We purchase loans from a mortgage company with an expressed agreement that we actually fund 95% of the unpaid principal balance and the 5% is matched by the mortgage company as a "reserve" of sorts. Do we report the full amount or only 95%? My instincts tell me, like in a participation, we would report the full amount, but I need to make sure. Any ideas?

Thanks,

Confused in Compliance

I assume you're referring to HMDA reporting.

Are these participation loans where you are only purchasing 95% of the loan or are you purchasing 100% of the loan and requiring a 5% reserve?

If they are true participation loans, you would not report anything because you are only purchasing a partial interest in the loan (see page D-2 of the GIR). If you are purchasing 100% of the loan and requiring a reserve then you would report the full amount.

The question that has to be answered is, are these purchased loans or participation loans?

I am pulling the original contract to see exactly how the deal is structured.

Thanks,

CIC