Prior to the 2004 changes to HMDA, a refinance of a non-dwelling-secured home improvement loan could be reported as a refinancing based on available documentation or upon the statement of the borrower about the purpose of the existing loan. Question: With the new definition of 'refinancing' being a loan that involves both the existing and the new loan to be dwelling-secured as well as purpose no longer being considered, would this type of loan be non-reportable for HMDA?

It depends, if your institution classifies the loan as a home improvement loan then the loan is a HMDA reportable loan as a home improvement loan. If the loan is not reported by your institution as a home improvement loan, then I would agree that this type of loan is not reportable for 2004.

That raises another question: If a home improvement loan is refinanced, then the bank still has the option to call it a home improvement loan on the LAR rather than a refinance?

For multi-purpose loans, you use the priority rankings provided by the regulators to determine loan purpose. They are: Home purchase trumps home improvement, home improvement trumps refinance and HELOC trumps all-reporting is optional.

Question: If an unsecured Home Improvement loan falls in the forest and no one was around to hear it, did it make a sound?

Point being - if you CLASSIFY the unsecured loan as Home Improvement, then it's HI regardless if you refinanced anything or not.

Or as I like to think of it - Don't ask, don't tell!

Maybe I'm misreading everyone's posts. But my interpretation is that you can only report a unsecured home improvement loan once, at origination. You don't report the refinance. The St. Louis Fed Reserve states that "a refinancing means a new loan that satisfies and replaces an existing loan by the same borrower, in which both the existing loan and the new loan are secured by liens on dwellings. However, the purpose test has been eliminated. Therefore, all loan refinancings secured by a dwelling (where the original loan was also secured) will now be reported, regardless of the purpose of the original or new loan. Likewise, unsecured loans will no longer be reported as refinancings, regardless of the purpose."

The original question referred to a refinance of an unsecured home improvement loan. Under the new rules this would not be reportable unless there was also new money for additional home improvements and the loan was classified as a home improvement loan.

It's me - original poster! I have heard from HMDA HELP and they cited the definition of a Multipurpose loan in which Tom mentioned in his post.

Non-dwelling secured home improvement loans are still a 2 part test. 1st, a portion of the funds has to be used for home improvement, and 2nd, the loan has to be classified as home improvement. In the original example of refinancing an unsecured home improvement loan, the first test is not met, so it would not be reportable regardless of how it is classified.

If, in addition to paying off the existing loan, the borrower gets additional funds for home improvement, then you could report it as home improvement if it is classified as home improvement.

FWIW, I agree with Sar524, HmdaGal and GreatBlue.

We're three (including HMDA Help) for reporting again as a Home Improvement and three for not reporting it at all! I am not assuming that new money will be added at the time it is refinanced and the bank did classify it originally as a Home Improvement loan.

Are you talking 2003 rules or 2004 rules?

2003 - it would be reportable.

2004 - it would not.

I would not report it in 2004 unless there was additional money taken out for home improvement purposes.

Your synopsis of the HMDA Help answer referred to a multipurpose loan. If there is no new money, this would fall under the refinance definition, in which both the old and the new obligation need to be secured by a dwelling. Assuming the refi occured in 2004, it would not be reportable.

Yes, I am speaking of a refinancing in 2004. I did not mention new money at all to HMDA Help - only the same question I posed here. The not reportable was my first reasoning as well until HMDA Help through me for a loop. Thanks to everyone for responding!