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HMDA and Reporting Second Mortgages
Question: I just need some clarification on some HMDA reporting issues.
1) Please verify how the 2nd mortgage should be reported in this situation - 2nd mortgage for purchase of investment property (purchase split to avoid PMI)and home improvements collateral is 2nd on primary residence - do we report as home improvement, nonowner occupied and geocode for address of investment property?
2) Using the same situation as above except no home improvement, would we report as follows: purchase, nonowner occupied use address of primary residence?
3) for permanent financing of primary residence paying off another lender do we report this as purchase or refinance?
Answer: 1a) In your scenario of a 2nd mortgage used to purchase an investment property, I'm assuming it is a residential property, and for home improvement purposes, if so would be treated and reported as a home purchase, non-owner occupied loan on your loan application register. 203.2(h)(7) of Regulation C.
1b) If the purchase property in non-residential, then if you classified the loan as home improvement, it would be treated and reported as a home improvement non-owner occupied loan on your loan application register. 203.2(g)(5) of Regulation C.
2) In answer to the question using scenario 1a, you would geocode the address of the purchased property if it was residential. You would report the loan as a purchased, non-owner occupied loan.
3) Yes, the loan would be reported as a refinance. It meets the definition of refinance, by paying off a loan and replacing it with a new one on the same property. 203.4(9)(2) of Regulation C.
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First published on BankersOnline.com 10/20/03
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