Need a little help -

Customer applied for a Home Equity loan (we are in TX btw) to make improvements to his primary residence. After pulling credit and getting a preliminary loan balance, the L/O realized the customer did not have sufficient equity in the home to let him make the amount of improvements he was requesting. The LTV would have been sufficiently over 80%.

Therefore the L/O counteroffered and explained we could do a small short term loan that was not secured by the dwelling to allow the customer to make the home improvements. The customer agreed and we made that loan.

Later on, after the improvements were made and we could get a new appraisal that was considered "as is" we made the customer a 2nd lien Home Equity to refi the small consumer debt.

So.... would you report the initial Home Equity request or not since it was counteroffered and accepted by the borrower? I have already reported the consumer Home Improvement loan.

Home Equity Loans should always be reported (if secured by the dwelling). If you couldnt make a loan based upon the original terms then you should have given an Adverse Action Letter. You really didnt counter the offer since you went a whole different direction. You denied the real estate secured loan request.

Yes it should have been reported as a denial.

Being a home equity loan isn't enough. Plenty of home equity loans with no HMDA purpose.

As to the original scenario, if you don't report non-dwelling secured HI loans (and it sounds like you don't), i wouldn't report. Why can't you counter-offer with different (or no) collateral?

Oops...missed the part where you said you reported the consumer HI loan. Regardless, no, i would not report a denial as it sounds to me like you had an accepted counteroffer.

Thanks, Raitch that's the clarification I was needing.

Having a brain lapse....

Loan app started out as placing a mortgage on dwelling to repay a non dwelling secured debt and make home improvements.....so far HMDA reportable as HI....

Appraisal came in too low to support amount for home improvements.....

Loan originated for amount to cover the non dwelling secured debt...

This would not be HMDA reportable...correct?

If no funds went for home improvement - not reportable.

Thanks...