Regulation C Reporting Requirements

D

The regulation that governs the reporting of home mortgage loan applications is Regulation C, which is also known as the Home Mortgage Disclosure Act (HMDA). The purpose of HMDA is to provide the public with information about the mortgage lending practices of financial institutions, which helps to identify potential discriminatory lending patterns and to ensure that lenders are meeting the credit needs of their communities.

In the context of a bank's home mortgage loan application register, HMDA requires reporting of certain types of loans. Specifically, HMDA requires reporting of "covered loans," which are defined as loans that are secured by a dwelling and made for the purpose of purchasing or improving the dwelling.

Given the options provided, the correct answer is D. Loans made and sold within the reporting period must be included in Regulation C reporting. This means that any loans that meet the definition of a covered loan that were originated and sold by the bank during the reporting period must be included in the bank's HMDA report. This requirement applies regardless of whether the loans were sold to another financial institution or to a non-bank purchaser.

Option A, loans made or purchased in a fiduciary capacity, are not required to be included in HMDA reporting. Fiduciary capacity refers to situations where a bank acts as a trustee or executor for a customer, and the bank makes or purchases loans on behalf of the customer. These loans are not considered to be originated by the bank, and therefore are not required to be reported under HMDA.

Option B, servicing rights purchased, are also not required to be included in HMDA reporting. Servicing rights refer to the right to collect payments on a loan, rather than the ownership of the loan itself. Purchasing servicing rights does not constitute loan origination, and therefore does not trigger HMDA reporting requirements.

Option C, interim construction loan applications, are generally not considered to be covered loans under HMDA. However, there are some circumstances where interim construction loans may be considered to be covered loans. For example, if the loan is made for the purpose of purchasing a dwelling that is under construction and will be used as the borrower's primary residence, it would be considered a covered loan. It is important to note that even if an interim construction loan is considered to be a covered loan, it may not be required to be reported if it does not meet certain criteria (such as the loan amount being below a certain threshold).