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#501089 - 02/19/06 08:09 PM More HMDA Reportable Questions ??
OldSchoolBanker Offline
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FL
Need guidance from a Guru in the room!

Prop A is free and clear of liens and client refinances A cash out to BUY Property B for all cash.

I am considering this NOT REPORTABLE as it does not meet the refinance defintiion nor the purchase definition as it is not secured by the purchased dwelling.

HMDA Gurus, do you agree that the transaction secured by prop A is not reportable?

Thank you in advance.

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#501090 - 02/19/06 08:32 PM Re: More HMDA Reportable Questions ??
Cowboys Fan Online
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The dwelling being purchased doesn't have to be your collateral. As long as A dwelling is being purchased and your loan is secured by A dwelling (and not temporary financing), HMDA reportable as a purchase.
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#501091 - 02/19/06 08:54 PM Re: More HMDA Reportable Questions ??
OldSchoolBanker Offline
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Thanks Cowboy Fan for your response.

Why does the definition of home purchase loan state "a loan secured by and made for the purpose of purchasing a dwelling"? It was the secured by portion that made me think the new loan had to be secured by the purchased property.
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#501092 - 02/20/06 02:02 PM Re: More HMDA Reportable Questions ??
Reed Offline
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Reed
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OSC 203.2(h)(1)Muliple Properties. A home purchase loan includes a loan secured by one dwelling and used to purchase another dwelling.

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#501093 - 02/20/06 02:18 PM Re: More HMDA Reportable Questions ??
OldSchoolBanker Offline
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Bliss, thanks for your input. In this scenario I outlined, there are not multiple properties involved in our loan so I do not think 203.2(h)(1) is applicable. There is one property "A" as collateal and it just so happens to be used to pay cash for "B". Prop B is not involved in our transaction.

Any Guru's care to chime in ??
Thanks
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#501094 - 02/20/06 02:29 PM Re: More HMDA Reportable Questions ??
#12 Offline
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I am certainly not a guru, but I agree with Cowboy Fan and Bliss. This loan should be reported as a purchase.
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#501095 - 02/20/06 02:33 PM Re: More HMDA Reportable Questions ??
Reed Offline
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Reed
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Old School, I gave the quote because I'm understanding the situation like this:

A loan secured by one dwelling (A) and used to purchase another dwelling (B)

Am I not understanding the situation correctly?

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#501096 - 02/20/06 02:44 PM Re: More HMDA Reportable Questions ??
hmdagal Offline
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I agree it's reportable. You have 2 properties in this transaction. Bliss' reference is correct.

OldSchool, the definition doesn't specify that the dwelling being purchased has to be THE SAME dwelling as the collateral. Your loan is to purchase a dwelling, and it is secured by a dwelling.

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#501097 - 02/20/06 03:42 PM Re: More HMDA Reportable Questions ??
rlcarey Online
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Galveston, TX
My question is - although you say the borrower used the funds to purchase Property B - was that officially done at the closing - or did you just give the money to the borrower and they actually could have done anything with it??? If you just gave the money to the borrower, I would opine that it is an unreportable transaction. If the funds went directly to the closing of property B, then I would opine that it is reportable under the above references.
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#501098 - 02/20/06 04:02 PM Re: More HMDA Reportable Questions ??
OldSchoolBanker Offline
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Great question. Cash went to borrower directly to complete other property purchase at a later date. It was not simultaneous.
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#501099 - 02/20/06 05:31 PM Re: More HMDA Reportable Questions ??
Dan Persfull Online
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Dan Persfull
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Quote:

Cash went to borrower directly to complete other property purchase at a later date. It was not simultaneous.




I have to say the loan is reportable, regardless whether the cash was given directly to the borrower or not. The purpose of the loan was to purchase a dwelling and the loan was secured by a dwelling. The regulation doesn't specify the transactions have to be simultaneous. It only looks to the purpose of the loan and in this case the purpose was to purchase a dwelling. I don't think the fact the purchase deal may have fell through after the loan closing is a factor.
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#501100 - 02/22/06 03:47 AM Re: More HMDA Reportable Questions ??
David Dickinson Offline
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Central City, NE
I agree that this is reportable. There's no doubt in my mind that this is exactly what the Commentary to 203.2(h)(1) is referring to (as Bliss pointed out). Now you have heard from several Guru's who all agree to report this loan.
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#501101 - 02/22/06 11:27 AM Re: More HMDA Reportable Questions ??
OldSchoolBanker Offline
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FL
Thanks to all who responded.

It is a tough pill to swallow as it is similar to an all cash out credit card consolidation which is not reportable. We hand over $X to the borrower and hope the monies are used for the purpose intended. In the case outlined above, we do not control funds in any way and have no guarantee the other property is ever purchased.

Everyone's input is appreciated. Thanks again.

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