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#173170 - 03/24/04 07:28 PM Ist this a refi or a purchase?
Wyogirl Offline
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Wyogirl
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Laramie, WY. USA
I need some help thinking through this one. My applicant has occupied a modular home since 1995, as his primary residence. It is on leased property. The applicant is the only one who lives in the home, there is, however a co-owner of the home, as shown on the title. The co-owner wants to sell her interest, and thus my customer's request, to purchase the co-owner's interest. The title is currently lien-free.

I'm feeling stupid, but I can't decide, is this a refi or a purchase for HMDA and other disclosure purposes? (Of course no R/E, no RESPA). The collateral is the equity in the modular. Maybe this is what's stumping me.

Thanks for your thoughts.

Wyogirl
Last edited by wyogirl; 03/24/04 07:30 PM.
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Lending Compliance
#173171 - 03/24/04 07:37 PM Re: Ist this a refi or a purchase?
rlcarey Online
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Galveston, TX
Sounds like a purchase of a half (or some %) interest to me. So both parties - old co-owner and new co-owner - are pledging the collateral - and new co-owner is signing the note?
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#173172 - 03/24/04 07:47 PM Re: Ist this a refi or a purchase?
Dan Persfull Offline
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Bloomington, IN
This would be similar to a spouse buying out another spouse in a divorce settlement.

RESPA does not apply - No Land.
HMDA applies - we would report as a refinance.
ROR will apply.
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#173173 - 03/24/04 07:50 PM Re: Ist this a refi or a purchase?
Wyogirl Offline
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Wyogirl
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Laramie, WY. USA
Exactly. The co-owner goes away with the buyout and will not be on the note. My applicant will own the home outright upon funding.

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#173174 - 03/24/04 07:57 PM Re: Ist this a refi or a purchase?
Wyogirl Offline
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Wyogirl
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Laramie, WY. USA
Dan,
I was leaning toward refi based on the following:

1. My borrower has lived there since 1995 (Thus ROR)
2. The home was already bought and paid for
3. There are no existing liens

Was this your thought process? Just curious if I'm missing something.

Thanks,
Wyogirl

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#173175 - 03/24/04 08:06 PM Re: Ist this a refi or a purchase?
Dan Persfull Offline
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Deb, I missed the no existing lien therefore it would not meet the refi definition for HMDA. However, I have seen these type transaction reported as purchases for HMDA.

The ROR applies under the following:

Supplement I, 226.2: Definitions and Rules of Construction (01/01/01)

2(a)(24) Residential mortgage transaction.

5. Acquisition. i. A residential mortgage transaction finances the acquisition of a consumer’s principal dwelling. The term does not include a transaction involving a consumer’s principal dwelling if the consumer had previously purchased and acquired some interest to the dwelling, even though the consumer had not acquired full legal title.

ii. Examples of new transactions involving a previously acquired dwelling include the financing of a balloon payment due under a land sale contract and an extension of credit made to a joint owner of property to buy out the other joint owner’s interest. In these instances, disclosures are not required under §226.18(q) or §226.19(a) (assumability policies and early disclosures for residential mortgage transactions). However, the rescission rules of §§226.15 and 226.23 do apply to these new transactions.
Last edited by dpersfull; 03/24/04 08:16 PM.
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#173176 - 03/24/04 08:44 PM Re: Ist this a refi or a purchase?
rlcarey Online
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Galveston, TX
But Dan, if I understand the situation, a current owner is not buying out a co-owner. It is a brand new owner that previously had no ownership in the dwelling, however it was their primary residence. I don't think that RofR would apply. Additional thoughts??
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#173177 - 03/24/04 08:55 PM Re: Ist this a refi or a purchase?
Wyogirl Offline
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Wyogirl
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Laramie, WY. USA
OK, then as described, I would call this a purchase for HMDA purposes, not a purchase for reg Z purposes. Of course we always love it when there's no R/E. LOL, compliance is sooo much fun. Thanks so much for the discussion.

Wyogirl

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#173178 - 03/24/04 08:57 PM Re: Ist this a refi or a purchase?
Wyogirl Offline
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Wyogirl
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Laramie, WY. USA
Randy,
A current owner is buying out the current co-owner.

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#173179 - 03/24/04 09:01 PM Re: Ist this a refi or a purchase?
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Randy, I based my comment on the following:

My applicant has occupied a modular home since 1995 , as his primary residence. The applicant is the only one who lives in the home, there is, however a co-owner of the home , as shown on the title. The co-owner wants to sell her interest , and thus my customer's request, to purchase the co-owner's interest . The title is currently lien-free
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The opinions expressed are mine and they are not to be taken as legal advice.

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#173180 - 03/24/04 09:03 PM Re: Ist this a refi or a purchase?
rlcarey Online
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rlcarey
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Galveston, TX
OK Dan - so that's twice in two days that I can't read - I should go to work for HUD. How do you put up with me??? Thanks for your patience.
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#173181 - 03/24/04 09:07 PM Re: Ist this a refi or a purchase?
RR Joker Offline
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The Swamp
Quote:

I should go to work for HUD


LMAO!
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#173182 - 03/24/04 09:10 PM Re: Ist this a refi or a purchase?
redsfan Offline
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The Pennant Race
Quote:

I should go to work for HUD.




Heaven forbid - they might actually get something done, and then where would we be???
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#173183 - 03/24/04 09:31 PM Re: Ist this a refi or a purchase?
Dan Persfull Offline
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Dan Persfull
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Bloomington, IN
Randy, It's not like you (or others for that matter) haven't caught me doing the same.

We have to keep each other on our toes.
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