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December 3, 2014
Overdrafts: Latest Regulatory Feedback, Guidance & Best Practices Webinar
David Dickinson and Jerod Moyer

December 4, 2014
Freebies, Bonuses and Contests
John Burnett and Andy Zavoina

December 9, 2014
Bankruptcy: Creditor Do's and Don'ts
Sam Ott

December 10, 2014
Branch Audits: What Is Going On Out There?
Patricia Cashman

December 11, 2014
Setting up New Accounts for Trusts
Mary Beth Guard

December 17, 2014
Integrated Disclosures - An Implementation Strategy
Mary Beth Guard and Jack Holzknecht

December 18, 2014
Loan Review Best Practices for a Community Bank
Bob Fritzlan

December 19, 2014
PREPAID PRODUCTS - Understanding the CFPB Proposal
John Burnett



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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: 41079
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: 41079
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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