Down Payment Assistance Programs

Are concurrent second lien loans for down payment assistance on the first lien transaction HMDA reportable?

From Regulation C Commentary: [You can also find this in the GIR]

6. Second mortgages that finance the downpayments on first mortgages. If an institution making a first mortgage loan to a home purchaser also makes a second mortgage loan to the same purchaser to finance part or all of the home purchaser's downpayment, the institution reports each loan separately as a home purchase loan.

Further clarification please. If the loan is a down payment assistance program loan, such as MSHDA, we wouldn't report that as a separate purchase since the state of Michigan underwrote the loan. Correct?

That is going to depend upon individual circumstances. Did the bank underwrite and approve the actual loan to the borrower while the state approved the loan to qualify under its program?

If the bank does not underwrite the transaction and simply originates if the state approved the transaction (given that the bank has already approved the larger purchase loan), then the bank will not report the loan on the HMDA LAR.

So then Kathleen, no one would report the transaction?

Thank you!

That's certainly possible. That's true of many financial institutions not subject to HMDA.