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#443981 - 10/20/05 02:42 PM hmda extra $ to complete const.
lol247 Offline
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If a customer returns to the bank needing additional funds to finish construction, after we have already closed the loan and entered it on the LAR as a home purchase, would it then be entered as a home improvement loan or refinance? We don't always do separate loans for const. and then permanent, they are done at the same time and entered on the LAR at closing.

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#443982 - 10/20/05 02:58 PM Re: hmda extra $ to complete const.
hmdagal Offline
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How are the additional funds disbursed? Was a modification done to increase the original note? If so, it is not a reportable transaction. Was a new note drawn? Then I would probably enter it as a home improvement loan.

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#443983 - 10/20/05 03:19 PM Re: hmda extra $ to complete const.
lol247 Offline
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A new note is drawn. Hmda help line suggested it should be entered as a refi as did our internal auditors, however I was leaning toward home improvement all along.

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#443984 - 10/20/05 03:33 PM Re: hmda extra $ to complete const.
#12 Offline
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I don't understand how it could be refi. It's additional money, you're not satisfying and replacing a note, are you? To me, it would be home improvement.
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#443985 - 10/20/05 03:39 PM Re: hmda extra $ to complete const.
Hated By Some Offline
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Quote:

I don't understand how it could be refi. It's additional money, you're not satisfying and replacing a note, are you? To me, it would be home improvement.



I concur

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#443986 - 10/20/05 04:11 PM Re: hmda extra $ to complete const.
GreatBlue Offline
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I'm not sure that new $ to finish construction could really be considered "home improvement".
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#443987 - 10/20/05 04:14 PM Re: hmda extra $ to complete const.
Hated By Some Offline
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Quote:

I'm not sure that new $ to finish construction could really be considered "home improvement".



good point. would you think home purchase then? my thinking was the home purchase loan was already made but the additional loan would be used to improve what they already had.

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#443988 - 10/20/05 04:38 PM Re: hmda extra $ to complete const.
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It sounds like then new money is a continuation of the initial RMT so I'd probably code it as purchase.
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#443989 - 10/20/05 05:34 PM Re: hmda extra $ to complete const.
GreatBlue Offline
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That's how I'd lean too.
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#443990 - 10/20/05 06:11 PM Re: hmda extra $ to complete const.
hmdagal Offline
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I would look at exactly how the funds are to be used. Paving the driveway, landscaping and similar things would be improvements, most upgrades would probably be purchase.

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#443991 - 10/20/05 06:34 PM Re: hmda extra $ to complete const.
lol247 Offline
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I initially loaded the new loan as a home purchase because it was to pay for upgrades but our internal auditors suggested I load it as a refi. Then I ask HMDA help line and they responded that a home purchase should only be reported once and after that it would be a refi. Well if understand correctly home improvement trumps refi. and it really is to finish construction or improve what they've started. Why does everything have to be so complicated?

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#443992 - 10/21/05 11:58 PM Re: HMDA extra $ to complete const.
Dan Persfull Offline
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This sounds to me like it's simply re-doing the loan to cover cost overruns.

1. Is the home still in the construction phase?
2. Is the money being paid to contractors or is it being used to reimburse out of pocket expenses to the borrower?

Just a FYI, this is why we don't report the loan on the LAR until the loan enters the permanent phase.
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