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#501129 - 02/20/06 03:34 PM HMDA Purchase or Refi ??
OldSchoolBanker Offline
Platinum Poster
Joined: May 2005
Posts: 662
FL
1) We have an applicant who applied to "buy out" the coowner of the property. Non spousal co-owners on a home, one has applied for a cash out refi to buy out the other person's interest in the property.

Proeprty is free and clear thus it is all cash out refinance, no liens on property. Property currently owned by both, but with this transaction, will be owned only by our applicant.

I am leaning to purchase as there is monetary exchange and deed changes occuring.

2) I have another one similar buy out scenario, but the property has liens on it, but still is cash out. This one could be a refinance as there are liens satisfied. Anyone agree refinance or should it be purchase?

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Lending Compliance
#501130 - 02/20/06 05:37 PM Re: HMDA Purchase or Refi ??
Dan Persfull Offline
10K Club
Dan Persfull
Joined: Aug 2002
Posts: 47,517
Bloomington, IN
1. We would not report this transaction. We treat these transactions as refis and in this case it doesn't meet the definition of a refi. However, some treats these as purchases and thus it would be reportable. The key is to be consistent in how you report them.

2. We would report as a refi, but as mentioned in #1 some would treat it as a purchase. Again consistency.

Both 1 & 2 are subject to the ROR under Reg. Z, whether you treat it as a refi or purchase for HMDA. Also since there is a transfer of title you should use the HUD 1 and not the HUD 1A.
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The opinions expressed are mine and they are not to be taken as legal advice.

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