Skip to content
BOL Conferences
Thread Options
#185608 - 04/30/04 02:36 PM HMDA reportable?
Anonymous
Unregistered

We renewed a note that originally was 60 months with a balloon. We renewed the balloon, and the purpose was home improvements. Am I correct in thinking that this is still HMDA reportable. We have not reported it before becuase we just started this year.

Return to Top
Lending Compliance
#185609 - 04/30/04 06:35 PM Re: HMDA reportable?
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
I need to know a few things first:
1. When you say "renewed", do you mean "refinanced"? A refinance is when the old loan is replaced by the new loan. A renewal is when the old loan still exists (not extinguished) but it is modified in some manner. HMDA applies to refinances but not renewals.

2. Is the old loan and the new loan secured by a lien on a dwelling? HMDA's definition of refinance requires this. If not, it is not HMDA.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#185610 - 04/30/04 07:46 PM Re: HMDA reportable?
Anonymous
Unregistered

The loan was set up as a five year balloon with a 10 year amortization. The original loan was paid-off with the remaining balloon set up in a new loan.

Return to Top
#185611 - 04/30/04 07:52 PM Re: HMDA reportable?
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
....and were/are both loans dwelling secured? If so, this is a HMDA refinance.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#185612 - 04/30/04 07:55 PM Re: HMDA reportable?
Anonymous
Unregistered

Both loans were dwelling secured. Thank you!!!

Return to Top
#185613 - 04/30/04 10:55 PM Re: HMDA reportable?
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 555
Louisiana
Quote:

A refinance is when the old loan is replaced by the new loan. A renewal is when the old loan still exists (not extinguished) but it is modified in some manner. HMDA applies to refinances but not renewals.




This is an interesting topic, because I had this discussion with my FDIC compliance examiner during our exam in March.

We generally put our rent house mortgage loans on a 15 year amort. w/ a 3 year balloon. My question to the examiner was when the balloon matured and we issued a new loan, was this a refinance. She said that the FDIC has taken the position that it was not, because the Collateral Mortage Note did not change, even though the borrower signed a new Promissory Note with a new note number. (Only changes to rate and terms are made. No new money is advanced.) I know that the reg doesn't say this, but they will be the ones looking at my LAR. I feel that I have to follow what they say. She also said that the FDIC may be issuing something in writting soon.

However, she said that the OCC has taken the position that if you issue a new Promissory Note and a new loan number, then that is a refi.

Is this crazy or what?
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
#185614 - 05/01/04 11:43 AM Re: HMDA reportable?
David Dickinson Offline
10K Club
David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
That is crazy, but we've heard it before a couple of times here on BOL. You said that they would be issuing a memo soon. Well it's May of 2004. These new rules went into affect on 1/1/04. When do they plan to issue this memo?

Second, no other regulator has come up with this new definition. The FRB wrote Reg C. Why does the FDIC feel like they can change a definition on their own.

Third, I asked a few FDIC examiners in the Kansas City Region about this and they said that they were not aware of it. I'm not sure where you are from, but I don't think this is a nation wide interpretation.
_________________________
David Dickinson
http://www.bankerscompliance.com

Return to Top
#185615 - 05/03/04 02:33 PM Re: HMDA reportable?
EdOils Offline
Platinum Poster
EdOils
Joined: Jan 2004
Posts: 555
Louisiana
My guess is they will issue the memo right before they change the law again.

I'm in Louisiana, which is in the Dallas region (formally Memphis). I always find it interesting that different regions interpret things differently. My guess is that they will change their minds and not inform us bankers. We'll see.
_________________________
You gain education by reading the fine print. You gain experience by not.

Return to Top
#185616 - 05/03/04 02:43 PM Re: HMDA reportable?
hmdagal Offline
Power Poster
hmdagal
Joined: Dec 2002
Posts: 3,841
I'll put my 2 cents worth in. We've never reported balloon renewals on the LAR, with the blessing of our regulator. However, the standard note forms that we use indicate that the new note that is signed refers back to the prior note and states that it does not satisfy the obligation.

Return to Top

Moderator:  Andy_Z