Q: We often originate unsecured loans to purchase dwellings. The HMDA-reporting software will not allow us to report lien status as code 3 (not secured by a dwelling). What lien status should be reported for these loans?
A: The bank should not report unsecured home purchase loans under HMDA because such loans are not secured by a dwelling. The definition of home purchase loan in §203.2(h) is a loan secured by and made for the purpose of purchasing a dwelling. Similarly, a refinancing, as defined in §203.2(k), must be a dwelling-secured loan. The FFIEC HMDA-reporting software contains a number of edits intended to identify potential errors in an institution's reported HMDA data. One edit in the software notes that the reported lien status cannot be 3 (not secured by a lien) if the loan purpose is 1 (home purchase) or 3 (refinancing). This edit helps ensure that the bank reports only dwelling-secured home purchase and refinance loans as required by HMDA. Additional information about HMDA edits is available at: http://bit.ly/ffiec-edit.