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#437801 - 12/14/05 05:47 PM Re: Another Temporary Financing Question
RVFlyboy Offline
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Soaring over Georgia
I agree - we very much need regulatory guidance on what should and should not be considered temporary financing. Especially if we are going to be second-guessed by examiners on what we have come up with absent any definition.
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#437802 - 12/14/05 06:06 PM Re: Another Temporary Financing Question
sugarbaby Offline
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texas
All of this makes me wonder if the individuals in our government that review this data actually understand what it is that they are looking for!!! Getting mixed data from one institution to another and from one regulatory agency to another seems like a big waste of time in the whole scheme of things. Just had to rant on this one!!!

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#437803 - 12/14/05 07:43 PM Re: Another Temporary Financing Question
David Dickinson Offline
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Central City, NE
Quote:

Getting mixed data from one institution to another and from one regulatory agency to another seems like a big waste of time in the whole scheme of things.



EXACTLY!

I can see both sides of the opinions offered by Magic and Dan. What bothers me is that this started as an FDIC opinion. Regulation C (HMDA) is written by the FRB. No one else has the authority to interpret it. I didn't like the Refinancing definition change in 2004, but the FRB said it and we follow it.

Why does one region of one agency get to decide a new interpretation? To make matters worse, the FFIEC agrees with them, but doesn't announce it. Instead, they (almost) hide it in a FAQ update.
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#437804 - 12/14/05 08:39 PM Re: Another Temporary Financing Question
D2Xs Offline
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I'm going to ask a stupid question here...What is the downside of reporting all these loans if you are not sure they are to be reported?
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#437805 - 12/14/05 09:13 PM Re: Another Temporary Financing Question
sugarbaby Offline
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texas
To me the downside is an examiner making the determination that I have an incorrect HMDA LAR, making me refile, and basically making me look bad to my boss.

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#437806 - 12/14/05 09:19 PM Re: Another Temporary Financing Question
David Dickinson Offline
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Central City, NE
Sugarbaby is correct. Over reporting is not allowable. HMDA must be 100% correct - you can't over kill it. Why: 2 reasons.

#1. Garbage in - garbage out. They want accurate data.
#2. You are asking people for their ethnicity, race and sex. It is wrong to ask applicant's for this info, unless it is required by law. If you overkill HMDA, you are over-asking for GMI.
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#437807 - 12/14/05 09:32 PM Re: Another Temporary Financing Question
sugarbaby Offline
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texas
David, you make a good point with regard to GMI. On the loans that we have considered as "temporary" all this time, we don't have the GMI for those loan applications that would require it under the new interpretation (FFIEC HMDA Q&A)!! How do we report what we don't have???

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#437808 - 12/14/05 09:44 PM Re: Another Temporary Financing Question
D2Xs Offline
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Are there any examples of CMPs for overreporting?
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#437809 - 12/14/05 10:18 PM Re: Another Temporary Financing Question
RVFlyboy Offline
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Soaring over Georgia
Probably not anything for overreporting specifically. But as David says, overreporting means over-asking about race and sex information. If you ask those questions and weren't required to, you now have fair lending violations. A pattern or practice of fair lending violations and now you are looking at Department of Justice referrals regarding your bank. Trust me, you don't want to go there.
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#437810 - 12/15/05 03:31 PM Re: Another Temporary Financing Question
wanted Offline
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At the beginning of 2004 I wrote a procedue for HMDA and 'Temporary Financing'. We included loans that would be paid with permanent financing or from sale of assest. We also used the source of repayment as a factor. We have been carefully screening the loans and all that fell under the Temporary Financing were not put on the HMDA LAR. We did this in 2004 and this year. Looks like we could now have a problem! We were examined early 2005. Had no prolem with this at this time.

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#437811 - 12/20/05 09:13 PM Re: Another Temporary Financing Question
campste Offline
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LA
Has someone determined what the final outcome of this argument relating to temporary finaincing will be? I just read a newsletter from Banker's Consulting dated Dec. 19th that refers to the temporary financing Q&A, but it only relates to what was discussed above without any resolution or clarity other that to say we need to go back and search out databases for these loan and place them on our LAR? Where are we with this situation? If, we do need to add these loans to our LAR, we don't have much time 'til HMDA [censored] starts.

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#437812 - 12/20/05 09:55 PM Re: Another Temporary Financing Question
Dan Persfull Offline
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As I have said in a couple other posts today I do not intend to change or add anything until instructed to do so by my examiner. As of now there has been no communication from the FDIC's DC office that I am aware of. I am following up with my examiner every couple of weeks to see if she has heard anything and I will continue to do so until instructions are received to either leave things as they are or to change them. However, I have an advantage as I am a small shop and it won't take me long to add these loans if it becomes necessary.

You may want to contact your lead examiner and ask their guidance.
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#437813 - 12/20/05 10:53 PM Re: Another Temporary Financing Question
jbest Offline
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I talked to our Examiner yesterday from the Dallas Region and they agree with the KC letter and expect us to go back and add the loans we had excluded as temporary. We won't have that many either.

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#437814 - 12/21/05 02:22 PM Re: Another Temporary Financing Question
Dani York, CRCM Offline
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TN
We have already gone through all of our loans and added these to our LAR. It wasn't as big of a project as we expected. Our examiners (Dallas region) told us to collect GMI and note them visual observation. All in all we only added about 40 loans to our LAR.
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#437815 - 12/21/05 03:54 PM Re: Another Temporary Financing Question
CRAatBOK Offline

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Further South than I wanna be.
I took this question to our OCC examiner (KC region). She said she would have to get an opinion from Washington. Still waiting for an answer.

I don't get the arguement that if it is a "splash and Dash" it won't ever get reported. I thought the whole ideas was to "improve" the property and sell it. If you sell it, somebody buys it and more than likely it will be financed. Maybe your bank won't be doing the financing, but someone will and they can report it. As said above, there are no guarantees that if you make a construction loan that you will be doing the end financing on that. I don't see the difference.
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#437816 - 12/21/05 10:43 PM Re: Another Temporary Financing Question
Bullseye Offline
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Bullseye
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Quote:

I don't see the difference.




Well said, IMO!

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#437817 - 12/22/05 04:01 AM Re: Another Temporary Financing Question
David Dickinson Offline
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Central City, NE
Quote:

Has someone determined what the final outcome of this argument relating to temporary finaincing will be? I just read a newsletter from Banker's Consulting dated Dec. 19th that refers to the temporary financing Q&A, but it only relates to what was discussed above without any resolution or clarity other that to say we need to go back and search out databases for these loan and place them on our LAR? Where are we with this situation? If, we do need to add these loans to our LAR, we don't have much time 'til HMDA [censored] starts.



We agree that you don't have much time to get these added to your 2005 LAR. That's why we issued the mid-month guidance (to add them to your LAR). You say the newsletter doesn't provided any resolution or clarity. If the FFIEC said you have to do it, who can trump their opinion? We have contacted several examiners, from several different agencies on this issue. They were all suprised, but basically all said "if the FFIEC said it, you have to do it."

The newsletter also advised you to contact your local examines and discuss this with them. We are hopeful some may advise you to begin this new practice in 2006 rather than go back, but we can't tell you that this is OK.

If anyone doesn't recieve our e-newsletter, you can see it here. You can also sign up for the newsletter at the same website. It's free, but remember, you get what you pay for.
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#437818 - 12/23/05 07:24 PM Re: Another Temporary Financing Question
Laketime Offline
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Posts: 554
The longer this thread goes the more confused I become (ha, ha).

I am now staring at a loan application that states a purpose of : "$500,000 for refinance and major remodel".

The loan was made for 9-months with interest-only payments. It was written for 9-months to correspond with the remodel time-frame. There is no indication of any permanent financing at this point. It is the borrowers' primary dwelling.

Should this loan be included on the 2005 HMDA-LAR as a home improvement loan?

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#437819 - 12/23/05 07:36 PM Re: Another Temporary Financing Question
Dani York, CRCM Offline
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TN
I would say yes. Why do you think this could be temporary?
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#437820 - 12/23/05 07:40 PM Re: Another Temporary Financing Question
#12 Offline
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I agree with Dani.
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#437821 - 12/23/05 08:20 PM Re: Another Temporary Financing Question
David Dickinson Offline
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Central City, NE
Quote:

There is no indication of any permanent financing at this point.



Where is the payoff coming from? I can't say that this is to be reported without the answer to this question. Ask the underwriter. Also teach them that this is necessary to document for HMDA purposes.
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#437822 - 12/23/05 09:05 PM Re: Another Temporary Financing Question
Reed Offline
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West Coast
Ok, I thought I was finally getting a handle on the whole temporary financing issue, but now I'm confused again.

Assuming the "new guidance" sticks, wouldn't the fact that the loan will not be replaced by permanent financing automatically make it temporary financing? (please see posts 477743 and 477765 on page 2)

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#437823 - 12/23/05 09:21 PM Re: Another Temporary Financing Question
Dani York, CRCM Offline
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TN
Correct me if I am wrong, but the way I read the FFIEC FAQ, it seems to me that even though they still say bridge loans and construction loans are examples of temp financing, the rest of the FAQ seems to eliminate anything but those two things. If the repayment of the loan mentioned a couple of posts ago was sale of house, it would be reportable. Same way if repayment was income or Christmas bonus. Only a repayment of perm financing would make this temp financing. (In my orginal post I wasn't even thinking about method of repayment. Sorry! )
Last edited by Dani York; 12/23/05 09:24 PM.
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#437824 - 12/23/05 09:27 PM Re: Another Temporary Financing Question
Reed Offline
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Reed
Joined: Sep 2005
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West Coast
Quote:

Only a repayment of perm financing would make this temp financing.




thats what I thought too

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#437825 - 12/23/05 10:11 PM Re: Another Temporary Financing Question
Laketime Offline
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Posts: 554
Quote:

Quote:

There is no indication of any permanent financing at this point.



Where is the payoff coming from? I can't say that this is to be reported without the answer to this question. Ask the underwriter. Also teach them that this is necessary to document for HMDA purposes.




The underwriter stated the borrowers said they will be "shopping for permanent financing in early 2006 as the loan gets closer to maturity" (which is May, 2006).

And as to the reason I thought this might be temporary financing was some information/phrases contained in CHIRO-07-2002.

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