Are Home Equity Lines of Credit HMDA Reportable?

Home Equity Lines of Credit (HELOCs) offer flexible access to funds based on home equity. The Home Mortgage Disclosure Act (HMDA) is a federal law ensuring transparency in mortgage lending. This article clarifies HELOC HMDA reporting requirements and their determining conditions.

Understanding HELOCs and HMDA

A Home Equity Line of Credit (HELOC) functions as a revolving line of credit secured by the equity in a homeowner’s property. Unlike a traditional mortgage that disburses a lump sum, a HELOC allows borrowers to draw funds as needed up to a set credit limit, typically over a specified draw period, followed by a repayment period. Interest rates on HELOCs are often variable, offering flexibility in borrowing but also introducing potential changes in payment amounts over time.

The Home Mortgage Disclosure Act (HMDA) was enacted to provide public information about mortgage lending activity across the United States. Its primary purpose involves helping to determine whether financial institutions are meeting the housing needs of their communities. HMDA data also assists public officials in distributing public-sector investments and helps identify potential discriminatory lending patterns.

Determining HMDA Reportability for HELOCs

Home Equity Lines of Credit are subject to HMDA reporting requirements, depending on specific criteria. Financial institutions covered by HMDA include banks, credit unions, and certain non-depository mortgage lenders that meet specific thresholds. For instance, banks, savings associations, and credit unions with assets of $58 million or less as of December 31, 2024, are exempt from collecting and reporting HMDA data for 2025 activity. Additionally, institutions must have a home or branch office in a Metropolitan Statistical Area (MSA) and originate a certain volume of loans. For open-end lines of credit like HELOCs, an institution must have originated at least 200 covered open-end lines of credit in each of the two preceding calendar years to be subject to reporting.

A HELOC transaction becomes HMDA reportable if it is dwelling-secured, meaning it is backed by a lien on a residential structure. The purpose of the HELOC also influences its reportability; transactions for home purchase, home improvement, or refinancing a dwelling-secured loan are reportable. This includes general purpose loans if they are secured by a dwelling.

The type of transaction also plays a role, with originations, applications that are denied, or applications that are withdrawn by the applicant being reportable. An application approved but not accepted by the applicant is also reported. However, certain scenarios exempt a HELOC from HMDA reporting, even if the institution meets the general coverage requirements.

Transactions not secured by a dwelling are not HMDA reportable. Furthermore, temporary financing, such as a bridge loan designed to be replaced by permanent financing, is excluded. Construction loans extended to a person exclusively to construct a dwelling for sale are also considered temporary financing and are exempt. Business-purpose loans secured by a dwelling are only reportable if their primary purpose is to purchase, refinance, or improve a dwelling, differentiating them from other business-purpose loans. Loans secured by unimproved land are exempt unless the proceeds will be used to construct a dwelling on that land within two years.

Data Collection for Reportable HELOCs

Once a Home Equity Line of Credit is determined to be HMDA reportable, financial institutions must collect specific data points to comply with regulatory requirements. This data forms the Loan Application Register (LAR), which provides a comprehensive record of mortgage lending activity.

Key data points collected include the application date, the loan amount, and the loan type, indicating it is an open-end line of credit. The specific purpose of the loan, such as home purchase, home improvement, or refinancing, is also recorded. Information about the property, including its type and occupancy status, along with geographic details like the property location and census tract, is necessary. Details regarding the action taken on the application, such as whether the loan was originated, denied, or withdrawn, are recorded for the LAR. Applicant and co-applicant information, including ethnicity, race, sex, age, and gross annual income, is also collected. Financial institutions gather this information from various sources, including loan applications, credit reports, borrower disclosures, and government monitoring information forms to ensure accuracy and completeness.

HMDA Data Submission and Use

After collecting and preparing required data for reportable HELOCs, financial institutions proceed with the submission process to the appropriate regulatory authorities. The primary method for electronic submission is the HMDA Platform, which allows institutions to upload their Loan Application Registers (LARs). This platform also facilitates the review of data for edits and certification of accuracy before submission.

Most financial institutions are required to submit their HMDA data annually, with the filing period running from January 1st to March 1st of the following year for the preceding calendar year’s data. Larger volume reporters, those with a combined total of at least 60,000 applications and covered loans in the preceding calendar year, are subject to quarterly reporting. These quarterly submissions are due within 60 calendar days after the end of each quarter.

Following submission, the collected HMDA data becomes publicly available, albeit with modifications to protect individual privacy. Regulatory agencies, such as the Consumer Financial Protection Bureau (CFPB) and the Federal Deposit Insurance Corporation (FDIC), utilize this data for various purposes, including fair lending analysis and assessing whether institutions are meeting community housing needs. The data also helps identify potential discriminatory lending patterns and supports compliance enforcement. The public can also access and use this information for research and advocacy efforts.