Skip to content
BOL Conferences
Thread Options
#2260469 - 09/29/21 10:45 PM Business Purpose Transactions - Reportable?
Mel in WA Offline
Diamond Poster
Joined: Mar 2013
Posts: 1,265
We have a couple business purpose transactions that are both secured by 1-4 family dwellings and the loan proceeds are paying off existing liens secured by the same dwellings. Typically, they would be HMDA reportable as a "refinance".

However, as part of the new transaction the property ownership is being transferred from two individuals into a LLC (the same individuals form the LLC as 50/50 ownership). Therefore, our new loans are not to the same borrower which would exclude it from being a refinance under HMDA. Since business purpose loans are not reported as “Other” for HMDA, we are thinking (actually hoping) these are exempt from reporting. Agreed?

Return to Top
HMDA

   
HMDA Academy
#2260471 - 09/30/21 11:24 AM Re: Business Purpose Transactions - Reportable? Mel in WA
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,225
Galveston, TX
Why would they not be purchases if the title is transferring at the time of the loan? This is no different than you buying a house from me and the proceeds paying off my lien, is it? You are not refinancing my loan. Ignore who owns the LLC - if it was not the same people, what would you do?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2260473 - 09/30/21 11:38 AM Re: Business Purpose Transactions - Reportable? Mel in WA
Adam Witmer Offline
Power Poster
Joined: Sep 2010
Posts: 2,658
Since the ownership of the property is being transferred, I would report this as a purchase. The fact that the owners of the property are also going to own the LLC is really just smoke and mirrors - technically they do indirectly own it, but from a legal perspective the LLC is a new and separate entity, and that is how we look at it for HMDA.

The bottom line is that the ownership has changed, so this should be reported as a purchase for HMDA even if the customer doesn't really view it that way for what they are doing.
_________________________
Adam Witmer, CRCM

All statements are my opinion, not those of my employer, and should not be taken as legal advice.
www.compliancecohort.com

Return to Top

Moderator:  SMQ, CRCM