Have a situation where we are refinancing a 1-4 rental. The appraisal came back low so the borrowers cashed out on a different 1-4 rental that was "free and clear" and applied the funds to pay down the refinanced property to get it below a certain LTV. For HMDA purposes, what would you use for purpose on the Cashed out property loan? Is it HMDA reportable at all?

If i understand your scenario correctly, it sounds like the note for the original rental property only got paid down and not paid off. If that's the case, since you state the 2nd rental was owned free and clear, it sounds like an equity loan that would not have a HMDA purpose, IMO.

Just got a little more info that might skew this. Basically what we did was we refinanced a loan from another bank with a loan on the property that was refinanced an a loan from the free and clear property. One loan being refinanced by two loans. So would that flip it to a refinance?

If both new loans were needed to pay off the original loan, both would be reported as refinances.

It sounds like you made one loan, secured by a property that was free and clear and the property securing the other bank's loan. You paid that loan off and your loan is now secured by two properties...is that what you are trying to say?

Yeah, that is what I am trying to say. But you said it much better!

I think you have a reportable refinance.