Hi,
The loan is to replace an existing HELOC with zero balance and home improvment. Applicant pays the re conveyence fee out of pocket at the time of closing. Is the loan purpose refi or home improvement?

Is the HELOC being closed or just paid to $0?

It's being closed.

Refinance then. If it was only being paid to $0 then it was not being replaced by the new loan and you would have reported it as Home Improvement.

Thank you.

If the HELOC agreement is being satisfied and replaced by the new dwelling secured obligation to the same borrower it meets the definition of a refinancing.

If the HELOC had a $10 balance and the new loan paid that $10 balance but the HELOC was being left open then the new loan did not satisfy and replace the HELOC agreement therefore it does not meet the definition of a refinancing.

I would like to revive this question for 2018 HMDA . If we are closing out a HELOC that currently has a zero balance, and essentially replacing it with a new HELOC, can we call it a refinance? If we are not paying any funds out, what links the two loans together? If we note in our underwriting that it was a condition of the approval that the existing loan be extinguished, would that be proof? And is that even needed to prove that it is a refinance?

(p) Refinancing means a closed-end mortgage loan or an open-end line of credit in which a new, dwelling-secured debt obligation satisfies and replaces an existing, dwelling-secured debt obligation by the same borrower.

A pay-off balance is not the requirement, it is replacing the debt obligation. If you are replacing the old HELOC with a new one, then it is a refinancing regardless of whether there is a current balance.

FWIW, I agree.

Thanks. I guess I was overthinking it.