
to finance part or all of the home purchaser’s
downpayment, both the first mortgage loan
and the second mortgage loan or line of credit are home purchase loans.
5. Assumptions. Under § 1003.2(j), an assumption is a home purchase loan when an institution enters into a written agreement accepting a new borrower as the obligor on an
existing obligation to finance the new bor-

2(l) Manufactured Home
1. Definition of a manufactured home. The
definition in § 1003.2(l) refers to the Federal
building code for manufactured housing established by the U.S. Department of Housing
and Urban Development (HUD) (24 CFR part
3280.2). Modular or other factory-built homes
that do not meet the HUD code standards are
not manufactured homes for purposes of
§ 1003.2(l). Recreational vehicles are excluded
from the HUD code standards pursuant to 24
CFR 3282.8(g) and are also excluded from the
definition of dwelling for purposes of
§ 1003.2(f). See comment 2(f)–3.
2. Identification. A manufactured home will
generally bear a data plate affixed in a permanent manner near the main electrical
panel or other readily accessible and visible
location noting its compliance with the Federal Manufactured Home Construction and
Safety Standards in force at the time of
manufacture and providing other information about its manufacture pursuant to 24
CFR 3280.5. A manufactured home will generally also bear a HUD Certification Label
pursuant to 24 CFR 3280.11.

87

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00097

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

2(m) Metropolitan Statistical Area (MD) or
Metropolitan Division (MD).

ings under § 1003.4(a)(32). However, a financial
institution would report the information required by § 1003.4(a)(4), (a)(10)(iii), and (a)(23),
(29), and (30), which is not applicable to covered loans secured by and applications proposed to be secured by multifamily dwellings. See comment 2(n)–2. In addition, in
both of these situations, the financial institution reports the number of individual
dwelling units securing the covered loan or
proposed to secure a covered loan as required
by § 1003.4(a)(31). See comment 4(a)(31)–3.

1. Use of terms ‘‘Metropolitan Statistical Area
(MSA)’’ and ‘‘Metropolitan Division (MD).’’
The U.S. Office of Management and Budget
(OMB) defines Metropolitan Statistical
Areas (MSAs) and Metropolitan Divisions
(MDs) to provide nationally consistent definitions for collecting, tabulating, and publishing Federal statistics for a set of geographic areas. For all purposes under Regulation C, if an MSA is divided by OMB into
MDs, the appropriate geographic unit to be
used is the MD; if an MSA is not so divided
by OMB into MDs, the appropriate geographic unit to be used is the MSA.

2(o) Open-End Line of Credit
1. General. Section 1003.2(o) defines an
open-end line of credit as an extension of
credit that is secured by a lien on a dwelling
and that is an open-end credit plan as defined in Regulation Z, 12 CFR 1026.2(a)(20),
but without regard to whether the credit is
consumer credit, as defined in § 1026.2(a)(12),
is extended by a creditor, as defined in
§ 1026.2(a)(17), or is extended to a consumer,
as defined in § 1026.2(a)(11). Aside from these
distinctions, institutions may rely on 12 CFR
1026.2(a)(20) and its related commentary in
determining whether a transaction is an
open-end line of credit under § 1003.2(o). For
example, assume a business-purpose transaction that is exempt from Regulation Z pursuant to § 1026.3(a)(1) but that otherwise is
open-end
credit
under
Regulation
Z
§ 1026.2(a)(20). The business-purpose transaction is an open-end line of credit under
Regulation C, provided the other requirements of § 1003.2(o) are met. Similarly, assume a transaction in which the person extending open-end credit is a financial institution under § 1003.2(g) but is not a creditor
under Regulation Z, § 1026.2(a)(17). In this example, the transaction is an open-end line of
credit under Regulation C, provided the
other requirements of § 1003.2(o) are met.
2. Extension of credit. Extension of credit
has the same meaning under § 1003.2(o) as
under § 1003.2(d) and comment 2(d)–2. Thus,
for example, a renewal of an open-end line of
credit is not an extension of credit under
§ 1003.2(o) and is not covered by Regulation C
unless the existing debt obligation is satisfied and replaced. Likewise, under § 1003.2(o),
each draw on an open-end line of credit is
not an extension of credit.

kpayne on VMOFRWIN702 with $$_JOB

2(n) Multifamily Dwelling
1. Multifamily residential structures. The definition of dwelling in § 1003.2(f) includes multifamily residential structures and the corresponding commentary provides guidance
on when such residential structures are included in that definition. See comments 2(f)–
2 through –5.
2. Special reporting requirements for multifamily dwellings. The definition of multifamily dwelling in § 1003.2(n) includes a
dwelling, regardless of construction method,
that contains five or more individual dwelling units. Covered loans secured by a multifamily dwelling are subject to additional reporting requirements under § 1003.4(a)(32),
but are not subject to reporting requirements under § 1003.4(a)(4), (10)(iii), (23), (29),
or (30).
3. Separate dwellings. A covered loan secured by five or more separate dwellings,
which are not multifamily dwellings, in
more than one location is not a loan secured
by a multifamily dwelling. For example, assume a landlord uses a covered loan to improve five or more dwellings, each with one
individual dwelling unit, located in different
parts of a town, and the loan is secured by
those properties. The covered loan is not secured by a multifamily dwelling as defined
by § 1003.2(n). Likewise, a covered loan secured by five or more separate dwellings that
are located within a multifamily dwelling,
but which is not secured by the entire multifamily dwelling (e.g., an entire apartment
building or housing complex), is not secured
by a multifamily dwelling as defined by
§ 1003.2(n). For example, assume that an investor purchases 10 individual unit condominiums in a 100-unit condominium complex using a covered loan. The covered loan
would not be secured by a multifamily dwelling as defined by § 1003.2(n). In both of these
situations, a financial institution reporting
a covered loan or application secured by
these separate dwellings would not be subject to the additional reporting requirements
for covered loans secured by or applications
proposed to be secured by multifamily dwell-

2(p) Refinancing
1. General. Section 1003.2(p) defines a refinancing as a closed-end mortgage loan or an
open-end line of credit in which a new, dwelling-secured debt obligation satisfies and replaces an existing, dwelling-secured debt obligation by the same borrower. Except as described in comment 2(p)–2, whether a refinancing has occurred is determined by reference to whether, based on the parties’ contract and applicable law, the original debt
obligation has been satisfied or replaced by a

88

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00098

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

new debt obligation. Whether the original
lien is satisfied is irrelevant. For example:
i. A new closed-end mortgage loan that
satisfies and replaces one or more existing
closed-end mortgage loans is a refinancing
under § 1003.2(p).
ii. A new open-end line of credit that satisfies and replaces an existing closed-end
mortgage loan is a refinancing under
§ 1003.2(p).
iii. Except as described in comment 2(p)–2,
a new debt obligation that renews or modifies the terms of, but that does not satisfy
and replace, an existing debt obligation, is
not a refinancing under § 1003.2(p).
2. New York State consolidation, extension,
and modification agreements. Where a transaction is completed pursuant to a New York
State consolidation, extension, and modification agreement and is classified as a supplemental mortgage under New York Tax
Law section§ 255, such that the borrower
owes reduced or no mortgage recording
taxes, and where, but for the agreement, the
transaction would have met the definition of
a refinancing under § 1003.2(p), the transaction is considered a refinancing under
§ 1003.2(p). See also comment 2(d)–2.ii.
3. Existing debt obligation. A closed-end
mortgage loan or an open-end line of credit
that satisfies and replaces one or more existing debt obligations is not a refinancing
under § 1003.2(p) unless the existing debt obligation (or obligations) also was secured by a
dwelling. For example, assume that a borrower has an existing $30,000 closed-end
mortgage loan and obtains a new $50,000
closed-end mortgage loan that satisfies and
replaces the existing $30,000 loan. The new
$50,000 loan is a refinancing under § 1003.2(p).
However, if the borrower obtains a new
$50,000 closed-end mortgage loan that satisfies and replaces an existing $30,000 loan secured only by a personal guarantee, the new
$50,000 loan is not a refinancing under
§ 1003.2(p). See § 1003.4(a)(3) and related commentary for guidance about how to report
the loan purpose of such transactions, if they
are not otherwise excluded under § 1003.3(c).
4. Same borrower. Section 1003.2(p) provides
that, even if all of the other requirements of
§ 1003.2(p) are met, a closed-end mortgage
loan or an open-end line of credit is not a refinancing unless the same borrower undertakes both the existing and the new obligation(s). Under § 1003.2(p), the ‘‘same borrower’’ undertakes both the existing and the
new obligation(s) even if only one borrower
is the same on both obligations. For example, assume that an existing closed-end
mortgage loan (obligation X) is satisfied and
replaced by a new closed-end mortgage loan
(obligation Y). If borrowers A and B both are
obligated on obligation X, and only borrower
B is obligated on obligation Y, then obligation Y is a refinancing under § 1003.2(p), assuming the other requirements of § 1003.2(p)

are met, because borrower B is obligated on
both transactions. On the other hand, if only
borrower A is obligated on obligation X, and
only borrower B is obligated on obligation Y,
then obligation Y is not a refinancing under
§ 1003.2(p). For example, assume that two
spouses are divorcing. If both spouses are obligated on obligation X, but only one spouse
is obligated on obligation Y, then obligation
Y is a refinancing under § 1003.2(p), assuming
the other requirements of § 1003.2(p) are met.
On the other hand, if only spouse A is obligated on obligation X, and only spouse B is
obligated on obligation Y, then obligation Y
is not a refinancing under § 1003.2(p). See
§ 1003.4(a)(3) and related commentary for
guidance about how to report the loan purpose of such transactions, if they are not
otherwise excluded under § 1003.3(c).
5. Two or more debt obligations. Section
1003.2(p) provides that, to be a refinancing, a
new debt obligation must satisfy and replace
an existing debt obligation. Where two or
more new obligations replace an existing obligation, each new obligation is a refinancing
if, taken together, the new obligations satisfy the existing obligation. Similarly, where
one new obligation replaces two or more existing obligations, the new obligation is a refinancing if it satisfies each of the existing
obligations.
6. Multiple-purpose loans. A closed-end
mortgage loan or an open-end line of credit
may be used for multiple purposes. For example, a closed-end mortgage loan that is a
refinancing under § 1003.2(p) may also be a
home improvement loan under § 1003.2(i) and
be used for other purposes if the refinancing
is a cash-out refinancing and the funds will
be used both for home improvement and to
pay college tuition. Such a transaction is a
multiple-purpose loan. Comment 4(a)(3)–3
provides details about how to report multiple-purpose covered loans.
Section 1003.3—Exempt Institutions and
Excluded and Partially Exempt Transactions
3(c) Excluded Transactions
Paragraph 3(c)(1)
1. Financial institution acting in a fiduciary
capacity. Section 1003.3(c)(1) provides that a
closed-end mortgage loan or an open-end line
of credit originated or purchased by a financial institution acting in a fiduciary capacity is an excluded transaction. A financial
institution acts in a fiduciary capacity if, for
example, the financial institution acts as a
trustee.
Paragraph 3(c)(2)
1. Loan or line of credit secured by a lien on
unimproved land. Section 1003.3(c)(2) provides
that a closed-end mortgage loan or an openend line of credit secured by a lien on unimproved land is an excluded transaction. A

89

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00099

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

loan or line of credit is secured by a lien on
unimproved land if the loan or line of credit
is secured by vacant or unimproved property,
unless the institution knows, based on information that it receives from the applicant or
borrower at the time the application is received or the credit decision is made, that
the proceeds of that loan or credit line will
be used within two years after closing or account opening to construct a dwelling on, or
to purchase a dwelling to be placed on, the
land. A loan or line of credit that is not excludable under § 1003.3(c)(2) nevertheless may
be excluded, for example, as temporary financing under § 1003.3(c)(3).

chase a home, renovate it, and re-sell it before the term expires. Under § 1003.3(c)(3), the
loan is not designed to be replaced by separate permanent financing extended to the
same borrower, and therefore the temporary
financing exclusion does not apply. Such a
transaction is not temporary financing
under § 1003.3(c)(3) merely because its term is
short.
2. Loan or line of credit to construct a dwelling for sale. A construction-only loan or line
of credit is considered temporary financing
and excluded under § 1003.3(c)(3) if the loan or
line of credit is extended to a person exclusively to construct a dwelling for sale. See
comment 3(c)(3)–1.ii through .iv for examples
of the reporting requirement for construction loans that are not extended to a person
exclusively to construct a dwelling for sale.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 3(c)(3)
1. Temporary financing. Section 1003.3(c)(3)
provides that closed-end mortgage loans or
open-end lines of credit obtained for temporary financing are excluded transactions.
A loan or line of credit is considered temporary
financing
and
excluded
under
§ 1003.3(c)(3) if the loan or line of credit is designed to be replaced by separate permanent
financing extended by any financial institution to the same borrower at a later time.
For example:
i. Lender A extends credit in the form of a
bridge or swing loan to finance a borrower’s
down payment on a home purchase. The borrower pays off the bridge or swing loan with
funds from the sale of his or her existing
home and obtains permanent financing for
his or her new home from Lender A or from
another lender. The bridge or swing loan is
excluded as temporary financing under
§ 1003.3(c)(3).
ii. Lender A extends credit to a borrower
to finance construction of a dwelling. The
borrower will obtain a new extension of credit for permanent financing for the dwelling,
either from Lender A or from another lender,
and either through a refinancing of the initial construction loan or a separate loan.
The initial construction loan is excluded as
temporary financing under § 1003.3(c)(3).
iii. Assume the same scenario as in comment 3(c)(3)–1.ii, except that the initial construction loan is, or may be, renewed one or
more times before the separate permanent financing is obtained. The initial construction
loan, including any renewal thereof, is excluded as temporary financing under
§ 1003.3(c)(3).
iv. Lender A extends credit to finance construction of a dwelling. The loan automatically will convert to permanent financing
extended to the same borrower with Lender
A once the construction phase is complete.
Under § 1003.3(c)(3), the loan is not designed
to be replaced by separate permanent financing extended to the same borrower, and
therefore the temporary financing exclusion
does not apply. See also comment 2(j)–3.
v. Lender A originates a loan with a ninemonth term to enable an investor to pur-

Paragraph 3(c)(4)
1. Purchase of an interest in a pool of loans.
Section 1003.3(c)(4) provides that the purchase of an interest in a pool of closed-end
mortgage loans or open-end lines of credit is
an excluded transaction. The purchase of an
interest in a pool of loans or lines of credit
includes, for example, mortgage-participation certificates, mortgage-backed securities, or real estate mortgage investment conduits.
Paragraph 3(c)(6)
1.
Mergers
and
acquisitions.
Section
1003.3(c)(6) provides that the purchase of
closed-end mortgage loans or open-end lines
of credit as part of a merger or acquisition,
or as part of the acquisition of all of the assets and liabilities of a branch office, are excluded transactions. If a financial institution
acquires loans or lines of credit in bulk from
another institution (for example, from the
receiver for a failed institution), but no
merger or acquisition of an institution, or
acquisition of a branch office, is involved
and no other exclusion applies, the acquired
loans or lines of credit are covered loans and
are reported as described in comment 4(a)–
1.iii.
Paragraph 3(c)(8)
1. Partial interest. Section 1003.3(c)(8) provides that the purchase of a partial interest
in a closed-end mortgage loan or an open-end
line of credit is an excluded transaction. If
an institution acquires only a partial interest in a loan or line of credit, the institution
does not report the transaction even if the
institution participated in the underwriting
and origination of the loan or line of credit.
If an institution acquires a 100 percent interest in a loan or line of credit, the transaction
is not excluded under § 1003.3(c)(8).

90

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00100

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

Paragraph 3(c)(9)

of credit secured by a multifamily dwelling
or a single-family investment property;
ii. A closed-end mortgage loan or an openend line of credit to improve a doctor’s office
or a daycare center that is located in a
dwelling other than a multifamily dwelling;
and
iii. A closed-end mortgage loan or an openend line of credit to a corporation, if the
funds from the loan or line of credit will be
used to purchase or to improve a dwelling, or
if the transaction is a refinancing.
4. Examples—excluded business- or commercial-purpose transactions. The following are
examples of closed-end mortgage loans and
open-end lines of credit that are not covered
loans because they primarily are for a business or commercial purpose, but they do not
meet the definition of a home improvement
loan under § 1003.2(i), a home purchase loan
under § 1003.2(j), or a refinancing under
§ 1003.2(p):
i. A closed-end mortgage loan or an openend line of credit whose funds will be used
primarily to improve or expand a business,
for example to renovate a family restaurant
that is not located in a dwelling, or to purchase a warehouse, business equipment, or
inventory;
ii. A closed-end mortgage loan or an openend line of credit to a corporation whose
funds will be used primarily for business purposes, such as to purchase inventory; and
iii. A closed-end mortgage loan or an openend line of credit whose funds will be used
primarily for business or commercial purposes other than home purchase, home improvement, or refinancing, even if the loan
or line of credit is cross-collateralized by a
covered loan.

1. Loan or line of credit used primarily for agricultural purposes. Section 1003.3(c)(9) provides that an institution does not report a
closed-end mortgage loan or an open-end line
of credit used primarily for agricultural purposes. A loan or line of credit is used primarily for agricultural purposes if its funds
will be used primarily for agricultural purposes, or if the loan or line of credit is secured by a dwelling that is located on real
property that is used primarily for agricultural purposes (e.g., a farm). An institution
may refer to comment 3(a)–8 in the official
interpretations of Regulation Z, 12 CFR part
1026, supplement I, for guidance on what is
an agricultural purpose. An institution may
use any reasonable standard to determine
the primary use of the property. An institution may select the standard to apply on a
case-by-case basis.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 3(c)(10)
1. General. Section 1003.3(c)(10) provides a
special rule for reporting a closed-end mortgage loan or an open-end line of credit that
is or will be made primarily for a business or
commercial purpose. If an institution determines that a closed-end mortgage loan or an
open-end line of credit primarily is for a
business or commercial purpose, then the
loan or line of credit is a covered loan only
if it is a home improvement loan under
§ 1003.2(i), a home purchase loan under
§ 1003.2(j), or a refinancing under § 1003.2(p)
and no other exclusion applies. Section
1003.3(c)(10) does not categorically exclude
all business- or commercial-purpose loans
and lines of credit from coverage.
2. Primary purpose. An institution must determine in each case if a closed-end mortgage loan or an open-end line of credit primarily is for a business or commercial purpose. If a closed-end mortgage loan or an
open-end line of credit is deemed to be primarily for a business, commercial, or organizational purpose under Regulation Z, 12 CFR
1026.3(a) and its related commentary, then
the loan or line of credit also is deemed to be
primarily for a business or commercial purpose under § 1003.3(c)(10).
3. Examples—covered business- or commercialpurpose transactions. The following are examples of closed-end mortgage loans and openend lines of credit that are not excluded from
reporting under § 1003.3(c)(10) because, although they primarily are for a business or
commercial purpose, they also meet the definition of a home improvement loan under
§ 1003.2(i), a home purchase loan under
§ 1003.2(j), or a refinancing under § 1003.2(p):
i. A closed-end mortgage loan or an openend line of credit to purchase or to improve
a multifamily dwelling or a single-family investment property, or a refinancing of a
closed-end mortgage loan or an open-end line

Paragraph 3(c)(11)
1. General. Section 1003.3(c)(11) provides
that a closed-end mortgage loan is an excluded transaction if a financial institution
originated fewer than 25 closed-end mortgage
loans in either of the two preceding calendar
years. For example, assume that a bank is a
financial institution in 2018 under § 1003.2(g)
because it originated 600 open-end lines of
credit in 2016, 650 open-end lines of credit in
2017, and met all of the other requirements
under § 1003.2(g)(1). Also assume that the
bank originated 10 and 20 closed-end mortgage loans in 2016 and 2017, respectively. The
open-end lines of credit that the bank originated or purchased, or for which it received
applications, during 2018 are covered loans
and must be reported, unless they otherwise
are excluded transactions under § 1003.3(c).
However, the closed-end mortgage loans that
the bank originated or purchased, or for
which it received applications, during 2018
are excluded transactions under § 1003.3(c)(11)
and need not be reported. See comments
4(a)–2 through –4 for guidance about the activities that constitute an origination.

91

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00101

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

2. Optional reporting. A financial institution may report applications for, originations of, or purchases of closed-end mortgage
loans that are excluded transactions because
the financial institution originated fewer
than 25 closed-end mortgage loans in either
of the two preceding calendar years. However, a financial institution that chooses to
report such excluded applications for, originations of, or purchases of closed-end mortgage loans must report all such applications
for closed-end mortgage loans that it receives, closed-end mortgage loans that it
originates, and closed-end mortgage loans
that it purchases that otherwise would be
covered loans for a given calendar year. Note
that applications which remain pending at
the end of a calendar year are not reported,
as described in comment 4(a)(8)(i)–14.

Paragraph 3(c)(13)
1. New funds extended before consolidation.
Section 1003.3(c)(13) provides an exclusion for
a transaction that provided or, in the case of
an application, proposed to provide new
funds to the borrower in advance of being
consolidated in a New York State consolidation, extension, and modification agreement
classified as a supplemental mortgage under
New York Tax Law section 255 (New York
CEMA) and for which final action is taken on
both transactions within the same calendar
year. The excluded transaction provides or
proposes to provide funds that are not part of
any existing debt obligation of the borrower
and that are then consolidated or proposed
to be consolidated with an existing debt obligation or obligations as part of the supplemental mortgage. The new funds are reported only insofar as they form part of the
total amount of the reported New York
CEMA, and not as a separate amount. This
exclusion applies only if, at the time the
transaction that provided new funds was
originated, the financial institution intended
to consolidate the loan into a New York
CEMA. If a New York CEMA that consolidates an excluded preliminary transaction is
carried out in a transaction involving an assumption, the financial institution reports
the New York CEMA and does not report the
preliminary transaction separately. The
§ 1003.3(c)(13) exclusion does not apply to
similar preliminary transactions that provide or propose to provide new funds to be
consolidated not pursuant to New York Tax
Law section 255 but under some other law in
a transaction that is not an extension of
credit. For example, assume a financial institution extends new funds to a consumer in
a preliminary transaction that is then consolidated as part of a consolidation, extension and modification agreement pursuant to
the law of a State other than New York. If
the preliminary extension of new funds is a
covered loan, it must be reported. If the consolidation, extension and modification agreement pursuant to the law of a State other
than New York is not an extension of credit
pursuant to Regulation C, it may not be reported. For discussion of how to report a
cash-out refinancing, see comment 4(a)(3)–2.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 3(c)(12)
1. General. Section 1003.3(c)(12) provides
that an open-end line of credit is an excluded
transaction if a financial institution originated fewer than 500 open-end lines of credit
in either of the two preceding calendar
years. For example, assume that a bank is a
financial institution in 2020 under § 1003.2(g)
because it originated 50 closed-end mortgage
loans in 2018, 75 closed-end mortgage loans in
2019, and met all of the other requirements
under § 1003.2(g)(1). Also assume that the
bank originated 75 and 85 open-end lines of
credit in 2018 and 2019, respectively. The
closed-end mortgage loans that the bank
originated or purchased, or for which it received applications, during 2020 are covered
loans and must be reported, unless they otherwise are excluded transactions under
§ 1003.3(c). However, the open-end lines of
credit that the bank originated or purchased,
or for which it received applications, during
2020
are
excluded
transactions
under
§ 1003.3(c)(12) and need not be reported. See
comments 4(a)–2 through –4 for guidance
about the activities that constitute an origination.
2. Optional reporting. A financial institution may report applications for, originations of, or purchases of open-end lines of
credit that are excluded transactions because the financial institution originated
fewer than 500 open-end lines of credit in either of the two preceding calendar years.
However, a financial institution that chooses
to report such excluded applications for,
originations of, or purchases of open-end
lines of credit must report all such applications for open-end lines of credit which it receives, open-end lines of credit that it originates, and open-end lines of credit that it
purchases that otherwise would be covered
loans for a given calendar year. Note that
applications which remain pending at the
end of a calendar year are not reported, as
described in comment 4(a)(8)(i)–14.

3(d) Partially Exempt Transactions
1. Merger or acquisition—application of partial exemption thresholds to surviving or newly
formed institution. After a merger or acquisition, the surviving or newly formed institution falls below the loan threshold described
in § 1003.3(d)(2) or (3) if it, considering the
combined lending activity of the surviving
or newly formed institution and the merged
or
acquired
institutions
or
acquired
branches, falls below the loan threshold described in § 1003.3(d)(2) or (3). For example, A
and B merge. The surviving or newly formed

92

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00102

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

institution falls below the loan threshold described in § 1003.3(d)(2) if the surviving or
newly formed institution, A, and B originated a combined total of fewer than 500
closed-end mortgage loans that are not excluded
from
this
part
pursuant
to
§ 1003.3(c)(1) through (10) or (c)(13) in each of
the two preceding calendar years. Comment
3(d)–3 discusses eligibility for partial exemptions during the calendar year of a merger.
2. Merger or acquisition—Community Reinvestment Act examination history. After a
merger or acquisition, the surviving or
newly formed institution is deemed to be ineligible for the partial exemptions pursuant
to § 1003.3(d)(6) if either it or any of the
merged or acquired institutions received a
rating of ‘‘needs to improve record of meeting community credit needs’’ during each of
its two most recent examinations or a rating
of ‘‘substantial noncompliance in meeting
community credit needs’’ on its most recent
examination under section 807(b)(2) of the
Community Reinvestment Act of 1977 (12
U.S.C. 2906(b)(2)). Comment 3(d)–3.iii discusses eligibility for partial exemptions during the calendar year of a merger when an
institution that is eligible for a partial exemption merges with an institution that is
ineligible for the partial exemption (including, for example, an institution that is ineligible for the partial exemptions pursuant to
§ 1003.3(d)(6)) and the surviving or newly
formed institution is ineligible for the partial exemption.
3. Merger or acquisition—applicability of partial exemptions during calendar year of merger
or acquisition. The scenarios described below
illustrate the applicability of partial exemptions under § 1003.3(d) during the calendar
year of a merger or acquisition. For purposes
of these illustrations, ‘‘institution’’ means a
financial institution, as defined in § 1003.2(g),
that is not exempt from reporting under
§ 1003.3(a). Although the scenarios below refer
to the partial exemption for closed-end
mortgage loans under § 1003.3(d)(2), the same
principles apply with respect to the partial
exemption for open-end lines of credit under
§ 1003.3(d)(3).
i. Assume two institutions that are eligible
for the partial exemption for closed-end
mortgage loans merge and the surviving or
newly formed institution meets all of the requirements for the partial exemption. The
partial exemption for closed-end mortgage
loans applies for the calendar year of the
merger.
ii. Assume two institutions that are eligible for the partial exemption for closed-end
mortgage loans merge and the surviving or
newly formed institution does not meet the
requirements for the partial exemption. Collection of optional data for closed-end mortgage loans is permitted but not required for
the calendar year of the merger (even though
the merger creates an institution that does

not meet the requirements for the partial exemption for closed-end mortgage loans).
When a branch office of an institution that is
eligible for the partial exemption is acquired
by another institution that is eligible for the
partial exemption, and the acquisition results in an institution that is not eligible for
the partial exemption, data collection for
closed-end mortgage loans is permitted but
not required for the calendar year of the acquisition.
iii. Assume an institution that is eligible
for the partial exemption for closed-end
mortgage loans merges with an institution
that is ineligible for the partial exemption
and the surviving or newly formed institution is ineligible for the partial exemption.
For the calendar year of the merger, collection of optional data as defined in
§ 1003.3(d)(1)(iii) for closed-end mortgage
loans is required for covered loans and applications handled in the offices of the merged
institution that was previously ineligible for
the partial exemption. For the calendar year
of the merger, collection of optional data for
closed-end mortgage loans is permitted but
not required for covered loans and applications handled in the offices of the merged institution that was previously eligible for the
partial exemption. When an institution that
is ineligible for the partial exemption for
closed-end mortgage loans acquires a branch
office of an institution that is eligible for the
partial exemption, collection of optional
data for closed-end mortgage loans is permitted but not required for covered loans
and applications handled by the acquired
branch office for the calendar year of the acquisition.
iv. Assume an institution that is eligible
for the partial exemption for closed-end
mortgage loans merges with an institution
that is ineligible for the partial exemption
and the surviving or newly formed institution is eligible for the partial exemption. For
the calendar year of the merger, collection
of optional data for closed-end mortgage
loans is required for covered loans and applications handled in the offices of the previously ineligible institution that took place
prior to the merger. After the merger date,
collection of optional data for closed-end
mortgage loans is permitted but not required
for covered loans and applications handled in
the offices of the institution that was previously ineligible for the partial exemption.
When an institution remains eligible for the
partial exemption for closed-end mortgage
loans after acquiring a branch office of an institution that is ineligible for the partial exemption, collection of optional data for
closed-end mortgage loans is required for
transactions of the acquired branch office
that take place prior to the acquisition. Collection of optional data for closed-end mortgage loans by the acquired branch office is
permitted but not required for transactions

93

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00103

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

taking place in the remainder of the calendar year after the acquisition.
4. Originations. Whether applications for
covered loans that an insured depository institution or insured credit union receives,
covered loans that it originates, or covered
loans that it purchases are partially exempt
transactions under § 1003.3(d) depends, in
part, on whether the institution originated
fewer than 500 closed-end mortgage loans
that are not excluded from this part pursuant to § 1003.3(c)(1) through (10) or (c)(13) in
each of the two preceding calendar years or
fewer than 500 open-end lines of credit that
are not excluded from this part pursuant to
§ 1003.3(c)(1) through (10) in each of the two
preceding calendar years. See comments
4(a)–2 through –4 for guidance about the activities that constitute an origination for
purposes of § 1003.3(d).
5. Affiliates. A financial institution that is
not itself an insured credit union or an insured depository institution as defined in
§ 1003.3(d)(1)(i) and (ii) is not eligible for the
partial
exemptions
under
§ 1003.3(d)(1)
through (3), even if it is owned by or affiliated with an insured credit union or an insured depository institution. For example,
an institution that is a subsidiary of an insured credit union or insured depository institution may not claim a partial exemption
under § 1003.3(d) for its closed-end mortgage
loans unless the subsidiary institution itself:
i. Is an insured credit union or insured depository institution,
ii. In each of the two preceding calendar
years originated fewer than 500 closed-end
mortgage loans that are not excluded from
this part pursuant to § 1003.3(c)(1) through
(10) or (c)(13), and
iii. If the subsidiary is an insured depository institution, had not received as of the
preceding December 31 a rating of ‘‘needs to
improve record of meeting community credit
needs’’ during each of its two most recent examinations or a rating of ‘‘substantial noncompliance in meeting community credit
needs’’ on its most recent examination under
section 807(b)(2) of the Community Reinvestment Act of 1977 (12 U.S.C. 2906(b)(2)).

insured depository institution or insured
credit union that, in each of the two preceding calendar years, originated fewer than
500 closed-end mortgage loans that are not
excluded from this part pursuant to
§ 1003.3(c)(1) through (10) or (c)(13) is not required to collect, record, or report optional
data as defined in § 1003.3(d)(1)(iii) for applications for closed-end mortgage loans that it
receives, closed-end mortgage loans that it
originates, and closed-end mortgage loans
that it purchases. For example, assume that
an insured credit union is a financial institution in 2020 under § 1003.2(g) and originated,
in 2018 and 2019 respectively, 100 and 200
closed-end mortgage loans that are not excluded
from
this
part
pursuant
to
§ 1003.3(c)(1) through (10) or (c)(13). The
closed-end mortgage loans that the insured
credit union originated or purchased, or for
which it received applications, during 2020
are
not
excluded
transactions
under
§ 1003.3(c)(11). However, due to the partial exemption in § 1003.3(d)(2), the insured credit
union is not required to collect, record, or
report
optional
data
as
defined
in
§ 1003.3(d)(1)(iii) for the closed-end mortgage
loans that it originated or purchased, or for
which it received applications, for which
final action is taken during 2020. See comments 4(a)–2 through –4 for guidance about
the activities that constitute an origination.
Paragraph 3(d)(3)
1. General. Section 1003.3(d)(3) provides
that, except as provided in § 1003.3(d)(6), an
insured depository institution or insured
credit union that, in each of the two preceding calendar years, originated fewer than
500 open-end lines of credit that are not excluded
from
this
part
pursuant
to
§ 1003.3(c)(1) through (10) is not required to
collect, record, or report optional data as defined in § 1003.3(d)(1)(iii) for applications for
open-end lines of credit that it receives,
open-end lines of credit that it originates,
and open-end lines of credit that it purchases. See § 1003.3(c)(12) and comments
3(c)(12)–1 and –2, which provide an exclusion
for certain open-end lines of credit from this
part and permit voluntary reporting of such
transactions under certain circumstances.
See also comments 4(a)–2 through –4 for
guidance about the activities that constitute
an origination.

Paragraph 3(d)(1)(iii)

kpayne on VMOFRWIN702 with $$_JOB

1. Optional data. The definition of optional
data in § 1003.3(d)(1)(iii) identifies the data
that are covered by the partial exemptions
for certain transactions of insured depository institutions and insured credit unions
under § 1003.3(d). If a transaction is not partially exempt under § 1003.3(d)(2) or (3), a financial institution must collect, record, and
report optional data as otherwise required
under this part.

Paragraph 3(d)(4)
1. General. Section 1003.3(d)(4) provides that
an insured depository institution or insured
credit union may collect, record, and report
optional data as defined in § 1003.3(d)(1)(iii)
for a partially exempt transaction as though
the institution were required to do so, provided that, if an institution voluntarily reports any data pursuant to any of the seven
paragraphs identified in § 1003.3(d)(4)(i) and

Paragraph 3(d)(2)
1. General. Section 1003.3(d)(2) provides
that, except as provided in § 1003.3(d)(6), an

94

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00104

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

(ii) (§ 1003.4(a)(9)(i) and (a)(15), (16), (17), (27),
(33), and (35)), it also must report all other
data for the covered loan or application that
would be required by that applicable paragraph if the transaction were not partially
exempt. For example, an insured depository
institution or insured credit union may voluntarily report the existence of a balloon
payment for a partially exempt transaction
pursuant to § 1003.4(a)(27), but, if it does so, it
must also report all other data for the transaction
that
would
be
required
by
§ 1003.4(a)(27) if the transaction were not partially exempt (i.e., whether the transaction
has interest-only payments, negative amortization, or other non-amortizing features).
2. Partially exempt transactions within the
same loan/application register. A financial institution may collect, record, and report optional data for some partially exempt transactions under § 1003.3(d) in the manner specified in § 1003.3(d)(4), even if it does not collect, record, and report optional data for
other partially exempt transactions under
§ 1003.3(d).
3. Exempt or not applicable. i. If a financial
institution would otherwise report that a
transaction is partially exempt pursuant to
§ 1003.3(d) and a particular requirement to report optional data is not applicable to the
transaction, the insured depository institution or insured credit union complies with
the particular requirement by reporting either that the transaction is exempt from the
requirement or that the requirement is not
applicable. For example, assume that an insured depository institution or insured credit union originates a partially exempt reverse mortgage. The requirement to report
lender credits is not applicable to reverse
mortgages, as comment 4(a)(20)–1 explains.
Accordingly, the institution could report either exempt or not applicable for lender
credits for the reverse mortgage transaction.
ii. An institution is considered as reporting
data in a data field for purposes of
§ 1003.3(d)(4)(i) and (ii) when it reports not applicable for that data field for a partially exempt transaction. For example, assume an
insured depository institution or insured
credit union originates a covered loan that is
eligible for a partial exemption and is made
primarily for business or commercial purposes. The requirement to report total loan
costs or total points and fees is not applicable to loans made primarily for business or
commercial
purposes,
as
comments
4(a)(17)(i)–1 and (ii)–1 explain. The institution can report not applicable for both total
loan costs and total points and fees, or it can
report exempt for both total loan costs and
total points and fees for the loan. Pursuant
to § 1003.3(d)(4)(ii), the institution is not permitted to report not applicable for total loan
costs and report exempt for total points and
fees for the business or commercial purpose
loan.

Paragraph 3(d)(4)(i)
1. State. Section 1003.3(d)(4)(i) provides that
if an institution eligible for a partial exemption under § 1003.3(d)(2) or (3) reports the
street address, city name, or Zip Code for a
partially exempt transaction pursuant to
§ 1003.4(a)(9)(i), it reports all data that would
be required by § 1003.4(a)(9)(i) if the transaction were not partially exempt, including
the State. An insured depository institution
or insured credit union that reports the
State pursuant to § 1003.4(a)(9)(ii) or comment 4(a)(9)(ii)–1 for a partially exempt
transaction without reporting any other
data required by § 1003.4(a)(9)(i) is not required to report the street address, city
name,
or
Zip
Code
pursuant
to
§ 1003.4(a)(9)(i).
Paragraph 3(d)(5)
1. NULI—uniqueness. For a partially exempt transaction under § 1003.3(d), a financial
institution may report a ULI or a NULI. Section 1003.3(d)(5)(ii) requires an insured depository institution or insured credit union that
assigns a NULI to a covered loan or application to ensure that the character sequence it
assigns is unique within the institution’s annual loan/application register in which it appears. A financial institution should assign
only one NULI to any particular covered
loan or application within each annual loan/
application register, and each NULI should
correspond to a single application and ensuing loan within the annual loan/application
register in which the NULI appears in the
case that the application is approved and a
loan is originated. A financial institution
may use a NULI more than once within an
annual loan/application register only if the
NULI refers to the same loan or application
or a loan that ensues from an application referred to elsewhere in the annual loan/application register. Refinancings or applications
for refinancing that are included in same annual loan/application register as the loan
that is being refinanced should be assigned a
different NULI than the loan that is being
refinanced. An insured depository institution
or insured credit union with multiple
branches must ensure that its branches do
not use the same NULI to refer to multiple
covered loans or applications within the institution’s same annual loan/application register.
2. NULI—privacy. Section 1003.3(d)(5)(iii)
prohibits an insured depository institution
or insured credit union from including information in the NULI that could be used to directly identify the applicant or borrower. Information that could be used to directly
identify the applicant or borrower includes,
but is not limited to, the applicant’s or borrower’s name, date of birth, Social Security
number, official government-issued driver’s

95

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00105

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

license or identification number, alien registration number, government passport number, or employer or taxpayer identification
number.

quires a financial institution to collect certain information regarding applications for
covered loans that it receives and regarding
covered loans that it originates. The following provides guidance on how to report
originations and applications involving more
than one institution. The discussion below
assumes that all of the parties are financial
institutions as defined by § 1003.2(g). The
same principles apply if any of the parties is
not a financial institution. Comment 4(a)–3
provides examples of transactions involving
more than one institution, and comment
4(a)–4 discusses how to report actions taken
by agents.
i. Only one financial institution reports
each originated covered loan as an origination. If more than one institution was involved in the origination of a covered loan,
the financial institution that made the credit decision approving the application before
closing or account opening reports the loan
as an origination. It is not relevant whether
the loan closed or, in the case of an application, would have closed in the institution’s
name. If more than one institution approved
an application prior to closing or account
opening and one of those institutions purchased the loan after closing, the institution
that purchased the loan after closing reports
the loan as an origination. If a financial institution reports a transaction as an origination, it reports all of the information required for originations, even if the covered
loan was not initially payable to the financial institution that is reporting the covered
loan as an origination.
ii. In the case of an application for a covered loan that did not result in an origination, a financial institution reports the action it took on that application if it made a
credit decision on the application or was reviewing the application when the application
was withdrawn or closed for incompleteness.
It is not relevant whether the financial institution received the application from the applicant or from another institution, such as
a broker, or whether another financial institution also reviewed and reported an action
taken on the same application.
3. Examples—originations and applications
involving more than one institution. The following scenarios illustrate how an institution reports a particular application or covered loan. The illustrations assume that all
of the parties are financial institutions as
defined by § 1003.2(g). However, the same
principles apply if any of the parties is not a
financial institution.
i. Financial Institution A received an application for a covered loan from an applicant and forwarded that application to Financial Institution B. Financial Institution
B reviewed the application and approved the

Paragraph 3(d)(6)
1.
Preceding
calendar
year.
Section
1003.3(d)(6) refers to the preceding December
31, which means the December 31 preceding
the current calendar year. For example, in
2020, the preceding December 31 is December
31, 2019. Assume that, as of December 31, 2019,
an insured depository institution received
ratings of ‘‘needs to improve record of meeting community credit needs’’ during its two
most recent examinations under section
807(b)(2) of the Community Reinvestment
Act (12 U.S.C. 2906(b)(2)) in 2018 and 2014. Accordingly, in 2020, the insured depository institution’s transactions are not partially exempt pursuant to § 1003.3(d).
Section 1003.4—Compilation of Reportable
Data

kpayne on VMOFRWIN702 with $$_JOB

4(a) Data Format and Itemization
1. General. Except as otherwise provided in
§ 1003.3, § 1003.4(a) describes a financial institution’s obligation to collect data on applications it received, on covered loans that it
originated, and on covered loans that it purchased during the calendar year covered by
the loan/application register.
i. A financial institution reports these data
even if the covered loans were subsequently
sold by the institution.
ii. A financial institution reports data for
applications that did not result in an origination but on which actions were taken—for
example, an application that the institution
denied, that it approved but that was not accepted, that it closed for incompleteness, or
that the applicant withdrew during the calendar year covered by the loan/application
register. A financial institution is required
to report data regarding requests under a
preapproval
program
(as
defined
in
§ 1003.2(b)(2)) only if the preapproval request
is denied, results in the origination of a
home purchase loan, or was approved but not
accepted.
iii. If a financial institution acquires covered loans in bulk from another institution
(for example, from the receiver for a failed
institution), but no merger or acquisition of
an institution, or acquisition of a branch office, is involved, the acquiring financial institution reports the covered loans as purchased loans.
iv. A financial institution reports the data
for an application on the loan/application
register for the calendar year during which
the application was acted upon even if the
institution received the application in a previous calendar year.
2. Originations and applications involving
more than one institution. Section 1003.4(a) re-

96

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00106

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

loan prior to closing. The loan closed in Financial Institution A’s name. Financial Institution B purchased the loan from Financial Institution A after closing. Financial Institution B was not acting as Financial Institution A’s agent. Since Financial Institution B made the credit decision prior to closing, Financial Institution B reports the
transaction as an origination, not as a purchase. Financial Institution A does not report the transaction.
ii. Financial Institution A received an application for a covered loan from an applicant and forwarded that application to Financial Institution B. Financial Institution
B reviewed the application before the loan
would have closed, but the application did
not result in an origination because Financial Institution B denied the application. Financial Institution B was not acting as Financial Institution A’s agent. Since Financial Institution B made the credit decision,
Financial Institution B reports the application as a denial. Financial Institution A does
not report the application. If, under the
same facts, the application was withdrawn
before Financial Institution B made a credit
decision, Financial Institution B would report the application as withdrawn and Financial Institution A would not report the
application.
iii. Financial Institution A received an application for a covered loan from an applicant and approved the application before
closing the loan in its name. Financial Institution A was not acting as Financial Institution B’s agent. Financial Institution B purchased the covered loan from Financial Institution A. Financial Institution B did not
review the application before closing. Financial Institution A reports the loan as an
origination. Financial Institution B reports
the loan as a purchase.
iv. Financial Institution A received an application for a covered loan from an applicant. If approved, the loan would have closed
in Financial Institution B’s name. Financial
Institution A denied the application without
sending it to Financial Institution B for approval. Financial Institution A was not acting as Financial Institution B’s agent. Since
Financial Institution A made the credit decision before the loan would have closed, Financial Institution A reports the application. Financial Institution B does not report
the application.
v. Financial Institution A reviewed an application and made the credit decision to approve a covered loan using the underwriting
criteria provided by a third party (e.g., another financial institution, Fannie Mae, or
Freddie Mac). The third party did not review
the application and did not make a credit decision prior to closing. Financial Institution
A was not acting as the third party’s agent.
Financial Institution A reports the application or origination. If the third party pur-

chased the loan and is subject to Regulation
C, the third party reports the loan as a purchase whether or not the third party reviewed the loan after closing. Assume the
same facts, except that Financial Institution
A approved the application, and the applicant chose not to accept the loan from Financial Institution A. Financial Institution
A reports the application as approved but
not accepted and the third party, assuming
the third party is subject to Regulation C,
does not report the application.
vi. Financial Institution A reviewed and
made the credit decision on an application
based on the criteria of a third-party insurer
or guarantor (for example, a government or
private insurer or guarantor). Financial Institution A reports the action taken on the
application.
vii. Financial Institution A received an application for a covered loan and forwarded it
to Financial Institutions B and C. Financial
Institution A made a credit decision, acting
as Financial Institution D’s agent, and approved the application. The applicant did not
accept the loan from Financial Institution
D. Financial Institution D reports the application as approved but not accepted. Financial Institution A does not report the application. Financial Institution B made a credit
decision, approving the application, the applicant accepted the offer of credit from Financial Institution B, and credit was extended. Financial Institution B reports the
origination. Financial Institution C made a
credit decision and denied the application.
Financial Institution C reports the application as denied.
4. Agents. If a financial institution made
the credit decision on a covered loan or application through the actions of an agent,
the institution reports the application or
origination. State law determines whether
one party is the agent of another. For example, acting as Financial Institution A’s
agent, Financial Institution B approved an
application prior to closing and a covered
loan was originated. Financial Institution A
reports the loan as an origination.
5. Purchased loans. i. A financial institution is required to collect data regarding
covered loans it purchases. For purposes of
§ 1003.4(a), a purchase includes a repurchase
of a covered loan, regardless of whether the
institution chose to repurchase the covered
loan or was required to repurchase the covered loan because of a contractual obligation
and regardless of whether the repurchase occurs within the same calendar year that the
covered loan was originated or in a different
calendar year. For example, assume that Financial Institution A originates or purchases
a covered loan and then sells it to Financial
Institution B, who later requires Financial
Institution A to repurchase the covered loan
pursuant to the relevant contractual obligations. Financial Institution B reports the

97

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00107

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)
Section 1003.4—Compilation of Reportable Data

purchase from Financial Institution A, assuming it is a financial institution as defined
under § 1003.2(g). Financial Institution A reports the repurchase from Financial Institution B as a purchase.
ii. In contrast, for purposes of § 1003.4(a), a
purchase does not include a temporary transfer of a covered loan to an interim funder or
warehouse creditor as part of an interim
funding agreement under which the originating financial institution is obligated to
repurchase the covered loan for sale to a subsequent investor. Such agreements, often referred to as ‘‘repurchase agreements,’’ are
sometimes employed as functional equivalents of warehouse lines of credit. Under
these agreements, the interim funder or
warehouse creditor acquires legal title to the
covered loan, subject to an obligation of the
originating institution to repurchase at a future date, rather than taking a security interest in the covered loan as under the terms
of a more conventional warehouse line of
credit. To illustrate, assume Financial Institution A has an interim funding agreement
with Financial Institution B to enable Financial Institution B to originate loans. Assume further that Financial Institution B
originates a covered loan and that, pursuant
to this agreement, Financial Institution A
takes a temporary transfer of the covered
loan until Financial Institution B arranges
for the sale of the covered loan to a subsequent investor and that Financial Institution B repurchases the covered loan to enable it to complete the sale to the subsequent investor (alternatively, Financial Institution A may transfer the covered loan directly to the subsequent investor at Financial Institution B’s direction, pursuant to
the interim funding agreement). The subsequent investor could be, for example, a financial institution or other entity that intends
to hold the loan in portfolio, a GSE or other
securitizer, or a financial institution or
other entity that intends to package and sell
multiple loans to a GSE or other securitizer.
In this example, the temporary transfer of
the covered loan from Financial Institution
B to Financial Institution A is not a purchase, and any subsequent transfer back to
Financial Institution B for delivery to the
subsequent investor is not a purchase, for
purposes of § 1003.4(a). Financial Institution
B reports the origination of the covered loan
as well as its sale to the subsequent investor.
If the subsequent investor is a financial institution under § 1003.2(g), it reports a purchase of the covered loan pursuant to
§ 1003.4(a), regardless of whether it acquired
the covered loan from Financial Institution
B or directly from Financial Institution A.

Paragraph 4(a)(1)(i)
1.
ULI—uniqueness.
Section
1003.4(a)(1)(i)(B)(2) requires a financial institution that assigns a universal loan identifier (ULI) to each covered loan or application
(except as provided in § 1003.4(a)(1)(i)(D) and
(E)) to ensure that the character sequence it
assigns is unique within the institution and
used only for the covered loan or application.
A financial institution should assign only
one ULI to any particular covered loan or
application, and each ULI should correspond
to a single application and ensuing loan in
the case that the application is approved and
a loan is originated. A financial institution
may use a ULI that was reported previously
to refer only to the same loan or application
for which the ULI was used previously or a
loan that ensues from an application for
which the ULI was used previously. A financial institution may not report an application for a covered loan in 2030 using the same
ULI that was reported for a covered loan
that was originated in 2020. Similarly,
refinancings or applications for refinancing
should be assigned a different ULI than the
loan that is being refinanced. A financial institution with multiple branches must ensure that its branches do not use the same
ULI to refer to multiple covered loans or applications.
2. ULI—privacy. Section 1003.4(a)(1)(i)(B)(3)
prohibits a financial institution from including information that could be used to directly identify the applicant or borrower in
the identifier that it assigns for the application or covered loan of the applicant or borrower. Information that could be used to directly identify the applicant or borrower includes, but is not limited to, the applicant’s
or borrower’s name, date of birth, Social Security number, official government-issued
driver’s license or identification number,
alien registration number, government passport number, or employer or taxpayer identification number.
3. ULI—purchased covered loan. If a financial institution has previously assigned a
covered loan with a ULI or reported a covered loan with a ULI under this part, a financial institution that purchases that covered
loan must report the same ULI that was previously assigned or reported unless the purchase of the covered loan is a partially exempt transaction under § 1003.3(d). For example, if a financial institution that submits an
annual loan/application register pursuant to
§ 1003.5(a)(1)(i) originates a covered loan that
is purchased by a financial institution that
also submits an annual loan/application register pursuant to § 1003.5(a)(1)(i), the financial institution that purchases the covered
loan must report the purchase of the covered
loan using the same ULI that was reported

98

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00108

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

by the originating financial institution if the
purchase is not a partially exempt transaction. If a financial institution that originates a covered loan has previously assigned
the covered loan with a ULI under this part
but has not yet reported the covered loan, a
financial institution that purchases that
covered loan must report the same ULI that
was previously assigned if the purchase is
not a partially exempt transaction. For example, if a financial institution that submits
an annual loan/application register pursuant
to § 1003.5(a)(1)(i) (Institution A) originates a
covered loan that is purchased by a financial
institution that submits a quarterly loan/application register pursuant to § 1003.5(a)(1)(ii)
(Institution B) and Institution A assigned a
ULI to the loan, then unless the purchase is
a partially exempt transaction Institution B
must report the ULI that was assigned by Institution A on Institution B’s quarterly loan/
application
register
pursuant
to
§ 1003.5(a)(1)(ii), even though Institution A
has not yet submitted its annual loan/application register pursuant to § 1003.5(a)(1)(i). A
financial institution that purchases a covered loan and is ineligible for a partial exemption with respect to the purchased covered loan must assign it a ULI pursuant to
§ 1003.4(a)(1)(i) and report it pursuant to
§ 1003.5(a)(1)(i) or (ii), whichever is applicable,
if the covered loan was not assigned a ULI by
the financial institution that originated the
loan because, for example, the loan was
originated prior to January 1, 2018, the loan
was originated by an institution not required
to report under this part, or the loan was assigned a non-universal loan identifier (NULI)
under § 1003.3(d)(5) rather than a ULI by the
loan originator.
4. ULI—reinstated or reconsidered application. A financial institution may, at its option, report a ULI previously reported under
this part if, during the same calendar year,
an applicant asks the institution to reinstate a counteroffer that the applicant previously did not accept or asks the financial
institution to reconsider an application that
was previously denied, withdrawn, or closed
for incompleteness. For example, if a financial institution reports a denied application
in its second-quarter 2020 data submission,
pursuant to § 1003.5(a)(1)(ii), but then reconsiders the application, resulting in an origination in the third quarter of 2020, the financial institution may report the origination
in its third-quarter 2020 data submission
using the same ULI that was reported for the
denied application in its second-quarter 2020
data submission, so long as the financial institution treats the origination as the same
transaction for reporting. However, a financial institution may not use a ULI previously reported if it reinstates or reconsiders an application that was reported in a
prior calendar year. For example, if a financial institution reports a denied application

that is not partially exempt in its fourthquarter 2020 data submission, pursuant to
§ 1003.5(a)(1)(ii), but then reconsiders the application, resulting in an origination that is
not partially exempt in the first quarter of
2021, the financial institution reports a denied application under the original ULI in its
fourth-quarter 2020 data submission and an
origination with a different ULI in its firstquarter 2021 data submission, pursuant to
§ 1003.5(a)(1)(ii).
5. ULI—check digit. Section 1003.4(a)(1)(i)(C)
requires that the two right-most characters
in the ULI represent the check digit. Appendix C prescribes the requirements for generating a check digit and validating a ULI.
6. NULI. For a partially exempt transaction under § 1003.3(d), a financial institution may report a ULI or a NULI. See
§ 1003.3(d)(5) and comments 3(d)(5)–1 and –2
for guidance on the NULI.
Paragraph 4(a)(1)(ii)
1. Application date—consistency. Section
1003.4(a)(1)(ii) requires that, in reporting the
date of application, a financial institution
report the date it received the application,
as defined under § 1003.2(b), or the date shown
on the application form. Although a financial institution need not choose the same approach for its entire HMDA submission, it
should be generally consistent (such as by
routinely using one approach within a particular division of the institution or for a
category of loans). If the financial institution chooses to report the date shown on the
application form and the institution retains
multiple versions of the application form,
the institution reports the date shown on the
first application form satisfying the application definition provided under § 1003.2(b).
2. Application date—indirect application. For
an application that was not submitted directly to the financial institution, the institution may report the date the application
was received by the party that initially received the application, the date the application was received by the institution, or the
date shown on the application form. Although an institution need not choose the
same approach for its entire HMDA submission, it should be generally consistent (such
as by routinely using one approach within a
particular division of the institution or for a
category of loans).
3. Application date—reinstated application.
If, within the same calendar year, an applicant asks a financial institution to reinstate
a counteroffer that the applicant previously
did not accept (or asks the institution to reconsider an application that was denied,
withdrawn, or closed for incompleteness),
the institution may treat that request as the
continuation of the earlier transaction using
the same ULI or NULI or as a new transaction with a new ULI or NULI. If the institution treats the request for reinstatement

99

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00109

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

or reconsideration as a new transaction, it
reports the date of the request as the application date. If the institution does not treat
the request for reinstatement or reconsideration as a new transaction, it reports the
original application date.
Paragraph 4(a)(2)
1. Loan type—general. If a covered loan is
not, or in the case of an application would
not have been, insured by the Federal Housing Administration, guaranteed by the Department of Veterans Affairs, or guaranteed
by the Rural Housing Service or the Farm
Service Agency, an institution complies with
§ 1003.4(a)(2) by reporting the covered loan as
not insured or guaranteed by the Federal
Housing Administration, Department of Veterans Affairs, Rural Housing Service, or
Farm Service Agency.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(3)
1. Purpose—statement of applicant. A financial institution may rely on the oral or written statement of an applicant regarding the
proposed use of covered loan proceeds. For
example, a lender could use a check-box or a
purpose line on a loan application to determine whether the applicant intends to use
covered loan proceeds for home improvement
purposes. If an applicant provides no statement as to the proposed use of covered loan
proceeds and the covered loan is not a home
purchase loan, cash-out refinancing, or refinancing, a financial institution reports the
covered loan as for a purpose other than
home purchase, home improvement, refinancing, or cash-out refinancing for purposes
of § 1003.4(a)(3).
2. Purpose—refinancing and cash-out refinancing. Section 1003.4(a)(3) requires a financial institution to report whether a covered
loan is, or an application is for, a refinancing
or a cash-out refinancing. A financial institution reports a covered loan or an application as a cash-out refinancing if it is a refinancing as defined by § 1003.2(p) and the institution considered it to be a cash-out refinancing in processing the application or setting the terms (such as the interest rate or
origination charges) under its guidelines or
an investor’s guidelines. For example:
i. Assume a financial institution considers
an application for a loan product to be a
cash-out refinancing under an investor’s
guidelines because of the amount of cash received by the borrower at closing or account
opening. Assume also that under the investor’s guidelines, the applicant qualifies for
the loan product and the financial institution approves the application, originates the
covered loan, and sets the terms of the covered loan consistent with the loan product.
In this example, the financial institution
would report the covered loan as a cash-out
refinancing for purposes of § 1003.4(a)(3).

ii. Assume a financial institution does not
consider an application for a covered loan to
be a cash-out refinancing under its own
guidelines because the amount of cash received by the borrower does not exceed a certain threshold. Assume also that the institution approves the application, originates the
covered loan, and sets the terms of the covered loan consistent with its own guidelines
applicable to refinancings other than cashout refinancings. In this example, the financial institution would report the covered
loan as a refinancing for purposes of
§ 1003.4(a)(3).
iii. Assume a financial institution does not
distinguish between a cash-out refinancing
and a refinancing under its own guidelines,
and sets the terms of all refinancings without regard to the amount of cash received by
the borrower at closing or account opening,
and does not offer loan products under investor guidelines. In this example, the financial
institution reports all covered loans and applications for covered loans that are defined
by § 1003.2(p) as refinancings for purposes of
§ 1003.4(a)(3).
3. Purpose—multiple-purpose loan. Section
1003.4(a)(3) requires a financial institution to
report the purpose of a covered loan or application. If a covered loan is a home purchase
loan as well as a home improvement loan, a
refinancing, or a cash-out refinancing, an institution complies with § 1003.4(a)(3) by reporting the loan as a home purchase loan. If
a covered loan is a home improvement loan
as well as a refinancing or cash-out refinancing, but the covered loan is not a home
purchase loan, an institution complies with
§ 1003.4(a)(3) by reporting the covered loan as
a refinancing or a cash-out refinancing, as
appropriate. If a covered loan is a refinancing or cash-out refinancing as well as
for another purpose, such as for the purpose
of paying educational expenses, but the covered loan is not a home purchase loan, an institution complies with § 1003.4(a)(3) by reporting the covered loan as a refinancing or
a cash-out refinancing, as appropriate. See
comment 4(a)(3)–2. If a covered loan is a
home improvement loan as well as for another purpose, but the covered loan is not a
home purchase loan, a refinancing, or cashout refinancing, an institution complies with
§ 1003.4(a)(3) by reporting the covered loan as
a home improvement loan. See comment 2(i)–
1.
4. Purpose—other. If a covered loan is not,
or an application is not for, a home purchase
loan, a home improvement loan, a refinancing, or a cash-out refinancing, a financial institution complies with § 1003.4(a)(3) by
reporting the covered loan or application as
for a purpose other than home purchase,
home improvement, refinancing, or cash-out
refinancing. For example, if a covered loan is
for the purpose of paying educational expenses, the financial institution complies

100

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00110

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

with § 1003.4(a)(3) by reporting the covered
loan as for a purpose other than home purchase, home improvement, refinancing, or
cash-out refinancing. Section 1003.4(a)(3) also
requires an institution to report a covered
loan or application as for a purpose other
than home purchase, home improvement, refinancing, or cash-out refinancing if it is a
refinancing but, under the terms of the
agreement, the financial institution was unconditionally obligated to refinance the obligation subject to conditions within the borrower’s control.
5. Purpose—business or commercial purpose
loans. If a covered loan primarily is for a
business or commercial purpose as described
in § 1003.3(c)(10) and comment 3(c)(10)–2 and is
a home purchase loan, home improvement
loan, or a refinancing, § 1003.4(a)(3) requires
the financial institution to report the applicable loan purpose. If a loan primarily is for
a business or commercial purpose but is not
a home purchase loan, home improvement
loan, or a refinancing, the loan is an excluded transaction under § 1003.3(c)(10).
6. Purpose—purchased loans. For purchased
covered loans where origination took place
prior to January 1, 2018, a financial institution complies with § 1003.4(a)(3) by reporting
that the requirement is not applicable.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(4)
1. Request under a preapproval program. Section 1003.4(a)(4) requires a financial institution to report whether an application or covered loan involved a request for a
preapproval of a home purchase loan under a
preapproval
program
as
defined
by
§ 1003.2(b)(2). If an application or covered
loan did not involve a request for a
preapproval of a home purchase loan under a
preapproval
program
as
defined
by
§ 1003.2(b)(2), a financial institution complies
with § 1003.4(a)(4) by reporting that the application or covered loan did not involve such a
request, regardless of whether the institution has such a program and the applicant
did not apply through that program or the
institution does not have a preapproval program as defined by § 1003.2(b)(2).
2. Scope of requirement. A financial institution reports that the application or covered
loan did not involve a preapproval request
for a purchased covered loan; an application
or covered loan for any purpose other than a
home purchase loan; an application for a
home purchase loan or a covered loan that is
a home purchase loan secured by a multifamily dwelling; an application or covered
loan that is an open-end line of credit or a
reverse mortgage; or an application that is
denied, withdrawn by the applicant, or
closed for incompleteness.

Paragraph 4(a)(5)
1. Modular homes and prefabricated components. Covered loans or applications related
to modular homes should be reported with a
construction method of site-built, regardless
of whether they are on-frame or off-frame
modular homes. Modular homes comply with
local or other recognized buildings codes
rather than standards established by the National Manufactured Housing Construction
and Safety Standards Act, 42 U.S.C. 5401 et
seq. Modular homes are not required to have
HUD Certification Labels under 24 CFR
3280.11 or data plates under 24 CFR 3280.5.
Modular homes may have a certification
from a State licensing agency that documents compliance with State or other applicable building codes. On-frame modular
homes are constructed on permanent metal
chassis similar to those used in manufactured homes. The chassis are not removed on
site and are secured to the foundation. Offframe modular homes typically have floor
construction similar to the construction of
other site-built homes, and the construction
typically includes wooden floor joists and
does not include permanent metal chassis.
Dwellings built using prefabricated components assembled at the dwelling’s permanent
site should also be reported with a construction method of site-built.
2. Multifamily dwelling. For a covered loan
or an application for a covered loan related
to a multifamily dwelling, the financial institution should report the construction
method as site-built unless the multifamily
dwelling is a manufactured home community, in which case the financial institution
should report the construction method as
manufactured home.
3. Multiple properties. See comment 4(a)(9)–
2 regarding transactions involving multiple
properties with more than one property
taken as security.
Paragraph 4(a)(6)
1. Multiple properties. See comment 4(a)(9)–
2 regarding transactions involving multiple
properties with more than one property
taken as security.
2. Principal residence. Section 1003.4(a)(6) requires a financial institution to identify
whether the property to which the covered
loan or application relates is or will be used
as a residence that the applicant or borrower
physically occupies and uses, or will occupy
and use, as his or her principal residence.
For purposes of § 1003.4(a)(6), an applicant or
borrower can have only one principal residence at a time. Thus, a vacation or other
second home would not be a principal residence. However, if an applicant or borrower
buys or builds a new dwelling that will become the applicant’s or borrower’s principal

101

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00111

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

residence within a year or upon the completion of construction, the new dwelling is considered the principal residence for purposes
of applying this definition to a particular
transaction.
3. Second residences. Section 1003.4(a)(6) requires a financial institution to identify
whether the property to which the loan or
application relates is or will be used as a second residence. For purposes of § 1003.4(a)(6), a
property is a second residence of an applicant or borrower if the property is or will be
occupied by the applicant or borrower for a
portion of the year and is not the applicant’s
or borrower’s principal residence. For example, if a person purchases a property, occupies the property for a portion of the year,
and rents the property for the remainder of
the year, the property is a second residence
for purposes of § 1003.4(a)(6). Similarly, if a
couple occupies a property near their place
of employment on weekdays, but the couple
returns to their principal residence on weekends, the property near the couple’s place of
employment is a second residence for purposes of § 1003.4(a)(6).
4. Investment properties. Section 1003.4(a)(6)
requires a financial institution to identify
whether the property to which the covered
loan or application relates is or will be used
as an investment property. For purposes of
§ 1003.4(a)(6), a property is an investment
property if the borrower does not, or the applicant will not, occupy the property. For example, if a person purchases a property, does
not occupy the property, and generates income by renting the property, the property
is an investment property for purposes of
§ 1003.4(a)(6). Similarly, if a person purchases
a property, does not occupy the property,
and does not generate income by renting the
property, but intends to generate income by
selling the property, the property is an investment
property
for
purposes
of
§ 1003.4(a)(6). Section 1003.4(a)(6) requires a financial institution to identify a property as
an investment property if the borrower or
applicant does not or will not occupy the
property, even if the borrower or applicant
does not consider the property as owned for
investment purposes. For example, if a corporation purchases a property that is a
dwelling under § 1003.2(f), that it does not occupy, but that is for the long-term residential use of its employees, the property is an
investment
property
for
purposes
of
§ 1003.4(a)(6), even if the corporation considers the property as owned for business
purposes rather than investment purposes,
does not generate income by renting the
property, and does not intend to generate income by selling the property at some point
in time. If the property is for transitory use
by employees, the property would not be
considered a dwelling under § 1003.2(f). See
comment 2(f)–3.

5. Purchased covered loans. For purchased
covered loans, a financial institution may
report principal residence unless the loan
documents or application indicate that the
property will not be occupied as a principal
residence.
Paragraph 4(a)(7)
1. Covered loan amount—counteroffer. If an
applicant accepts a counteroffer for an
amount different from the amount for which
the applicant applied, the financial institution reports the covered loan amount granted. If an applicant does not accept a
counteroffer or fails to respond, the institution reports the amount initially requested.
2. Covered loan amount—application approved but not accepted or preapproval request
approved but not accepted. A financial institution reports the covered loan amount that
was approved.
3. Covered loan amount—preapproval request
denied, application denied, closed for incompleteness or withdrawn. For a preapproval request that was denied, and for an application
that was denied, closed for incompleteness,
or withdrawn, a financial institution reports
the amount for which the applicant applied.
4. Covered loan amount—multiple-purpose
loan. A financial institution reports the entire amount of the covered loan, even if only
a part of the proceeds is intended for home
purchase, home improvement, or refinancing.
5. Covered loan amount—closed-end mortgage
loan. For a closed-end mortgage loan, other
than a purchased loan, an assumption, or a
reverse mortgage, a financial institution reports the amount to be repaid as disclosed on
the legal obligation. For a purchased closedend mortgage loan or an assumption of a
closed-end mortgage loan, a financial institution reports the unpaid principal balance
at the time of purchase or assumption.
6. Covered loan amount—open-end line of
credit. For an open-end line of credit, a financial institution reports the entire amount of
credit available to the borrower under the
terms of the open-end plan, including a purchased open-end line of credit and an assumption of an open-end line of credit, but
not for a reverse mortgage open-end line of
credit.
7. Covered loan amount—refinancing. For a
refinancing, a financial institution reports
the amount of credit extended under the
terms of the new debt obligation.
8. Covered loan amount—home improvement
loan. A financial institution reports the entire amount of a home improvement loan,
even if only a part of the proceeds is intended for home improvement.
9. Covered loan amount—non-federally insured reverse mortgage. A financial institution
reports the initial principal limit of a nonfederally insured reverse mortgage as set
forth in § 1003.4(a)(7)(iii).

102

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00112

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(8)(i)
1. Action taken—covered loan originated. A
financial institution reports that the covered
loan was originated if the financial institution made a credit decision approving the application before closing or account opening
and that credit decision results in an extension of credit. The same is true for an application that began as a request for a
preapproval that subsequently results in a
covered loan being originated. See comments
4(a)–2 through –4 for guidance on transactions in which more than one institution
is involved.
2. Action taken—covered loan purchased. A
financial institution reports that the covered
loan was purchased if the covered loan was
purchased by the financial institution after
closing or account opening and the financial
institution did not make a credit decision on
the application prior to closing or account
opening, or if the financial institution did
make a credit decision on the application
prior to closing or account opening, but is
repurchasing the loan from another entity
that the loan was sold to. See comment 4(a)–
5. See comments 4(a)–2 through –4 for guidance on transactions in which more than one
financial institution is involved.
3. Action taken—application approved but not
accepted. A financial institution reports application approved but not accepted if the financial institution made a credit decision
approving the application before closing or
account opening, subject solely to outstanding conditions that are customary commitment or closing conditions, but the applicant or the party that initially received the
application fails to respond to the financial
institution’s approval within the specified
time, or the closed-end mortgage loan was
not otherwise consummated or the account
was not otherwise opened. See comment
4(a)(8)(i)–13.
4. Action taken—application denied. A financial institution reports that the application
was denied if it made a credit decision denying the application before an applicant withdraws the application or the file is closed for
incompleteness. See comments 4(a)–2 through
–4 for guidance on transactions in which
more than one institution is involved.
5. Action taken—application withdrawn. A financial institution reports that the application was withdrawn when the application is
expressly withdrawn by the applicant before
the financial institution makes a credit decision denying the application, before the financial institution makes a credit decision
approving the application, or before the file
is closed for incompleteness. A financial institution also reports application withdrawn
if the financial institution provides a conditional approval specifying underwriting or
creditworthiness conditions, pursuant to
comment 4(a)(8)(i)–13, and the application is

expressly withdrawn by the applicant before
the applicant satisfies all specified underwriting or creditworthiness conditions. A
preapproval request that is withdrawn is not
reportable under HMDA. See § 1003.4(a).
6. Action taken—file closed for incompleteness. A financial institution reports that the
file was closed for incompleteness if the financial institution sent a written notice of
incompleteness under Regulation B, 12 CFR
1002.9(c)(2), and the applicant did not respond
to the request for additional information
within the period of time specified in the notice before the applicant satisfies all underwriting or creditworthiness conditions. See
comment 4(a)(8)(i)–13. If a financial institution then provides a notification of adverse
action on the basis of incompleteness under
Regulation B, 12 CFR 1002.9(c)(1)(i), the financial institution may report the action
taken as either file closed for incompleteness
or application denied. A preapproval request
that is closed for incompleteness is not reportable under HMDA. See § 1003.4(a) and
comment 4(a)–1.ii.
7. Action taken—preapproval request denied.
A financial institution reports that the
preapproval request was denied if the application was a request for a preapproval under
a preapproval program as defined in
§ 1003.2(b)(2) and the institution made a credit decision denying the preapproval request.
8. Action taken—preapproval request approved but not accepted. A financial institution reports that the preapproval request
was approved but not accepted if the application was a request for a preapproval under a
preapproval
program
as
defined
in
§ 1003.2(b)(2) and the institution made a credit decision approving the preapproval request
but the application did not result in a covered loan originated by the financial institution.
9. Action taken—counteroffers. If a financial
institution makes a counteroffer to lend on
terms different from the applicant’s initial
request (for example, for a shorter loan maturity, with a different interest rate, or in a
different amount) and the applicant declines
to proceed with the counteroffer or fails to
respond, the institution reports the action
taken as a denial on the original terms requested by the applicant. If the applicant
agrees to proceed with consideration of the
financial institution’s counteroffer, the financial institution reports the action taken
as the disposition of the application based on
the terms of the counteroffer. For example,
assume a financial institution makes a
counteroffer, the applicant agrees to proceed
with the terms of the counteroffer, and the
financial institution then makes a credit decision approving the application conditional
on satisfying underwriting or creditworthiness conditions, and the applicant expressly
withdraws before satisfying all underwriting
or creditworthiness conditions and before

103

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00113

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

the institution denies the application or
closes the file for incompleteness. The financial institution reports the action taken as
application withdrawn in accordance with
comment 4(a)(8)(i)–13.i. Similarly, assume a
financial institution makes a counteroffer,
the applicant agrees to proceed with consideration of the counteroffer, and the financial
institution provides a conditional approval
stating the conditions to be met to originate
the counteroffer. The financial institution
reports the action taken on the application
in accordance with comment 4(a)(8)(i)–13 regarding conditional approvals.
10. Action taken—rescinded transactions. If a
borrower rescinds a transaction after closing
and before a financial institution is required
to submit its loan/application register containing the information for the transaction
under § 1003.5(a), the institution reports the
transaction as an application that was approved but not accepted.
11. Action taken—purchased covered loans.
An institution reports the covered loans that
it purchased during the calendar year. An institution does not report the covered loans
that it declined to purchase, unless, as discussed in comments 4(a)–2 through –4, the institution reviewed the application prior to
closing, in which case it reports the application or covered loan according to comments
4(a)–2 through –4.
12. Action taken—repurchased covered loans.
See comment 4(a)–5 regarding reporting requirements when a covered loan is repurchased by the originating financial institution.
13. Action taken—conditional approvals. If an
institution issues an approval other than a
commitment pursuant to a preapproval program as defined under § 1003.2(b)(2), and that
approval is subject to the applicant meeting
certain conditions, the institution reports
the action taken as provided below dependent on whether the conditions are solely customary commitment or closing conditions or
if the conditions include any underwriting or
creditworthiness conditions.
i. Action taken examples. If the approval is
conditioned on satisfying underwriting or
creditworthiness conditions and they are not
met, the institution reports the action taken
as a denial. If, however, the conditions involve submitting additional information
about underwriting or creditworthiness that
the institution needs to make the credit decision, and the institution has sent a written
notice of incompleteness under Regulation
B, 12 CFR 1002.9(c)(2), and the applicant did
not respond within the period of time specified in the notice, the institution reports the
action taken as file closed for incompleteness. See comment 4(a)(8)(i)–6. If the conditions are solely customary commitment or
closing conditions and the conditions are not
met, the institution reports the action taken
as approved but not accepted. If all the con-

ditions (underwriting, creditworthiness, or
customary commitment or closing conditions) are satisfied and the institution agrees
to extend credit but the covered loan is not
originated, the institution reports the action
taken as application approved but not accepted. If the applicant expressly withdraws
before satisfying all underwriting or creditworthiness conditions and before the institution denies the application or closes the file
for incompleteness, the institution reports
the action taken as application withdrawn.
If all underwriting and creditworthiness conditions have been met, and the outstanding
conditions are solely customary commitment or closing conditions and the applicant
expressly withdraws before the covered loan
is originated, the institution reports the action taken as application approved but not
accepted.
ii. Customary commitment or closing conditions. Customary commitment or closing
conditions include, for example: A clear-title
requirement, an acceptable property survey,
acceptable title insurance binder, clear termite inspection, a subordination agreement
from another lienholder, and, where the applicant plans to use the proceeds from the
sale of one home to purchase another, a settlement statement showing adequate proceeds from the sale.
iii. Underwriting or creditworthiness conditions. Underwriting or creditworthiness conditions include, for example: Conditions that
constitute a counter-offer, such as a demand
for a higher down-payment; satisfactory
debt-to-income or loan-to-value ratios, a determination of need for private mortgage insurance, or a satisfactory appraisal requirement; or verification or confirmation, in
whatever form the institution requires, that
the applicant meets underwriting conditions
concerning applicant creditworthiness, including documentation or verification of income or assets.
14. Action taken—pending applications. An
institution does not report any covered loan
application still pending at the end of the
calendar year; it reports that application on
its loan/application register for the year in
which final action is taken.
Paragraph 4(a)(8)(ii)
1. Action taken date—general. A financial institution reports the date of the action
taken.
2. Action taken date—applications denied and
files closed for incompleteness. For applications, including requests for a preapproval,
that are denied or for files closed for incompleteness, the financial institution reports
either the date the action was taken or the
date the notice was sent to the applicant.
3. Action taken date—application withdrawn.
For applications withdrawn, the financial institution may report the date the express
withdrawal was received or the date shown

104

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00114

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

on the notification form in the case of a
written withdrawal.
4. Action taken date—approved but not accepted. For a covered loan approved by an institution but not accepted by the applicant,
the institution reports any reasonable date,
such as the approval date, the deadline for
accepting the offer, or the date the file was
closed. Although an institution need not
choose the same approach for its entire
HMDA submission, it should be generally
consistent (such as by routinely using one
approach within a particular division of the
institution or for a category of covered
loans).
5. Action taken date—originations. For covered
loan
originations,
including
a
preapproval request that leads to an origination by the financial institution, an institution generally reports the closing or account
opening date. For covered loan originations
that an institution acquires from a party
that initially received the application, the
institution reports either the closing or account opening date, or the date the institution acquired the covered loan from the
party that initially received the application.
If the disbursement of funds takes place on a
date later than the closing or account opening date, the institution may use the date of
initial disbursement. For a construction/permanent covered loan, the institution reports
either the closing or account opening date,
or the date the covered loan converts to the
permanent financing. Although an institution need not choose the same approach for
its entire HMDA submission, it should be
generally consistent (such as by routinely
using one approach within a particular division of the institution or for a category of
covered loans). Notwithstanding this flexibility regarding the use of the closing or account opening date in connection with reporting the date action was taken, the institution must report the origination as occurring in the year in which the origination
goes to closing or the account is opened.
6. Action taken date—loan purchased. For
covered loans purchased, a financial institution reports the date of purchase.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(9)
1. Multiple properties with one property taken
as security. If a covered loan is related to
more than one property, but only one property is taken as security (or, in the case of
an application, proposed to be taken as security), a financial institution reports the information required by § 1003.4(a)(9) for the
property taken as or proposed to be taken as
security. A financial institution does not report the information required by § 1003.4(a)(9)
for the property or properties related to the
loan that are not taken as or proposed to be
taken as security. For example, if a covered
loan is secured by property A, and the proceeds are used to purchase or rehabilitate (or

to refinance home purchase or home improvement loans related to) property B, the
institution reports the information required
by § 1003.4(a)(9) for property A and does not
report
the
information
required
by
§ 1003.4(a)(9) for property B.
2. Multiple properties with more than one
property taken as security. If more than one
property is taken or, in the case of an application, proposed to be taken as security for
a single covered loan, a financial institution
reports the covered loan or application in a
single entry on its loan/application register
and provides the information required by
§ 1003.4(a)(9) for one of the properties taken
as security that contains a dwelling. A financial institution does not report information
about the other properties taken as security.
If an institution is required to report specific
information about the property identified in
§ 1003.4(a)(9), the institution reports the information that relates to the property identified in § 1003.4(a)(9) (or, if the transaction is
partially exempt under § 1003.3(d) and no data
are reported pursuant to § 1003.4(a)(9), the
property that the institution would have
identified in § 1003.4(a)(9) if the transaction
were not partially exempt). For example, Financial Institution A originated a covered
loan that is secured by both property A and
property B, each of which contains a dwelling. Financial Institution A reports the loan
as one entry on its loan/application register,
reporting the information required by
§ 1003.4(a)(9) for either property A or property
B. If Financial Institution A elects to report
the information required by § 1003.4(a)(9)
about property A, Financial Institution A
also reports the information required by
§ 1003.4(a)(5), (6), (14), (29), and (30) related to
property A. For aspects of the entries that
do not refer to the property identified in
§ 1003.4(a)(9) (i.e., § 1003.4(a)(1) through (4), (7),
(8), (10) through (13), (15) through (28), and
(31) through (38)), Financial Institution A reports the information applicable to the covered loan or application and not information
that relates only to the property identified
in § 1003.4(a)(9).
3. Multifamily dwellings. A single multifamily dwelling may have more than one
postal address. For example, three apartment buildings, each with a different street
address, comprise a single multifamily
dwelling that secures a covered loan. For the
purposes of § 1003.4(a)(9), a financial institution reports the information required by
§ 1003.4(a)(9) in the same manner described in
comment 4(a)(9)–2.
4. Loans purchased from another institution.
The requirement to report the property location information required by § 1003.4(a)(9) applies not only to applications and originations but also to purchased covered loans.
5. Manufactured home. If the site of a manufactured home has not been identified, a financial institution complies by reporting

105

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00115

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

that the information required by § 1003.4(a)(9)
is not applicable.
Paragraph 4(a)(9)(i)

kpayne on VMOFRWIN702 with $$_JOB

1. General. Except for partially exempt
transactions under § 1003.3(d), § 1003.4(a)(9)(i)
requires a financial institution to report the
property address of the location of the property securing a covered loan or, in the case
of an application, proposed to secure a covered loan. The address should correspond to
the property identified on the legal obligation related to the covered loan. For applications that did not result in an origination,
the address should correspond to the location of the property proposed to secure the
loan as identified by the applicant. For example, assume a loan is secured by a property located at 123 Main Street, and the applicant’s or borrower’s mailing address is a
post office box. The financial institution
should not report the post office box, and
should report 123 Main Street.
2. Property address—format. A financial institution complies with the requirements in
§ 1003.4(a)(9)(i) by reporting the following information about the physical location of the
property securing the loan.
i. Street address. When reporting the street
address of the property, a financial institution complies by including, as applicable, the
primary address number, the predirectional,
the street name, street prefixes and/or suffixes, the postdirectional, the secondary address identifier, and the secondary address,
as applicable. For example, 100 N Main ST
Apt 1.
ii. City name. A financial institution complies by reporting the name of the city in
which the property is located.
iii. State name. A financial institution complies by reporting the two letter State code
for the State in which the property is located, using the U.S. Postal Service official
State abbreviations.
iv. Zip Code. A financial institution complies by reporting the five or nine digit Zip
Code in which the property is located.
3. Property address—not applicable. A financial institution complies with § 1003.4(a)(9)(i)
by reporting that the requirement is not applicable if the property address of the property securing the covered loan is not known.
For example, if the property did not have a
property address at closing or if the applicant did not provide the property address of
the property to the financial institution before the application was denied, withdrawn,
or closed for incompleteness, the financial
institution complies with § 1003.4(a)(9)(i) by
reporting that the requirement is not applicable.
Paragraph 4(a)(9)(ii)
1. Optional reporting. Section 1003.4(a)(9)(ii)
requires a financial institution to report the

State, county, and census tract of the property securing the covered loan or, in the case
of an application, proposed to secure the covered loan if the property is located in an
MSA or MD in which the financial institution has a home or branch office or if the institution is subject to § 1003.4(e). Section
1003.4(a)(9)(ii)(C) further limits the requirement to report census tract to covered loans
secured by or applications proposed to be secured by properties located in counties with
a population of more than 30,000 according to
the most recent decennial census conducted
by the U.S. Census Bureau. For transactions
for which State, county, or census tract reporting is not required under § 1003.4(a)(9)(ii)
or (e), financial institutions may report that
the requirement is not applicable, or they
may voluntarily report the State, county, or
census tract information.
Paragraph 4(a)(9)(ii)(A)
1. Applications—State not provided. When reporting an application, a financial institution complies with § 1003.4(a)(9)(ii)(A) by reporting that the requirement is not applicable if the State in which the property is located was not known before the application
was denied, withdrawn, or closed for incompleteness.
Paragraph 4(a)(9)(ii)(B)
1. General. A financial institution complies
by reporting the five-digit Federal Information Processing Standards (FIPS) numerical
county code.
2. Applications—county not provided. When
reporting an application, a financial institution complies with § 1003.4(a)(9)(ii)(B) by reporting that the requirement is not applicable if the county in which the property is located was not known before the application
was denied, withdrawn, or closed for incompleteness.
Paragraph 4(a)(9)(ii)(C)
1. General. Census tract numbers are defined by the U.S. Census Bureau. A financial
institution complies with § 1003.4(a)(9)(ii)(C)
if it uses the boundaries and codes in effect
on January 1 of the calendar year covered by
the loan/application register that it is reporting.
2. Applications—census tract not provided.
When reporting an application, a financial
institution complies with § 1003.4(a)(9)(ii)(C)
by reporting that the requirement is not applicable if the census tract in which the
property is located was not known before the
application was denied, withdrawn, or closed
for incompleteness.

106

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00116

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

Paragraph 4(a)(10)(i)
1. Applicant data—general. Refer to appendix B to this part for instructions on collection of an applicant’s ethnicity, race, and
sex.
2. Transition rule for applicant data collected
prior to January 1, 2018. If a financial institution receives an application prior to January
1, 2018, but final action is taken on or after
January 1, 2018, the financial institution
complies with § 1003.4(a)(10)(i) and (b) if it
collects the information in accordance with
the requirements in effect at the time the information was collected. For example, if a financial institution receives an application
on November 15, 2017, collects the applicant’s
ethnicity, race, and sex in accordance with
the instructions in effect on that date, and
takes final action on the application on January 5, 2018, the financial institution has
complied
with
the
requirements
of
§ 1003.4(a)(10)(i) and (b), even though those instructions changed after the information was
collected but before the date of final action.
However, if, in this example, the financial
institution collected the applicant’s ethnicity, race, and sex on or after January 1,
2018, § 1003.4(a)(10)(i) and (b) requires the financial institution to collect the information in accordance with the amended instructions.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(10)(ii)
1. Applicant data—completion by financial institution. A financial institution complies
with § 1003.4(a)(10)(ii) by reporting the applicant’s age, as of the application date under
§ 1003.4(a)(1)(ii), as the number of whole years
derived from the date of birth as shown on
the application form. For example, if an applicant provides a date of birth of 01/15/1970
on the application form that the financial institution receives on 01/14/2015, the institution reports 44 as the applicant’s age.
2. Applicant data—co-applicant. If there are
no co-applicants, the financial institution
reports that there is no co-applicant. If there
is more than one co-applicant, the financial
institution reports the age only for the first
co-applicant listed on the application form.
A co-applicant may provide an absent co-applicant’s age on behalf of the absent co-applicant.
3. Applicant data—purchased loan. A financial
institution
complies
with
§ 1003.4(a)(10)(ii) by reporting that the requirement is not applicable when reporting a
purchased loan for which the institution
chooses not to report the age.
4. Applicant data—non-natural person. A financial
institution
complies
with
§ 1003.4(a)(10)(ii) by reporting that the requirement is not applicable if the applicant
or co-applicant is not a natural person (for
example, a corporation, partnership, or
trust). For example, for a transaction involv-

ing a trust, a financial institution reports
that the requirement to report the applicant’s age is not applicable if the trust is the
applicant. On the other hand, if the applicant is a natural person, and is the beneficiary of a trust, a financial institution reports the applicant’s age.
5. Applicant data—guarantor. For purposes
of § 1003.4(a)(10)(ii), if a covered loan or application includes a guarantor, a financial institution does not report the guarantor’s
age.
Paragraph 4(a)(10)(iii)
1. Income data—income relied on. When a financial institution evaluates income as part
of a credit decision, it reports the gross annual income relied on in making the credit
decision. For example, if an institution relies on an applicant’s salary to compute a
debt-to-income ratio but also relies on the
applicant’s annual bonus to evaluate creditworthiness, the institution reports the salary and the bonus to the extent relied upon.
If an institution relies on only a portion of
an applicant’s income in its determination,
it does not report that portion of income not
relied on. For example, if an institution, pursuant to lender and investor guidelines, does
not rely on an applicant’s commission income because it has been earned for less than
12 months, the institution does not include
the applicant’s commission income in the income reported. Likewise, if an institution relies on the verified gross income of the applicant in making the credit decision, then the
institution reports the verified gross income.
Similarly, if an institution relies on the income of a cosigner to evaluate creditworthiness, the institution includes the cosigner’s
income to the extent relied upon. An institution, however, does not include the income of
a guarantor who is only secondarily liable.
2. Income data—co-applicant. If two persons
jointly apply for a covered loan and both list
income on the application, but the financial
institution relies on the income of only one
applicant in evaluating creditworthiness, the
institution reports only the income relied
on.
3. Income data—loan to employee. A financial
institution
complies
with
§ 1003.4(a)(10)(iii) by reporting that the requirement is not applicable for a covered
loan to, or an application from, its employee
to protect the employee’s privacy, even
though the institution relied on the employee’s income in making the credit decision.
4. Income data—assets. A financial institution does not include as income amounts
considered in making a credit decision based
on factors that an institution relies on in addition to income, such as amounts derived
from underwriting calculations of the potential annuitization or depletion of an applicant’s remaining assets. Actual distributions
from retirement accounts or other assets

107

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00117

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

that are relied on by the financial institution as income should be reported as income.
The interpretation of income in this paragraph does not affect § 1003.4(a)(23), which requires, except for purchased covered loans,
the collection of the ratio of the applicant’s
or borrower’s total monthly debt to the total
monthly income relied on in making the
credit decision.
5. Income data—credit decision not made.
Section 1003.4(a)(10)(iii) requires a financial
institution to report the gross annual income relied on in processing the application
if a credit decision was not made. For example, assume an institution received an application that included an applicant’s self-reported income, but the application was withdrawn before a credit decision that would
have considered income was made. The financial institution reports the income information relied on in processing the application at the time that the application was
withdrawn or the file was closed for incompleteness.
6. Income data—credit decision not requiring
consideration of income. A financial institution complies with § 1003.4(a)(10)(iii) by reporting that the requirement is not applicable if the application did not or would not
have required a credit decision that considered income under the financial institution’s
policies and procedures. For example, if the
financial institution’s policies and procedures do not consider income for a streamlined refinance program, the institution reports that the requirement is not applicable,
even if the institution received income information from the applicant.
7. Income data—non-natural person. A financial institution reports that the requirement
is not applicable when the applicant or coapplicant is not a natural person (e.g., a corporation, partnership, or trust). For example, for a transaction involving a trust, a financial institution reports that the requirement to report income data is not applicable
if the trust is the applicant. On the other
hand, if the applicant is a natural person,
and is the beneficiary of a trust, a financial
institution is required to report the information described in § 1003.4(a)(10)(iii).
8. Income data—multifamily properties. A financial
institution
complies
with
§ 1003.4(a)(10)(iii) by reporting that the requirement is not applicable when the covered loan is secured by, or application is proposed to be secured by, a multifamily dwelling.
9. Income data—purchased loans. A financial
institution complies with § 1003.4(a)(10)(iii)
by reporting that the requirement is not applicable when reporting a purchased covered
loan for which the institution chooses not to
report the income.
10. Income data—rounding. A financial institution complies by reporting the dollar
amount of the income in thousands, rounded

to the nearest thousand ($500 rounds up to
the next $1,000). For example, $35,500 is reported as 36.
Paragraph 4(a)(11)
1. Type of purchaser—loan-participation interests sold to more than one entity. A financial
institution that originates a covered loan,
and then sells it to more than one entity, reports the ‘‘type of purchaser’’ based on the
entity purchasing the greatest interest, if
any. For purposes of § 1003.4(a)(11), if a financial institution sells some interest or interests in a covered loan but retains a majority
interest in that loan, it does not report the
sale.
2. Type of purchaser—swapped covered loans.
Covered loans ‘‘swapped’’ for mortgagebacked securities are to be treated as sales;
the purchaser is the entity receiving the covered loans that are swapped.
3. Type of purchaser—affiliate institution.
For
purposes
of
complying
with
§ 1003.4(a)(11), the term ‘‘affiliate’’ means any
company that controls, is controlled by, or is
under common control with, another company, as set forth in the Bank Holding Company Act of 1956 (12 U.S.C. 1841 et seq.).
4. Type of purchaser—private securitizations.
A financial institution that knows or reasonably believes that the covered loan it is selling will be securitized by the entity purchasing the covered loan, other than by one
of the government-sponsored enterprises, reports the purchasing entity type as a private
securitizer regardless of the type or affiliation of the purchasing entity. Knowledge or
reasonable belief could, for example, be
based on the purchase agreement or other related documents, the financial institution’s
previous transactions with the purchaser, or
the purchaser’s role as a securitizer (such as
an investment bank). If a financial institution selling a covered loan does not know or
reasonably believe that the purchaser will
securitize the loan, and the seller knows that
the purchaser frequently holds or disposes of
loans by means other than securitization,
then the financial institution should report
the covered loan as purchased by, as appropriate, a commercial bank, savings bank,
savings association, life insurance company,
credit union, mortgage company, finance
company, affiliate institution, or other type
of purchaser.
5. Type of purchaser—mortgage company. For
purposes of complying with § 1003.4(a)(11), a
mortgage company means a nondepository
institution that purchases covered loans and
typically originates such loans. A mortgage
company might be an affiliate or a subsidiary of a bank holding company or thrift
holding company, or it might be an independent mortgage company. Regardless, a financial institution reports the purchasing
entity type as a mortgage company, unless
the mortgage company is an affiliate of the

108

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00118

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

seller institution, in which case the seller institution should report the loan as purchased
by an affiliate institution.
6. Purchases by subsidiaries. A financial institution that sells a covered loan to its subsidiary that is a commercial bank, savings
bank, or savings association, should report
the covered loan as purchased by a commercial bank, savings bank, or savings association. A financial institution that sells a covered loan to its subsidiary that is a life insurance company, should report the covered
loan as purchased by a life insurance company. A financial institution that sells a covered loan to its subsidiary that is a credit
union, mortgage company, or finance company, should report the covered loan as purchased by a credit union, mortgage company,
or finance company. If the subsidiary that
purchases the covered loan is not a commercial bank, savings bank, savings association,
life insurance company, credit union, mortgage company, or finance company, the seller institution should report the loan as purchased by other type of purchaser. The financial institution should report the covered
loan as purchased by an affiliate institution
when the subsidiary is an affiliate of the seller institution.
7. Type of purchaser—bank holding company
or thrift holding company. When a financial
institution sells a covered loan to a bank
holding company or thrift holding company
(rather than to one of its subsidiaries), it
should report the loan as purchased by other
type of purchaser, unless the bank holding
company or thrift holding company is an affiliate of the seller institution, in which case
the seller institution should report the loan
as purchased by an affiliate institution.
8. Repurchased covered loans. See comment
4(a)–5 regarding reporting requirements
when a covered loan is repurchased by the
originating financial institution.
9. Type of purchaser—quarterly recording.
For purposes of recording the type of purchaser within 30 calendar days after the end
of the calendar quarter pursuant to
§ 1003.4(f), a financial institution records that
the requirement is not applicable if the institution originated or purchased a covered
loan and did not sell it during the calendar
quarter for which the institution is recording the data. If the financial institution sells
the covered loan in a subsequent quarter of
the same calendar year, the financial institution records the type of purchaser on its
loan/application register for the quarter in
which the covered loan was sold. If a financial institution sells the covered loan in a
succeeding year, the financial institution
should not record the sale.
10. Type of purchaser—not applicable. A financial institution reports that the requirement is not applicable for applications that
were denied, withdrawn, closed for incompleteness or approved but not accepted by

the applicant; and for preapproval requests
that were denied or approved but not accepted by the applicant. A financial institution
also reports that the requirement is not applicable if the institution originated or purchased a covered loan and did not sell it during that same calendar year.
Paragraph 4(a)(12)
1. Average prime offer rate. Average prime
offer rates are annual percentage rates derived from average interest rates and other
loan pricing terms offered to borrowers by a
set of creditors for mortgage loans that have
low-risk pricing characteristics. Other loan
pricing terms may include commonly used
indices, margins, and initial fixed-rate periods for variable-rate transactions. Relevant
pricing characteristics may include a consumer’s credit history and transaction characteristics such as the loan-to-value ratio,
owner-occupant status, and purpose of the
transaction. To obtain average prime offer
rates, the Bureau uses creditor data by
transaction type.
2. Bureau tables. The Bureau publishes tables of current and historic average prime
offer rates by transaction type on the
FFIEC’s website (http://www.ffiec.gov/hmda)
and
the
Bureau’s
website
(https://
www.consumerfinance.gov). The Bureau calculates an annual percentage rate, consistent with Regulation Z (see 12 CFR 1026.22
and 12 CFR part 1026, appendix J), for each
transaction type for which pricing terms are
available from the creditor data described in
comment 4(a)(12)–1. The Bureau uses loan
pricing terms available in the creditor data
and other information to estimate annual
percentage rates for other types of transactions for which the creditor data are limited or not available. The Bureau publishes
on the FFIEC’s website and the Bureau’s
website the methodology it uses to arrive at
these estimates. A financial institution may
either use the average prime offer rates published by the Bureau or determine average
prime offer rates itself by employing the
methodology published on the FFIEC’s
website and the Bureau’s website. A financial institution that determines average
prime offer rates itself, however, is responsible for correctly determining the rates in
accordance with the published methodology.
3. Rate spread calculation—annual percentage rate. The requirements of § 1003.4(a)(12)(i)
refer to the covered loan’s annual percentage
rate. For closed-end mortgage loans, a financial institution complies with § 1003.4(a)(12)(i)
by relying on the annual percentage rate for
the covered loan, as calculated and disclosed
pursuant to Regulation Z, 12 CFR 1026.18 or
1026.38. For open-end lines of credit, a financial institution complies with § 1003.4(a)(12)(i)
by relying on the annual percentage rate for
the covered loan, as calculated and disclosed

109

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00119

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

pursuant to Regulation Z, 12 CFR 1026.6. If
multiple annual percentage rates are calculated and disclosed pursuant to Regulation
Z, 12 CFR 1026.6, a financial institution relies
on the annual percentage rate in effect at
the time of account opening. If an open-end
line of credit has a variable-rate feature and
a fixed-rate and -term payment option during the draw period, a financial institution
relies on the annual percentage rate in effect
at the time of account opening under the
variable-rate feature, which would be a discounted initial rate if one is offered under
the variable-rate feature. See comment
4(a)(12)–8 for guidance regarding the annual
percentage rate a financial institution relies
on in the case of an application or
preapproval request that was approved but
not accepted.
4. Rate spread calculation—comparable transaction. The rate spread calculation in
§ 1003.4(a)(12)(i) is defined by reference to a
comparable transaction, which is determined
according to the covered loan’s amortization
type (i.e., fixed- or variable-rate) and loan
term. For covered loans that are open-end
lines of credit, § 1003.4(a)(12)(i) requires a financial institution to identify the most
closely comparable closed-end transaction.
The tables of average prime offer rates published by the Bureau (see comment 4(a)(12)–
2) provide additional detail about how to
identify the comparable transaction.
i. Fixed-rate transactions. For fixed-rate
covered loans, the term for identifying the
comparable transaction is the transaction’s
maturity (i.e., the period until the last payment will be due under the closed-end mortgage loan contract or open-end line of credit
agreement). If an open-end credit plan has a
fixed rate but no definite plan length, a financial
institution
complies
with
§ 1003.4(a)(12)(i) by using a 30-year fixed-rate
loan as the most closely comparable closedend transaction. Financial institutions may
refer to the table on the FFIEC website entitled ‘‘Average Prime Offer Rates-Fixed’’
when identifying a comparable fixed-rate
transaction.
ii. Variable-rate transactions. For variablerate covered loans, the term for identifying
the comparable transaction is the initial,
fixed-rate period (i.e., the period until the
first scheduled rate adjustment). For example, five years is the relevant term for a variable-rate transaction with a five-year, fixedrate introductory period that is amortized
over thirty years. Financial institutions
may refer to the table on the FFIEC website
entitled ‘‘Average Prime Offer Rates-Variable’’ when identifying a comparable variable-rate transaction. If an open-end line of
credit has a variable rate and an optional,
fixed-rate feature, a financial institution
uses the rate table for variable-rate transactions.

iii. Term not in whole years. When a covered
loan’s term to maturity (or, for a variablerate transaction, the initial fixed-rate period) is not in whole years, the financial institution uses the number of whole years
closest to the actual loan term or, if the actual loan term is exactly halfway between
two whole years, by using the shorter loan
term. For example, for a loan term of ten
years and three months, the relevant term is
ten years; for a loan term of ten years and
nine months, the relevant term is 11 years;
for a loan term of ten years and six months,
the relevant term is ten years. If a loan term
includes an odd number of days, in addition
to an odd number of months, the financial
institution rounds to the nearest whole
month, or rounds down if the number of odd
days is exactly halfway between two months.
The financial institution rounds to one year
any covered loan with a term shorter than
six months, including variable-rate covered
loans with no initial, fixed-rate periods. For
example, if an open-end covered loan has a
rate that varies according to an index plus a
margin, with no introductory, fixed-rate period, the transaction term is one year.
iv. Amortization period longer than loan term.
If the amortization period of a covered loan
is longer than the term of the transaction to
maturity, § 1003.4(a)(12)(i) requires a financial
institution to use the loan term to determine the applicable average prime offer rate.
For example, assume a financial institution
originates a closed-end, fixed-rate loan that
has a term to maturity of five years and a
thirty-year amortization period that results
in a balloon payment. The financial institution complies with § 1003.4(a)(12)(i) by using
the five-year loan term.
5. Rate-set date. The relevant date to use to
determine the average prime offer rate for a
comparable transaction is the date on which
the interest rate was set by the financial institution for the final time before final action is taken (i.e., the application was approved but not accepted or the covered loan
was originated).
i. Rate-lock agreement. If an interest rate is
set pursuant to a ‘‘lock-in’’ agreement between the financial institution and the borrower, then the date on which the agreement
fixes the interest rate is the date the rate
was set. Except as provided in comment
4(a)(12)–5.ii, if a rate is reset after a lock-in
agreement is executed (for example, because
the borrower exercises a float-down option or
the agreement expires), then the relevant
date is the date the financial institution exercises discretion in setting the rate for the
final time before final action is taken. The
same rule applies when a rate-lock agreement is extended and the rate is reset at the
same rate, regardless of whether market
rates have increased, decreased, or remained
the same since the initial rate was set. If no

110

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00120

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

lock-in agreement is executed, then the relevant date is the date on which the institution sets the rate for the final time before
final action is taken.
ii. Change in loan program. If a financial institution issues a rate-lock commitment
under one loan program, the borrower subsequently changes to another program that is
subject to different pricing terms, and the financial institution changes the rate promised to the borrower under the rate-lock
commitment accordingly, the rate-set date
is the date of the program change. However,
if the financial institution changes the
promised rate to the rate that would have
been available to the borrower under the new
program on the date of the original rate-lock
commitment, then that is the date the rate
is set, provided the financial institution consistently follows that practice in all such
cases or the original rate-lock agreement so
provided. For example, assume that a borrower locks a rate of 2.5 percent on June 1
for a 30-year, variable-rate loan with a fiveyear, fixed-rate introductory period. On June
15, the borrower decides to switch to a 30year, fixed-rate loan, and the rate available
to the borrower for that product on June 15
is 4.0 percent. On June 1, the 30-year, fixedrate loan would have been available to the
borrower at a rate of 3.5 percent. If the financial institution offers the borrower the 3.5
percent rate (i.e., the rate that would have
been available to the borrower for the fixedrate product on June 1, the date of the original rate-lock) because the original agreement so provided or because the financial institution consistently follows that practice
for borrowers who change loan programs,
then the financial institution should use
June 1 as the rate-set date. In all other
cases, the financial institution should use
June 15 as the rate-set date.
iii. Brokered loans. When a financial institution has reporting responsibility for an application for a covered loan that it received
from a broker, as discussed in comment 4(a)–
2 (e.g., because the financial institution
makes a credit decision prior to closing or
account opening), the rate-set date is the
last date the financial institution set the
rate with the broker, not the date the broker
set the borrower’s rate.
6. Compare the annual percentage rate to the
average
prime
offer
rate.
Section
1003.4(a)(12)(i) requires a financial institution
to compare the covered loan’s annual percentage rate to the most recently available
average prime offer rate that was in effect
for the comparable transaction as of the
rate-set
date.
For
purposes
of
§ 1003.4(a)(12)(i), the most recently available
rate means the average prime offer rate set
forth in the applicable table with the most
recent effective date as of the date the interest rate was set. However, § 1003.4(a)(12)(i)
does not permit a financial institution to use

an average prime offer rate before its effective date.
7. Rate spread—scope of requirement. If the
covered loan is an assumption, reverse mortgage, a purchased loan, or is not subject to
Regulation Z, 12 CFR part 1026, a financial
institution complies with § 1003.4(a)(12) by reporting that the requirement is not applicable. If the application did not result in an
origination for a reason other than the application was approved but not accepted by the
applicant, a financial institution complies
with § 1003.4(a)(12) by reporting that the requirement is not applicable. For partially
exempt transactions under § 1003.3(d), an insured depository institution or insured credit union is not required to report the rate
spread. See § 1003.3(d) and related commentary.
8. Application or preapproval request approved but not accepted. In the case of an application or preapproval request that was approved but not accepted, § 1003.4(a)(12) requires a financial institution to report the
applicable rate spread. In such cases, the financial institution would provide early disclosures under Regulation Z, 12 CFR 1026.18
or 1026.37 (for closed-end mortgage loans), or
1026.40 (for open-end lines of credit), but
might never provide any subsequent disclosures. In such cases where no subsequent disclosures are provided, a financial institution
complies with § 1003.4(a)(12)(i) by relying on
the annual percentage rate for the application or preapproval request, as calculated
and disclosed pursuant to Regulation Z, 12
CFR 1026.18 or 1026.37 (for closed-end mortgage loans), or 1026.40 (for open-end lines of
credit), as applicable. For transactions subject to Regulation C for which no disclosures
under Regulation Z are required, a financial
institution complies with § 1003.4(a)(12)(i) by
reporting that the requirement is not applicable.
9. Corrected disclosures. In the case of a covered loan or an application that was approved but not accepted, if the annual percentage rate changes because a financial institution provides a corrected version of the
disclosures required under Regulation Z, 12
CFR 1026.19(a), pursuant to 12 CFR
1026.19(a)(2), under 12 CFR 1026.19(f), pursuant
to 12 CFR 1026.19(f)(2), or under 12 CFR
1026.6(a), the financial institution complies
with § 1003.4(a)(12)(i) by comparing the corrected and disclosed annual percentage rate
to the most recently available average prime
offer rate that was in effect for a comparable
transaction as of the rate-set date, provided
that the corrected disclosure was provided to
the borrower prior to the end of the reporting period in which final action is taken. For
purposes of § 1003.4(a)(12), the date the corrected disclosure was provided to the borrower is the date the disclosure was mailed
or delivered to the borrower in person; the financial institution’s method of delivery does

111

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00121

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

not affect the date provided. For example,
where a financial institution provides a corrected version of the disclosures required
under 12 CFR 1026.19(f), pursuant to 12 CFR
1026.19(f)(2), the date provided is the date disclosed pursuant to Regulation Z, 12 CFR
1026.38(a)(3)(i). The provision of a corrected
disclosure does not affect how a financial institution determines the rate-set date. See
comment 4(a)(12)–5. For example:
i. In the case of a financial institution’s
annual loan/application register submission
made pursuant to § 1003.5(a)(1)(i), if the financial institution provides a corrected disclosure pursuant to Regulation Z, 12 CFR
1026.19(f)(2)(v), that reflects a corrected annual percentage rate, the financial institution reports the difference between the corrected annual percentage rate and the most
recently available average prime offer rate
that was in effect for a comparable transaction as of the rate-set date only if the corrected disclosure was provided to the borrower prior to the end of the calendar year in
which final action is taken.
ii. In the case of a financial institution’s
quarterly submission made pursuant to
§ 1003.5(a)(1)(ii), if the financial institution
provides a corrected disclosure pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), that reflects a corrected annual percentage rate,
the financial institution reports the difference between the corrected annual percentage rate and the most recently available
average prime offer rate that was in effect
for a comparable transaction as of the rateset date only if the corrected disclosure was
provided to the borrower prior to the end of
the quarter in which final action is taken.
The financial institution does not report the
difference between the corrected annual percentage rate and the most recently available
average prime offer rate that was in effect
for a comparable transaction as of the rateset date if the corrected disclosure was provided to the borrower after the end of the
quarter in which final action is taken, even
if the corrected disclosure was provided to
the borrower prior to the deadline for timely
submission of the financial institution’s
quarterly data. However, the financial institution reports the difference between the
corrected annual percentage rate and the
most recently available average prime offer
rate that was in effect for a comparable
transaction as of the rate-set date on its annual loan/application register, provided that
the corrected disclosure was provided to the
borrower prior to the end of the calendar
year in which final action is taken.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(13)
1. HOEPA status—not applicable. If the covered loan is not subject to the Home Ownership and Equity Protection Act of 1994, as
implemented in Regulation Z, 12 CFR 1026.32,

a financial institution complies with
§ 1003.4(a)(13) by reporting that the requirement is not applicable. If an application did
not result in an origination, a financial institution complies with § 1003.4(a)(13) by reporting that the requirement is not applicable.
Paragraph 4(a)(14)
1. Determining lien status for applications
and covered loans originated and purchased.
i. Financial institutions are required to report lien status for covered loans they originate and purchase and applications that do
not result in originations (preapproval requests that are approved but not accepted,
preapproval requests that are denied, applications that are approved but not accepted,
denied, withdrawn, or closed for incompleteness). For covered loans purchased by a financial institution, lien status is determined
by reference to the best information readily
available to the financial institution at the
time of purchase. For covered loans that a financial institution originates and applications that do not result in originations, lien
status is determined by reference to the best
information readily available to the financial institution at the time final action is
taken and to the financial institution’s own
procedures. Thus, financial institutions may
rely on the title search they routinely perform as part of their underwriting procedures—for example, for home purchase loans.
Regulation C does not require financial institutions to perform title searches solely to
comply with HMDA reporting requirements.
Financial institutions may rely on other information that is readily available to them
at the time final action is taken and that
they reasonably believe is accurate, such as
the applicant’s statement on the application
or the applicant’s credit report. For example,
where the applicant indicates on the application that there is a mortgage on the property
or where the applicant’s credit report shows
that the applicant has a mortgage—and that
mortgage will not be paid off as part of the
transaction—the financial institution may
assume that the loan it originates is secured
by a subordinate lien. If the same application did not result in an origination—for example, because the application was denied or
withdrawn—the financial institution would
report the application as an application for a
subordinate-lien loan.
ii. Financial institutions may also consider
their established procedures when determining lien status for applications that do
not result in originations. For example, assume an applicant applies to a financial institution to refinance a $100,000 first mortgage; the applicant also has an open-end line
of credit for $20,000. If the financial institution’s practice in such a case is to ensure
that it will have first-lien position—through

112

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00122

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

a subordination agreement with the holder
of the lien securing the open-end line of credit—then the financial institution should report the application as an application for a
first-lien covered loan.
2. Multiple properties. See comment 4(a)(9)–
2 regarding transactions involving multiple
properties with more than one property
taken as security.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(15)
1. Credit score—relied on. Except for purchased covered loans and partially exempt
transactions under § 1003.3(d), § 1003.4(a)(15)
requires a financial institution to report the
credit score or scores relied on in making the
credit decision and information about the
scoring model used to generate each score. A
financial institution relies on a credit score
in making the credit decision if the credit
score was a factor in the credit decision even
if it was not a dispositive factor. For example, if a credit score is one of multiple factors in a financial institution’s credit decision, the financial institution has relied on
the credit score even if the financial institution denies the application because one or
more underwriting requirements other than
the credit score are not satisfied.
2. Credit score—multiple credit scores. When a
financial institution obtains or creates two
or more credit scores for a single applicant
or borrower but relies on only one score in
making the credit decision (for example, by
relying on the lowest, highest, most recent,
or average of all of the scores), the financial
institution complies with § 1003.4(a)(15) by reporting that credit score and information
about the scoring model used. When a financial institution uses more than one credit
scoring model and combines the scores into a
composite credit score that it relies on, the
financial institution reports that score and
reports that more than one credit scoring
model was used. When a financial institution
obtains or creates two or more credit scores
for an applicant or borrower and relies on
multiple scores for the applicant or borrower
in making the credit decision (for example,
by relying on a scoring grid that considers
each of the scores obtained or created for the
applicant or borrower without combining the
scores into a composite score), § 1003.4(a)(15)
requires the financial institution to report
one of the credit scores for the applicant or
borrower that was relied on in making the
credit decision. In choosing which credit
score to report in this circumstance, a financial institution need not use the same approach for its entire HMDA submission, but
it should be generally consistent (such as by
routinely using one approach within a particular division of the institution or for a
category of covered loans). In instances such
as these, the financial institution should re-

port the name and version of the credit scoring model for the score reported.
3. Credit score—multiple applicants or borrowers. In a transaction involving two or
more applicants or borrowers for whom the
financial institution obtains or creates a single credit score and relies on that credit
score in making the credit decision for the
transaction, the institution complies with
§ 1003.4(a)(15) by reporting that credit score
for the applicant and reporting that the requirement is not applicable for the first coapplicant or, at the financial institution’s
discretion, by reporting that credit score for
the first co-applicant and reporting that the
requirement is not applicable for the applicant. Otherwise, a financial institution complies with § 1003.4(a)(15) by reporting a credit
score for the applicant that it relied on in
making the credit decision, if any, and a
credit score for the first co-applicant that it
relied on in making the credit decision, if
any. To illustrate, assume a transaction involves one applicant and one co-applicant
and that the financial institution obtains or
creates two credit scores for the applicant
and two credit scores for the co-applicant.
Assume further that the financial institution relies on a single credit score that is the
lowest, highest, most recent, or average of
all of the credit scores obtained or created to
make the credit decision for the transaction.
The financial institution complies with
§ 1003.4(a)(15) by reporting that credit score
and information about the scoring model
used for the applicant and reporting that the
requirement is not applicable for the first
co-applicant or, at the financial institution’s
discretion, by reporting the data for the first
co-applicant and reporting that the requirement is not applicable for the applicant. Alternatively, assume a transaction involves
one applicant and one co-applicant and that
the financial institution obtains or creates
three credit scores for the applicant and
three credit scores for the co-applicant. Assume further that the financial institution
relies on the middle credit score for the applicant and the middle credit score for the
co-applicant to make the credit decision for
the transaction. The financial institution
complies with § 1003.4(a)(15) by reporting both
the middle score for the applicant and the
middle score for the co-applicant.
4. Transactions for which no credit decision
was made. If a file was closed for incompleteness or the application was withdrawn before
a credit decision was made, the financial institution complies with § 1003.4(a)(15) by reporting that the requirement is not applicable, even if the financial institution had obtained or created a credit score for the applicant or co-applicant. For example, if a file is
closed for incompleteness and is so reported
in accordance with § 1003.4(a)(8), the financial

113

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00123

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

institution complies with § 1003.4(a)(15) by reporting that the requirement is not applicable, even if the financial institution had obtained or created a credit score for the applicant or co-applicant. Similarly, if an application was withdrawn by the applicant before a credit decision was made and is so reported in accordance with § 1003.4(a)(8), the
financial
institution
complies
with
§ 1003.4(a)(15) by reporting that the requirement is not applicable, even if the financial
institution had obtained or created a credit
score for the applicant or co-applicant.
5. Transactions for which no credit score was
relied on. If a financial institution makes a
credit decision without relying on a credit
score for the applicant or borrower, the financial
institution
complies
with
§ 1003.4(a)(15) by reporting that the requirement is not applicable.
6. Purchased covered loan. A financial institution complies with § 1003.4(a)(15) by reporting that the requirement is not applicable
when the covered loan is a purchased covered
loan.
7. Non-natural person. When the applicant
and co-applicant, if applicable, are not natural persons, a financial institution complies
with § 1003.4(a)(15) by reporting that the requirement is not applicable.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(16)
1. Reason for denial—general. A financial institution complies with § 1003.4(a)(16) by reporting the principal reason or reasons it denied the application, indicating up to four
reasons. The financial institution should report only the principal reason or reasons it
denied the application, even if there are
fewer than four reasons. For example, if a financial institution denies the application because of the applicant’s credit history and
debt-to-income ratio, the financial institution need only report these two principal
reasons. The reasons reported must be specific and accurately describe the principal
reason or reasons the financial institution
denied the application.
2. Reason for denial—preapproval request denied. Section 1003.4(a)(16) requires a financial
institution to report the principal reason or
reasons it denied the application. A request
for a preapproval under a preapproval program as defined by § 1003.2(b)(2) is an application. If a financial institution denies a
preapproval request, the financial institution complies with § 1003.4(a)(16) by reporting
the reason or reasons it denied the
preapproval request.
3. Reason for denial—adverse action model
form or similar form. If a financial institution
chooses to provide the applicant the reason
or reasons it denied the application using the
model form contained in appendix C to Regulation B (Form C–1, Sample Notice of Action
Taken and Statement of Reasons) or a similar form, § 1003.4(a)(16) requires the financial

institution to report the reason or reasons
that were specified on the form by the financial institution, which includes reporting the
‘‘Other’’ reason or reasons that were specified on the form by the financial institution,
if applicable. If a financial institution chooses to provide a disclosure of the applicant’s
right to a statement of specific reasons using
the model form contained in appendix C to
Regulation B (Form C–5, Sample Disclosure
of Right to Request Specific Reasons for
Credit Denial) or a similar form, or chooses
to provide the denial reason or reasons orally under Regulation B, 12 CFR 1002.9(a)(2)(ii),
the financial institution complies with
§ 1003.4(a)(16) by entering the principal reason
or reasons it denied the application.
4. Reason for denial—scope of requirement. A
financial
institution
complies
with
§ 1003.4(a)(16) by reporting that the requirement is not applicable if the action taken on
the application, pursuant to § 1003.4(a)(8), is
not a denial. For example, a financial institution complies with § 1003.4(a)(16) by reporting that the requirement is not applicable if
the loan is originated or purchased by the financial institution, or the application or
preapproval request was approved but not accepted, or the application was withdrawn before a credit decision was made, or the file
was closed for incompleteness. For partially
exempt transactions under § 1003.3(d), an insured depository institution or insured credit union is not required to report the principal reason or reasons it denied an application. See § 1003.3(d) and related commentary.
Paragraph 4(a)(17)(i)
1. Total loan costs—scope of requirement. Section 1003.4(a)(17)(i) does not require financial
institutions to report the total loan costs for
applications, or for transactions not subject
to Regulation Z, 12 CFR 1026.43(c), and 12
CFR 1026.19(f), 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 with § 1003.4(a)(17)(i) by
reporting that the requirement is not applicable to the transaction. For partially exempt transactions under § 1003.3(d), an insured depository institution or insured credit union is not required to report the total
loan costs. See § 1003.3(d) and related commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective date.
For purchased covered loans subject to this
reporting requirement for which applications
were received by the selling entity prior to
the effective date of Regulation Z, 12 CFR
1026.19(f), a financial institution complies
with § 1003.4(a)(17)(i) by reporting that the requirement is not applicable to the transaction.
3. Corrected disclosures. If the amount of
total loan costs changes because a financial

114

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00124

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

institution provides a corrected version of
the disclosures required under Regulation Z,
12 CFR 1026.19(f), pursuant to 12 CFR
1026.19(f)(2), the financial institution complies with § 1003.4(a)(17)(i) by reporting the
corrected amount, provided that the corrected disclosure was provided to the borrower prior to the end of the reporting period
in which closing occurs. For purposes of
§ 1003.4(a)(17)(i), the date the corrected disclosure was provided to the borrower is the
date disclosed pursuant to Regulation Z, 12
CFR 1026.38(a)(3)(i). For example:
i. In the case of a financial institution’s
annual loan/application register submission
made pursuant to § 1003.5(a)(1)(i), if the financial institution provides a corrected disclosure to the borrower to reflect a refund made
pursuant
to
Regulation
Z,
12
CFR
1026.19(f)(2)(v), the financial institution reports the corrected amount of total loan
costs only if the corrected disclosure was
provided to the borrower prior to the end of
the calendar year in which closing occurs.
ii. In the case of a financial institution’s
quarterly submission made pursuant to
§ 1003.5(a)(1)(ii), if the financial institution
provides a corrected disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution reports the corrected
amount of total loan costs only if the corrected disclosure was provided to the borrower prior to the end of the quarter in
which closing occurs. The financial institution does not report the corrected amount of
total loan costs in its quarterly submission
if the corrected disclosure was provided to
the borrower after the end of the quarter in
which closing occurs, even if the corrected
disclosure was provided to the borrower prior
to the deadline for timely submission of the
financial institution’s quarterly data. However, the financial institution reports the
corrected amount of total loan costs on its
annual loan/application register, provided
that the corrected disclosure was provided to
the borrower prior to the end of the calendar
year in which closing occurs.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(17)(ii)
1. Total points and fees—scope of requirement.
Section 1003.4(a)(17)(ii) does not require financial institutions to report the total
points and fees for transactions not subject
to Regulation Z, 12 CFR 1026.43(c), 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
with § 1003.4(a)(17)(ii) by reporting that the
requirement is not applicable to the transaction. For partially exempt transactions
under § 1003.3(d), an insured depository institution or insured credit union is not required

to report the total points and fees. See
§ 1003.3(d) and related commentary.
2. Total points and fees cure mechanism. For
covered loans subject to this reporting requirement, if a financial institution determines that the transaction’s total points and
fees exceeded the applicable limit and cures
the overage pursuant to Regulation Z, 12
CFR 1026.43(e)(3)(iii) and (iv), a financial institution complies with § 1003.4(a)(17)(ii) by
reporting the correct amount of total points
and fees, provided that the cure was effected
during the same reporting period in which
closing occurred. For example, in the case of
a financial institution’s quarterly submission, the financial institution reports the revised amount of total points and fees only if
it cured the overage prior to the end of the
quarter in which closing occurred. The financial institution does not report the revised
amount of total points and fees in its quarterly submission if it cured the overage after
the end of the quarter, even if the cure was
effected prior to the deadline for timely submission of the financial institution’s quarterly data. However, the financial institution reports the revised amount of total
points and fees on its annual loan/application register.
Paragraph 4(a)(18)
1. Origination charges—scope of requirement.
Section 1003.4(a)(18) does not require financial institutions to report the total borrower-paid origination charges for applications, or for transactions not subject to Regulation Z, 12 CFR 1026.19(f), 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 with § 1003.4(a)(18)
by reporting that the requirement is not applicable to the transaction. For partially exempt transactions under § 1003.3(d), an insured depository institution or insured credit union is not required to report the total
borrower-paid
origination
charges.
See
§ 1003.3(d) and related commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective date.
For purchased covered loans subject to this
reporting requirement for which applications
were received by the selling entity prior to
the effective date of Regulation Z, 12 CFR
1026.19(f), a financial institution complies
with § 1003.4(a)(18) by reporting that the requirement is not applicable to the transaction.
3. Corrected disclosures. If the total amount
of borrower-paid origination charges changes
because a financial institution provides a
corrected version of the disclosures required
under Regulation Z, 12 CFR 1026.19(f), pursuant to 12 CFR 1026.19(f)(2), the financial institution complies with § 1003.4(a)(18) by reporting the corrected amount, provided that the

115

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00125

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

corrected disclosure was provided to the borrower prior to the end of the reporting period
in which closing occurs. For purposes of
§ 1003.4(a)(18), the date the corrected disclosure was provided to the borrower is the date
disclosed pursuant to Regulation Z, 12 CFR
1026.38(a)(3)(i). For example:
i. In the case of a financial institution’s
annual loan/application register submission
made pursuant to § 1003.5(a)(1)(i), if the financial institution provides a corrected disclosure to the borrower to reflect a refund made
pursuant
to
Regulation
Z,
12
CFR
1026.19(f)(2)(v), the financial institution reports the corrected amount of borrower-paid
origination charges only if the corrected disclosure was provided to the borrower prior to
the end of the calendar year in which closing
occurs.
ii. In the case of a financial institution’s
quarterly submission made pursuant to
§ 1003.5(a)(1)(ii), if the financial institution
provides a corrected disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution reports the corrected
amount of borrower-paid origination charges
only if the corrected disclosure was provided
to the borrower prior to the end of the quarter in which closing occurs. The financial institution does not report the corrected
amount of borrower-paid origination charges
in its quarterly submission if the corrected
disclosure was provided to the borrower after
the end of the quarter in which closing occurs, even if the corrected disclosure was
provided to the borrower prior to the deadline for timely submission of the financial
institution’s quarterly data. However, the financial institution reports the corrected
amount of borrower-paid origination charges
on its annual loan/application register, provided that the corrected disclosure was provided to the borrower prior to the end of the
calendar year in which closing occurs.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(19)
1. Discount points—scope of requirement. Section 1003.4(a)(19) does not require financial
institutions to report the discount points for
applications, or for transactions not subject
to Regulation Z, 12 CFR 1026.19(f), 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 with
§ 1003.4(a)(19) by reporting that the requirement is not applicable to the transaction.
For partially exempt transactions under
§ 1003.3(d), an insured depository institution
or insured credit union is not required to report the discount points. See § 1003.3(d) and
related commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective date.
For purchased covered loans subject to this
reporting requirement for which applications

were received by the selling entity prior to
the effective date of Regulation Z, 12 CFR
1026.19(f), a financial institution complies
with § 1003.4(a)(19) by reporting that the requirement is not applicable to the transaction.
3. Corrected disclosures. If the amount of
discount points changes because a financial
institution provides a corrected version of
the disclosures required under Regulation Z,
12 CFR 1026.19(f), pursuant to 12 CFR
1026.19(f)(2), the financial institution complies with § 1003.4(a)(19) by reporting the corrected amount, provided that the corrected
disclosure was provided to the borrower prior
to the end of the reporting period in which
closing occurs. For purposes of § 1003.4(a)(19),
the date the corrected disclosure was provided to the borrower is the date disclosed
pursuant
to
Regulation
Z,
12
CFR
1026.38(a)(3)(i). For example:
i. In the case of a financial institution’s
annual loan/application register submission
made pursuant to § 1003.5(a)(1)(i), if the financial institution provides a corrected disclosure to the borrower to reflect a refund made
pursuant
to
Regulation
Z,
12
CFR
1026.19(f)(2)(v), the financial institution reports the corrected amount of discount
points only if the corrected disclosure was
provided to the borrower prior to the end of
the calendar year in which closing occurred.
ii. In the case of a financial institution’s
quarterly submission made pursuant to
§ 1003.5(a)(1)(ii), if the financial institution
provides a corrected disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution reports the corrected
amount of discount points only if the corrected disclosure was provided to the borrower prior to the end of the quarter in
which closing occurred. The financial institution does not report the corrected amount
of discount points in its quarterly submission if the corrected disclosure was provided
to the borrower after the end of the quarter
in which closing occurred, even if the corrected disclosure was provided to the borrower prior to the deadline for timely submission of the financial institution’s quarterly data. However, the financial institution reports the corrected amount of discount points on its annual loan/application
register, provided that the corrected disclosure was provided to the borrower prior to
the end of the calendar year in which closing
occurred.
Paragraph 4(a)(20)
1. Lender credits—scope of requirement. Section 1003.4(a)(20) does not require financial
institutions to report lender credits for applications, or for transactions not subject to
Regulation Z, 12 CFR 1026.19(f), such as openend lines of credit, reverse mortgages, or
loans or lines of credit made primarily for

116

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00126

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

business or commercial purposes. In these
cases, a financial institution complies with
§ 1003.4(a)(20) by reporting that the requirement is not applicable to the transaction.
For partially exempt transactions under
§ 1003.3(d), an insured depository institution
or insured credit union is not required to report lender credits. See § 1003.3(d) and related
commentary.
2. Purchased loans—applications received
prior to the integrated disclosure effective date.
For purchased covered loans subject to this
reporting requirement for which applications
were received by the selling entity prior to
the effective date of Regulation Z, 12 CFR
1026.19(f), a financial institution complies
with § 1003.4(a)(20) by reporting that the requirement is not applicable to the transaction.
3. Corrected disclosures. If the amount of
lender credits changes because a financial institution provides a corrected version of the
disclosures required under Regulation Z, 12
CFR
1026.19(f),
pursuant
to
12
CFR
1026.19(f)(2), the financial institution complies with § 1003.4(a)(20) by reporting the corrected amount, provided that the corrected
disclosure was provided to the borrower prior
to the end of the reporting period in which
closing
occurred.
For
purposes
of
§ 1003.4(a)(20), the date the corrected disclosure was provided to the borrower is the date
disclosed pursuant to Regulation Z, 12 CFR
1026.38(a)(3)(i). For example:
i. In the case of a financial institution’s
annual loan/application register submission
made pursuant to § 1003.5(a)(1)(i), if the financial institution provides a corrected disclosure to the borrower to reflect a refund made
pursuant
to
Regulation
Z,
12
CFR
1026.19(f)(2)(v), the financial institution reports the corrected amount of lender credits
only if the corrected disclosure was provided
to the borrower prior to the end of the calendar year in which closing occurred.
ii. In the case of a financial institution’s
quarterly submission made pursuant to
§ 1003.5(a)(1)(ii), if the financial institution
provides a corrected disclosure to the borrower to reflect a refund made pursuant to
Regulation Z, 12 CFR 1026.19(f)(2)(v), the financial institution reports the corrected
amount of lender credits only if the corrected disclosure was provided to the borrower prior to the end of the quarter in
which closing occurred. The financial institution does not report the corrected amount
of lender credits in its quarterly submission
if the corrected disclosure was provided to
the borrower after the end of the quarter in
which closing occurred, even if the corrected
disclosure was provided to the borrower prior
to the deadline for timely submission of the
financial institution’s quarterly data. However, the financial institution reports the
corrected amount of lender credits on its annual loan/application register, provided that

the corrected disclosure was provided to the
borrower prior to the end of the calendar
year in which closing occurred.
Paragraph 4(a)(21)
1. Interest rate—disclosures. Except for partially exempt transactions under § 1003.3(d),
§ 1003.4(a)(21) requires a financial institution
to identify the interest rate applicable to the
approved application, or to the covered loan
at closing or account opening. For covered
loans or applications subject to the integrated mortgage disclosure requirements of
Regulation Z, 12 CFR 1026.19(e) and (f), a financial
institution
complies
with
§ 1003.4(a)(21) by reporting the interest rate
disclosed on the applicable disclosure. For
covered loans or approved applications for
which disclosures were provided pursuant to
both the early and the final disclosure requirements in Regulation Z, 12 CFR 1026.19(e)
and (f), a financial institution reports the interest rate disclosed pursuant to 12 CFR
1026.19(f). A financial institution may rely on
the definitions and commentary to the sections of Regulation Z relevant to the disclosure of the interest rate pursuant to 12 CFR
1026.19(e) or (f). If a financial institution provides a revised or corrected version of the
disclosures required under Regulation Z, 12
CFR 1026.19(e) or (f), pursuant to 12 CFR
1026.19(e)(3)(iv) or (f)(2), as applicable, the financial
institution
complies
with
§ 1003.4(a)(21) by reporting the interest rate
on the revised or corrected disclosure, provided that the revised or corrected disclosure
was provided to the borrower prior to the end
of the reporting period in which final action
is taken. For purposes of § 1003.4(a)(21), the
date the revised or corrected disclosure was
provided to the borrower is the date disclosed pursuant to Regulation Z, 12 CFR
1026.37(a)(4) or 1026.38(a)(3)(i), as applicable.
2. Applications. In the case of an application, § 1003.4(a)(21) requires a financial institution to report the applicable interest rate
only if the application has been approved by
the financial institution but not accepted by
the borrower. In such cases, a financial institution reports the interest rate applicable at
the time that the application was approved
by the financial institution. A financial institution may report the interest rate appearing on the disclosure provided pursuant
to 12 CFR 1026.19(e) or (f) if such disclosure
accurately reflects the interest rate at the
time the application was approved. For applications that have been denied or withdrawn, or files closed for incompleteness, a
financial institution reports that no interest
rate was applicable to the application.
3. Adjustable rate—interest rate unknown.
Except as provided in comment 4(a)(21)–1, for
adjustable-rate covered loans or applications, if the interest rate is unknown at the
time that the application was approved, or

117

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00127

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

at closing or account opening, a financial institution reports the fully-indexed rate based
on the index applicable to the covered loan
or application. For purposes of § 1003.4(a)(21),
the fully-indexed rate is the index value and
margin at the time that the application was
approved, or, for covered loans, at closing or
account opening.
Paragraph 4(a)(22)
1. Prepayment penalty term—scope of requirement. Section 1003.4(a)(22) does not require financial institutions to report the term of
any prepayment penalty for transactions not
subject to Regulation Z, 12 CFR part 1026,
such as loans or lines of credit made primarily for business or commercial purposes,
or for reverse mortgages or purchased covered loans. In these cases, a financial institution complies with § 1003.4(a)(22) by reporting
that the requirement is not applicable to the
transaction. For partially exempt transactions under § 1003.3(d), an insured depository institution or insured credit union is
not required to report the term of any prepayment penalty. See § 1003.3(d) and related
commentary.
2. Transactions for which no prepayment penalty exists. For covered loans or applications
that have no prepayment penalty, a financial
institution complies with § 1003.4(a)(22) by reporting that the requirement is not applicable to the transaction. A financial institution may rely on the definitions and commentary
to
Regulation
Z,
12
CFR
1026.32(b)(6)(i) or (ii) in determining whether
the terms of a transaction contain a prepayment penalty.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(23)
1. General. For covered loans that are not
purchased covered loans and that are not
partially
exempt
under
§ 1003.3(d),
§ 1003.4(a)(23) requires a financial institution
to report the ratio of the applicant’s or borrower’s total monthly debt to total monthly
income (debt-to-income ratio) relied on in
making the credit decision. For example, if a
financial institution calculated the applicant’s or borrower’s debt-to-income ratio
twice—once according to the financial institution’s own requirements and once according to the requirements of a secondary market investor—and the financial institution
relied on the debt-to-income ratio calculated
according to the secondary market investor’s requirements in making the credit decision, § 1003.4(a)(23) requires the financial institution to report the debt-to-income ratio
calculated according to the requirements of
the secondary market investor.
2. Transactions for which a debt-to-income
ratio was one of multiple factors. A financial
institution relies on the ratio of the applicant’s or borrower’s total monthly debt to
total monthly income (debt-to-income ratio)

in making the credit decision if the debt-toincome ratio was a factor in the credit decision even if it was not a dispositive factor.
For example, if the debt-to-income ratio was
one of multiple factors in a financial institution’s credit decision, the financial institution has relied on the debt-to-income ratio
and complies with § 1003.4(a)(23) by reporting
the debt-to-income ratio, even if the financial institution denied the application because one or more underwriting requirements other than the debt-to-income ratio
were not satisfied.
3. Transactions for which no credit decision
was made. If a file was closed for incompleteness, or if an application was withdrawn before a credit decision was made, a financial
institution complies with § 1003.4(a)(23) by reporting that the requirement is not applicable, even if the financial institution had calculated the ratio of the applicant’s total
monthly debt to total monthly income (debtto-income ratio). For example, if a file was
closed for incompleteness and was so reported in accordance with § 1003.4(a)(8), the
financial
institution
complies
with
§ 1003.4(a)(23) by reporting that the requirement is not applicable, even if the financial
institution had calculated the applicant’s
debt-to-income ratio. Similarly, if an application was withdrawn by the applicant before a credit decision was made, the financial
institution complies with § 1003.4(a)(23) by reporting that the requirement is not applicable, even if the financial institution had calculated the applicant’s debt-to-income ratio.
4. Transactions for which no debt-to-income
ratio was relied on. Section 1003.4(a)(23) does
not require a financial institution to calculate the ratio of an applicant’s or borrower’s total monthly debt to total monthly
income (debt-to-income ratio), nor does it require a financial institution to rely on an applicant’s or borrower’s debt-to-income ratio
in making a credit decision. If a financial institution made a credit decision without relying on the applicant’s or borrower’s debtto-income ratio, the financial institution
complies with § 1003.4(a)(23) by reporting that
the requirement is not applicable since no
debt-to-income ratio was relied on in connection with the credit decision.
5. Non-natural person. A financial institution complies with § 1003.4(a)(23) by reporting
that the requirement is not applicable when
the applicant and co-applicant, if applicable,
are not natural persons.
6. Multifamily dwellings. A financial institution complies with § 1003.4(a)(23) by reporting
that the requirement is not applicable for a
covered loan secured by, or an application
proposed to be secured by, a multifamily
dwelling.
7. Purchased covered loans. A financial institution complies with § 1003.4(a)(23) by reporting that the requirement is not applicable when reporting a purchased covered loan.

118

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00128

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(24)
1. General. Except for purchased covered
loans and partially exempt transactions
under § 1003.3(d), § 1003.4(a)(24) requires a financial institution to report the ratio of the
total amount of debt secured by the property
to the value of the property (combined loanto-value ratio) relied on in making the credit
decision. For example, if a financial institution calculated a combined loan-to-value
ratio twice—once according to the financial
institution’s own requirements and once according to the requirements of a secondary
market investor—and the financial institution relied on the combined loan-to-value
ratio calculated according to the secondary
market investor’s requirements in making
the credit decision, § 1003.4(a)(24) requires the
financial institution to report the combined
loan-to-value ratio calculated according to
the requirements of the secondary market
investor.
2. Transactions for which a combined loan-tovalue ratio was one of multiple factors. A financial institution relies on the ratio of the
total amount of debt secured by the property
to the value of the property (combined loanto-value ratio) in making the credit decision
if the combined loan-to-value ratio was a
factor in the credit decision, even if it was
not a dispositive factor. For example, if the
combined loan-to-value ratio is one of multiple factors in a financial institution’s credit decision, the financial institution has relied on the combined loan-to-value ratio and
complies with § 1003.4(a)(24) by reporting the
combined loan-to-value ratio, even if the financial institution denies the application because one or more underwriting requirements other than the combined loan-to-value
ratio are not satisfied.
3. Transactions for which no credit decision
was made. If a file was closed for incompleteness, or if an application was withdrawn before a credit decision was made, a financial
institution complies with § 1003.4(a)(24) by reporting that the requirement is not applicable, even if the financial institution had calculated the ratio of the total amount of debt
secured by the property to the value of the
property (combined loan-to-value ratio). For
example, if a file is closed for incompleteness
and is so reported in accordance with
§ 1003.4(a)(8), the financial institution complies with § 1003.4(a)(24) by reporting that the
requirement is not applicable, even if the financial institution had calculated a combined loan-to-value ratio. Similarly, if an application was withdrawn by the applicant before a credit decision was made and is so reported in accordance with § 1003.4(a)(8), the
financial
institution
complies
with
§ 1003.4(a)(24) by reporting that the requirement is not applicable, even if the financial
institution had calculated a combined loanto-value ratio.

4. Transactions for which no combined loanto-value ratio was relied on. Section
1003.4(a)(24) does not require a financial institution to calculate the ratio of the total
amount of debt secured by the property to
the value of the property (combined loan-tovalue ratio), nor does it require a financial
institution to rely on a combined loan-tovalue ratio in making a credit decision. If a
financial institution makes a credit decision
without relying on a combined loan-to-value
ratio, the financial institution complies with
§ 1003.4(a)(24) by reporting that the requirement is not applicable since no combined
loan-to-value ratio was relied on in making
the credit decision.
5. Purchased covered loan. A financial institution complies with § 1003.4(a)(24) by reporting that the requirement is not applicable
when the covered loan is a purchased covered
loan.
6. Property. A financial institution reports
the combined loan-to-value ratio relied on in
making the credit decision, regardless of
which property or properties it used in the
combined loan-to-value ratio calculation.
The property used in the combined loan-tovalue ratio calculation does not need to be
the property identified in § 1003.4(a)(9) and
may include more than one property and
non-real property. For example, if a financial institution originated a covered loan for
the purchase of a multifamily dwelling, the
loan was secured by the multifamily dwelling and by non-real property, such as securities, and the financial institution used the
multifamily dwelling and the non-real property to calculate the combined loan-to-value
ratio that it relied on in making the credit
decision, § 1003.4(a)(24) requires the financial
institution to report the relied upon ratio.
Section 1003.4(a)(24) does not require a financial institution to use a particular combined
loan-to-value ratio calculation method but
instead requires financial institutions to report the combined loan-to-value ratio relied
on in making the credit decision.
Paragraph 4(a)(25)
1. Amortization and maturity. For a fully
amortizing covered loan, the number of
months after which the legal obligation matures is the number of months in the amortization schedule, ending with the final payment. Some covered loans do not fully amortize during the maturity term, such as covered loans with a balloon payment; such
loans should still be reported using the maturity term rather than the amortization
term, even in the case of covered loans that
mature before fully amortizing but have
reset options. For example, a 30-year fully
amortizing covered loan would be reported
with a term of ‘‘360,’’ while a five year balloon covered loan would be reported with a
loan term of ‘‘60.’’

119

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00129

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

2. Non-monthly repayment periods. If a covered loan or application includes a schedule
with repayment periods measured in a unit
of time other than months, the financial institution should report the covered loan or
application term using an equivalent number
of whole months without regard for any remainder.
3. Purchased loans. For a covered loan that
was purchased, a financial institution reports the number of months after which the
legal obligation matures as measured from
the covered loan’s origination.
4. Open-end line of credit. For an open-end
line of credit with a definite term, a financial institution reports the number of
months from origination until the account
termination date, including both the draw
and repayment period.
5. Loan term—scope of requirement. For a
covered loan or application without a definite term, such as a reverse mortgage, a financial
institution
complies
with
§ 1003.4(a)(25) by reporting that the requirement is not applicable. For partially exempt
transactions under § 1003.3(d), an insured depository institution or insured credit union
is not required to report the loan term. See
§ 1003.3(d) and related commentary.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(26)
1. Types of introductory rates. Except for
partially
exempt
transactions
under
§ 1003.3(d), § 1003.4(a)(26) requires a financial
institution to report the number of months,
or proposed number of months in the case of
an application, from closing or account
opening until the first date the interest rate
may change. For example, assume an openend line of credit contains an introductory
or ‘‘teaser’’ interest rate for two months
after the date of account opening, after
which the interest rate may adjust. In this
example, the financial institution complies
with § 1003.4(a)(26) by reporting the number
of months as ‘‘2.’’ Section 1003.4(a)(26) requires a financial institution to report the
number of months based on when the first
interest rate adjustment may occur, even if
an interest rate adjustment is not required
to occur at that time and even if the rates
that will apply, or the periods for which they
will apply, are not known at closing or account opening. For example, if a closed-end
mortgage loan with a 30-year term has an adjustable-rate product with an introductory
interest rate for the first 60 months, after
which the interest rate is permitted, but not
required to vary, according to the terms of
an index rate, the financial institution complies with § 1003.4(a)(26) by reporting the
number of months as ‘‘60.’’ Similarly, if a
closed-end mortgage loan with a 30-year
term is a step-rate product with an introductory interest rate for the first 24 months,
after which the interest rate will increase to
a different known interest rate for the next

36 months, the financial institution complies
with § 1003.4(a)(26) by reporting the number
of months as ‘‘24.’’
2. Preferred rates. Section 1003.4(a)(26) does
not require reporting of introductory interest rate periods based on preferred rates unless the terms of the legal obligation provide
that the preferred rate will expire at a certain defined date. Preferred rates include
terms of the legal obligation that provide
that the initial underlying rate is fixed but
that it may increase or decrease upon the occurrence of some future event, such as an
employee leaving the employ of the financial
institution, the borrower closing an existing
deposit account with the financial institution, or the borrower revoking an election to
make automated payments. In these cases,
because it is not known at the time of closing or account opening whether the future
event will occur, and if so, when it will
occur, § 1003.4(a)(26) does not require reporting of an introductory interest rate period.
3. Loan or application with a fixed rate. A financial
institution
complies
with
§ 1003.4(a)(26) by reporting that the requirement is not applicable for a covered loan
with a fixed rate or an application for a covered loan with a fixed rate.
4. Purchased loan. A financial institution
complies with § 1003.4(a)(26) by reporting that
requirement is not applicable when the covered loan is a purchased covered loan with a
fixed rate.
5. Non-monthly introductory periods. If a covered loan or application includes an introductory interest rate period measured in a
unit of time other than months, the financial institution complies with § 1003.4(a)(26)
by reporting the introductory interest rate
period for the covered loan or application
using an equivalent number of whole months
without regard for any remainder. For example, assume an open-end line of credit contains an introductory interest rate for 50
days after the date of account opening, after
which the interest rate may adjust. In this
example, the financial institution complies
with § 1003.4(a)(26) by reporting the number
of months as ‘‘1.’’ The financial institution
must report one month for any introductory
interest rate period that totals less than one
whole month.
Paragraph 4(a)(27)
1. General. Except for partially exempt
transactions under § 1003.3(d), § 1003.4(a)(27)
requires reporting of contractual features
that would allow payments other than fully
amortizing payments. Section 1003.4(a)(27)
defines the contractual features by reference
to Regulation Z, 12 CFR part 1026, but without regard to whether the covered loan is
consumer credit, as defined in § 1026.2(a)(12),
is extended by a creditor, as defined in
§ 1026.2(a)(17), or is extended to a consumer,

120

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00130

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

as defined in § 1026.2(a)(11), and without regard to whether the property is a dwelling as
defined in § 1026.2(a)(19). For example, assume
that a financial institution originates a business-purpose transaction that is exempt
from Regulation Z pursuant to 12 CFR
1026.3(a)(1), to finance the purchase of a multifamily dwelling, and that there is a balloon
payment, as defined by Regulation Z, 12 CFR
1026.18(s)(5)(i), at the end of the loan term.
The multifamily dwelling is a dwelling under
§ 1003.2(f), but not under Regulation Z, 12
CFR 1026.2(a)(19). In this example, the financial institution should report the businesspurpose transaction as having a balloon payment under § 1003.4(a)(27)(i), assuming the
other requirements of this part are met.
Aside from these distinctions, financial institutions may rely on the definitions and
related commentary provided in the appropriate sections of Regulation Z referenced in
§ 1003.4(a)(27) of this part in determining
whether the contractual feature should be
reported.

ment is not applicable, even if the financial
institution had obtained a property value.
Similarly, if an application was withdrawn
by the applicant before a credit decision was
made and is so reported in accordance with
§ 1003.4(a)(8), the financial institution complies with § 1003.4(a)(28) by reporting that the
requirement is not applicable, even if the financial institution had obtained a property
value.
4. Transactions for which no property value
was relied on. Section 1003.4(a)(28) does not
require a financial institution to obtain a
property valuation, nor does it require a financial institution to rely on a property
value in making a credit decision. If a financial institution makes a credit decision
without relying on a property value, the financial
institution
complies
with
§ 1003.4(a)(28) by reporting that the requirement is not applicable since no property
value was relied on in making the credit decision.
Paragraph 4(a)(29)

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(28)
1. General. Except for partially exempt
transactions under § 1003.3(d), § 1003.4(a)(28)
requires a financial institution to report the
property value relied on in making the credit
decision. For example, if the institution relies on an appraisal or other valuation for
the property in calculating the loan-to-value
ratio, it reports that value; if the institution
relies on the purchase price of the property
in calculating the loan-to-value ratio, it reports that value.
2. Multiple property values. When a financial
institution obtains two or more valuations
of the property securing or proposed to secure the covered loan, the financial institution complies with § 1003.4(a)(28) by reporting
the value relied on in making the credit decision. For example, when a financial institution obtains an appraisal, an automated
valuation model report, and a broker price
opinion with different values for the property, it reports the value relied on in making
the credit decision. Section § 1003.4(a)(28)
does not require a financial institution to
use a particular property valuation method,
but instead requires a financial institution
to report the valuation relied on in making
the credit decision.
3. Transactions for which no credit decision
was made. If a file was closed for incompleteness or the application was withdrawn before
a credit decision was made, the financial institution complies with § 1003.4(a)(28) by reporting that the requirement is not applicable, even if the financial institution had obtained a property value. For example, if a
file is closed for incompleteness and is so reported in accordance with § 1003.4(a)(8), the
financial
institution
complies
with
§ 1003.4(a)(28) by reporting that the require-

1. Classification under State law. A financial
institution should report a covered loan that
is or would have been secured only by a manufactured home but not the land on which it
is sited as secured by a manufactured home
and not land, even if the manufactured home
is considered real property under applicable
State law.
2. Manufactured home community. A manufactured home community that is a multifamily dwelling is not considered a manufactured home for purposes of § 1003.4(a)(29).
3. Multiple properties. See comment 4(a)(9)–
2 regarding transactions involving multiple
properties with more than one property
taken as security.
4. Scope of requirement. A financial institution reports that the requirement is not applicable for a covered loan where the dwelling related to the property identified in
§ 1003.4(a)(9) is not a manufactured home. For
partially
exempt
transactions
under
§ 1003.3(d), an insured depository institution
or insured credit union is not required to report
the
information
specified
in
§ 1003.4(a)(29). See § 1003.3(d) and related commentary.
Paragraph 4(a)(30)
1. Indirect land ownership. Indirect land
ownership can occur when the applicant or
borrower is or will be a member of a resident-owned community structured as a housing cooperative in which the occupants own
an entity that holds the underlying land of
the manufactured home community. In such
communities, the applicant or borrower may
still have a lease and pay rent for the lot on
which his or her manufactured home is or
will be located, but the property interest

121

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00131

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

type for such an arrangement should be reported as indirect ownership if the applicant
is or will be a member of the cooperative
that owns the underlying land of the manufactured home community. If an applicant
resides or will reside in such a community
but is not a member, the property interest
type should be reported as a paid leasehold.
2. Leasehold interest. A leasehold interest
could be formalized in a lease with a defined
term and specified rent payments, or could
arise as a tenancy at will through permission
of a land owner without any written, formal
arrangement. For example, assume a borrower will locate the manufactured home in
a manufactured home community, has a
written lease for a lot in that park, and the
lease specifies rent payments. In this example, a financial institution complies with
§ 1003.4(a)(30) by reporting a paid leasehold.
However, if instead the borrower will locate
the manufactured home on land owned by a
family member without a written lease and
with no agreement as to rent payments, a financial
institution
complies
with
§ 1003.4(a)(30) by reporting an unpaid leasehold.
3. Multiple properties. See comment 4(a)(9)–
2 regarding transactions involving multiple
properties with more than one property
taken as security.
4. Manufactured home community. A manufactured home community that is a multifamily dwelling is not considered a manufactured home for purposes of § 1003.4(a)(30).
5. Direct ownership. An applicant or borrower has a direct ownership interest in the
land on which the dwelling is or is to be located when it has a more than possessory
real property ownership interest in the land
such as fee simple ownership.
6. Scope of requirement. A financial institution reports that the requirement is not applicable for a covered loan where the dwelling related to the property identified in
§ 1003.4(a)(9) is not a manufactured home. For
partially
exempt
transactions
under
§ 1003.3(d), an insured depository institution
or insured credit union is not required to report
the
information
specified
in
§ 1003.4(a)(30). See § 1003.3(d) and related commentary.

attached. A financial institution may include in the number of individual dwelling
units other units such as recreational vehicle pads, manager apartments, rental apartments, site-built homes or other rentable
space that are ancillary to the operation of
the secured property if it considers such
units under its underwriting guidelines or
the guidelines of an investor, or if it tracks
the number of such units for its own internal
purposes. For a loan secured by a single
manufactured home that is or will be located
in a manufactured home community, the financial institution should report one individual dwelling unit.
3. Condominium and cooperative projects. For
a covered loan secured by a condominium or
cooperative property, the financial institution reports the total number of individual
dwelling units securing the covered loan or
proposed to secure the covered loan in the
case of an application. For example:
i. Assume that a loan is secured by the entirety of a cooperative property. The financial institution would report the number of
individual dwelling units in the cooperative
property.
ii. Assume that a covered loan is secured
by 30 individual dwelling units in a condominium property that contains 100 individual dwelling units and that the loan is
not exempt from Regulation C under
§ 1003.3(c)(3). The financial institution reports 30 individual dwelling units.
4. Best information available. A financial institution may rely on the best information
readily available to the financial institution
at the time final action is taken and on the
financial institution’s own procedures in reporting
the
information
required
by
§ 1003.4(a)(31). Information readily available
could include, for example, information provided by an applicant that the financial institution reasonably believes, information
contained in a property valuation or inspection, or information obtained from public
records.

Paragraph 4(a)(31)

1. Affordable housing income restrictions. For
purposes of § 1003.4(a)(32), affordable housing
income-restricted units are individual dwelling units that have restrictions based on the
income level of occupants pursuant to restrictive covenants encumbering the property. Such income levels are frequently expressed as a percentage of area median income by household size as established by the
U.S. Department of Housing and Urban Development or another agency responsible for
implementing the applicable affordable housing program. Such restrictions are frequently part of compliance with programs

1. Multiple properties. See comment 4(a)(9)–
2 regarding transactions involving multiple
properties with more than one property
taken as security.
2. Manufactured home community. For an application or covered loan secured by a manufactured home community, the financial institution should include in the number of individual dwelling units the total number of
manufactured home sites that secure the
loan and are available for occupancy, regardless of whether the sites are currently occupied or have manufactured homes currently

Paragraph 4(a)(32)

122

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00132

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

that provide public funds, special tax treatment, or density bonuses to encourage development or preservation of affordable housing. Such restrictions are frequently evidenced by a use agreement, regulatory agreement, land use restriction agreement, housing assistance payments contract, or similar
agreement. Rent control or rent stabilization laws, and the acceptance by the owner
or manager of a multifamily dwelling of
Housing Choice Vouchers (24 CFR part 982) or
other similar forms of portable housing assistance that are tied to an occupant and not
an individual dwelling unit, are not affordable housing income-restricted dwelling
units for purposes of § 1003.4(a)(32).
2. Federal affordable housing sources. Examples of Federal programs and funding sources
that may result in individual dwelling units
that are reportable under § 1003.4(a)(32) include, but are not limited to:
i. Affordable housing programs pursuant to
Section 8 of the United States Housing Act
of 1937 (42 U.S.C. 1437f);
ii. Public housing (42 U.S.C. 1437a(b)(6));
iii. The HOME Investment Partnerships
program (24 CFR part 92);
iv. The Community Development Block
Grant program (24 CFR part 570);
v. Multifamily tax subsidy project funding
through tax-exempt bonds or tax credits (26
U.S.C. 42; 26 U.S.C. 142(d));
vi. Project-based vouchers (24 CFR part
983);
vii. Federal Home Loan Bank affordable
housing program funding (12 CFR part 1291);
and
viii. Rural Housing Service multifamily
housing loans and grants (7 CFR part 3560).
3. State and local government affordable
housing sources. Examples of State and local
sources that may result in individual dwelling units that are reportable under
§ 1003.4(a)(32) include, but are not limited to:
State or local administration of Federal
funds or programs; State or local funding
programs for affordable housing or rental assistance, including programs operated by
independent public authorities; inclusionary
zoning laws; and tax abatement or tax increment financing contingent on affordable
housing requirements.
4. Multiple properties. See comment 4(a)(9)–
2 regarding transactions involving multiple
properties with more than one property
taken as security.
5. Best information available. A financial institution may rely on the best information
readily available to the financial institution
at the time final action is taken and on the
financial institution’s own procedures in reporting
the
information
required
by
§ 1003.4(a)(32). Information readily available
could include, for example, information provided by an applicant that the financial institution reasonably believes, information
contained in a property valuation or inspec-

tion, or information obtained from public
records.
6. Scope of requirement. A financial institution reports that the requirement is not applicable if the property securing the covered
loan or, in the case of an application, proposed to secure the covered loan is not a
multifamily dwelling. For partially exempt
transactions under § 1003.3(d), an insured depository institution or insured credit union
is not required to report the information
specified in § 1003.4(a)(32). See § 1003.3(d) and
related commentary.
Paragraph 4(a)(33)
1. Agents. If a financial institution is reporting actions taken by its agent consistent
with comment 4(a)–4, the agent is not considered the financial institution for the purposes of § 1003.4(a)(33). For example, assume
that an applicant submitted an application
to Financial Institution A, and Financial Institution A made the credit decision acting
as Financial Institution B’s agent under
State law. A covered loan was originated and
the obligation arising from a covered loan
was initially payable to Financial Institution A. Financial Institution B purchased
the loan. Financial Institution B reports the
origination and not the purchase, and indicates that the application was not submitted
directly to the financial institution and that
the transaction was not initially payable to
the financial institution.
Paragraph 4(a)(33)(i)
1. General. Except for partially exempt
transactions under § 1003.3(d), § 1003.4(a)(33)(i)
requires a financial institution to indicate
whether the applicant or borrower submitted
the application directly to the financial institution that is reporting the covered loan
or application. The following scenarios demonstrate whether an application was submitted directly to the financial institution
that is reporting the covered loan or application.
i. The application was submitted directly
to the financial institution if the mortgage
loan originator identified pursuant to
§ 1003.4(a)(34) was an employee of the reporting financial institution when the originator
performed the origination activities for the
covered loan or application that is being reported.
ii. The application was also submitted directly to the financial institution reporting
the covered loan or application if the reporting financial institution directed the applicant to a third-party agent (e.g., a credit
union service organization) that performed
loan origination activities on behalf of the
financial institution and did not assist the
applicant with applying for covered loans
with other institutions.

123

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00133

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

iii. If an applicant contacted and completed an application with a broker or correspondent that forwarded the application to
a financial institution for approval, an application was not submitted to the financial institution.
Paragraph 4(a)(33)(ii)
1. General. Except for partially exempt
transactions
under
§ 1003.3(d),
§ 1003.4(a)(33)(ii) requires financial institutions to report whether the obligation arising from a covered loan was or, in the case
of an application, would have been initially
payable to the institution. An obligation is
initially payable to the institution if the obligation is initially payable either on the
face of the note or contract to the financial
institution that is reporting the covered loan
or application. For example, if a financial institution reported an origination of a covered loan that it approved prior to closing,
that closed in the name of a third-party,
such as a correspondent lender, and that the
financial institution purchased after closing,
the covered loan was not initially payable to
the financial institution.
2. Applications. A financial institution complies with § 1003.4(a)(33)(ii) by reporting that
the requirement is not applicable if the institution had not determined whether the
covered loan would have been initially payable to the institution reporting the application when the application was withdrawn,
denied, or closed for incompleteness.

kpayne on VMOFRWIN702 with $$_JOB

Paragraph 4(a)(34)
1. NMLSR ID. Except for partially exempt
transactions under § 1003.3(d), § 1003.4(a)(34)
requires a financial institution to report the
Nationwide Mortgage Licensing System and
Registry unique identifier (NMLSR ID) for
the mortgage loan originator, as defined in
Regulation G, 12 CFR 1007.102, or Regulation
H, 12 CFR 1008.23, as applicable. The NMLSR
ID is a unique number or other identifier
generally assigned to individuals registered
or licensed through NMLSR to provide loan
originating services. For more information,
see the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008, title V of the
Housing and Economic Recovery Act of 2008
(S.A.F.E. Act), 12 U.S.C. 5101 et seq., and its
implementing regulations (12 CFR part 1007
and 12 CFR part 1008).
2. Mortgage loan originator without NMLSR
ID. An NMLSR ID for the mortgage loan
originator is not required by § 1003.4(a)(34) to
be reported by a financial institution if the
mortgage loan originator is not required to
obtain and has not been assigned an NMLSR
ID. For example, certain individual mortgage loan originators may not be required to
obtain an NMLSR ID for the particular
transaction being reported by the financial
institution, such as a commercial loan. How-

ever, some mortgage loan originators may
have obtained an NMLSR ID even if they are
not required to obtain one for that particular transaction. If a mortgage loan originator has been assigned an NMLSR ID, a financial
institution
complies
with
§ 1003.4(a)(34) by reporting the mortgage loan
originator’s NMLSR ID regardless of whether the mortgage loan originator is required
to obtain an NMLSR ID for the particular
transaction being reported by the financial
institution. In the event that the mortgage
loan originator is not required to obtain and
has not been assigned an NMLSR ID, a financial institution complies with § 1003.4(a)(34)
by reporting that the requirement is not applicable.
3. Multiple mortgage loan originators. If more
than one individual associated with a covered loan or application meets the definition
of a mortgage loan originator, as defined in
Regulation G, 12 CFR 1007.102, or Regulation
H, 12 CFR 1008.23, a financial institution
complies with § 1003.4(a)(34) by reporting the
NMLSR ID of the individual mortgage loan
originator with primary responsibility for
the transaction as of the date of action
taken pursuant to § 1003.4(a)(8)(ii). A financial institution that establishes and follows
a reasonable, written policy for determining
which individual mortgage loan originator
has primary responsibility for the reported
transaction as of the date of action taken
complies with § 1003.4(a)(34).
4. Purchased loans. If a financial institution
purchases a covered loan that satisfies the
coverage criteria of Regulation Z, 12 CFR
1026.36(g), and that was originated prior to
January 10, 2014, the financial institution
complies with § 1003.4(a)(34) by reporting that
the requirement is not applicable. In addition, if a financial institution purchases a
covered loan that does not satisfy the coverage criteria of Regulation Z, 12 CFR
1026.36(g), and that was originated prior to
January 1, 2018, the financial institution
complies with § 1003.4(a)(34) by reporting that
the requirement is not applicable. Purchasers of both such types of covered loans
may report the NMLSR ID.
Paragraph 4(a)(35)
1. Automated underwriting system data—general. Except for purchased covered loans and
partially
exempt
transactions
under
§ 1003.3(d), § 1003.4(a)(35) requires a financial
institution to report the name of the automated underwriting system (AUS) used by
the financial institution to evaluate the application and the result generated by that
AUS. The following scenarios illustrate when
a financial institution reports the name of
the AUS used by the financial institution to
evaluate the application and the result generated by that AUS.
i. A financial institution that uses an AUS,
as defined in § 1003.4(a)(35)(ii), to evaluate an

124

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00134

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

application, must report the name of the
AUS used by the financial institution to
evaluate the application and the result generated by that system, regardless of whether
the AUS was used in its underwriting process. For example, if a financial institution
uses an AUS to evaluate an application prior
to submitting the application through its
underwriting process, the financial institution complies with § 1003.4(a)(35) by reporting
the name of the AUS it used to evaluate the
application and the result generated by that
system.
ii. A financial institution that uses an
AUS, as defined in § 1003.4(a)(35)(ii), to evaluate an application, must report the name of
the AUS it used to evaluate the application
and the result generated by that system, regardless of whether the financial institution
intends to hold the covered loan in its portfolio or sell the covered loan. For example, if
a financial institution uses an AUS developed by a securitizer to evaluate an application and intends to sell the covered loan to
that securitizer but ultimately does not sell
the covered loan and instead holds the covered loan in its portfolio, the financial institution complies with § 1003.4(a)(35) by reporting the name of the securitizer’s AUS that
the institution used to evaluate the application and the result generated by that system. Similarly, if a financial institution uses
an AUS developed by a securitizer to evaluate an application to determine whether to
originate the covered loan but does not intend to sell the covered loan to that
securitizer and instead holds the covered
loan in its portfolio, the financial institution
complies with § 1003.4(a)(35) by reporting the
name of the securitizer’s AUS that the institution used to evaluate the application and
the result generated by that system.
iii. A financial institution that uses an
AUS, as defined in § 1003.4(a)(35)(ii), that is
developed by a securitizer to evaluate an application, must report the name of the AUS
it used to evaluate the application and the
result generated by that system, regardless
of whether the securitizer intends to hold
the covered loan it purchased from the financial institution in its portfolio or securitize
the covered loan. For example, if a financial
institution uses an AUS developed by a
securitizer to evaluate an application and
the financial institution sells the covered
loan to that securitizer but the securitizer
holds the covered loan it purchased in its
portfolio, the financial institution complies
with § 1003.4(a)(35) by reporting the name of
the securitizer’s AUS that the institution
used to evaluate the application and the result generated by that system.
iv. A financial institution, which is also a
securitizer, that uses its own AUS, as defined
in § 1003.4(a)(35)(ii), to evaluate an application, must report the name of the AUS it
used to evaluate the application and the re-

sult generated by that system, regardless of
whether the financial institution intends to
hold the covered loan it originates in its
portfolio, purchase the covered loan, or
securitize the covered loan. For example, if a
financial institution, which is also a
securitizer, has developed its own AUS and
uses that AUS to evaluate an application
that it intends to originate and hold in its
portfolio and not purchase or securitize the
covered loan, the financial institution complies with § 1003.4(a)(35) by reporting the
name of its AUS that it used to evaluate the
application and the result generated by that
system.
2. Definition of automated underwriting system. A financial institution must report the
information required by § 1003.4(a)(35)(i) if
the financial institution uses an automated
underwriting system (AUS), as defined in
§ 1003.4(a)(35)(ii), to evaluate an application.
To be covered by the definition in
§ 1003.4(a)(35)(ii), a system must be an electronic tool that has been developed by a
securitizer, Federal government insurer, or a
Federal government guarantor of closed-end
mortgage loans or open-end lines of credit. A
person is a securitizer, Federal government
insurer, or Federal government guarantor of
closed-end mortgage loans or open-end lines
of credit, respectively, if it has securitized,
provided Federal government insurance, or
provided a Federal government guarantee for
a closed-end mortgage loan or open-end line
of credit at any point in time. A person may
be a securitizer, Federal government insurer,
or Federal government guarantor of closedend mortgage loans or open-end lines of credit, respectively, for purposes of § 1003.4(a)(35)
even if it is not actively securitizing, insuring, or guaranteeing closed-end mortgage
loans or open-end lines of credit at the time
a financial institution uses the AUS to
evaluate an application. Where the person
that developed the electronic tool has never
been a securitizer, Federal government insurer, or Federal government guarantor of
closed-end mortgage loans or open-end lines
of credit, respectively, at the time a financial institution uses the tool to evaluate an
application, the financial institution complies with § 1003.4(a)(35) by reporting that the
requirement is not applicable because an
AUS was not used to evaluate the application. If a financial institution has developed
its own proprietary system that it uses to
evaluate an application and the financial institution is also a securitizer, then the financial institution complies with § 1003.4(a)(35)
by reporting the name of that system and
the result generated by that system. On the
other hand, if a financial institution has developed its own proprietary system that it
uses to evaluate an application and the financial institution is not a securitizer, then
the financial institution is not required by
§ 1003.4(a)(35) to report the use of that system

125

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00135

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

and the result generated by that system. In
addition, for an AUS to be covered by the
definition in § 1003.4(a)(35)(ii), the system
must provide a result regarding both the
credit risk of the applicant and the eligibility of the covered loan to be originated,
purchased, insured, or guaranteed by the
securitizer, Federal government insurer, or
Federal government guarantor that developed the system being used to evaluate the
application. For example, if a system is an
electronic tool that provides a determination of the eligibility of the covered loan to
be originated, purchased, insured, or guaranteed by the securitizer, Federal government
insurer, or Federal government guarantor
that developed the system being used by a financial institution to evaluate the application, but the system does not also provide an
assessment of the creditworthiness of the applicant—such as an evaluation of the applicant’s income, debt, and credit history—then
that system does not qualify as an AUS, as
defined in § 1003.4(a)(35)(ii). A financial institution that uses a system that is not an
AUS, as defined in § 1003.4(a)(35)(ii), to evaluate an application does not report the information required by § 1003.4(a)(35)(i).
3. Reporting automated underwriting system
data—multiple results. When a financial institution uses one or more automated underwriting systems (AUS) to evaluate the application and the system or systems generate
two or more results, the financial institution
complies with § 1003.4(a)(35) by reporting, except for purchased covered loans, the name
of the AUS used by the financial institution
to evaluate the application and the result
generated by that AUS as determined by the
following principles. To determine what AUS
(or AUSs) and result (or results) to report
under § 1003.4(a)(35), a financial institution
follows each of the principles that is applicable to the application in question, in the
order in which they are set forth below.
i. If a financial institution obtains two or
more AUS results and the AUS generating
one of those results corresponds to the loan
type reported pursuant to § 1003.4(a)(2), the
financial
institution
complies
with
§ 1003.4(a)(35) by reporting that AUS name
and result. For example, if a financial institution evaluates an application using the
Federal Housing Administration’s (FHA)
Technology Open to Approved Lenders
(TOTAL) Scorecard and subsequently evaluates the application with an AUS used to determine eligibility for a non-FHA loan, but
ultimately originates an FHA loan, the financial
institution
complies
with
§ 1003.4(a)(35) by reporting TOTAL Scorecard
and the result generated by that system. If a
financial institution obtains two or more
AUS results and more than one of those AUS
results is generated by a system that corresponds to the loan type reported pursuant
to § 1003.4(a)(2), the financial institution

identifies which AUS result should be reported by following the principle set forth
below in comment 4(a)(35)–3.ii.
ii. If a financial institution obtains two or
more AUS results and the AUS generating
one of those results corresponds to the purchaser, insurer, or guarantor, if any, the financial
institution
complies
with
§ 1003.4(a)(35) by reporting that AUS name
and result. For example, if a financial institution evaluates an application with the
AUS of Securitizer A and subsequently evaluates the application with the AUS of
Securitizer B, but the financial institution
ultimately originates a covered loan that it
sells within the same calendar year to
Securitizer A, the financial institution complies with § 1003.4(a)(35) by reporting the
name of Securitizer A’s AUS and the result
generated by that system. If a financial institution obtains two or more AUS results
and more than one of those AUS results is
generated by a system that corresponds to
the purchaser, insurer, or guarantor, if any,
the financial institution identifies which
AUS result should be reported by following
the principle set forth below in comment
4(a)(35)–3.iii.
iii. If a financial institution obtains two or
more AUS results and none of the systems
generating those results correspond to the
purchaser, insurer, or guarantor, if any, or
the financial institution is following this
principle because more than one AUS result
is generated by a system that corresponds to
either the loan type or the purchaser, insurer, or guarantor, the financial institution
complies with § 1003.4(a)(35) by reporting the
AUS result generated closest in time to the
credit decision and the name of the AUS that
generated that result. For example, if a financial institution evaluates an application
with the AUS of Securitizer A, subsequently
again evaluates the application with
Securitizer A’s AUS, the financial institution complies with § 1003.4(a)(35) by reporting
the name of Securitizer A’s AUS and the second AUS result. Similarly, if a financial institution obtains a result from an AUS that
requires the financial institution to underwrite the loan manually, but the financial
institution subsequently processes the application through a different AUS that also
generates a result, the financial institution
complies with § 1003.4(a)(35) by reporting the
name of the second AUS that it used to
evaluate the application and the AUS result
generated by that system.
iv. If a financial institution obtains two or
more AUS results at the same time and the
principles in comment 4(a)(35)–3.i through
.iii do not apply, the financial institution
complies with § 1003.4(a)(35) by reporting the
name of all of the AUSs used by the financial
institution to evaluate the application and
the results generated by each of those systems. For example, if a financial institution

126

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00136

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

simultaneously evaluates an application
with the AUS of Securitizer A and the AUS
of Securitizer B, the financial institution
complies with § 1003.4(a)(35) by reporting the
name of both Securitizer A’s AUS and
Securitizer B’s AUS and the results generated by each of those systems. In any
event, however, the financial institution
does not report more than five AUSs and five
results. If more than five AUSs and five results meet the criteria in this principle, the
financial
institution
complies
with
§ 1003.4(a)(35) by choosing any five among
them to report.
4. Transactions for which an automated underwriting system was not used to evaluate the
application. Section 1003.4(a)(35) does not require a financial institution to evaluate an
application using an automated underwriting system (AUS), as defined in
§ 1003.4(a)(35)(ii). For example, if a financial
institution only manually underwrites an
application and does not use an AUS to
evaluate the application, the financial institution complies with § 1003.4(a)(35) by reporting that the requirement is not applicable
since an AUS was not used to evaluate the
application.
5. Purchased covered loan. A financial institution complies with § 1003.4(a)(35) by reporting that the requirement is not applicable
when the covered loan is a purchased covered
loan.
6. Non-natural person. When the applicant
and co-applicant, if applicable, are not natural persons, a financial institution complies
with § 1003.4(a)(35) by reporting that the requirement is not applicable.
7. Determination of securitizer, Federal government insurer, or Federal government guarantor. Section 1003.4(a)(35)(ii) provides that
an ‘‘automated underwriting system’’ means
an electronic tool developed by a securitizer,
Federal government insurer, or Federal government guarantor of closed-end mortgage
loans or open-end lines of credit that provides a result regarding the credit risk of the
applicant and whether the covered loan is eligible to be originated, purchased, insured,
or guaranteed by that securitizer, Federal
government insurer, or Federal government
guarantor. A person is a securitizer, Federal
government insurer, or Federal government
guarantor of closed-end mortgage loans or
open-end lines of credit, respectively, if it
has ever securitized, insured, or guaranteed a
closed-end mortgage loan or open-end line of
credit. If a financial institution knows or
reasonably believes that the system it is
using to evaluate an application is an electronic tool that has been developed by a
securitizer, Federal government insurer, or
Federal government guarantor of closed-end
mortgage loans or open-end lines of credit,
then the financial institution complies with
§ 1003.4(a)(35) by reporting the name of that
system and the result generated by that sys-

tem. Knowledge or reasonable belief could,
for example, be based on a sales agreement
or other related documents, the financial institution’s previous transactions or relationship with the developer of the electronic
tool, or representations made by the developer of the electronic tool demonstrating
that the developer of the electronic tool is a
securitizer, Federal government insurer, or
Federal government guarantor of closed-end
mortgage loans or open-end lines of credit. If
a financial institution does not know or reasonably believe that the system it is using to
evaluate an application is an electronic tool
that has been developed by a securitizer,
Federal government insurer, or Federal government guarantor of closed-end mortgage
loans or open-end lines of credit, the financial institution complies with § 1003.4(a)(35)
by reporting that the requirement is not applicable, provided that the financial institution maintains procedures reasonably adapted to determine whether the electronic tool
it is using to evaluate an application meets
the definition in § 1003.4(a)(35)(ii). Reasonably
adapted procedures include attempting to
determine with reasonable frequency, such
as annually, whether the developer of the
electronic tool is a securitizer, Federal government insurer, or Federal government
guarantor of closed-end mortgage loans or
open-end lines of credit. For example:
i. In the course of renewing an annual sales
agreement the developer of the electronic
tool represents to the financial institution
that it has never been a securitizer, Federal
government insurer, or Federal government
guarantor of closed-end mortgage loans or
open-end lines of credit. On this basis, the financial institution does not know or reasonably believe that the system it is using to
evaluate an application is an electronic tool
that has been developed by a securitizer,
Federal government insurer, or Federal government guarantor of closed-end mortgage
loans or open-end lines of credit and complies with § 1003.4(a)(35) by reporting that the
requirement is not applicable.
ii. Based on their previous transactions a
financial institution is aware that the developer of the electronic tool it is using to
evaluate an application has securitized a
closed-end mortgage loan or open-end line of
credit in the past. On this basis, the financial institution knows or reasonably believes
that the developer of the electronic tool is a
securitizer and complies with § 1003.4(a)(35)
by reporting the name of that system and
the result generated by that system.
Paragraph 4(a)(37)
1. Open-end line of credit. Except for partially exempt transactions under § 1003.3(d),
§ 1003.4(a)(37) requires a financial institution
to identify whether the covered loan or the
application is for an open-end line of credit.

127

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00137

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I

12 CFR Ch. X (1–1–20 Edition)

See comments 2(o)–1 and –2 for a discussion
of open-end line of credit and extension of
credit.
Paragraph 4(a)(38)
1. Primary purpose. Except for partially exempt
transactions
under
§ 1003.3(d),
§ 1003.4(a)(38) requires a financial institution
to identify whether the covered loan is, or
the application is for a covered loan that will
be, made primarily for a business or commercial purpose. See comment 3(c)(10)–2 for a
discussion of how to determine the primary
purpose of the transaction and the standard
applicable to a financial institution’s determination of the primary purpose of the
transaction. See comments 3(c)(10)–3 and 4
for examples of excluded and reportable
business- or commercial-purpose transactions.
4(f) Quarterly Recording of Data
1. General. Section 1003.4(f) requires a financial institution to record the data collected pursuant to § 1003.4 on a loan/application register within 30 calendar days after
the end of the calendar quarter in which
final action is taken. Section 1003.4(f) does
not require a financial institution to record
data on a single loan/application register on
a quarterly basis. Rather, for purposes of
§ 1003.4(f), a financial institution may record
data on a single loan/application register or
separately for different branches or different
loan types (such as home purchase or home
improvement loans, or loans on multifamily
dwellings).
2. Agency requirements. Certain State or
Federal regulations may require a financial
institution to record its data more frequently than is required under Regulation C.
3. Form of quarterly records. A financial institution may maintain the records required
by § 1003.4(f) in electronic or any other format, provided the institution can make the
information available to its regulatory agency in a timely manner upon request.
Section 1003.5—Disclosure and Reporting

kpayne on VMOFRWIN702 with $$_JOB

5(a) Reporting to Agency
1. Quarterly reporting—coverage. i. Section
1003.5(a)(1)(ii) requires that, within 60 calendar days after the end of each calendar
quarter except the fourth quarter, a financial institution that reported for the preceding calendar year at least 60,000 covered
loans and applications, combined, excluding
purchased covered loans, must submit its
loan/application register containing all data
required to be recorded for that quarter pursuant to § 1003.4(f). For example, if for calendar year 2019 Financial Institution A reports 60,000 covered loans, excluding purchased covered loans, it must comply with
§ 1003.5(a)(1)(ii) in calendar year 2020. Simi-

larly, if for calendar year 2019 Financial Institution A reports 20,000 applications and
40,000 covered loans, combined, excluding
purchased covered loans, it must comply
with § 1003.5(a)(1)(ii) in calendar year 2020. If
for calendar year 2020 Financial Institution
A reports fewer than 60,000 covered loans and
applications, combined, excluding purchased
covered loans, it is not required to comply
with § 1003.5(a)(1)(ii) in calendar year 2021.
ii. In the calendar year of a merger or acquisition, the surviving or newly formed financial institution is required to comply
with § 1003.5(a)(1)(ii), effective the date of the
merger or acquisition, if a combined total of
at least 60,000 covered loans and applications, combined, excluding purchased covered loans, is reported for the preceding calendar year by or for the surviving or newly
formed financial institution and each financial institution or branch office merged or
acquired. For example, Financial Institution
A and Financial Institution B merge to form
Financial Institution C in 2020. Financial Institution A reports 40,000 covered loans and
applications, combined, excluding purchased
covered loans, for 2019. Financial Institution
B reports 21,000 covered loans and applications, combined, excluding purchased covered loans, for 2019. Financial Institution C
is required to comply with § 1003.5(a)(1)(ii) effective the date of the merger. Similarly, for
example, Financial Institution A acquires a
branch office of Financial Institution B in
2020. Financial Institution A reports 58,000
covered loans and applications, combined,
excluding purchased covered loans, for 2019.
Financial Institution B reports 3,000 covered
loans and applications, combined, excluding
purchased covered loans, for 2019 for the
branch office acquired by Financial Institution A. Financial Institution A is required to
comply with § 1003.5(a)(1)(ii) in 2020 effective
the date of the branch acquisition.
iii. In the calendar year following a merger
or acquisition, the surviving or newly formed
financial institution is required to comply
with § 1003.5(a)(1)(ii) if a combined total of at
least 60,000 covered loans and applications,
combined, excluding purchased covered
loans, is reported for the preceding calendar
year by or for the surviving or newly formed
financial institution and each financial institution or branch office merged or acquired. For example, Financial Institution A
and Financial Institution B merge to form
Financial Institution C in 2019. Financial Institution C reports 21,000 covered loans and
applications, combined, excluding purchased
covered loans, each for Financial Institution
A, B, and C for 2019, for a combined total of
63,000 covered loans and applications reported, excluding purchased covered loans.
Financial Institution C is required to comply
with § 1003.5(a)(1)(ii) in 2020. Similarly, for
example, Financial Institution A acquires a
branch office of Financial Institution B in

128

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00138

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I

2019. Financial Institution A reports 58,000
covered loans and applications, combined,
excluding purchased covered loans, for 2019.
Financial Institution A or B reports 3,000
covered loans and applications, combined,
excluding purchased covered loans, for 2019
for the branch office acquired by Financial
Institution A. Financial Institution A is required to comply with § 1003.5(a)(1)(ii) in 2020.
2. Change in appropriate Federal agency. If
the appropriate Federal agency for a financial institution changes (as a consequence of
a merger or a change in the institution’s
charter, for example), the institution must
identify its new appropriate Federal agency
in its annual submission of data pursuant to
§ 1003.5(a)(1)(i) for the year of the change. For
example, if an institution’s appropriate Federal agency changes in February 2018, it
must identify its new appropriate Federal
agency beginning with the annual submission of its 2018 data by March 1, 2019 pursuant to § 1003.5(a)(1)(i). For an institution required to comply with § 1003.5(a)(1)(ii), the institution also must identify its new appropriate Federal agency in its quarterly submission of data pursuant to § 1003.5(a)(1)(ii)
beginning with its submission for the quarter of the change, unless the change occurs
during the fourth quarter. For example, if
the appropriate Federal agency for an institution
required
to
comply
with
§ 1003.5(a)(1)(ii) changes during February 2020,
the institution must identify its new appropriate Federal agency beginning with its
quarterly
submission
pursuant
to
§ 1003.5(a)(1)(ii) for the first quarter of 2020. If
the appropriate Federal agency for an institution
required
to
comply
with
§ 1003.5(a)(1)(ii) changes during December
2020, the institution must identify its new
appropriate Federal agency beginning with
the annual submission of its 2020 data by
March 1, 2021 pursuant to § 1003.5(a)(1)(i).
3. Subsidiaries. A financial institution is a
subsidiary of a bank or savings association
(for purposes of reporting HMDA data to the
same agency as the parent) if the bank or
savings association holds or controls an ownership interest in the institution that is
greater than 50 percent.
4. Retention. A financial institution may
satisfy the requirement under § 1003.5(a)(1)(i)
that it retain a copy of its submitted annual
loan/application register for three years by
retaining a copy of the annual loan/application register in either electronic or paper
form.
5. Federal Taxpayer Identification Number.
Section 1003.5(a)(3) requires a financial institution to provide its Federal Taxpayer Identification Number with its data submission.
If a financial institution obtains a new Federal Taxpayer Identification Number, it
should provide the new number in its subsequent data submission. For example, if two
financial institutions that previously re-

ported HMDA data under this part merge
and the surviving institution retained its
Legal Entity Identifier but obtained a new
Federal Taxpayer Identification Number,
then the surviving institution should report
the new Federal Taxpayer Identification
Number with its HMDA data submission.
5(b) Disclosure Statement
1. Business day. For purposes of § 1003.5(b), a
business day is any calendar day other than
a Saturday, Sunday, or legal public holiday.
2. Format of notice. A financial institution
may make the written notice required under
§ 1003.5(b)(2) available in paper or electronic
form.
3. Notice—suggested text. A financial institution may use any text that meets the requirements of § 1003.5(b)(2). The following
language is suggested but is not required:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are available online for review.
The data show geographic distribution of loans
and applications; ethnicity, race, sex, age, and
income of applicants and borrowers; and information about loan approvals and denials. These
data are available online at the Consumer Financial
Protection
Bureau’s
Web
site
(www.consumerfinance.gov/hmda). HMDA data
for many other financial institutions are also
available at this Web site.
4. Combined notice. A financial institution
may use the same notice to satisfy the requirements
of
both
§ 1003.5(b)(2)
and
§ 1003.5(c).
5(c) Modified loan/application Register
1. Format of notice. A financial institution
may make the written notice required under
§ 1003.5(c)(1) available in paper or electronic
form.
2. Notice—suggested text. A financial institution may use any text that meets the requirements of § 1003.5(c)(1). The following
language is suggested but is not required:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are available online for review.
The data show geographic distribution of loans
and applications; ethnicity, race, sex, age, and
income of applicants and borrowers; and information about loan approvals and denials. These
data are available online at the Consumer Financial
Protection
Bureau’s
Web
site
(www.consumerfinance.gov/hmda). HMDA data
for many other financial institutions are also
available at this Web site.
3. Combined notice. A financial institution
may use the same notice to satisfy the requirements
of
both
§ 1003.5(c)
and
§ 1003.5(b)(2).

129

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00139

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

Pt. 1003, Supp. I, Nt.

12 CFR Ch. X (1–1–20 Edition)

5(e) Posted Notice of Availability of Data
1. Posted notice—suggested text. A financial
institution may post any text that meets the
requirements of § 1003.5(e). The Bureau or
other appropriate Federal agency for a financial institution may provide a notice that
the institution can post to inform the public
of the availability of its HMDA data, or an
institution may create its own notice. The
following language is suggested but is not required:
Home Mortgage Disclosure Act Notice
The HMDA data about our residential mortgage lending are available online for review.
The data show geographic distribution of loans
and applications; ethnicity, race, sex, age, and
income of applicants and borrowers; and information about loan approvals and denials.
HMDA data for many other financial institutions are also available online. For more information, visit the Consumer Financial Protection
Bureau’s Web site (www.consumerfinance.gov/
hmda).

reau’s Web site did not provide a census
tract number for the property address entered by the financial institution is not excused as a bona fide error. In addition, a census tract error caused by a financial institution entering an inaccurate property address
into the geocoding tool on the Bureau’s Web
site is not excused as a bona fide error.
[80 FR 66317, 66339, Oct. 28, 2015, as amended
at 82 FR 43136, 43145, Sept. 13, 2017; 82 FR
61146, Dec. 27, 2017; 84 FR 514, Jan. 31, 2019; 84
FR 57981, Oct. 29, 2019; 84 FR 69994, Dec. 20,
2019]
EFFECTIVE DATE NOTE: At 84 FR 58003, Oct.
29, 2019, effective Jan. 1, 2022, supplement I to
part 1003 was amended as follows:
a. Under Section 1003.2—Definitions, revising
2(g) Financial Institution; and
b. Under Section 1003.3—Exempt Institutions
and Excluded and Partially Exempt Transactions, under 3(c) Excluded Transactions, revising Paragraph 3(c)(12).
For the convenience of the user, the revised text is set forth as follows:

Section 1003.6—Enforcement

SUPPLEMENT I TO PART 1003—OFFICIAL
INTERPRETATIONS

kpayne on VMOFRWIN702 with $$_JOB

6(b) Bona Fide Errors
1. Information from third parties. Section
1003.6(b) provides that an error in compiling
or recording data for a covered loan or application is not a violation of the Act or this
part if the error was unintentional and occurred despite the maintenance of procedures reasonably adapted to avoid such an
error. A financial institution that obtains
the required data, such as property-location
information, from third parties is responsible for ensuring that the information reported pursuant to § 1003.5 is correct. See
comment 6(b)–2 concerning obtaining census
tract information from a geocoding tool that
the Bureau makes available on its Web site.
2. Information from the Bureau. Section
1003.6(b)(2) provides that an incorrect entry
for census tract number is deemed a bona
fide error, and is not a violation of the Act
or this part, provided that the financial institution maintains procedures reasonably
adapted to avoid an error. Obtaining the census tract numbers for covered loans and applications from a geocoding tool available on
the Bureau’s Web site that identifies the census tract of a property using property addresses entered by users is an example of a
procedure reasonably adapted to avoid errors
under § 1003.6(b)(2). Accordingly, a census
tract error is not a violation of the Act or
this part if the financial institution obtained
the census tract number from the geocoding
tool on the Bureau’s Web site. However, a financial institution’s failure to provide the
correct census tract number for a covered
loan or application on its loan/application
register, as required by § 1003.4(a)(9)(ii)(C) or
(e), because the geocoding tool on the Bu-

*

*

*

*

*

*

*

*

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00140

Fmt 8010

*

2(g) Financial Institution
1. Preceding calendar year and preceding December 31. The definition of financial institution refers both to the preceding calendar
year and the preceding December 31. These
terms refer to the calendar year and the December 31 preceding the current calendar
year. For example, in 2019, the preceding calendar year is 2018 and the preceding December 31 is December 31, 2018. Accordingly, in
2019, Financial Institution A satisfies the
asset-size
threshold
described
in
§ 1003.2(g)(1)(i) if its assets exceeded the
threshold specified in comment 2(g)–2 on December 31, 2018. Likewise, in 2020, Financial
Institution A does not meet the loan-volume
test described in § 1003.2(g)(1)(v)(A) if it originated fewer than 25 closed-end mortgage
loans during either 2018 or 2019.
2. [Reserved]
3. Merger or acquisition—coverage of surviving or newly formed institution. After a
merger or acquisition, the surviving or
newly formed institution is a financial institution under § 1003.2(g) if it, considering the
combined assets, location, and lending activity of the surviving or newly formed institution and the merged or acquired institutions
or acquired branches, satisfies the criteria
included in § 1003.2(g). For example, A and B

130

VerDate Sep<11>2014

*

Section 1003.2—Definitions

Sfmt 8002

Q:\12\12V8.TXT

PC31

kpayne on VMOFRWIN702 with $$_JOB

Bur. of Consumer Financial Protection

Pt. 1003, Supp. I, Nt.

merge. The surviving or newly formed institution meets the loan threshold described in
§ 1003.2(g)(1)(v)(B) if the surviving or newly
formed institution, A, and B originated a
combined total of at least 100 open-end lines
of credit in each of the two preceding calendar years. Likewise, the surviving or
newly formed institution meets the assetsize threshold in § 1003.2(g)(1)(i) if its assets
and the combined assets of A and B on December 31 of the preceding calendar year exceeded
the
threshold
described
in
§ 1003.2(g)(1)(i). Comment 2(g)–4 discusses a financial institution’s responsibilities during
the calendar year of a merger.
4. Merger or acquisition—coverage for calendar year of merger or acquisition. The scenarios described below illustrate a financial
institution’s responsibilities for the calendar
year of a merger or acquisition. For purposes
of these illustrations, a ‘‘covered institution’’ means a financial institution, as defined in § 1003.2(g), that is not exempt from
reporting under § 1003.3(a), and ‘‘an institution that is not covered’’ means either an institution that is not a financial institution,
as defined in § 1003.2(g), or an institution that
is exempt from reporting under § 1003.3(a).
i. Two institutions that are not covered
merge. The surviving or newly formed institution meets all of the requirements necessary to be a covered institution. No data
collection is required for the calendar year
of the merger (even though the merger creates an institution that meets all of the requirements necessary to be a covered institution). When a branch office of an institution that is not covered is acquired by another institution that is not covered, and the
acquisition results in a covered institution,
no data collection is required for the calendar year of the acquisition.
ii. A covered institution and an institution
that is not covered merge. The covered institution is the surviving institution, or a new
covered institution is formed. For the calendar year of the merger, data collection is
required for covered loans and applications
handled in the offices of the merged institution that was previously covered and is optional for covered loans and applications
handled in offices of the merged institution
that was previously not covered. When a covered institution acquires a branch office of
an institution that is not covered, data collection is optional for covered loans and applications handled by the acquired branch office for the calendar year of the acquisition.
iii. A covered institution and an institution that is not covered merge. The institution that is not covered is the surviving institution, or a new institution that is not
covered is formed. For the calendar year of
the merger, data collection is required for
covered loans and applications handled in offices of the previously covered institution
that took place prior to the merger. After

the merger date, data collection is optional
for covered loans and applications handled in
the offices of the institution that was previously covered. When an institution remains not covered after acquiring a branch
office of a covered institution, data collection is required for transactions of the acquired branch office that take place prior to
the acquisition. Data collection by the acquired branch office is optional for transactions taking place in the remainder of the
calendar year after the acquisition.
iv. Two covered institutions merge. The
surviving or newly formed institution is a
covered institution. Data collection is required for the entire calendar year of the
merger. The surviving or newly formed institution files either a consolidated submission
or separate submissions for that calendar
year. When a covered institution acquires a
branch office of a covered institution, data
collection is required for the entire calendar
year of the merger. Data for the acquired
branch office may be submitted by either institution.
5. Originations. Whether an institution is a
financial institution depends in part on
whether the institution originated at least 25
closed-end mortgage loans in each of the two
preceding calendar years or at least 100 openend lines of credit in each of the two preceding calendar years. Comments 4(a)–2
through –4 discuss whether activities with
respect to a particular closed-end mortgage
loan or open-end line of credit constitute an
origination for purposes of § 1003.2(g).
6. Branches of foreign banks—treated as
banks. A Federal branch or a State-licensed
or insured branch of a foreign bank that
meets the definition of a ‘‘bank’’ under section 3(a)(1) of the Federal Deposit Insurance
Act (12 U.S.C. 1813(a)) is a bank for the purposes of § 1003.2(g).
7. Branches and offices of foreign banks and
other entities—treated as nondepository financial institutions. A Federal agency, State-licensed agency, State-licensed uninsured
branch of a foreign bank, commercial lending company owned or controlled by a foreign bank, or entity operating under section
25 or 25A of the Federal Reserve Act, 12
U.S.C. 601 and 611 (Edge Act and agreement
corporations) may not meet the definition of
‘‘bank’’ under the Federal Deposit Insurance
Act and may thereby fail to satisfy the definition of a depository financial institution
under § 1003.2(g)(1). An entity is nonetheless a
financial institution if it meets the definition of nondepository financial institution
under § 1003.2(g)(2).

*

*

*

*

131

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00141

Fmt 8010

Sfmt 8002

Q:\12\12V8.TXT

PC31

*

Pt. 1004

12 CFR Ch. X (1–1–20 Edition)

Section 1003.3—Exempt Institutions and
Excluded and Partially Exempt Transactions

1004.4 Requirements for alternative mortgage transactions.
APPENDIX A TO PART 1004—OFFICIAL COMMENTARY ON REGULATION D

3(c) Excluded Transactions

*

*

*

*

AUTHORITY: 12 U.S.C. 3802, 3803; 15 U.S.C.
1604, 1639b; Pub. L. No. 111–203, 124 Stat. 1376.

*

Paragraph 3(c)(12)
1. General. Section 1003.3(c)(12) provides
that an open-end line of credit is an excluded
transaction if a financial institution originated fewer than 100 open-end lines of credit
in either of the two preceding calendar
years. For example, assume that a bank is a
financial institution in 2022 under § 1003.2(g)
because it originated 50 closed-end mortgage
loans in 2020, 75 closed-end mortgage loans in
2021, and met all of the other requirements
under § 1003.2(g)(1). Also assume that the
bank originated 75 and 85 open-end lines of
credit in 2020 and 2021, respectively. The
closed-end mortgage loans that the bank
originated or purchased, or for which it received applications, during 2022 are covered
loans and must be reported, unless they otherwise are excluded transactions under
§ 1003.3(c). However, the open-end lines of
credit that the bank originated or purchased,
or for which it received applications, during
2022
are
excluded
transactions
under
§ 1003.3(c)(12) and need not be reported. See
comments 4(a)–2 through –4 for guidance
about the activities that constitute an origination.
2. Optional reporting. A financial institution may report applications for, originations of, or purchases of open-end lines of
credit that are excluded transactions because the financial institution originated
fewer than 100 open-end lines of credit in either of the two preceding calendar years.
However, a financial institution that chooses
to report such excluded applications for,
originations of, or purchases of open-end
lines of credit must report all such applications for open-end lines of credit which it receives, open-end lines of credit that it originates, and open-end lines of credit that it
purchases that otherwise would be covered
loans for a given calendar year. Note that
applications which remain pending at the
end of a calendar year are not reported, as
described in comment 4(a)(8)(i)–14.

SOURCE: 76 FR 44242, July 22, 2011, unless
otherwise noted.

§ 1004.1

§ 1004.2
*

*

*

*

*

kpayne on VMOFRWIN702 with $$_JOB

PART 1004—ALTERNATIVE MORTGAGE TRANSACTION PARITY
(REGULATION D)
Sec.
1004.1
1004.2
1004.3

Authority, purpose, and scope.
Definitions.
Preemption of State law.

Authority, purpose, and scope.

(a) Authority. This regulation, known
as Regulation D, is issued by the Bureau of Consumer Financial Protection
to implement the Alternative Mortgage Transaction Parity Act, 12 U.S.C.
3801 et seq., as amended by title X, Section 1083 of the Dodd-Frank Wall
Street Reform and Consumer Protection Act (Pub. L. 111–203, 124 Stat.
1376). Section 1004.4 is issued pursuant
to the Alternative Mortgage Transaction Parity Act (as amended) and the
Truth in Lending Act, 15 U.S.C. 1601 et
seq.
(b) Purpose. Consistent with the Alternative Mortgage Transaction Parity
Act, the Truth in Lending Act, and the
Dodd-Frank Wall Street Reform and
Consumer Protection Act, the purpose
of this regulation is to balance access
to responsible credit and enhanced parity between State and federal housing
creditors regarding the making, purchase, and enforcement of alternative
mortgage transactions with consumer
protection and the interests of the
States in regulating mortgage transactions generally.
(c) Scope. This regulation applies to
an alternative mortgage transaction if
the creditor received an application for
that transaction on or after July 22,
2011. This regulation does not apply to
a transaction if the creditor received
the application for that transaction before July 22, 2011.
Definitions.

For purposes of this part:
Alternative
mortgage
transaction
means a loan, credit sale, or account:
(1) That is secured by an interest in a
residential structure that contains one
to four units, whether or not that
structure is attached to real property,
including an individual condominium
unit, cooperative unit, mobile home, or
trailer, if it is used as a residence;

132

VerDate Sep<11>2014

13:19 Feb 20, 2020

Jkt 250042

PO 00000

Frm 00142

Fmt 8010

Sfmt 8010

Q:\12\12V8.TXT

PC31