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We are receiving conflicting and confusing information regarding what income to report for HMDA reportable loans that are business purpose but the borrower is an individual. Our lenders use a cash flow analysis to determine the debt service coverage. My questions are: 1. Is cash flow considered income for HMDA purposes- or revenue- in which case we would enter N/A for income because per regulation “income” was not used in the credit decision? 2. If we do need to report income for these type of loans- do we report the cash flow available (which includes net rental income and interest and depreciation expenses) as the income used to make a decision or does that need to be dissected to determine what was Gross Annual Income? Any clarification would be appreciated!
1. If your borrower is an individual you report the income of the individual. Cash flow is not income. If you are certain that your lenders did not consider income then NA is the appropriate entry.
2. It sounds like you lenders are picking through the income statement to calculate the cash flow. They have income figures but do not rely on them in the credit decision. NA is still your answer.
1. If your borrower is an individual you report the income of the individual. Cash flow is not income. If you are certain that your lenders did not consider income then NA is the appropriate entry.
2. It sounds like you lenders are picking through the income statement to calculate the cash flow. They have income figures but do not rely on them in the credit decision. NA is still your answer.
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