Refinance: Trust to Individual =Same Borrower?

Posted By: Dodge

Refinance: Trust to Individual =Same Borrower? - 10/09/12 01:46 PM

I wanted to make sure I was on the right track for HMDA on the following situation. We did a loan in the name of a Trust secured by a dwelling in 07. We are now refinancing the loan, but the trust dissolved and the borrower will be an individual name. The ownership changed back in September from the Trust to the individual, so it will not be part of the loan transaction. Am I right to assume that this loan is not HMDA since it is not to the same borrower (Trust to Individual), refinance? Also, since ownership changed prior to our loan then it will not be a purchase? Also, the individual was a trustee on the Trust, but that does not make a difference correct?
Posted By: hmdagal

Re: Refinance: Trust to Individual =Same Borrower? - 10/09/12 04:36 PM

Your thinking is correct. However, I would be surprised if the individual was not a co-borrower on the original loan. If they were, then the new loan would be a refi.
Posted By: Truffle Royale

Re: Refinance: Trust to Individual =Same Borrower? - 10/09/12 04:40 PM

I agree with hmdagal.
We do trust loans to both the individual and the Trust, largely because the trust has no income to qualify on it's own.
In my scenario, this loan would be a refi.
Posted By: fslic banker

Re: Refinance: Trust to Individual =Same Borrower? - 01/24/13 03:21 PM

I couldn't find what I was looking for after a brief review so will ask. In this same vein, if husband and wife were co-borrowers on previous loan secured by their primary residence (both on loan and deed) and due to divorce, wife is refinancing loan (new credit underwriting, paying off existing note, etc) and new loan will be in wife's name only should this be reported as a refi for HMDA purposes?
Posted By: Truffle Royale

Re: Refinance: Trust to Individual =Same Borrower? - 01/24/13 03:53 PM

oh there's a TON of discussion on this topic. Try searching 'divorce' in the HMDA and Lending forums with Dan Persfull as the poster.

Basically you'll find two camps on this topic.
One follows the logic that the wife is PURCHASING the ex-husband's interest so they treat it as a purchase.
The other camp (mine) recognizes the wife already owns and is merely refinancing to get rid of him so we treat it as a refinance.
Read some posts.
Pick a stance.
Stay consistent with whichever stance you chose.