Thread Options
#2244825 - 10/29/20 07:14 PM ECOA Monitoring - Overthinking Alert
ckme Offline
100 Club
ckme
Joined: Sep 2002
Posts: 239
We are out of HMDA based on the volume in 2018 and 2019. Now that we only have to collect ECOA monitoring info I am getting myself confused.

What if you have a commercial revolving line of credit with a borrower who is a natural person and it is secured by their primary residence, and it matures. When you payoff that line and replace it with a new line of credit to the same borrower with the same collateral (so your loan purpose is to renew RLOC), is it subject to ECOA monitoring collection?

If it is, would it make a difference if the line had a zero balance (so there is not loan balance to payoff)?

THANKS.

Return to Top
Lending Compliance
#2244828 - 10/29/20 07:23 PM Re: ECOA Monitoring - Overthinking Alert ckme
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 46,460
Bloomington, IN
6. Refinancings. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction.

Whether you pay off a balance or not is nor relevant. If you replace the existing obligation (note/loan agreement) with a new one you have a refinancing.

5. Transactions not covered. The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information-collection requirements. An application for an open-end home equity line of credit is not subject to this section unless it is readily apparent to the creditor when the application is taken that the primary purpose of the line is for the purchase or refinancing of a principal dwelling.

What is the primary purpose of the RLOC?
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.

Return to Top
#2244846 - 10/29/20 09:21 PM Re: ECOA Monitoring - Overthinking Alert ckme
ckme Offline
100 Club
ckme
Joined: Sep 2002
Posts: 239
The RLOC purpose is a working line of credit for business expenses or equipment purchases.

Return to Top

Moderator:  Andy_Z