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#1990798 - 01/23/15 08:49 PM refi w/cash out becomes modification of loan docs
Melissa S Offline
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Melissa S
Joined: Jan 2015
Posts: 374
Maine
We have a borrower who had requested the refinance of his existing mortgage with cash out for future purchases. (Both loans collateralized by residential real estate, same borrower)

The closing attorney decided it would be easier (!) to do a modification of the existing loan documents referencing the new, higher loan amount. The participating CUs will all be required to send their share of the new money to the attorney for the closing.

So we have no new loan, just an increase in outstandings and new/modified loan documents.

where the existing mortgage was not paid off, equity was advanced with no purchase/home equity/refi involved, has then gone from reportable to not reportable?
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#1990810 - 01/23/15 09:09 PM Re: refi w/cash out becomes modification of loan docs Melissa S
hmdagal Offline
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hmdagal
Joined: Dec 2002
Posts: 3,841
Yes. Modifications are not reportable.

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#1990814 - 01/23/15 09:14 PM Re: refi w/cash out becomes modification of loan docs Melissa S
Melissa S Offline
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Melissa S
Joined: Jan 2015
Posts: 374
Maine
Thanks hmdagal. That was my assumption, but a second opinion never hurts.

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#1990864 - 01/23/15 11:25 PM Re: refi w/cash out becomes modification of loan docs Melissa S
CompBanker0613 Offline
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CompBanker0613
Joined: May 2014
Posts: 63
From the FAQ's

http://www.ffiec.gov/hmda/faqreg.htm#meca

MECAs. Should MECAs (Modification, Extension and Consolidation Agreements) be reported under HMDA as refinancings?

Answer: No. The rule is unchanged: MECAs are not reportable as refinancings under Regulation C. See 67 Fed. Reg. 7221, 7227 (Feb. 15, 2002). The applicable comment was inadvertently omitted when the Commentary was revised in 2002; the comment will be restored when the Commentary is next revised.
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#1990865 - 01/23/15 11:28 PM Re: refi w/cash out becomes modification of loan docs Melissa S
Melissa S Offline
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Melissa S
Joined: Jan 2015
Posts: 374
Maine
Thank you CompBanker!

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#1990890 - 01/26/15 02:22 PM Re: refi w/cash out becomes modification of loan docs Melissa S
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
The closing attorney decided it would be easier (!) to do a modification of the existing loan document . . . The participating CUs will all be required to send their share of the new money to the attorney for the closing.

Quite frankly if the closing attorney unilaterally changed the loan documentation without my expressed written approval they wouldn't have a snowball's chance in Hades of getting my share.
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#1990892 - 01/26/15 02:27 PM Re: refi w/cash out becomes modification of loan docs Melissa S
Melissa S Offline
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Melissa S
Joined: Jan 2015
Posts: 374
Maine
We contacted the borrower when the attorney expressed her preference and the borrower had no problem with modifying rather than refinancing, but it has certainly created a world full of headaches from our perspective. It will not happen again!
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