Posted By: Linkpars
Purpose vs. Collateral - 07/16/15 02:14 PM
I have a loan that is marked as a refinance, but the funds are going to purchase land only. Since a purchase trumps a refinance would this not be listed on the lar? Also, this is for a denial, but I wouldn't think it would matter either way, approved or not.
Posted By: Adam F
Re: Purpose vs. Collateral - 07/16/15 02:18 PM
See the definitions of purchase and refinance:
A home purchase loan is any loan secured by and made for the purpose of purchasing a dwelling.
A refinancing is any dwelling-secured loan that replaces and satisfies another dwelling-secured loan to the same borrower. For reporting purposes, both the existing obligation and the new obligation must be secured by liens on dwellings.
Does the loan meet the definition of a refi for HMDA?
Do you have the same borrowers, and both the loan being paid off and the new loan are secured by residential real estate?
Posted By: Linkpars
Re: Purpose vs. Collateral - 07/16/15 02:21 PM
The loan would be refinancing against the home and I guess the equity they have in the house would be used to purchase the land.
Posted By: Adam F
Re: Purpose vs. Collateral - 07/16/15 02:25 PM
Sorry, I misread your post at first.
The purchase would not trump refinance if it was just to purchase land only with no dwelling.
Remember the definition of home purchase for HMDA which I listed in my first post.
If no loan secured by residential real estate is being paid off, this loan is not a refinance for HMDA; it would be a non-reportable cash out equity loan.
It is not a purchase because land purchases are not reportable for HMDA and it is not a home improvement loan.