I have an application for a property, in which the borrower lives above his business (store). He wants to improve the upstairs (the part of the property where he lives). The borrower also had some debt he wanted to consolidate. The request was turned down because of appraisal reasons. Basically, the current loan has a very high LTV and there is little equity left to lend on. I'm thinking that I can consider this a home equity loan and not worry about reporting it.

The problem-The loan officer treated this as a business loan. Upon opening the file, this apprears to be a request for a business property refinance, which should be reported, correct? I'm basically lost as to what I should do as the HMDA reporter. Also, does the loan officer need to send out adverse action? In this case, he chose not to since he considered it a business loan. Any help would be appreciated... Thanks

As compliance officer and loan underwriter I would absolutely report this and send out an adverse notice with the HMDA purpose of home improvement. It is his homestead and he wanted to do improvements on it regardless of the business in the downstairs in my opinion.

1. Home equity loans are reportable if they meet the HMDA tests. Only Home Equity Lines of Credit are optional.

2. Review the GIR for "mixed-use" properties. You have some lead way on how to treat mixed used property.

3. If the majority of the "consolidation" was for business debts then I think you can treat it as a business loan request and, as long as the appropriate notice of the right to receive the information was given during the application process and a verbal declination was given, an AAN would not be required.

For the HMDA monitoring information should I put not applicable or not provided?

If your applicant and/or co-applicant is a natural person you input the appropriate GMI. You could not use NA or NP if the application was takien in a face to face interview.

In this situation the loan officer did not get the monitoring info, since he thought it was a business loan...There is nothing in the file about the monitoring information.....

Retrain this lender. If the loan is subject to HMDA and to a natural person GMI is required whether it is business or consumer.

If the GMI disclosure was not given you have a violation if you have determined this loan is subject to HMDA based on the mixed use property section and you will have to report the GMI as not provided and cite this application.

Without the disclosure you did not give the applicant the opportunity to furnish or not furnish the information and according to examiners I have talked to you can not report the GMI if the disclosure was not given in accordance with the Reg.