We do some Simo second mortgage loans with the purpose of purchase of primary residence behind our mortgage department's first mortgage. These loans are usually closed on the same day and the application, appraisal, etc are usually forwarded to begin the process for the portfolio lenders second mortgage. Can the portfolio lender use the GMI from the mortgage application since for the portfolio lender usually does not see the applicant?

When an applicant applies for a first and second simultaneously, yes GMI should be used for both loans.

Kathleen,
We are obtaining the GMI but the question the following:

"Can the portfolio lender use the GMI from the mortgage application since for the portfolio lender usually does not see the applicant?"

They generally don't see the applicant in mail or Internet applications either yet if the GMI is complete they report it.

The portfolio loan officer and your secondary loan officer are both employees of the bank. The bank can use the information for both loans when an applicant applies for a first and second simultaneously.

I'm kind of curious though, if they applied simultaneously for both loans why aren't the loans closed simultaneously?

WE have a similar situation. Our simo 2nds are usually done as a result of one request for credit. The applicant allies for 100k but for whatever reason we accommodate them in 2 separate loans, let's say 85k and 15k. If in the process the applicant is denied or withdraws how would that situation get reported? I think we should report it as on transaction on the LAR for 100k, there are some that say this should be reported as two transactions on the LAR for 85k and 15k. I think if we do that, we would be reporting that we received more applications that we actually did. What say all of you?

When we deny one it also impacts the second loan. We report both on the LAR.

I think by definition if someone applies for a 100% purchase loan, they are (whether they're aware or not) submitting 2 applications (one for the 80% purchase; the other for the 20% purchase). Your bank is/was considering making the loan(s), but only as 2 separate loans right? If it falls through, i'd report it as 2 separate applications--because that's how your bank was treating it. Otherwise, you wouldn't have been contemplating the 2nd lien loan simultaneously.

"Your bank is/was considering making the loan(s), but only as 2 separate loans right?"
Playing devil's advocate here:
I guess that would depend on the loan program they qualify for. If they qualify for our "in-house" product there might only be one loan. My understanding is that the 2 loans for the one request is necessary to get the loan sold. The customer only applies for one loan but because it can't be sold @ 100% financing the bank does it in two loans. To me that is cheating on the LAR, reporting that the number of applications received is more than it is.

Interesting. I think the issue is "what did they apply for?"

Here's my thoughts:
If they applied for a 100% financing, and the lender denies it, then it's reported once - as a denial.

If the lender says "we can make this loan, but we'll need to do 80% in 1 loan and 20% in another", and they do make it, then you have 2 reportable transactions.

I know this results in 2 different answers (depending on if the application is approved or denied), but I can't see turning 1 application into 2 denials.

I'm not stadning firm on this answer as I'm aware of no guidance. Just my 2 cents worth.

I do agree that it's all in how the bank is treating it, but it sounds like the bank (correct me if i'm wrong) is ONLY considering making 100% loan via 2 loans (are there banks that will make only 1 loan to finance 100% of the purchase price of a home?); therefore, they treated the application in that manner. If not, i guess i would assume you'd deny the application right away. If the 2 loans were going to happen (you approved them), and they later "withdrew" (approved, not accepted), would you still only report 1 LAR entry?

I'm with David on this...i'm not trying to make a definitive statement; just stating my opinion on something that, to be honest, i rarely see in my shop.

Could point raitchjay. My answer was either make or deny. But if you approved the application by splitting the request into 2 loans AND if you agree that this would result in 2 LAR entries if the loans were made (I can't argue any other way on that), then what happens if the loan request is withdrawn or closed for incompleteness?

My thoughts are evolving (thinking out loud). I think once the lender approves the request but breaks it into 2 to do so, the result is 2 LAR entries no matter what happens.

if the request is denied initially, I think you would have 1 denial on the LAR.

Thoughts?

David, i'm in agreement with that.

Although (as you say, just thinking out loud), i'm wondering if i'd say it even had to be "approved"...i'm thinking once the bank breaks it into 2 pieces to consider approval, it's reportable as 2 LAR entries. If they want to deny it outright from the beginning because they know they don't want to make a 100% loan (or loans), then one LAR entry. I'm willing to listen to disagreement though.

Like everything else in life, it is not crystal clear. I really don't have a preference to has we report it, but I do want to be consistent. Consistency on this topic is not a something we know of here in our office and we are trying for it. It sounds like we need to pick a way and then sick to it on the front end (which is really our problem). thanks for all your comments. I will always invite more!