I am going blank and would like some input please. I have a loan that we took the customers investment property that they own free and clear to get cash out ($75,000) to go and purchase a new residence for her primary residence. Ok, with us taking the investment property as collateral I reported on that property, and as purpose I reported a 1, home purchase(because she is going to purchase a primary residence with her cash out), and reported occupancy as a 1, owner occupied.

But that seems weird too me, because I am reporting the collateral we have, which is an investment property of hers that she owns, but then as purpose and occupancy I am reporting that it's a home purchase because she is going to purchase a home and then occupancy as owner occupied, because whatever she purchases it will be her home.

Is this correct? I would appreciate any feedback please. Thanks.

You would report this as a purchase, but provide reporting information based on the collateral, meaning you report the geocoding and occupancy for the investment property.

From the commentary to 4(a)(9):
2. Property location--multiple properties (home purchase/refinance of home purchase). For a home purchase loan, an institution reports the property taken as security. If an institution takes more than one property as security, the institution reports the location of the property being purchased if there is just one. If the loan is to purchase multiple properties and is secured by multiple properties, the institution reports the location of one of the properties or reports the loan using multiple entries on its HMDA/LAR (with unique identifiers) and allocating the loan amount among the properties.

From the commentary to 4(a)(6):
Paragraph 4(a)(6).
1. Occupancy--multiple properties. If a loan relates to multiple properties, the institution reports the owner occupancy status of the property for which property location is being reported. (See the comments to paragraph 4(a)(9)).

Thank you so much. That is what I did but then I started doubting myself. Thanks again.

I completely understand the doubting. Good luck with your last submission under the current rules.