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HMDA Reportable?

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  • #7152
    Citizenbank
    Member

    Unique situation-home loan was rewritten with funds advanced for construction of a garage (home improvement) at a term of 4 months. At the end, the loan will be refinanced into a regular, amortizing fixed rate loan.

    Can this meet the temporary financing exemption? We are concerned we might need to report as home improvement.

    If it meets the exemption, how is to be reported when it converts to regular financing?

    #7157
    rcooper
    Member

    From Consumer Compliance Outlook 2 Qtr, 2011 (https://consumercomplianceoutlook.org/2011/second-quarter/hmda-and-cra-data-reporting/):

    4) Do we report short-term home improvement loans that have a documented take-out commitment?

    If a home improvement loan is set up like a construction-permanent loan, the loan should be reported, as explained in comment 203.2(h)-5. This section states that a construction-permanent home purchase loan is not considered a temporary loan and should be reported for HMDA purposes. If the short-term home improvement loan will be replaced with permanent financing of a much longer term, the bank would report the permanent take-out loan but not the short-term temporary loan.

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