Borrower had three loans with a FI...two secured by Equipment, and one was a 2nd mortgage on his primary residence, all for the purpose of purchasing equipment. Our FI paid off all 3 notes from the other FI and consolidated all 3 loans into one, taking the liens on the equipment as well as the 2nd lien position on his home. Does this qualify as a refinance for HMDA purposes? Thanks!

Yes.

It satisfies and replaces an existing lien on a dwelling - Yes, I would report it.

I guess I got confused by reading the definition of a refinance in the Reference Guide to Regulatory Compliance which said under Loans Covered, "Refinancings of loans secured by residential property (including one-to-four family and multifamily homes) that were originally made for the purpose of purchase or home improvement." The loan we refinanced was not originally for the purpose of purchase or home improvement.

How old is that guide?

Since Jan 2004 a reportable refinancing is any dwelling secured loan that satisfies and replaces another dwelling secured loan to the same borrower.

Yikes, it better not be outdated...I just got it from the ABA...it is their official study guide for the CRCM exam!! It is their sixteenth edition, 2006 edition.

I've not seen this guide but make sure you are looking at the reporting requirements then and not the coverage requirements. See 203.2(k)(1)&(2).

203.2(K)(1)&(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), 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.



I am a bit confused. What is the definition of covered purpose?

If I have a loan that initially was a loan for working capital, with residential real estate taken as part of the collateral.

In this example the original obligation was not a home purchase. So it would not meet the definition of …(K)(1) When that loan is renewed will it be a HMDA loan? ….(K)(2) says it is.

(k)(1) outlines the definition of a refinancing to determine if your institution is covered by Reg. C under the provisions of 202.2(e)(iii).

If you are covered by Reg. C under (k)(1) then you must report all covered refinancing loans under the criteria of (k)(2).

I get it now thanks