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CLTV for HELOCs

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  • #36414
    lumullins1121
    Participant

    Should we calculate and report the CLTV when there are HELOCs involved, using the balance drawn on the LOC or the total amount that can be drawn?

    #36416
    pparks
    Participant

    “Enter, as a percentage, the ratio of the total amount of debt secured by
    the property to the value of the property relied on in making the credit
    decision. Use decimal places only if the ratio relied upon uses decimal
    places. The HMDA Platform can accept up to fifteen (15) decimal places
    for the Combined Loan-to-Value Ratio.”

    ยง 1003.4(a)(24),
    Comments
    4(a)(24)-1 through –
    6

    What was used in your institution’s credit decision (ask department that underwrites them)? One would imagine they utilized the worst case scenario of the entire HELOC amount (“total amount of debt secured by the property”).

    • This reply was modified 4 months ago by pparks. Reason: to add notifications
    #36418
    lumullins1121
    Participant

    This is what I have advised we use and what we have been using all along but for some reason we are getting some push back from processing. Our software, Encompass, calculates LTV, CLTV, and HCLTV. Process is questioning why we report HCLTV instead of CLTV since the HMDA Screen on Encompass asks for CLTV specifically. I just wanted to make sure I wasn’t missing something.

    #36419
    pparks
    Participant

    Your advice is accurate…the following is a quote during a HELOC discussion that I heard from another forum in 2018:

    “You are mixing acronyms between FNMA and HMDA, which is never a good idea.

    If you are making a credit decision based on a HCLTV for FNMA – that equates to a CLTV under HMDA. It is purely the ratio upon which you are relying. How you get to that ratio is a moot point.”

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