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#1755541 - 11/06/12 06:22 PM
Reg B Refinance
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Diamond Poster
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Posts: 2,059
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Does Reg B require monitoring information only refinances of purchase money loans or all refinances? If it is just refinances of purchase money loans where does it say this in the regulation?
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#1755562 - 11/06/12 06:49 PM
Re: Reg B Refinance
terpsfan
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This says "refinancing of a dwelling...
ยง1002.13 Information for monitoring purposes. (a) Information to be requested. (1) A creditor that receives an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, shall request as part of the application the following information regarding the applicant(s):
And this, from the commentary, explains further...
1002.13-6 6. Refinancings. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction.
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#1755572 - 11/06/12 07:15 PM
Re: Reg B Refinance
terpsfan
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We used to 'say' it like this.
Collect on purchase, or refinance of original purchase money loans for Reg B.
This, from the old commentary, should be of help to you:
5. Transactions not covered. The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements. An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling.
6. Refinancings. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction.
Last edited by RR Joker; 11/06/12 07:18 PM.
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#1755823 - 11/07/12 02:11 PM
Re: Reg B Refinance
terpsfan
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I don't see where "Collect on purchase, or refinance of original purchase money loans" is the commentary referenced. And if it is not where did this come from?
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#1755829 - 11/07/12 02:18 PM
Re: Reg B Refinance
terpsfan
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Bloomington, IN
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but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements
A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction
It is my opinion if a person is taking cash out for home improvement, consolidation, new boat, etc. they are refinancing for purposes other than refinancing their purchase transaction.
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#1756219 - 11/07/12 08:37 PM
Re: Reg B Refinance
terpsfan
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What if they get a loan just to refinance and get a lower rate how is this not a refinance under Reg B even though lets say the loan they are refinancing was not a purchase money loan?
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#1756227 - 11/07/12 08:46 PM
Re: Reg B Refinance
terpsfan
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Was it originally? Even though this may be refi # 4 or 5 down the road?
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#1756248 - 11/07/12 09:27 PM
Re: Reg B Refinance
terpsfan
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No the original loan was a home improvement
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#1756316 - 11/08/12 01:45 PM
Re: Reg B Refinance
terpsfan
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Reg B. is specific. I believe where you may be confusing yourself is in terminology. For Reg B monitoring purposes, all 'refinances' or loans secured by PR's are not created equally.
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#1756353 - 11/08/12 02:29 PM
Re: Reg B Refinance
terpsfan
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But it defines refinance as follows Refinancings. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction.
So if a loan is used to replace a dwelling secured loan no matter what the original purpose of the loan being replaced would it not fit this definition?
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#1756371 - 11/08/12 03:16 PM
Re: Reg B Refinance
terpsfan
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No, it wouldn't...at least that's not the intention.
It's not explained crystal clear...but you can take it from this portion that all that is left would be refinances of original purchase money.
Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements. You don't collect for other purposes, so unlike HMDA, which is broader, a loan that didn't meet the definition of refi, but later becomes a "refi" in banking terms, isn't considered the same for Reg B.
This goes back as far as my memory as an MLO goes {which predates HMDA}. I always explained it as I did above and as follows:
Written applications and GMI are required for Purchase and Refi of original purchase money loans and no other.
Last edited by RR Joker; 11/08/12 03:17 PM.
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#1756374 - 11/08/12 03:21 PM
Re: Reg B Refinance
terpsfan
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But if it is primarly for the purpose of refinancing to get a lower rate than it would be reportable no matter what the original loan was for right?
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#1756379 - 11/08/12 03:34 PM
Re: Reg B Refinance
terpsfan
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Not in my opinion, unless at some point, the loan was originally for the purchase of the home.
For HMDA purposes, it would be.
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#1756397 - 11/08/12 04:20 PM
Re: Reg B Refinance
terpsfan
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So is the example below that is included in the definition of a refinance the only time it is considered a refinance for reg B? I took that as just an example used to explain when it would not need to be requested again not to define a refinance. So I guess I was reading it wrong.
creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction.
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#1756463 - 11/08/12 06:01 PM
Re: Reg B Refinance
terpsfan
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It's about all you'll get besides the examples of what would not fall under reporting guidelines. As I elluded to, it's about clear as mud, but the interpretation has always been purchase and refi of purchase and I've never seen a regulator question that. However, I have seen them write up collecting the info when it was anything else.
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#1999201 - 03/02/15 06:10 PM
Re: Reg B Refinance
terpsfan
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Joined: Jan 2015
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Kentucky
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Year later, and I'm still confused. Scenario: Loan booked as real estate loan. Collateral: 2nd mortgage on customer's primary dwelling Purpose: pay off an unsecured business loan
GMI was not collected on this application. The appraisal notice was given and a copy of the appraisal was provided to the customer. My HMDA coordinator says GMI is not required on this loan under Reg C. Would GMI be required under Reg B?? Reading the comments above lead me to think no.
Alternatively, let's say that the purpose of the loan was to refinance the initial loan in 1st position. The initial loan being the one used to actually purchase the residence. In this case, GMI information is required to be collected. (Provided the creditor did not finance the initial purchase and does not have GMI on file.)
Are my thoughts correct?
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#1999208 - 03/02/15 06:23 PM
Re: Reg B Refinance
terpsfan
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Bloomington, IN
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The home equity loan is neither purchasing or refinancing the consumer's primary dwelling. GMI would not be required for Reg. B or Reg. C.
The second scenario would require GMI for both Reg. B and Reg. C.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#2124441 - 03/30/17 06:27 PM
Re: Reg B Refinance
terpsfan
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In your first scenario, i believe you are correct--no GMI.
However, for your 2nd scenario....i don't see anything in Reg. B that says the refinance has to be the original creditor's purchase loan.
JMO--i'm open to corrections.
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#2124458 - 03/30/17 07:01 PM
Re: Reg B Refinance
terpsfan
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We're a HMDA bank, so i'm not a Reg. B monitoring expert.....let someone else confirm both for you. (I actually have less confidence in my first scenario answer than i do my 2nd scenario answer.)
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#2124479 - 03/30/17 07:39 PM
Re: Reg B Refinance
terpsfan
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In the first scenario.....i don't think in any way you can call it a "refinance" under Reg. B....but i'm a bit unsure whether it might still meet the definition of a purchase.
Again, in the 2nd scenario, i just don't see anything that says the same bank must make both the purchase and the refinance loan for it to be a "refinance". That's always been my understanding.
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#2124503 - 03/30/17 09:05 PM
Re: Reg B Refinance
terpsfan
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The Reg. B rule itself is not perfectly clear regarding refinance; it does not specifically say that the loan being refinanced has to be secured by the dwelling.
If it is clear that the purpose of the loan being refinanced was for the purchase of the dwelling then a refinance of that loan (if the refinance is secured by the borrower's principal dwelling) may require collection of monitoring info.
Just a guess. Perhaps others have a clearer understanding.
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