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#2232245 - 03/03/20 09:55 PM HMDA refinance or modification?
debbie sluder Offline
Member
Joined: Oct 2011
Posts: 50
I'm sorry another question...on some of our loans we do modification agreements. Basically just a change in terms. I've been told that is considered a refinance under HMDA. I'm not in agreement, I always understood a refinance is where your new dwelling secured debt (loan) replaces and satisfies the old dwelling secured debt (loan). On our modifications all we do is change the terms, we do not replace or satisfy anything. Can someone give me the definition of a refinance?
Last edited by Truffle Royale; 03/04/20 04:00 AM. Reason: edited thread title
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#2232261 - 03/04/20 03:59 AM Re: HMDA refinance or modification? debbie sluder
Truffle Royale Offline

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Joined: Jul 2003
Posts: 17,395
Consider the source, namely who is this someone that's telling you it's a refi and what are they basing it on?
The definitions are in the GIR and you reiterated it in your question. If it doesn't satisfy and replace, it's not a refi.

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#2232273 - 03/04/20 02:35 PM Re: HMDA refinance or modification? debbie sluder
Inherent_Risk Offline
Platinum Poster
Joined: Jan 2017
Posts: 570
If you need the citation:

1003.2(p) Refinancing means a closed-end mortgage loan or an open-end line of credit in which a new, dwelling-secured debt obligation satisfies and replaces an existing, dwelling-secured debt obligation by the same borrower.

Doesn't sound like a refi unless you are in New York and the below applies:

Comment 2. New York State consolidation, extension, and modification agreements. Where a transaction is completed pursuant to a New York State consolidation, extension, and modification agreement and is classified as a supplemental mortgage under New York Tax Law section§ 255, such that the borrower owes reduced or no mortgage recording taxes, and where, but for the agreement, the transaction would have met the definition of a refinancing under § 1003.2(p), the transaction is considered a refinancing under § 1003.2(p). See also comment 2(d)-2.ii.

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#2232324 - 03/04/20 06:36 PM Re: HMDA refinance or modification? debbie sluder
David Dickinson Offline
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David Dickinson
Joined: Nov 2000
Posts: 18,762
Central City, NE
Think about this from a contractual standpoint, not an "in-house" term.

Refinancing means Loan A is satisfied/replaced/extinguished with Loan B. A modification, extension, renewal (or whatever you want to call it) is where Loan A still legally exists but is changed someone with an extra agreement. The extra agreement typically has 3 parts:
1. It references the existing loan;
2. It states what is changing; and
3. Has a statement like this "All other terms and conditions remain the same."

Now, there's more criteria to be met to meet the definition of "refinance" in HMDA, but I hope that helps.
_________________________
David Dickinson
http://www.bankerscompliance.com

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