GMI on Refinance Q & A - Clarification Needed

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Question:

In reading a response by Dan Persfull dated 7/7/08 titled "GMI on Refinance" he states that the definition of a refinancing applies whether you are refinancing one of your loans or a loan from another financial institution. However, if I read the definition of refinancing under Reg B - Supplement I (Official Staff Interpretations)it states the following: Sec. 202.13 Information for Monitoring Purposes 6. Refinancings. A refinancing occurs when an existing obligation is satisfied and replaced by a new obligation undertaken by the same borrower. A creditor that receives an application to refinance an existing extension of credit made by that creditor for the purchase of the applicant's dwelling may request the monitoring information again but is not required to do so if it was obtained in the earlier transaction. So do we collect it if we are refinancing the original purchase money from another financial institution or only if we financed the original purchase money?

Answer:

As the definition you quote above states a refinancing is a transaction that satisfies and replaces an existing transaction to the same borrower. So whether I refinance with the existing creditor or a new creditor the transaction is a refinancing. It goes on to say that if, under Reg B requirements, I refinance with the same creditor and they collected my GMI with the original loan they can rely on that information for the refinancing, but a new creditor would have to collect the GMI.

First published on BankersOnline.com 4/06/09