Thread Options
#1506948 - 02/08/11 10:12 PM Denied Loan
swthomeala Offline
Junior Member
Joined: Oct 2005
Posts: 39
Georgia
If an application to renew a loan with no new money is declined is it HMDA reportable? I know that originated renewals with no new money are not reported but can't find clarification on declined ones. Thanks for the input.
_________________________
swthomeala

Return to Top
HMDA

   
HMDA Academy
#1507023 - 02/09/11 05:37 AM Re: Denied Loan swthomeala
SMQ, CRCM Offline

Power Poster
SMQ, CRCM
Joined: Apr 2001
Posts: 4,828
Between the lines
First you have to decide if you have a HMDA purpose.
Purchase? no
HI? no
Refi? maybe, are both the old loan and the new loan secured by a dwelling? Will a new note satisfy and replace the existing note? If so, yes it is HMDA reportable.

I am not sure what you mean when you say "renewals with no new money are not reported"; I think this statement probably has some assumed conditions that we, the reader, are not aware of. Also, Renewals with no new money are not reportable for CRA, but that's CRA. Gotta love HMDA.
_________________________
NOLA is my Beach!

Return to Top
#1507211 - 02/09/11 04:19 PM Re: Denied Loan SMQ, CRCM
swthomeala Offline
Junior Member
Joined: Oct 2005
Posts: 39
Georgia
GURU WEEK - states by Dan Persfull

HMDA does not apply to "renewals" but does to refinancing - definition of a renewal is "when a loan continues to go on, but a term[s] is changed.

So, this is my dilemma - we have a divided group here.
_________________________
swthomeala

Return to Top
#1507238 - 02/09/11 04:31 PM Re: Denied Loan swthomeala
Kathleen O. Blanchard Offline

10K Club
Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
It depends on how you "renewed" the loan. If you did a new note that paid off and replaced the old note your renewal is a refinance. You have to convert your bank's terms to HMDA terms to make a determination.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

Return to Top
#1507248 - 02/09/11 04:35 PM Re: Denied Loan swthomeala
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,416
Bloomington, IN
Don't think we have a divided group. SMQ references if the new note satisfies and replaces the existing note.

What you have to determine is whether your process constitutes a renewal or refinancing. 98% of the people uses those terms interchangeably and that's why I was disappointed to see the one proposal postponed. But that's a different topic.

If the new agreement is a continuation/modification of the original agreement then it would not be subject to reporting.

If the new agreement satisfies and replaces the existing agreement then you have a refinancing which would be reportable.

The question: Is the original agreement still the legal obligation? IOWs is that the agreement (along with its amendments) you would take to court to evidence the legal agreement between you and the borrower? If so then you have a renewal. If the "new" agreement is what you would take to court to evidence the debt then that agreement satisfied and replaced the original agreement and you therefore have a refinancing.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#1507568 - 02/09/11 07:32 PM Re: Denied Loan Dan Persfull
swthomeala Offline
Junior Member
Joined: Oct 2005
Posts: 39
Georgia
If this loan had been approved - we would not have reported it as we do not report renewals with no new money - however it did not pass the credit scoring and therefore was denied. Why would we report it on HMDA if it was denied if we would not have reported it if it were approved? Would not be a continuation of the original agreement thus renewal?
_________________________
swthomeala

Return to Top
#1507619 - 02/09/11 08:04 PM Re: Denied Loan swthomeala
Truffle Royale Offline

10K Club
Joined: Jul 2003
Posts: 17,285
You're still using that word 'renewal' and I think that's what's confusing you.
Are you marking the current note paid and having the borrowers sign a new one? If so, you are doing REFINANCES as defined by Reg C/HMDA and must report them as such whether you approve or deny the application that requests it.
Renewals/modifications are not reportable. That means you change A TERM on the existing note but you do not pay it off and replace it with a new one.

Return to Top