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HMDA on a Car Loan Refinance?
by Dan Persfull, BOL Guru
Guru BIOS
Question: If you make a loan for home improvement ($10,000) and you classify it as a home improvement and you use a non-dwelling as collateral ( i.e. auto), it would be a HMDA reported loan. If in 6 months, for example, the customer requests a $2,000 consumer purpose loan (i.e. pay debts) and the consumer wants to renew the previous loan and add the $2,000 to have one payment, then would the second loan be HMDA reportable even though the amount being renewed is greater than 50%, or would the second loan not be HMDA reportable since the definition of a refinance says it must be dwelling-secured?
Answer: It would not be reportable. The purpose of the new loan is not for a dwelling purchase, home improvement, and it does not meet the definition of a refinance. Also, throw out the 50% rule - it's been gone for some time.
If ANY portion of the loan proceeds are for home improvement (meeting the HI requirements outlined in the Reg.), purchase or refinance, the loan is reportable.
First published on BankersOnline.com 10/03/05
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