I need to make sure I'm understanding these scenarios correctly. The borrower owns a dwelling free & clear and the 'cash out' loan will be used to pay down (not payoff):

- an Ag or Commercial loan or line of credit - this is not reportable even if the loan/line being payed down is dwelling secured. If this new loan is refinanced/replaced in the future with another dwelling secured loan, then it will be reported.

- consumer credit card debt - this is reportable as "Other/consumer home equity" (if not purchase/refi/home improvement)

If the borrower has an existing lien on the dwelling and they will replace the original loan and get cash out to
- pay down a Ag/Commercial/consumer debt - it is reportable.

1st scenario (Ag/Commercial loan): You are correct. This is not reported for HMDA. First, ALL ag loans are exempt. If non-Ag, commercial purpose, then only if it is used to purchase, refinance or improve a dwelling. Since this is a business operating loan, it is NOT reported (the first time). IF you were to refinance this loan, it would be reported (as a refinance).

2nd scenario (credit card): You are correct. This is reported as an other purpose.

3rd scenario (existing lien replaced to pay down a loan). Let's break this apart.
If it's for Ag purposes, it is not reported. ALL ag loans are exempt.
It would be repotted if the purpose was for Commercial or consumer reasons. You have an existing, dwelling secured loan, that you are replacing with a new, dwelling secured loan. The purpose of those funds won't matter (unless it was an exempt reason - like all Ag loans).

Concerning Ag loans: §1003.3(c)(9) tells us not to report any applications for loans or lines primarily for agricultural purposes. Also, Comment #1 to this section tells us not to report any loans where there's a dwelling on land that is used primarily for ag purposes (a farm).

We did some additional research on the 1st scenario. The property was originally 1600+ acres of ranch land that included the borrower's primary residence. That property secured an existing Ag term loan with us. The borrower surveyed off the house and 40 acres and that property was used for the new cash out loan on secondary market. The cash out funds were used to pay down the Ag term loan. Still Ag purpose?

This has always been an interesting dilemma BA. Just because they "carved out" the house from the farm, does that make it not a "house located on property used primarily for ag purposes?" I can see it both ways. They separated the land legally so it could be sold on the 2nd market. Your borrowers own both the "house land" and the "farm land" attached to it. In my opinion, this house is still part of the farm.

Great information, thank you David!