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#2157243 - 12/14/17 03:11 PM Free and Clear Refi to Purchase Land
Working From Home Offline
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We are doing a cash out "refinance" on a free and clear property (no current mortgage on it). The proceeds will be used to purchase raw land. Is this HMDA reportable? It would not be considered a refinance under the HMDA definition since they are not replacing any debt. Is it considered a purchase because of the raw land being purchased, or since there is no dwelling, it is excluded from reporting?

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#2157250 - 12/14/17 03:25 PM Re: Free and Clear Refi to Purchase Land Working From Home
NSF, CRCM Offline
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No dwelling being purchased, refinanced or improved = Not HMDA (For 2017)
Last edited by NSF; 12/14/17 05:00 PM. Reason: Clarified my answer pre2018
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#2157251 - 12/14/17 03:25 PM Re: Free and Clear Refi to Purchase Land Working From Home
raitchjay Offline
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No, it doesn't meet any of the current purpose requirements. However, if this loan were to close in January or later, it would be reportable as an "other" (after re-reading.....i'm assuming that the property owned free and clear has a dwelling on it....if not, then it wouldn't be reportable now or in 2018).
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#2157252 - 12/14/17 03:26 PM Re: Free and Clear Refi to Purchase Land Working From Home
raitchjay Offline
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Let me clarify what i said above...if it has a dwelling on it, the loan closes in 2018 or later, and it's a consumer purpose loan, it would be reportable. Closes in 2017--not reportable.
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#2157253 - 12/14/17 03:29 PM Re: Free and Clear Refi to Purchase Land raitchjay
#12 Offline
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and to clarify raitchjay's comment a little further: if the collateral has a dwelling on it, the loan closes in 2018 or later, and it's a consumer purpose loan, it would be reportable.
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#2157254 - 12/14/17 03:30 PM Re: Free and Clear Refi to Purchase Land Working From Home
raitchjay Offline
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Thanks #12....i said that in my first post, but not the subsequent one.
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#2157255 - 12/14/17 03:30 PM Re: Free and Clear Refi to Purchase Land Working From Home
Working From Home Offline
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Thanks. I thought it was not, but just wanted to be certain. And thanks for the reminder for next year's reporting.

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#2157336 - 12/14/17 08:05 PM Re: Free and Clear Refi to Purchase Land Working From Home
David Dickinson Offline
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Just to clarify - you called this a "refinance". You're not replacing a debt with a new debt. Therefore, it's not a refinancing as defined by any regulation. It's a home equity loan. That's why it is reported as "other" in 2018 and not reported in 201.
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#2157378 - 12/14/17 11:51 PM Re: Free and Clear Refi to Purchase Land Working From Home
Moman Offline
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But - - - in banker lingo it's considered a refinance. Try telling a commercial lender it's not a refi, at least in our neck of the woods. Too bad regulations don't always dovetail into local vernacular!

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#2157393 - 12/15/17 01:47 PM Re: Free and Clear Refi to Purchase Land Moman
Adam Witmer Offline
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Originally Posted By Moman
But - - - in banker lingo it's considered a refinance. Try telling a commercial lender it's not a refi, at least in our neck of the woods. Too bad regulations don't always dovetail into local vernacular!


I don't think this is just local lingo as I have seen this misconception many places. All lenders need to understand the definitions as using "lingo" (i.e. calling them something that doesn't align with an applicable regulation) will result in violations.
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#2157397 - 12/15/17 02:27 PM Re: Free and Clear Refi to Purchase Land Working From Home
RR Joker Offline
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Nope...it holds true all the way down here in the Swamp. smirk
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#2157411 - 12/15/17 03:21 PM Re: Free and Clear Refi to Purchase Land Working From Home
swiggles Offline
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Correct......"commercial lenders" = a different breed.

An equity cash out is a refinance to them.

An investment dwelling is "commercial real estate"

"Commercial" or "Business Purpose" loans are exempt from all regulations.
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#2157417 - 12/15/17 03:47 PM Re: Free and Clear Refi to Purchase Land Working From Home
Adam Witmer Offline
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My favorite: "That's why I'm a commercial lender; because the regulations don't apply to me."
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#2157419 - 12/15/17 03:50 PM Re: Free and Clear Refi to Purchase Land swiggles
raitchjay Offline
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Originally Posted By swiggles



An investment dwelling is "commercial real estate"



They all drive me crazy, but that one particularly.
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#2157447 - 12/15/17 05:32 PM Re: Free and Clear Refi to Purchase Land Working From Home
David Dickinson Offline
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Central City, NE
I understand what the industry calls it and I run into this all of the time as I train bankers all around the country. My point is just because lenders use that term, doesn't mean that's what it is for the regulation and I didn't want anyone reading this to be confused. I was only trying to clarify that. We don't get to define terms. The regulators do.

Another example is a construction line of credit. It's a closed-end, multiple advance loan. That's not a line (open-end, revolving).
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#2157482 - 12/15/17 08:02 PM Re: Free and Clear Refi to Purchase Land Working From Home
RR Joker Offline
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I preach proper terms every single change I get. Sadly, they don't ever make the transition. It would save so much back and forth questioning if they would just conform to my definitions, which are the ones that tell me the regulatory story smirk

ETA: I think we all got on a roll with it because the OP also new it wasn't an actual refinance so there wasn't any need for clarification...or at least there wasn't to me. I read the sarcasm/eye roll in the post smile
Last edited by RR Joker; 12/15/17 08:04 PM.
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#2157484 - 12/15/17 08:06 PM Re: Free and Clear Refi to Purchase Land Working From Home
raitchjay Offline
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Yes, nearly every day i'll have a phone conversation like this:

Them: "I have a loan that is to purchase commercial RE."

Me: "What kind? A warehouse? Office building?"

Them: "No, a rent house."

Me: "Oh....then you have a home loan."

Them: "Yes, but it's business purpose."

Me: "I understand that....but that doesn't change the fact that it's a home."
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#2157493 - 12/15/17 09:06 PM Re: Free and Clear Refi to Purchase Land raitchjay
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At two former banks, I banned the word "commercial" from real estate descriptions. They had to use residential, retail, industrial, office building, etc..
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