We are about to start offering a 2nd mtg purchase money LOC.
I found a previous post that indicated that a HELOC used for a purchase money is a purchase money loan. Now here comes the confusion. If I give a HELOC disclosure do I still need to give a GFE? Should I give all of the normal purchase money disclosures in addition to the HELOC disclosure? We do not report our lines of credit for HMDA purposes but since this is a purchase, should we count this as a purchase?

Section 7(f) of HUD's Regulation X states:

"(f) Open-end lines of credit (home-equity plans) under Truth in Lending Act. In the case of a federally related mortgage loan involving an open-end line of credit (home-equity plan) covered under the Truth in Lending Act and Regulation Z, a lender or mortgage broker that provides the borrower with the disclosures required by 12 CFR 226.5b of Regulation Z at the time the borrower applies for such loan shall be deemed to satisfy the requirements of this section."

The early TIL disclosure requirement is in Section 19 of Regulation Z applicable to closed end loans.

As to the HMDA question, page 10 of the FFIEC publication A Guide to HMDA Reporting Getting it Right! found at http://www.ffiec.gov/hmda/pdf/guide.pdf states the following:

"Home equity credit lines for home purchase or improvement may be reported at the institution’s option. Report only the amount that is intended for home purchase or home improvement purposes. An institution that reports home equity credit line originations must also report any applications that do not result in an origination."

And don't forget that the customer has to at least intend to use this as a line. Your sales people shouldn't be positioning it as an interest only product where the balance can just sit there.

Don't forget rescission also. Although the initial purchase-money advance is not subject to rescission, any subsequent advances would be.

We choose not to report lines of credit under HMDA. Would we need to collect GMI under Reg B if the purpose of the line is to purchase and just not report it under HMDA? Or do we not collect GMI at all?