Good morning!
If the loan is an additional advance (separate loan from the 1st mortgage loan we have) for home improvement and the loan officer’s comments state “underwritten as if unsecured, we are taking an abundance of caution lien on the home….”, how would we report the lien status? The secretary has indicated 3 = not secured by a lien. There is a separate recorded RE Mortgage for this loan.

Thanks in advance!
Lele

If you took a mortgage, it's secured by a lien. Sounds like a 2nd to me.

Please, remove "abundance of caution" (ABC) from your mind when it comes to ALL compliance regulations. The only rule that consider "ABC" is the certified/licensed appraisal rules. RESPA, Flood, TIL, HMDA, etc. ALL of them say "if you have it, you play".

David - I don't understand your response past remove ABC. Would you agree with hmdagal that it is a 2nd?

You have a second. The term "Abundance of Caution" means nothing. You still record a Deed and take a lien.

Even if you don't record your mortgage, you have a lien. Recording is how your perfect the lien - when they sign the mortgage they have given you a lien on the property.

Very true. Thanks for that clarification, HMDAGAL!

I've seen too many bankers try to find a way out of complying

Thanks for clarifying for me Kermie and hmdagal.

lele: my point is Abundance of Caution (ABC) gets you out of NOTHING. When a lender says "this is just an ABC", you should tell them "so, we still must comply with ALL regulations." Show me one place in a regulation where it says "don't worry about this requirement if the collateral is taken as an ABC."

The only one you'll find is Appraisal requirements [FDIC Part 323.3(a)(2)] and even there it is limited to less than most loan officers realize.