Parent down payment

Posted By: jmm

Parent down payment - 05/15/17 04:36 PM

I believe the following scenario should be reported as "Purchase" for HMDA but would like other opinions. The parent is refinancing existing loan and taking cash our for credit card debt along with funds for downpayment for daughter to purchase a home. I understand if this borrower was purchase another home themselves and this was the downpayment for sure would report it as purchase, but looking for opinion. The only way I knew this was what the funds were for was lender comments in the file. The disbursement funds were given directly to borrower. Any reference in the Reg would be greatly apprciated, I did not find anything definite.

Thanks in advance.
Posted By: raitchjay

Re: Parent down payment - 05/15/17 04:49 PM

If you have a HMDA refi (dwelling-secured on both loans, with at least one borrower the same), then i agree it's reportable, but i would stick with the refinance classification--giving your child a gift doesn't equate to a HMDA purchase.
Posted By: raitchjay

Re: Parent down payment - 05/15/17 04:50 PM

And you aren't going to find anything in Reg. C or the GIR that directly touches on this subject--but what a non-borrower gets to do with gifted funds is irrelevant under HMDA IMHO.
Posted By: JSD

Re: Parent down payment - 05/15/17 08:22 PM

The funds your customer walks away with is not purchasing a home - it is a gift to their daughter. Not reportable transaction here!
Posted By: Truffle Royale

Re: Parent down payment - 05/16/17 03:59 PM

Quote:
The parent is refinancing existing loan...


Sorry, JSD, but I disagree with you.
As raitchjay pointed out, the parent is refinancing.
Right there you have a reportable Refinance for HMDA.
Paying off additional debt and gifting money to child do not change that.
Posted By: JSD

Re: Parent down payment - 05/16/17 05:04 PM

TR - you are correct that it would be refi. I was focused on the gifting!