This question is about the very confusing table for calculating cash to close when a seller is involved in the transaction. Two or three of the line items have instructions that are different depending on the whether or not the loan meets the rule's definition of "Purchase." As long as there is a seller, why does it matter if there is a "Purchase"?

Am I taking this too literally? My understanding is that if I purchase A and secure it with B, it is not a "Purchase." But there would still be a seller and a down payment and a deposit so why does that change the rules? As long as there is a seller it could be handled as a "Purchase." Without a seller, I'm praying my LOS will automatically use the alternative table.

Why is there a seller? YOu shouldn't be involved with that piece of the transaction you just described. You would be doing a cash-out equity loan and/or refinance. The sale part is between the buyer and seller, not the bank.

Okay, I have trouble with real world scenarios. It sounds like we would advance the borrower the funds and the borrower's purchase of his new home would be handled as a cash transaction? As far as processing this loan, we ignore the borrower's stated purpose (to purchase a new home) and concentrate more on the collateral. That sounds much easier and solves that dilemma for me.

Now I need to convince the lenders that if the security is another dwelling it is still a purchase for HMDA

If you are not taking the purchased property as collateral, it's a separate deal...cash, as you state above.

For HMDA it will remain a purchase, just like the same situation today would be.