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#2025382 - 07/06/15 06:19 PM Loan to purchase more Investment Property
Catm1991 Offline
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Joined: Jul 2014
Posts: 194
MO
Reportable or not...
We have a loan for the purpose of cash out to purchase more investment property, where the collateral we are taking is an investment property of theirs that is free and clear. Would this be reportable or no?

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#2025385 - 07/06/15 06:25 PM Re: Loan to purchase more Investment Property Catm1991
RR Becca Offline
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RR Becca
Joined: Sep 2004
Posts: 5,249
out of the frying pan...
I report these types as purchases.
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#2025391 - 07/06/15 06:33 PM Re: Loan to purchase more Investment Property Catm1991
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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If the collateral is residential real estate and the property to be purchased is residential real estate, this is a purchase for HMDA.
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HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#2025394 - 07/06/15 06:41 PM Re: Loan to purchase more Investment Property Catm1991
Catm1991 Offline
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Joined: Jul 2014
Posts: 194
MO
But we are not taking the purchased I/P as collateral. They are just getting cash out and told us they will be purchasing I/P with it. So the collateral we are taking is free and clear and I thought I have read somewhere that if the property is free and clear than it would not be reportable.

We have several loans for purchase of I/P but the collateral is usually the property that they purchased, so of course those were reported as a purchase.

So with this one I am unsure. Thanks.

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#2025395 - 07/06/15 06:42 PM Re: Loan to purchase more Investment Property Catm1991
Catm1991 Offline
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Joined: Jul 2014
Posts: 194
MO
Sorry, I just realized I didn't add that they are planning on renovating the I/P that they are going to purchase with their cash out.

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#2025396 - 07/06/15 06:47 PM Re: Loan to purchase more Investment Property Catm1991
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
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Posts: 21,293
If the property that will secure the loan is residential real estate and the property to be purchased is residential real estate (does not have to be the same property), the loan will be HMDA reportable. The renovation doesn't matter because the loan will be reported as purchase.

Also, by investment property we are assuming you mean rental property.

If the proceeds were not being used to purchase or improve, and the property had no prior lien being paid off, the loan would not be reportable as a refinance. A refinance must be to the same borrowers and both the old and new loans must be secured by residential real estate. That is what you are remembering about "cash out".
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#2025399 - 07/06/15 06:50 PM Re: Loan to purchase more Investment Property Catm1991
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
A dwelling secured loan where any portion of the loan proceeds will be used to purchase a dwelling is reportable as a home purchase.
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The opinions expressed are mine and they are not to be taken as legal advice.

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#2025400 - 07/06/15 06:52 PM Re: Loan to purchase more Investment Property Catm1991
Catm1991 Offline
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Joined: Jul 2014
Posts: 194
MO
So with the customer saying they are going to renovate the investment/rental property, which I forgot to mention in my first entry, it would be purchase anyway because purchase trumps home improvement correct? And then I report the collateral we are taking for this loan, even though it's not the property they will be purchasing and renovating?

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#2025401 - 07/06/15 06:53 PM Re: Loan to purchase more Investment Property Catm1991
Catm1991 Offline
100 Club
Joined: Jul 2014
Posts: 194
MO
Thank you so much!

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#2025403 - 07/06/15 06:54 PM Re: Loan to purchase more Investment Property Catm1991
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,293
Originally Posted By Catm1991
So with the customer saying they are going to renovate the investment/rental property, which I forgot to mention in my first entry, it would be purchase anyway because purchase trumps home improvement correct? And then I report the collateral we are taking for this loan, even though it's not the property they will be purchasing and renovating?


Correct
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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