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#879106 - 12/27/07 04:22 PM 2nd mtg to build horse barn
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I have a loan where customers have taken out a second mortgage loan for construction of a horse barn. To complicate matters further, loan notes in file state the original purpose of this loan is to "construct horse barn, help pay closing costs and pay down loan amt to refi. 1st mortgage (avoiding escrow, lower rate etc), and combine other debt". The amount needed to avoid escrow on the first morgage was added into a note with other debt and set up for 7 days; at which time the loan was paid off and absorbed into another loan. This happened several times and now construction of horse barn is complete and we are looking to see if we report this loan under HMDA. Any suggestions on how or if we report?

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#879175 - 12/27/07 05:04 PM Re: 2nd mtg to build horse barn Relax
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Assuming there is a dwelling on the property that now includes the horse barn, this would be reportable as a home improvement loan.

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#879319 - 12/27/07 07:03 PM Re: 2nd mtg to build horse barn hmdagal
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My PBS seminar trainer is telling me it is not HMDA. I am confused.
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#879336 - 12/27/07 07:33 PM Re: 2nd mtg to build horse barn Relax
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Did they say why it wasn't reportable? Could it be temporary financing?

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#879346 - 12/27/07 07:41 PM Re: 2nd mtg to build horse barn hmdagal
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It is not temporary. I asked him if the auditor would view it as home improvement and he said no, people aren't living there. It is not a purchase of a dwelling, a refi, or home improvement of a dwelling. Thats all I got from him.
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"I like a little rebellion now and then. It is like a storm in the atmosphere." -Thomas Jefferson

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#879356 - 12/27/07 07:49 PM Re: 2nd mtg to build horse barn Relax
Dan Persfull Offline
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Bloomington, IN
I will assume the horse barn is not located on the same property as the dwelling that the subordinate lien was taken on and that there is no other dwelling located on the same property as the horse barn. If that assumption is correct then it is not reportable.
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#879388 - 12/27/07 08:16 PM Re: 2nd mtg to build horse barn Dan Persfull
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It is located at the same address as the primary residence. So, as I gather, it may indeed be HMDA.
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"I like a little rebellion now and then. It is like a storm in the atmosphere." -Thomas Jefferson

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#879414 - 12/27/07 08:41 PM Re: 2nd mtg to build horse barn Relax
hmdagal Offline
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Look at the first part of the definition of home improvement:

(1) A loan secured by a lien on a dwelling that is for the purpose, in whole or in part, of repairing, rehabilitating, remodeling, or improving a dwelling or the real property on which it is located;

Your customer is improving the real property on which a dwelling is located.

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#879468 - 12/27/07 09:50 PM Re: 2nd mtg to build horse barn hmdagal
Dan Persfull Offline
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Bloomington, IN
I agree. This definitely sounds like a HI loan.
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The opinions expressed are mine and they are not to be taken as legal advice.

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