Collecting GMI on a Refi of a HELOC

Posted By: M&M

Collecting GMI on a Refi of a HELOC - 02/27/20 01:42 PM

I know that on a HELOC, which is secured by the primary residence, used for remodeling a bathroom, we do not collect GMI under Reg B. If the borrower then refinances that same HELOC, which is still secured by the primary residence, do we collect GMI? We have conflicting opinions here on whether GMI is required since the HELOC is secured by the primary residence and is a "refinance". However, the HELOC is not to purchase the primary residence.
Posted By: Skittles

Re: Collecting GMI on a Refi of a HELOC - 02/27/20 01:57 PM

From Reg B:

1002.13—Information for monitoring purposes.
(a) Information to be requested. (1) A creditor that receives an application for credit primarily for the purchase or refinancing of a dwelling occupied or to be occupied by the applicant as a principal residence, where the extension of credit will be secured by the dwelling, shall request as part of the application the following information regarding the applicant(s):

Collection is also required for refinancing of the primary residence of the applicant. In my opinion - refinancing a HELOC secured by the applicant's primary residence requires collection for Reg B purposes.
Posted By: M&M

Re: Collecting GMI on a Refi of a HELOC - 02/27/20 04:04 PM

Thanks. The argument I’m having difficulty with is the fact that we don’t collect GMI for the initial HELOC application, which is secured by the primary residence, but we would be required to collect GMI on a refi of that same HELOC 5 years later.
Posted By: Inspector

Re: Collecting GMI on a Refi of a HELOC - 02/27/20 04:35 PM

I would agree with Skittles based on a strict reading of the regulation but there are multiple opinions on this topic. Check out this thread:

https://www.bankersonline.com/forum...g-b-government-monitoring-info-and-refis