HMDA - Refinance of a Short Term Loan

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Question:

Our department recently attended a web seminar about HMDA and we had a recent issue that created a question. We had a loan that was a three month bridge loan of a RE property and it was not reported as HMDA because of it being short term and refinancing into permanent. It is now being refinanced for another term of three months with a higher interest rate. Does it now become HMDA reportable because it is refinanced, or not because it is still short term?

Answer:

First, never rely on the term to decide if the loan is subject to HMDA reporting. Short term loans are reportable, temporary loans are not. I am assuming the reason the "bridge" loan is being renewed/refinanced is because the property has yet to sell and the repayment of the bridge loan is based on the sale of the property. If that assumption is correct the renewal/refinancing of a bridge loan does not lose its temporary status. However, once the bridge loan is placed into permanent financing then it would become a reportable transaction.

First published on BankersOnline.com 5/14/07