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#51812 - 01/03/03 12:10 AM
Workout
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Anonymous
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We have a loan that is a workout for a car loan. No new $, taking a lean on their primary residence as extra precaution. Can a consumer application be used or should we have a R/E application?
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#51814 - 01/03/03 01:17 PM
Re: Workout
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While you do not need a 1003 application, you do need to look at the applicability of flood, RESPA and parts of Reg. Z addressing home loans.
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AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#51815 - 01/03/03 01:55 PM
Re: Workout
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Anonymous
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I agree w/ Andy, If a residential property is being used to secure the loan.
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#51816 - 01/03/03 02:01 PM
Re: Workout
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Anonymous
Unregistered
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You need to give the ROR. If they did rescind, it would only remove the home from the loan and the new money in connection with securing the property (ie flood determination, recording fees), the original funds would still be owed.
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#51818 - 01/03/03 02:18 PM
Re: Workout
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Galveston, TX
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If the existing debt was secured by a lien on a dwelling I would agree with you. However, since the previous loan was secured by a lien on a automobile, I would be hard pressed to justify reporting this under HMDA. Refer to page 25 in "Getting it Right". It clarifies that the existing loan has to be secured by a dwelling.
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#51819 - 01/03/03 02:56 PM
Re: Workout
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Posts: 47,673
Bloomington, IN
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I agree with Randy that this loan is not subject to HMDA.
The original post indicates this is an auto loan that is being redone with no new money and they are taking a lien on the property primarily as an abundance of caution, which would indicate that the lien is probably a junior lien.
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The opinions expressed are mine and they are not to be taken as legal advice.
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#51820 - 01/03/03 03:05 PM
Re: Workout
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But the thought provoking point is valid. Don't dismiss HMDA as the loan may be structured such that HMDA is applicable.
The original post didn't indicate that another lender of any kind was going to be paid off, but we all know that postings are not always complete. For someone researching this later, it does clear up for the reader that HMDA could apply in some circumstances.
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#51821 - 01/03/03 05:09 PM
Re: Workout
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Power Poster
Joined: Apr 2001
Posts: 4,828
Between the lines
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Never underestimate loan officers!!!! This same situation came up at our bank today----or maybe the anon poster was our bank! Anyway, thanks.
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#51823 - 01/03/03 07:54 PM
Re: Workout
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I initially thought the same thing about the rate but categorized my advice in general terms since in a workout situation as this seems, they should be more concerned with a return of the money, than a return on the money.
_________________________
AndyZ CRCM My opinions are not necessarily my employers. R+R-R=R+R Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell
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#51824 - 01/03/03 08:51 PM
Re: Workout
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Anonymous
Unregistered
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The loan is simply an auto loan that is being reworked and is not HMDA reportable. CAnderson I am not from Mississippi, just a coincidence I guess.
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#51827 - 01/03/03 09:34 PM
Re: Workout
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10K Club
Joined: Aug 2002
Posts: 47,673
Bloomington, IN
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Jack, based on the following assumption I have to disagree that this loan may be reportable:
They are refinancing a car loan.
They are taking a junior lien on the home to "shore up" the loan.
If the assumptions are correct they are refinancing a car loan and not a home loan, thus this loan is not reportable as it is not for the purpose of purchasing, refinancing or rehabilitating a dwelling or the property upon which the dwelling is located.
PS. I enjoyed your 2002 Loan Pricing Issues Seminar you conducted fot the IBA back on 7/1/602.
Last edited by dpersfull; 01/03/03 09:37 PM.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#51829 - 01/03/03 11:52 PM
Re: Workout
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10K Club
Joined: Aug 2002
Posts: 47,673
Bloomington, IN
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In reply to:
7/1/602.
Hey I look good for my age don't I? Ok, so I can't type, it was suppose to be 7/16/02
If they are taking a first lien on this property, then I would agree that this loan may be reportable. But I still contend that if the loan is a junior lien it would not be, becasue taking a junior lien would not be refinancing the dwelling. I don't think this loan could be reported as a refinancing under HMDA.
iii. Assume that the new obligation is a refinancing of a home-purchase or home-improvement loan only if the new obligation will be secured by a lien on a dwelling." In this case I don’t think you can “assume” this is a refinancing of a home purchase or home improvement loan simply because you are taking a lien on the dwelling.
From Jack’s post: According to Regulation C, "An institution may always determine the actual purpose of the existing obligation.
You have determined the purpose of the existing obligation, You know the loan you are refinancing is a car loan and not a home purchase or home improvement loan.
And, if they were taking a first lien and there is no outstanding loan on the dwelling then I also would contend that the loan would not be reportable, as you are not refinancing any type of existing obligation on the dwelling, and the existing obligation you are refinancing is not secured by a dwelling nor is the loan's purpose to purchase, refinance or rehabilitate a dwelling.
MHO.
_________________________
The opinions expressed are mine and they are not to be taken as legal advice.
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#51831 - 01/05/03 08:25 PM
Re: Workout
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10K Club
Joined: Aug 2002
Posts: 47,673
Bloomington, IN
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Jack, I will concede that this loan MAY be reportable if placing a first lien, which I did alude to earlier, but I will stick by my convictions if it is a junior lien.
The new ruling for 1/1/04 will eliminate these type docussions becasue if the loan is secured by a lien it will be reportable. As far as I'm concerned that will make things easier.
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The opinions expressed are mine and they are not to be taken as legal advice.
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