Posted By: George

Assumption - 10/01/18 02:06 PM

Have a loan that was transferred/being assumed by the customer's daughter. Would this be reportable?
Posted By: Adam Witmer

Re: Assumption - 10/01/18 03:53 PM

It depends whether it is considered an "extension of credit." The commentary to Regulation C explains this:

"2. Extension of credit. Under § 1003.2(d), a dwelling-secured loan is not a closed-end mortgage loan unless it involves an extension of credit. For example, some transactions completed pursuant to installment sales contracts, such as some land contracts, depending on the facts and circumstances, may or may not involve extensions of credit rendering the transactions closed-end mortgage loans. In general, extension of credit under § 1003.2(d) refers to the granting of credit only pursuant to a new debt obligation. Thus, except as described in comments 2(d)-2.i and .ii, if a transaction modifies, renews, extends, or amends the terms of an existing debt obligation, but the existing debt obligation is not satisfied and replaced, the transaction is not a closed-end mortgage loan under § 1003.2(d) because there has been no new extension of credit. The phrase extension of credit thus is defined differently under Regulation C than under Regulation B, 12 CFR part 1002.

i. Assumptions. For purposes of Regulation C, an assumption is a transaction in which an institution enters into a written agreement accepting a new borrower in place of an existing borrower as the obligor on an existing debt obligation. For purposes of Regulation C, assumptions include successor-in-interest transactions, in which an individual succeeds the prior owner as the property owner and then assumes the existing debt secured by the property. Under § 1003.2(d), assumptions are extensions of credit even if the new borrower merely assumes the existing debt obligation and no new debt obligation is created."

So, do you have an extension of credit based on how your transaction is being established? If so, it would be reportable (barring other exemptions of course).
Posted By: George

Re: Assumption - 10/01/18 08:07 PM

Based on what you provided, yes, I believe ours is definitely reportable. Thank you very much, I appreciate your help!