Our borrower is taking equity out of their free and clear multi-family investment property to have cash available for future investment purchases (use of funds provided verbally by the borrower). At the time of making the cash-out loan, the borrower has not identified a property to acquire.

Should this be HMDA reportable as a home purchase loan?

Page D-10 of the GIR

1. Purpose—statement of applicant.
An institution may rely on the oral
or written statement of an applicant
regarding the proposed use of loan
proceeds. For example, a lender
could use a check-box, or a purpose
line, on a loan application to determine
whether or not the applicant
intends to use loan proceeds for
home improvement purposes.

Does everyone agree that this is HMDA reportable as a purchase? I seem to remember a similar discussion where some felt that this was not HMDA reportable, it's just a cash out.

Similar to cust. that cashes out to replace his cash that he spent on a rental property.

Not that I have had this come up, just want to be prepared and understand the difference.

Assuming the customer is planning on buying additional rental property, we would report. If they wanted the money to invest in the stock market, then not reportable.

Agree.

Thank you all for your replies.