Refi or Other

Posted By: Melissa S

Refi or Other - 09/20/21 07:43 PM

I have an entity borrower that had an existing commercial loan made for the purpose of purchasing the non-real estate assets of another business. The collateral to this loan was a 1st security interest in the purchased assets, and two junior mortgages, on on each of the guarantor's personal residences.

The borrower recently came back to us as they wanted to purchase a new vehicle such as a Kenworth or Freightliner along with another piece of equipment. The borrower decided to wrap all the debt into one loan and asked to refinance the existing loan with cash out to facilitate the equipment purchase. The NEW loan was to be collateralized by the new equipment purchased, the business assets previously purchased, and a junior mortgage on ONE of the two original personal residences.

My feeling is that this is reportable as HMDA - even thought the purpose is to purchase equipment - because I have a residential property refinance.

Am I on the right track?
Posted By: Cowboys Fan

Re: Refi or Other - 09/20/21 08:12 PM

Yes. It sounds like you are satisfying and replacing the 1st loan rather than modifying it so it's a refi (assuming your borrower on the new loan is the same).
Posted By: Melissa S

Re: Refi or Other - 09/20/21 08:42 PM

Yes, exact same borrower.

Thank you!