We are in the process of entering into an agreement with a mortgage broker. We will basically act as a correspondent, and will take applications – the mortgage broker will underwrite and make the credit decision. We will close and fund the loan, the mortgage broker will then immediately purchase. Will we report these as originated loan applications, or will the mortgage broker report as originated?
HMDA uses the terms broker and investor. An institution that takes and processes a loan application and arranges for another institution to acquire the loan at or after closing is acting as a “broker,” and an institution that acquires a loan from a broker at or after closing is acting as an “investor.” The party making the credit decision is responsible for HMDA reporting. Depending on the facts, a broker may or may not make a credit decision on an application (and thus it may or may not have reporting responsibilities). If the broker makes a credit decision, it reports that decision; if it does not make a credit decision, it does not report. If an investor reviews an application and makes a credit decision prior to closing, the investor reports that decision. If the investor does not review the application prior to closing, it reports only the loans that it purchases; it does not report the loans it does not purchase. An institution that makes a credit decision on an application prior to closing reports that decision regardless of whose name the loan closes in.
These definitions and concepts come from Section 1003.1(c) of Regulation C.