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The Masses Are Still Confused on Refinancings

Question: 
This is specifically for David Dickinson, please. Your "Distinguishing Between Renewal and Refinancing" article published on BOL 1/5/04 answers a specific question that we have been attempting to get a clarification on from FDIC (with no luck yet). However, discussions previously in BOL have indicated differently - stating that various FRB seminars have indicated "new note - reportable"; Mary Beth's article in June, 2003 indicated if there is a new note, it is HMDA reportable; your posting "HMDA - refinance vs renewal" 6/13/01 you indicated that the renewal of a HMDA loan with a new note is reportable; and Jack Holzknecht in his November seminar was explicit in his response to this question, indicating that "if there is a new note, it is HMDA reportable". Our situation is EXACTLY the same as the questions in the 1/5/04 "Distinguishing" article and you are saying it is not reportable. So, is the key "if we consider our renewal note as an extension agreement"what makes it non-reportable, or something else? I am really confused and we want to get it right, but we do a tremendous number of "renewals" of HMDA-covered loans and would like to not have to report them if we don't have to. Can you help clarify, please?
Answer: 

Here's the "Distinguishing Between Renewal and Refinancing" article published on BOL 1/5/04 that you reference. Let me start by saying that HMDA applies to refinancings but not to renewals. I don't believe that my response in this article contradicted anything that I have heard Mary Beth or Jack say and I stand by what I said in that article.

The question that I responded to indicated the bank did Renewals. They retained the old loan and simply completed an Extension Agreement. This is not a refinancing and is not subject to HMDA.

If the old loan is replaced, satisfied and extinguished by a new note, it is a refinancing. If both the old and new loan are secured by a dwelling, then it is subject to HMDA.

First published on BankersOnline.com 06/7/04

First published on 06/07/2004

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