As I understand it, under the revised rules, the new purpose priority is as follows:

If any part of the covered loan is for purchase of a dwelling: Report it as a PURCHASE

If no part of a covered loan is for a home purchase, but proceeds are for a refinance in addition to a stated other purpose such home improvement: Report it as REFINANCING

If no part of a covered loan is for a home purchase, but proceeds are for home improvement as well as a refinance: Report it as REFINANCING

Refinance trumps home improvement.

Does this also apply to business purpose loans as well? For example, if a borrower is refinancing a multifamily dwelling to improve the heating system, according to the revised rules, would this would be coded as a refinance, since refinance now trumps home improvement?

When would we report a business loan as a home improvement?

Yes, it applies to business purpose loans too. And yes, your example is a refinance.


If I applied to received funds to remodel a rental house or apartment building (new money - nothing refinanced or purchased with the proceeds). That would be a home improvement purpose but a business purpose loan.

Thank you David!

I have a question regarding free and clear properties (new money).

In the scenario where a borrower owns a property free and clear, and the borrower obtains a loan on the free and clear property to purchase another property:

1. Which property do we report on the HMDA LAR? I think it's the one taken as collateral (the free and clear one)
2. How should we report it? I think purchase since the borrower is purchasing a property. It is not a refinance since there was no existing debt to satisfy and not a HI.

Do I have this right?

Thank you!

1. Yes, the collateral property.
2. Yes, purchase.

Thank you!