{"id":1548,"date":"2019-02-21T19:16:54","date_gmt":"2019-02-21T19:16:54","guid":{"rendered":"https:\/\/albanknews.com\/?p=1548"},"modified":"2019-02-21T19:17:01","modified_gmt":"2019-02-21T19:17:01","slug":"compliance-qa-hmda-and-interest-only-loans","status":"publish","type":"post","link":"https:\/\/albanknews.com\/?p=1548","title":{"rendered":"Compliance Q&A: HMDA and Interest-only Loans"},"content":{"rendered":"\n

Question:<\/strong><\/p>\n\n\n\n

I have a HMDA question about construction loans. Our construction loans are 360 months plus 9 months interest. They are construction to perm. The first 9 months are interest only and then the 10th month includes principal &interest. Would we report this on HMDA as an interest-only loan?<\/p>\n\n\n\n

Answer:<\/strong><\/p>\n\n\n\n

If the loan is a single transaction–a construction-to-perm loan (one closing)–our interpretation is that you would report it as having an interest-only feature.  If this was two transactions, a construction-to-perm loan with two closings, then you would only report on the perm portion of the loan.<\/p>\n\n\n\n

References:<\/p>\n\n\n\n

The requirements of this part do not apply to: Temporary Financing…<\/em><\/p>\n\n\n\n

12 CFR \u00a7 1003.3(c)(3) https:\/\/www.consumerfinance.gov\/policy-compliance\/rulemaking\/regulations\/1003\/3\/#c-3<\/a><\/em><\/p>\n\n\n\n

A loan or line of credit is considered temporary financing and excluded under \u00a7 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.<\/em><\/p>\n\n\n\n

Commentary to 12 CFR \u00a7 1003.3(c)(3)-1 https:\/\/www.consumerfinance.gov\/policy-compliance\/rulemaking\/regulations\/1003\/3\/#3-c-3-Interp-1<\/a><\/em><\/p>\n\n\n\n

Whether the contractual terms include or would have included any of the following: (ii) Interest-only payments as defined in Regulation Z, 12 CFR 1026.18(s)(7)(iv);<\/em><\/p>\n\n\n\n

12 CFR \u00a7 1003.4(a)(27) https:\/\/www.consumerfinance.gov\/policy-compliance\/rulemaking\/regulations\/1003\/4\/#a-27<\/a><\/em><\/p>\n\n\n\n

The term \u2018interest-only\u2019 means that, under the terms of the legal obligation, one or more of the periodic payments may be applied solely to accrued interest and not to loan principal; an \u2018interest-only loan\u2019 is a loan that permits interest-only payments.<\/em><\/p>\n\n\n\n

12 CFR \u00a7 1026.18(s)(7)(iv) https:\/\/www.consumerfinance.gov\/policy-compliance\/rulemaking\/regulations\/1026\/18\/#s-7-iv<\/a><\/em><\/p>\n\n\n\n

Compliance Alliance offers a comprehensive suite of compliance management solutions. To learn how to put them to work for your bank, call (888) 353-3933<\/strong> or email info@compliancealliance.com<\/a><\/strong>.<\/p>\n\n\n\n

Not a member? <\/strong>Learn more about membership with Compliance Alliance by attending one of our live demos:<\/p>\n\n\n\n

\u00b7         Live Demo on Tuesday, February 26th<\/sup> @ 10:00am CT.<\/a><\/strong><\/p>\n\n\n\n

\u00b7         Live Demo on Thursday, February 28th<\/sup> @ 1:00pm CT.<\/a><\/strong><\/p>\n\n\n\n

Compliance rules and regulations change quickly! For timely compliance updates, subscribe to Compliance Alliance\u2019s email newsletters<\/a><\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

Question: I have a HMDA question about construction loans. Our construction loans are 360 months plus 9 months interest. They are construction to perm. The first 9 months are interest only and then the 10th month includes principal &interest. Would we report this on HMDA as an interest-only loan? Answer: If the loan is a single transaction–a construction-to-perm loan (one closing)–our interpretation is that you would report it as having an interest-only feature.  If this was two transactions, a construction-to-perm loan with two closings, then you would only report on the perm portion of the loan. References: The requirements of […]<\/p>\n","protected":false},"author":1,"featured_media":1070,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[19,33,23],"tags":[],"class_list":["post-1548","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-breaking","category-compliance-qa","category-publications","has_thumb"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/i0.wp.com\/albanknews.com\/wp-content\/uploads\/2017\/11\/compliance-alliance.png?fit=800%2C800&ssl=1","jetpack_shortlink":"https:\/\/wp.me\/p4Y3P2-oY","jetpack_sharing_enabled":true,"jetpack-related-posts":[],"_links":{"self":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/1548","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1548"}],"version-history":[{"count":1,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/1548\/revisions"}],"predecessor-version":[{"id":1550,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/posts\/1548\/revisions\/1550"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=\/wp\/v2\/media\/1070"}],"wp:attachment":[{"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1548"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1548"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/albanknews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1548"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}