If the original loan and the refinanced loan are both secured by a dwelling, must there by additional funds for it to be HMDA reportable?

I don't think there has to be additional funds to qualify as a refinance. My understanding of the definition of refinancing is: one loan is paid off and a new loan created AND both loans are secured by a dwelling.

I'll also share a response I got back from the HMDAhelp@frb regarding the following question --
"If a financial institution does not report Home Equity Lines of Credit, what, if any, is the reporting requirement under the following circumstance:

"Consumer closes a Home Equity Loan (closed-end loan) that is secured by a dwelling and replaces it with a Home Equity Line of Credit (open-end loan) that is secured by a dwelling."

HMDAhelp response was: "Based on the specific scenario you described below, a refinance of a HELOC will still be optional to report on HMDA."

This question has been debated many times in this format. According to a response I received from HMDAhelp@frb renewals should not be included on the HMDA LAR. The response was:

“Balloon loans are to only be reported once. Do not report the renewals of balloon loans.”

And to clarify I asked about including the renewal on the HMDA LAR beginning in 2004 they responded with:

“Renewals are still not reportable for 2004 and forward.”

May I ask for your definition of a "renewal"?

In my question to the FRB I did not define what a renewal was or was not, just that it was simply a renewal of a balloon loan and secured by a dwelling.

The term "refinancing" has been well documented in this forum.

However, a "renewal" has not.

In Appendix A, Section 1,A,5 it states:

Quote:

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a. Do not report a refinancing if, under the loan agreement, you were
unconditionally obligated to refinance the obligation, or you were obligated to
refinance the obligation subject to conditions within the borrower's control.

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This section may or may not apply to your balloon loan, depending on the circumstances.

At my former bank, we did numerous balloon loans, but we "satisfied and replaced" the old note with a new note at each "renewal", and we were not unconditionally obligated to refinance, therefore, we reported them as HMDA loans each time.

If you are doing this, then I would recommend that you revisit the HMDA Help Line and give them all the facts pertaining to your "renewal", and get another opinion.

After some clean-up here is the conversation.

FRB - response:

Renewals are still not reportable for 2004 and forward.

Jesse - question:

Thank you for your response to my question.

Will this statement regarding renewal of balloon loans still be true for reporting loans secured by a dwelling on the LAR in 2004 also?

Sincerely,

Jesse

FRB - response:

Balloon loans are to only be reported once. Do not report the renewals of balloon loans.

Thank you for using HMDAHELP. Do you have the 2003 version of "The Guide to HMDA Reporting: Getting It Right!"? If not, go to
http://www.ffiec.gov/hmda/pdf/guide.pdf


Jesse - question:

To Whom It May Concern:

My questions are as follows:

Are we required to include renewals of balloon loans secured by dwellings as refinancings on the HMDA LAR?

1. Our loan agreements do not state that we "are unconditionally obligated to refinance the obligation, or you (we) are obligated to refinance the obligation subject to conditions within the borrower's control."

2. Our previous loan agreements state on the face of the new obligation that "This Note renews and does not satisfy or discharge a Note I executed to the Lender on _________________.

3. The software program that we currently use to draft our loan paperwork does not refer to previous notes. However, the statement in point number 2 could be inserted into our contracts if the bank should not be reporting renewals as refinancings on the HMDA LAR.

Should we include the statement quoted in point number 2 on our loan
documents?

If this statement is added are we still required to include the renewal on the HMDA LAR?

Sincerely,

Jesse

Quote:

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1. Our loan agreements do not state that we "are unconditionally obligated to refinance the obligation, or you (we) are obligated to refinance the obligation subject to conditions within the borrower's control."

2. Our previous loan agreements state on the face of the new obligation that "This Note renews and does not satisfy or discharge a Note I executed to the Lender on _________________.

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Since the above statements now clarify the facts, I would say your response from the FRB was correct.

Because this post was about "refinancings" and not "renewals"; I just wanted to make sure we were all on the same page.