Business purpose loan secured by principal dwelling now the business belly up and customers refinance loan again secured by principal dwelling. This is a consumer loan and HMDA reportable, right? I can't convince the officer. Please help me out.
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It doesn't matter if it's consumer or business. A loan secured by a dwelling that pays off another loan secured by a dwelling is a refinance for HMDA purposes.
The ROR is the easy question, a refinancing by the same creditor is exempt from ROR, except to the extent of any new money. The question of disclosures is difficult because the purpose of the loan matters. Are they refinancing a business loan or is this a loan primarily for personal purposes.
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Quote: It doesn't matter if it's consumer or business. A loan secured by a dwelling that pays off another loan secured by a dwelling is a refinance for HMDA purposes.
Agreed - as long as the new loan and the old loan are to the same borrower.
I think classifying it as business purpose is a risky proposition. Sounds like it might now be just personal debt that was incurred through the failed business. If the business is no longer viable - what else could it be?
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I agree with treating it as a consumer loan and disclosing -- especially because these borrowers are in trouble and are likely to be looking for any way out. Your lender should be doing everything possible to protect the bank -- not finding lazy ways to expose the bank to more risk.
Also, the HMDA reportable decision does not have much of anything to do with whether or not the consumer disclosures should be made. Each regulation has its own definitions that set coverage. Reporting or not reporting on the LAR dos not affect TIL coverage.