HMDA Exemption Property Address
In this Compliance Clip (video), Adam discusses how the Property Address data point applies to the partial exemption. Specifically, he provides guidance on how exempt institutions are to report the street, city and state when they are listing the state data field as part of the Property Location data point. As you would expect, this is a fairly complex topic that has caused quite a bit of confusion, so Adam attempts to break the rules down into easy-to-understand layman’s terms.
If you are an exempt reporter or plan to use the partial exemption for your 2019 data, be sure to check out our Compliance Class (video webinar) on the HMDA partial exemption in our store. Everything you need to know about the partial exemption is covered in less than an hour and includes a comprehensive training manual for reference and a Q&A of some more complex questions relating to the partial exemption. View the Compliance Class (video webinar) at www.compliancecohort.com/hmda-webinar.
Video Transcript
The following is a transcript of this video.
This Compliance Clip is going to talk about the HMDA Exemption and the property address.
We are in the middle of HMDA season and what I have found is quite a few HMDA reporters are struggling with the new partial exemption for small HMDA filers. So I wanted to talk about this in particular because this is a topic I have seen come up quite a bit and there has been great confusion on this topic.
Specifically, the question here is, “If the “State” data field is reported on the HMDA LAR, is a small filer still permitted to exempt the address, the city and the zip?” In other words, the address, city and zip are part of the property address, but state is also there. So state is listed and can it still be exempt? Because what the rules have really said is when you have one data field reported, you have to report all the other data fields within that larger data point.
Let me see if I can explain this a little bit better, but first, our answer is going to come from the CFPB Interpretive and Procedural Rule. It's going to come from Regulation C and it's going to come from the Filing Instruction Guide or the FIG.
Let’s take a look at the rules first. I need to clarify that there are actually two different data points. There's the property address, which includes the street address, the city, the state, and the zip. Now the other data point is property location. The property location has three data fields, which includes the census tract, the county, and the state. So on your LAR, what's interesting is you only have one field for state, but that state applies to both the property address data point as well as the property location data point. Are you following me so far? So all of these fields here - the address, the city, state, and zip - are data fields that are part of the larger data point property address. And what the rules say is when you list one of these data fields, you have to include all of the data fields in the data point. And again, this applies to small filers who are utilizing the exemption. You can optionally report. That's what the rules say, but when you provide one data field, you have to list all the fields within the larger data point.
That's where our concern comes from because the HMDA partial exemption only applies to the property address. The result is that the property location is not an exempt field. For the most part, you're going to list the county, census, tract, and state for most of your loans. There are a few instances where it's not required. What most financial institutions do is they go ahead and provide the property location every time because that is not an exempt field. So if the property location includes the state, how does this relate to the property address?
The question is, what happens when the state data field is listed because it is required by the property location? So we have a state field listing the property location, but the state is also part of the property address. So the question is, does this state require us to automatically include all the other data fields within the property address data point?
See, this is very confusing and I can see why so many of us have struggled through this. So the question is, does the fact that you're listing the state, because you're listing it as part of the property location which is required, does that listing of the state require you to automatically include the street address, the city and the zip, which are the other elements, three of the four elements of the property address field? I hope I'm explaining this well.
The answer to this comes from the HMDA Filing Instruction Guide, the FIG, and it specifically comes in Validity Edit V-709. When you look at V-709 and this Validity Edit, it says, “If the street address, city or zip code is reported exempt, then all three must be reported exempt.” Now what this validity edit is doing is it's basically the program on how we need to make sure that our property address is listing all of the fields the same way. You either list them all exempt or you report them all. And this is the edit that's telling us what to do for the property address. And as you can see, there's only three fields listed under the property address data point. When in fact, there are four fields, which state is the fourth.
What this essentially tells us is that we are permitted to exempt the street address, the city and the zip code even if you report the state as part of the property location. That is how it works.
I hope I made this clear for you. It's very complicated. When I struggle through a topic as much as I did just now, it reminds me of how complicated the topic actually is. One more thing is some vendors may be conservative. So they may take a more conservative approach and force you to list the street address, the city and the zip. But I do not believe it's required because of that Validity Edit 709.