Our commercial business line may process a line of credit increase for a revolving line of credit in the same HMDA reporting year that the loan originated. For example: a borrower takes out a new revolving line of credit and then determines that they need more money than originally requested. They do a new application/CAF. However, they keep the same loan number and add a letter to the end of the loan number to make the ULI # unique. Do we only report a loan that has originated once in a reporting year, or do we report the line increase since it has more money and has a new promissory note as it is satisfying and replacing the original dwelling secured debt obligation. If it must be reported a second time, do we report the full loan amount for the line increase? I have searched throughout the regulation and have yet to find any information on what to do in this type of situation. I am thinking we treat this as a refinance and report the loan again and the full loan amount since it is satisfying and replacing the existing debt obligation.
For CRA reporting we must report the amount of the line increase and the loan is reported twice in the same reporting year. For the loan amount on the line increase for CRA we only report the new money (the difference).
I could not find anything here with this same type of scenario. Any help you can give me will be greatly appreciated. Thank you!
This is what I found:
1. General. Section 1003.2(p) defines a refinancing as a closed-end mortgage loan or an open-end line of credit in which a new, dwelling-secured debt obligation satisfies and replaces an existing, dwelling-secured debt obligation by the same borrower. Except as described in comment 2(p)-2, whether a refinancing has occurred is determined by reference to whether, based on the parties' contract and applicable law, the original debt obligation has been satisfied or replaced by a new debt obligation. Whether the original lien is satisfied is irrelevant.