In the past my institution has not reported home improvement loans because these were not classified on our books in any way.

Under the new rules, if the loan is secured by a lien on a dwelling and the purpose is for home improvement (adding garage, landscaping, pool, etc...) then it is reported as a Purpose type 2. If it is an unsercured loan for home improvement purposes and the bank continues not to classify these in the books, it is not reportable.

You are correct. If it is for HI and dwelling secured it is reportable regardless how you classify it. Unsecured HI loans still must be classified as HI in order to be reported.