For unsecured loans, do we have a duty to determine whether the borrower intends to use the loans for home improvement purposes? Or, can we avoid reporting such loans when we do not know what purpose the loan is for? Thanks.

If it is unsecured and you don't know the purpose, I wouldn't consider that HMDA reportable. It isn't related to real estate in any way is it?

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Or, can we avoid reporting such loans when we do not know what purpose the loan is for?

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Why would you consider making a loan if you don't know what the proceeds are to be used for?

We do it all the time. I mean, if someone wants a $1000 loan and they credit-qualify, we typically book it. These folks do have good credit to get an unsecured loan, but I am just curious about whether HMDA mandates that we ascertain whether the loan is to improve a home. For example, if someone borrowed $1,000 and credit qualified, we would approve it and that would be it. If, however, that loan was to pay the contractor for installing drywall in the basement, it would likely be a home improvement loan.

Reminds me of the banker in a small bank in a state I won't mention, but begins with OK, that told me it wasn't any of his or the other loan officer's business what the borrower was going to do with the money. He just wanted it paid back. I told him he should talk to my client that had that opinion until he lent on a semi and lost it to the Gov. when the customer was busted for hauling drugs in it.

The Bank Secrecy Act requires us to have a purpose statement for loans over $10,000 that are NOT secured by real estate:

"§ 103.33 Records to be made and retained by financial institutions.

Each financial institution shall retain either the original or a microfilm or other copy or reproduction of each of the following:
(a) A record of each extension of credit in an amount in excess of $10,000, except an extension of credit secured by an interest in real property, which record shall contain the name and address of the person to whom the extension of credit is made, the amount thereof, the nature or purpose thereof, and the date thereof; . . . "