We are struggling with loan purpose when one person is buying out the ownership interest of another person. In the past, we have always reported these loans as Purchase because one person will be the sole title owner of the property.

Situation 1: I have two people on a residential deed. One person is buying out the ownership interests of another person. There will be a new deed prepared so that one person will be the sole 100% owner. There is a lien on the property which will be paid off with a new loan. Should this be reported as a Purchase or a Refi?

Situation 2: I have two people on a residential deed. One person is buying out the ownership interests of another person. There will be a new deed prepared so that one person will be the sole 100% owner. There is NO lien on the property. Should this be reported as a Purchase or Other?


Situation 3: I have two people on a residential property. One person is buying out the ownership interests of another person. There will be a new deed prepared so that one person will be the sole 100% owner. There is NO lien on the property. The property will be used as a rental and booked in our commercial department. Should this be reported as a Purchase or not reported because there is no “other” in business purpose loans?

Situation 4: I have two people on a residential property. One person is buying out the ownership interests of another person. There will be a new deed prepared so that one person will be the sole 100% owner. There is a lien on the property. The property will be used as a rental and booked in our commercial department. Should this be reported as a Purchase or a refi?

This post may help:

https://www.bankersonline.com/forum/ubbthreads.php/topics/2181819/re-2018-rules-interest-buyout

Does anyone else have an opinion?

I've always been in the camp that if I already own a property (even partly with others), I can't purchase it. I already own it. Thus:

1. Refinance
2. Other
3. Not reported.
4. Refinance