I have several questions on this application

1. The house in question is owned by 4 parties. One of the parties is going to buy the other ones out and borrow money to do so. There is no debt on the house. Is this a purchase, refinance or other purpose as far as HMDA

2. This was for a secondary market transaction and when the appraisal came in, it showed that there was no septic system on the property. That is a requirement for loans sold on secondary market and a requirement for that particular county

3. Customer stated he would get a septic system installed but loan was already locked and lock was going to expire so he requested to withdraw the application and would reapply when septic was installed.

4. I think this is a denial for both Reg B and Reg C with the reason being value or type of collateral insufficient

Looking for validation to my decision. Thank you.

Here are my thoughts on it:

- Is the property type a non-owner-occupied rental? If so, this could mean that the loan is business/commercial use. Based on the scenario, you are not purchasing, refinancing, or improving a dwelling - which are the only options for a business/commercial type HMDA loan. If this considered, primary or secondary residence - you have a personal use and could use "other" for equity.

- As far as your denial/withdrawal scenario - you have both denial reasons and the applicant requesting to withdraw the loan. We had a similar situation and asked our compliance consultants - they advised that if there was an AAN in file, they would recommend reporting it as a denial.

I would report this as an other purpose loan, unless this is for business or commercial use, which then it wouldn't be reportable.

Adam - assuming the property in question is a rental and therefore a commercial purpose property, would this not be considered a purchase as there is one owner buying our the other 3 owners? Or is this not considered a purchase as this personal already has ownership?

This is a question that has been debated here quite a bit, and really goes back to the full topic of interest buyouts.

Honestly, the rule isn't crystal clear on this but I have taken a position that interest buyout loans are a refinance - unless the dwelling is owned free and clear, which would default to an "other" purpose for consumer purpose loans and not reportable for business/commercial purpose loans. This is actually a very complicated topic, but I based this stance on two things: 1) the commentary to the definition of a refinance that says "same borrower" includes instances where one person on a prior loan remains on a new loan and 2) I've talked with a few different examiners over the years who apparently escalated the question to higher ups and were told interest buyouts were considered a refinance.

Truth is, there is a valid argument for the other side of things, so this is one of those instance where you really just need to pick a side and be consistent.

So in my reply above, I did start by saying "I would report this..." but should have also ended with "I wouldn't report this" rather than say "it wouldn't be reportable" (which is my stance - and I acknowledge that others may have a different stance).