ABA Regulatory Policy and Compliance Inbox: For HMDA reporting, should bank utilize fiscal year of application or date of last action?

And it allowable for a bank to buy an e-mail list from a 3rd party to send e-mail marketing products to non-customers?

By Leslie Callaway, CRCM, CAFP; Mark Kruhm, CRCM, CAFP; and Rhonda Castaneda, CRCM

Q: My bank goes through the Home Mortgage Disclosure Act (Regulation C), and it has actually fulfilled the covered open-end loan limit in 2021 and 2022 and will start reporting these loans on its Home Mortgage Disclosure Act loan/application register in 2023. For reporting functions, does the bank utilize the fiscal year of the application date or the fiscal year of the date on which last action was taken?

A: The bank reports the year in which last action is taken. Thus, any application for a covered loan made in 2022 on which last action is taken in 2023 ought to be reported in 2023.

See Comment 14 to §1003.4(a)(8)(i) which states, “An institution does not report any covered loan application still pending at the end of the calendar year; it reports that application on its loan/application register for the year in which final action is taken.” (Answer supplied January 2023

If an advantageous owner of a bank’s legal entity clients (a corporation, restricted liability business, basic collaboration, and so on.) is a non-resident, the bank needs to get Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding and Reporting). This kind, often described as a “certificate of foreign status,” develops that the person is a foreign individual and the helpful owner of the earnings linked to the kind.

My bank needs a Form W-8BEN from all foreign helpful owners of legal entity accounts, whether they are signers on the account. An auditor is questioning this practice, asserting it is not needed to finish the kind for non-signers. Should the bank need a W-8 BEN kind if the helpful owner is not a signer on the account?

It depends. The W-8 BEN directions specify that the kind uses to “beneficial owners.” In its kind,, the internal revenue service describes:

The helpful owner of earnings is typically the individual who is needed under U.S. tax concepts to consist of the payment in gross earnings on an income tax return. An individual is not an advantageous owner of earnings, nevertheless, to the level that individual is getting the earnings as a candidate, representative, or custodian, or to the level the individual is a channel whose involvement in a deal is overlooked. In the case of quantities paid that do not make up earnings, helpful ownership is identified as if the payment were earnings.

Thus, if the helpful owners/non-signers fit this meaning, the bank is needed to get a finished W-8BEN, even if these people are not signers on the savings account related to the entity. (Answer supplied February 2023.)

Q: My bank is under the impression that if a structure protecting a loan lies in a neighborhood that does not take part in the National Flood Insurance Program the flood policies (12 CFR §§ 25, 208.25, 339) do not use. The banks auditor states this is not fix.

A: Do the flood policies use if the security structure is not situated in a getting involved neighborhood?

Yes, the guideline uses, however flood insurance coverage is not needed. Per response to concern Applicability 1 in the 2022 Interagency Questions and Answers Regarding Flood Insurance, the guideline does use in these cases. This indicates lending institutions should figure out whether the structure or mobile house remains in an SFHA utilizing a Standard Flood Hazard Determination Form and supply the customer with a notification of flood dangers. However, the lending institution need not need the customer get flood insurance coverage for the structure. Note that banks may, by policy, need that customers get flood insurance protection for security and strength functions (although it would need a personal flood insurance plan). (Answer supplied January 2023.)

Q: My bank remains in a state in which customers might put their home to be promised as security in a rely on which the bank is the trustee. Is this a HMDA-reportable deal?

A: No. Loans in which the bank is acting in a fiduciary capability as the trustee are not reportable. See Comment 1 to §1003.3(c)(1) which specifies that “a closed-end mortgage loan or an open-end line of credit originated or purchased by a financial institution acting in a fiduciary capacity is an excluded transaction. A financial institution acts in a fiduciary capacity if, for example, the financial institution acts as a trustee.” (Answer supplied February 2023.)

Q: Is it allowable for a bank to buy an e-mail list from a 3rd party to send e-mail marketing products to non-customers? If yes, what laws or guideline might use?

A: Yes, it is allowable, however the bank needs to think about the European Union’s General Data Protection Regulation and the Controlling the Assault of Non-Solicited Pornography and Marketing Act.

GDPR needs that the customer grant get marketing e-mails which the approval be easily offered, particular, notified, unambiguous and supplied by some kind of clear affirmative action. In addition, due to the fact that an e-mail might not expose the area of the customer, the bank ought to either ask for physical addresses representing the e-mail addresses or that the company offering the list either accredit that it is GDPR-compliant or that none of the e-mail addresses supplied undergo GDPR.

The other law to think about is the CAN-SPAM Act, which sets the guidelines for industrial e-mail, develops requirements for spot announcements, provides receivers the right to have the sender stop emailing them and define charges for infractions. It uses to all industrial e-mail sent out both to clients and non-customers. The bank requires to guarantee that it can handle and honor the capability of e-mail receivers to unsubscribe. The Federal Trade Commission releases an exceptional guide on CAN-SPAM compliance. (Answer supplied February 2023.)

Answers are supplied by ABA Regulatory Policy and Compliance employee Leslie T. Callaway, CRCM, CAFP, senior director, compliance outreach and advancement; Mark Kruhm, CRCM, CAFP, senior compliance expert; and Rhonda Castaneda, CRCM, senior compliance expert. Answers do not supply, nor are they alternatives to, expert legal recommendations.


A news media journalist always on the go, I've been published in major publications including VICE, The Atlantic, and TIME.

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