Criticized for Gathering Info on HE Refi Loans

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Question:

We recently had an FDIC compliance exam and were criticized for gathering information on some home equity refinanced loans. We had been told in the past that if it was a refi, we should get the info...we are not a HMDA reporting bank. This examiner said that according to Regulation B it depended on what the principal percentage of what the refi was used for...either purchase money or HE. We checked with several non-HMDA banks and they are doing it like us. The examiner said we could question it, but this was his determination. Any help?

Answer:

If you refer to the commentary to 12 CFR 1002.13, it gives you some pretty clear guidance on when you can and cannot gather this information, for example:

Transactions not covered. The information-collection requirements of this section apply to applications for credit primarily for the purchase or refinancing of a dwelling that is or will become the applicant's principal residence. Therefore, applications for credit secured by the applicant's principal residence but made primarily for a purpose other than the purchase or refinancing of the principal residence (such as loans for home improvement and debt consolidation) are not subject to the information collection requirements.

First published on BankersOnline.com 7/9/12