[Angie Cowell]

We have a denied application that is HMDA reportable. The customer did provide income, however, we denied the loan because we were unable to use the income. The borrower works for a temp agency so the requirement is that we have to have a two year history of this income, the borrower only had for one year, we denied due to temporary or irregular employment. Since income was required for this loan type, do we report what was provided even though we were unable to use or do we report .00 for income?

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

[rcooper]

Thanks for the question! My thought it you would not report any of the income since you did not rely on any of it for your decision as given in the example above: “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.”

I’ve asked Jack to give his thoughts as well.

[jholzknecht]

You re[port the income relied on. Since you did not rely on any income, you report $0.00

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