(k) Refinancing means a new obligation that satisfies and replaces an existing obligation by the same borrower, in which:
(1) For coverage purposes, the existing obligation is a home purchase loan (as determined by the lender, for example,
by reference to available documents; or as stated by the applicant), and both the existing obligation and the new obligation are secured by first liens on dwellings; and
(2) For reporting purposes, both the existing obligation and the new obligation are secured by liens on dwellings.
Based on the above, I have a few questions and thoughts...
1)What does (1) mean by coverage purposes? If I understand this correctly, we would only be able to report a refinance if we had the original purchase to begin with. Is that right?
2)So if a customer uses their home to secure a automobile purchase (not reportable) and then later refinances this loan and again secures it with their home, is it reportable as a refinance?
3)If we originate a loan that pays off a construction loan from another lender, would this be reported as a purchase or not reportable at all?
4)If it is reportable, are we under obligation to find out if the other loan was for construction? I often see purpose as "refinance loan from another lender" with no other information.
...I think I am starting to confuse myself...please help!
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