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#503292 - 02/23/06 03:51 PM
Re: HMDA Question Please
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10K Club
Joined: Aug 2002
Posts: 47,152
Bloomington, IN
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FWIW, I agree with Bliss.
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#503294 - 02/23/06 04:05 PM
Re: HMDA Question Please
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Joined: Aug 2002
Posts: 47,152
Bloomington, IN
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Yes. Under the Q&A the loan does not qualify as temporary financing.
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#503295 - 02/24/06 08:31 PM
Re: HMDA Question Please
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Power Poster
Joined: Mar 2004
Posts: 6,172
Further South than I wanna be.
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Hey Bliss, you go girl. Good stab.
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#503296 - 02/25/06 03:10 PM
Re: HMDA Question Please
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100 Club
Joined: Mar 2005
Posts: 126
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If no money is being used for improvements I wouldn't report it. You aren't replacing a loan used to purchase the dwelling (regardless of whether that loan was HMDA reportable), it doesn't meet the definition of a refinance.
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#503297 - 02/25/06 04:13 PM
Re: HMDA Question Please
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Power Poster
Joined: Apr 2005
Posts: 3,663
TN
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bgehres-- How is this not a refi? They refinanced an existing loan (the assumption based on the description given is that the bank replaced a dwelling secured note with another dwelling secured note). The original question was if it would qualify as temp financing because they would repay from the sale of a dwelling. I agree with Bliss, Dan, and KC--this is a reportable refi.
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#503298 - 02/27/06 04:40 PM
Re: HMDA Question Please
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100 Club
Joined: Mar 2005
Posts: 126
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Excerpt from Reg C 203.2 -
(k) Refinancing means a new obligation that satisfies and replaces an existing obligation by the same borrower, in which:
(1) For coverage purposes, the existing obligation is a home purchase loan (as determined by the lender, for example, by reference to available documents; or as stated by the applicant)
You're refinancing a refinance, not a purchase loan.
Since it doesn't meet the definition of a refinance, who cares if it's temp financing?
If the loan being refinanced was a purchase loan, then I would report it and not consider it temporary financing.
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#503299 - 02/27/06 04:49 PM
Re: HMDA Question Please
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10K Club
Joined: Aug 2002
Posts: 47,152
Bloomington, IN
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Don't confuse coverage purposes with reporting purposes.
Your cite is a test to see if the financial institution is covered by Reg. C. If the FI meets the coverage test then they must look to the reporting tests for the loans they make. You need to read a little further in your cite for the reporting tests.
Long story short - the loan scenario as presented is a reportable refinancing for a covered institution.
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#503300 - 02/27/06 05:01 PM
Re: HMDA Question Please
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100 Club
Joined: Mar 2005
Posts: 126
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Quote:
Don't confuse coverage purposes with reporting purposes.
That was the definition I was told to use for refinances. During our last exam, we had refinances of loans that were not purchase transactions and were cited for reporting them when we shouldn't have.
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#503301 - 02/27/06 05:26 PM
Re: HMDA Question Please
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10K Club
Joined: Aug 2002
Posts: 47,152
Bloomington, IN
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Then your regulators are confused.
(k) Refinancing means a new obligation that satisfies and replaces an existing obligation by the same borrower, in which:
(1) For coverage purposes, the existing obligation is a home purchase loan (as determined by the lender, for example, by reference to available documents; or as stated by the applicant), and both the existing obligation and the new obligation are secured by first liens on dwellings; and
(2) For reporting purposes, both the existing obligation and the new obligation are secured by liens on dwellings.
If you are a covered institution then any dwelling secured loan that is satisfied and replaced by a dwelling secured loan to the same borrower is a reportable refinancing. Regardless of what any new money (if any) is used for.
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#503303 - 02/27/06 07:08 PM
Re: HMDA Question Please
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100 Club
Joined: Mar 2005
Posts: 126
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Dan,
I agree with you, but I'm going to still going to use their definition (even though I too think it's wrong).
BTW - The exam was in July '05.
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#503305 - 02/27/06 08:32 PM
Re: HMDA Question Please
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100 Club
Joined: Mar 2005
Posts: 126
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We had to scrub our data because they said we had loans on the LAR that shouldn't have been reported.
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#503307 - 02/28/06 02:44 AM
Re: HMDA Question Please
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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Quote:
That was the definition I was told to use for refinances. During our last exam, we had refinances of loans that were not purchase transactions and were cited for reporting them when we shouldn't have.
If I purchase a car using my home as collateral (a home equity loan), it is not HMDA reportable. If later, I refinance this loan, it is reported as a "refinance". Is this loan a dwelling purchase that is being refinanced? No, but it meets the definition in Reg C, so it is reported.
Likewise, if a small business gets a loan and the bank takes the business owners home as collateral, this loan is NOT reported (the first time). If the loan is later refinanced, it is reported (once again, as a "refinance").
There's no question about either of these scenarios or any of the other information being presented to you bgehres. You have a responsibility to your bank to ensure that they follow the regulations correctly, not what an examiner said. The next examiner won't let it slide because some examiner misinformed you. You should email this thread to your examiner and ask them to read it and call you to discuss.
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#503308 - 02/28/06 02:08 PM
Re: HMDA Question Please
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Joined: Mar 2005
Posts: 126
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I don't disagree with you about reporting either one of those situations. I'm just following what I was told from my examiner, who, if I report these loans (refi's of non-purchases) like before they will make us scrub our data again.
BTW - His argument to me was that there was no other definition of a refi in the actual regulation, therefore, that's the definition we should use.
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#503309 - 02/28/06 02:23 PM
Re: HMDA Question Please
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10K Club
Joined: Aug 2002
Posts: 47,152
Bloomington, IN
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You better go to this examiner's supervisor because s/he does not know what they are doing. As David said, you are responsible to insure your institution complies with the Regulation, not the interpretation of an examiner.
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#503310 - 02/28/06 05:05 PM
Re: HMDA Question Please
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Platinum Poster
Joined: Dec 2002
Posts: 862
Mexifornia
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Quote:
"....you are responsible to insure your institution complies with the Regulation, not the interpretation of an examiner."
I think this should be the mission statement of all Audit/Compliance Departments!
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#503311 - 02/28/06 07:27 PM
Re: HMDA Question Please
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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Quote:
I don't disagree with you about reporting either one of those situations. I'm just following what I was told from my examiner, who, if I report these loans (refi's of non-purchases) like before they will make us scrub our data again.
BTW - His argument to me was that there was no other definition of a refi in the actual regulation, therefore, that's the definition we should use.
But we have overwhelmingly showed you that this is wrong. You even agree that it is wrong. Could it be that the examiner mis-spoke or that the examiner was misunderstood? Why would you willing choose to do something that you know is incorrect?
Report correctly. If the examiner comes back and says it is wrong, you point out their error. Your OK. If you don't report it correctly and a new examiner comes in and tells you that you are wrong, saying "last time we were told to do it this way" won't get you anywhere. The new examiner should say exactly what I said in the previous post (you must comply with the requirements).
Have you tried contacting your examiner like I suggested?
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