Guys, you can weigh in on this one.

Borrower regularly buys dwellings for rental. He has established an LOC which he frequently uses to acquire properties much quicker. So, he's taken out another loan on a property with no existing obligation. The purpose of the new loan is to pay down the LOC with the intent of freeing up the line ready to be used to acquire any dwellings he finds in the future. Is this reportable (as a Purchase, as that's his ultimate intent) or not reportable?

I am not a HMDA guru, but the purpose to me is to pay down an existing LOC. For what purpose the customer might sometime in the future use the LOC seems a little too far removed to tie it into HMDA reporting.

I agree with Randy. The purpose is to pay down a line of credit, so I wouldn't call this a purchase in this particular case. It can't be a refi as you aren't paying off the line in full, and it doesn't appear to be directly for home improvement purposes. Therefore, it would be an "other" purpose loan, but whether this is reportable will depend on whether this is a consumer purpose or business purpose loan. Based on what was provided, I don't think it is 100% clear if this current loan is a consumer purpose or business purpose loan as you said "He has established an LOC which he frequently uses to acquire properties much quicker." While this could be a business purpose loan, I can imagine a scenario where it is actually a consumer purpose loan.

Is this new loan a consumer purpose or business purpose loan?

If it is a consumer purpose loan, it would be reportable as an "other" purpose. If it is a business purpose loan, it would not be HMDA reportable.

Randy/Adam,


I knew I was reading too much into it.


Thanks