I have searched the forums and did not see this addressed.

In the 2004 HMDA there is a statement:

In determining whether loan proceeds are intended for home improvement purposes, lenders may rely on applicants’ statements, and are not required to take other steps to determine loan purpose.

Okay, the applicant has indicated the purpose as vacation , home improvements , and other . But they have no guess how much will be used for home improvement.

Assume the loan is dwelling-secured…

What is the loan amount? (Does the bank “guess the amount” for the borrower? Does the bank simply report the total loan amount?)

Assume the loan is not dwelling-secured but will be classified as home improvement…

What is the loan amount? (Does the bank “guess the amount” for the borrower? Does the bank simply report the total loan amount?)

Guidance please.

Assuming your transaction is a loan and not a line, the loan amount is the total amount of the loan, irregardless of how much is actually used for home improvement. I don't believe this has changed, all that has changed for home improvement loans is that it is no longer necessary to classify dwelling-secured loans as home improvement.

Yes, your assumption is correct – loan not a line.

Well, I brought this up because the FED’s section-by-section analysis explains that a bank may rely on the applicants’ statement but does not provide any guidance if the applicant does not give a statement (of how much $ is for HI). The least cumbersome task is to report the full amount as HI.

Thanks for the comments.

"all that has changed for home improvement loans is that it is no longer necessary to classify dwelling-secured loans as home improvement. "

Please explain further, I did not fillow this statement. Thanks.

As I understand the rules going into effect 1/04 if a loan is secured by a dwelling and is paid off by another loan secured by the dwelling it is reportable regardless of the loan's purpose.

As an example (and I understand this is trying to be amended) if you make a business purpose loan secured by the borrower's dwelling that loan is not reportable because of the loan's purpose, but if the borrower comes back at a later date to refinance the loan (for whatever reason) and the loan remains secured by the dwelling it is now reportable as refi.

If this understaning is incorrect, someone please correct me.

It does not matter how much $$ is used for home improvement. Purchase trumps home improvement; home improvement trumps refinance. So if you rely on the applicant's statement:

"if any $ is for purchase - report purhase. If none:
"if any $ is used for home improvement - report home improvement. If none;
report refinance.

Dan, that's the way I understand the new rules for refinance also - and I haven't heard any more about changes being made to it.