For a HMDA refinance, I have a question concerning what constitutes the “same borrower”. It is my understanding in the situation where one borrower dies, the renewal for the remaining borrower would be a refinance.
However in a divorce, when one party is buying out the other party’s interest, would you consider this a purchase or refinance?
The other situation is I am unusre of is when two borrowers are on a note and when the note is refinanced, one of the borrowers is taken off (Example: mother and son are on the original note, when the note is refinanced the note is only in the son’s name.) Would this be a refinance for HMDA and qualify as “same borrower” as long as one of the original borrowers is on the subsuequent note? Thank you very much for your help. I am confused on whether there are specific answers to these situations or whether consistency is appropriate approach.
These are classic questions – they have been around for years and there are no definitive answers. I will give you my spin on these issues in a moment, but you or I, in a quick Internet search, can find several credible sources that will disagree with me and an equal number that will agree with me.
I encourage you to formulate the approach that makes sense to you and then run it by your friendly local examiner to determine if he/she concurs with your position. If your examiner agrees with your position then use that position consistently. Please understand there will other examiners that will disagree with whatever conclusion is reached by your examiner.
I know this is very frustrating, but this is the result went regulators fail to address specific questions such as these.
> One borrower dies and the other refinances – I agree with your conclusion that the loan is a refinance.
> Divorce and one party buys out the other party’s interest – I suggest that you report as a home purchase.
> Mother is dropped off the note when it is refinanced – I would not report at all.