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October 29
Documenting an Applicant's Intent to be a Joint Applicant;
David Dickinson

November 4
Issues with Deceased Customers;
Mary Beth Guard and John Burnett

November 5
Vault Burglaries, Floods, Fires & Other Disasters;
Dave McGuinn

November 6
MLO v LO - Who Has to Do What?;
Jack Holzknecht and Mary Beth Guard

November 13
Domestic Violence & Workplace Violence: There Is A Link;
Shelly Collins and Dana Turner

November 18
Understanding USPAP and Regulatory Guidelines for Appraisal and Evaluation Compliance Reviews;
Eric Collinsworth



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#1511570 - 02/17/11 02:32 PM future advance clause make all loans a refi?
JBanker28 Offline
Member

Registered: 04/04/06
Posts: 57
Loc: Kansas
In our commercial files, we will occasionally find a mortgage (with a future advance clause) that is still active but is not listed on the note as specific security. Because of the future advance clause and the intent of cross collateralizing all loans, does that make all renewals for the commercial credit a HMDA refi? Even if the mortgage is or is not listed as specific collateral for the note being renewed? (The mortgage secures farm acreage and the home place).

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HMDA
#1511578 - 02/17/11 02:38 PM Re: future advance clause make all loans a refi? [Re: JBanker28]
Dan Persfull Offline
10K Club

Registered: 08/28/02
Posts: 40993
Loc: Bloomington, IN
If the new loan is dwelling secured, even by virtue of a cross collateral clause, and it satisfies and replaces another dwelling secured loan it would meet the definition of a refinancing.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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#1511628 - 02/17/11 03:25 PM Re: future advance clause make all loans a refi? [Re: Dan Persfull]
JBanker28 Offline
Member

Registered: 04/04/06
Posts: 57
Loc: Kansas
The only way from a second review standpoint that we can determine if it is dwelling secured like this is to look through the old documents in addition to the new, and recognize any old mortgages that the current servicing officer may have forgotten about. So, if we find an forgotten mortgage - that has a future advance clause in it, it will make the loan being refinanced and the new note both mortgage secured. Correct? Even though the mortgage is not referenced on the existing notes or security agreements. Correct? We don't have a cross collateralization clause other than the future advance clause on the mortgage (and on the commercial security agreement that references the mortgage). Thanks so much for your help. I thought that I was told before that if it is not listed a specific collateral for your note, that you did not have to consider it for HMDA. Maybe I misunderstood.

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#1511685 - 02/17/11 04:36 PM Re: future advance clause make all loans a refi? [Re: JBanker28]
Dan Persfull Offline
10K Club

Registered: 08/28/02
Posts: 40993
Loc: Bloomington, IN
A future advance clause is not a cross collateral clause.

A future advance clause allows you to make new advances on a new note secured by the mortgage. The new note would have to reference the mortgage. This note would be subject to HMDA reporting depending on it's purpose, RESPA & TIL if a consumer purpose, Flood, HPML, MDIA, etc.

A cross collateral clause encompasses all present and future extensions of credit regardless if the mortgage is referenced. There are exclusions for loans subject to the ROR where the ROR was not provided. If the loan is secured by virtue of the cross collateral clause then all the disclosure mentioned in the case of the future advance clause would also apply.



Edited by Dan Persfull (02/17/11 04:39 PM)
Edit Reason: Add additional comment.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

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