How is this coded for HMDA?
by Dan Persfull, BOL Guru Guru BIOS
Question: Please advise how to classify purpose code for HMDA reporting purposes. A mortgage application is received for the refinance of the borrowers primary residence with the purpose defined as a debt consolidation. An appraisal is ordered and upon receipt of the appraisal, it is learned that the bathroom is completely gutted and incomplete, so the loan officer requires a $10,000 holdback to complete the bathroom. Is this clasified as a refinance, or does the loan officer's requirement in the commitment of a holdback for improvement of the bathroom, trump refinance even though the customer did not disclose this?
Answer: Unusual scenario, but if any portion of the loan proceeds will be used for home improvement then it is a home improvement loan.
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