HMDA - Refinance or purchase

Posted By: Vander

HMDA - Refinance or purchase - 03/15/22 08:29 PM

We have loan A, which was a refinance plus funds for home improvement. This loan was set up on 12 month interest only payments and was intended to be replaced with permanent financing. We now have loan b, which refinances the balance of loan A. I'm not sure if this follows the rule like interim to permanent financing and would be considered a purchase. Or, since the first obligation was extinguished and satisfied with a new debt, be a refinance?
Posted By: raitchjay

Re: HMDA - Refinance or purchase - 03/15/22 08:34 PM

Definitely not a purchase as described. Not home improvement, as no new funds for home improvement are included. Reportable as a refinance.
Posted By: Vander

Re: HMDA - Refinance or purchase - 03/15/22 08:35 PM

Refinance was my gut, but the more I thought about it, the more I questioned myself!
Posted By: raitchjay

Re: HMDA - Refinance or purchase - 03/15/22 08:36 PM

There's been an age-old argument about whether to extrapolate the explicit instruction to report the permanent financing that replaces a construction only loan as purchase over to other categories. I've always been of the belief that it would have taken about 15 words to accomplish that if the writers of Reg. C had intended, but those words are not there....so that's why i have always been in the refinance camp for these kinds of loans.

ETA: and with the changes to Reg. C that place refinance above home improvement in the waterfall, i feel like that's just more reason to be of that belief.
Posted By: Truffle Royale

Re: HMDA - Refinance or purchase - 03/23/22 04:28 PM

You can only build a house once. You stated that the loan being paid off was a cash out refinance. There's no way this could be a purchase for HMDA. It cannot be Home Improvement either because, as raitchjay pointed out, refi trumps HI.
Posted By: JoAnne S

Re: HMDA - Refinance or purchase - 03/24/22 02:30 PM

Similar question: Borrowers got a gift of money from parents to purchase a home. No loan was obtained. They are now wanting a loan to repay parents secured by the principal residence. Half of us are saying refinance and the other half are saying it is Other for HMDA purpose. No secured debt was extinguished or paid off.
Posted By: rlcarey

Re: HMDA - Refinance or purchase - 03/24/22 02:48 PM

(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.

I also fail to see how this is a refinance.