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#2269041 - 04/13/22 05:40 PM HELOC
jel99 Offline
Junior Member
Joined: Sep 2021
Posts: 27
We have multiple consumer HELOC's where the borrower is planning to use it for business expenses.

Would the HMDA need to marked primarily business purpose? I was tripped up because these are on consumer HELOC's, not commercial open-end lines, and secured by principal residences.

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#2269048 - 04/13/22 06:22 PM Re: HELOC jel99
Dan Persfull Offline
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Dan Persfull
Joined: Aug 2002
Posts: 46,961
Bloomington, IN
If they are primarily for a business purpose then that is what they should be coded for HMDA purposes.

My next comment would be why would a "business" purpose revolving line of credit be booked on a consumer based note? Even though this may be a business purpose loan you most likely have priced as a consumer loan due to the HELOC classification and if something goes wrong you are very limited in being able to suspend or terminate the line of credit due to the consumer protection limitation built into the consumer loan agreement.
The opinions expressed are mine and they are not to be taken as legal advice.

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#2269085 - 04/13/22 09:52 PM Re: HELOC jel99
jel99 Offline
Junior Member
Joined: Sep 2021
Posts: 27
We are working on that now to prevent it happening again.

I do have a follow-up question if you don't mind as well. In the scenario above, the HMDA purpose is other... Would we be obligated to report this since it is under a consumer note even though it is a commercial, other purpose?

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#2269102 - 04/14/22 02:05 PM Re: HELOC jel99
Inherent_Risk Offline
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Joined: Jan 2017
Posts: 407
No. A business purpose loan that is not for purchase, refi, or HI is not reportable.

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