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#343728 - 04/07/05 12:39 PM HMDA
Anonymous
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I have a loan that originated back on 4/28/04 and the purpose was to buy and resale a home. The original term was 6 months so it was excluded from HMDA reporting because of Temporary Financing. When it matured on 10/26/04, it was renewed at that point for another 3 months. Again, it was not reported on the HMDA LAR because of the Temp Financing. When that matured on 1/26/05, it was again renewed for another 3 months, set to mature on 4/26/05. I understood in an explination of HMDA that a bank can not use the Temp Financing exclusion to avoid reporting by breaking up a loan into a lot of Temp Financing periods. At what point does a loan get to be "a lot of Temp Financing periods"? This one has really only been on our books for less then one year. Thanks

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Lending Compliance
#343729 - 04/07/05 01:45 PM Re: HMDA
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Quote:

I understood in an explination of HMDA that a bank can not use the Temp Financing exclusion to avoid reporting by breaking up a loan into a lot of Temp Financing periods.




Just curious, where did you hear this?

As long as you have not set, or require, a principal reduction payment plan then you can renew a temporary loan as many time as needed and it does not lose its temporary status. But once you require a principal reduction, you have set a repayment plan in motion and it will lose the temporary status.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#343730 - 04/07/05 03:13 PM Re: HMDA
Anonymous
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Well, I really dont remember if it was at a compliance school or from and examiner. It also could have been that I misunderstood the explination. So, it is the requiring of a principal reduction by the bank that makes it lose it's temp status? Ao, if we would have required them to pay down the loan on the first renewal it would have made it a rewrite and it would have been at that point that we would have had to put it on a HMDA LAR? If so, what dates and other information would we go by?

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#343731 - 04/07/05 03:34 PM Re: HMDA
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I think someone gave you their opinion without it being supported by Reg C. I can't imagine a loan officer wanting to roll over a loan every 3 months just to avoid HMDA reporting. What you have described sounds perfectly like a temporary financing loan that continues to be a temporary financing loan. I assume that the home hasn't sold so the loan officer continues to extend the loan. This is actually very typical.
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David Dickinson
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#343732 - 04/07/05 04:14 PM Re: HMDA
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
Quote:

Ao, if we would have required them to pay down the loan on the first renewal it would have made it a rewrite and it would have been at that point that we would have had to put it on a HMDA LAR? If so, what dates and other information would we go by?




Yes because you now are not depending on the sale of the asset to repay the loan but you are requiring a set repayment term. IMO you use the dates and information taken when you put the loan into a "permanent" status.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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