So they are purchasing ½, but they already own it. I was hoping it was like a spouse so we could look at the commentary about "buying out" the other spouse, like this:
For example, assume that two spouses are divorcing. If both spouses are obligated on obligation X, but only one spouse is obligated on obligation Y, then obligation Y is a refinancing… On the other hand, if only spouse A is obligated on obligation X, and only spouse B is obligated on obligation Y, then obligation Y is not a refinancing… [Commentary to §1003.2(p) #4]
That doesn't quite fit, however. I'd like to call this a purchase (makes logical sense). I think this Commentary (about a "purchase") is close, however, it's not perfect:
If an institution making a first mortgage loan to a home purchaser also makes a second mortgage loan or line of credit to the same purchaser to finance part or all of the home purchaser’s downpayment, both the first mortgage loan and the second mortgage loan or line of credit are home purchase loans. Commentary to §1003.2(j) #4
I'd call it a purchase using this Commentary to support my decision. If an examiner wanted to argue, I'd look at them cross-eyed and ask what regulatory support they have to say not to report it.