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#143257 - 12/26/03 07:16 PM HMDA-Business purpose refinance examples
Anonymous Unregistered	Our lenders are looking for some real-life examples where the new lunatic HMDA refi rules come into play with commercial loans. I could not find any examples in BOL threads. I gave them the example from the FED where a business owner purchases a company car and she secures it with a dweliing. The lenders told me that example was "lame" since they don't do many of those types of commercial loans. So they are thirsting (we'll maybe not that bad) for additional examples to guide them. We are not reporting business lines (or consumer HELOCs). All real world (and "other world" since this is HMDA) scenarios are welcome. Thanks.
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General Discussion

#143258 - 12/26/03 07:43 PM Re: HMDA-Business purpose refinance examples
LSmith Platinum Poster Joined: Dec 2002 Posts: 703	John Smith has an existing loan for buying inventory for his lumber company. The loan is FULLY secured by a lien on the lumberyard and a mortgage on his residence as abundance of caution. In January, 2004 Smith applies to refinance the loan. The new loan is still fully secured by the lumberyard and his residence. Bank requires Smith to sign a new note and DT for the transaction. The lender must report the new loan as a refinance on HMDA because it meets the two-prong test for the regulation: (1) The new loan satisfies and replaces the old, loan, and (2) Both the old and new loans are secured by a dwelling.
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#143259 - 12/26/03 08:23 PM Re: HMDA-Business purpose refinance examples
David Dickinson 10K Club Joined: Nov 2000 Posts: 18,765 Central City, NE	I think I could give you hundreds of examples, but here's one close to home (for me): Banker's Compliance Consulting needs some operating funds. Since BCC is a service business (S Corp) without a lot of assets, the loan officer wants my (David Dickinson's) home as collateral. This is not HMDA reportable. But if you refinance it, it is reported.
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#143260 - 12/26/03 08:46 PM Re: HMDA-Business purpose refinance examples
CalifDreamin Diamond Poster Joined: Mar 2002 Posts: 2,301 Far from Calif	What might be helpful is to pull some of the commercial files you already have on the books that are secured by a dwelling. Then, you would let them know that if they did a refi of that loan, it is now HMDA reportable. _________________________ The opinions expressed are mine and do not necessarily reflect those of my employer _._._._._._. A.S.A.P. Always Say A Prayer <><
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#143261 - 12/26/03 08:59 PM Re: HMDA-Business purpose refinance examples
KrisH Gold Star Joined: Mar 2003 Posts: 358 Massachusetts	I got an email from one of my FDIC examiners (I'm on an email list now because of a roundtable discussion I attended) regarding new guidance that the FFIEC has issued regarding business purpose loans / refinancings. The link to the FAQ is here, but the relevant question is this: Quote: Refinancing --- guaranty secured by dwelling. If an obligation secured by a dwelling is satisfied and replaced by an obligation in which a guaranty of the credit obligation is secured by a dwelling but the new credit obligation is not secured by a dwelling, is the transaction reportable under HMDA? Answer: No, a transaction is not reportable as a home purchase loan or refinancing unless the credit obligation, itself, is secured by a dwelling. See 203.2(h), 203.2(k)(2). An obligation not secured by a dwelling is reportable as a home improvement loan only if classified by the lender as a home improvement loan. See 203.2(g)(2). While this might not cease all the headaches regarding this new refinancing definition as it affects commercial loans, I know it will certainly lessen the impact on my institution to a minimum; most of the mortgages we take on dwellings do secure guarantys, and not the note directly. I hope this makes some people happy, I know it made my day to return from vacation and find this information in my email box. _________________________ My opinions are my own and do not necessarily reflect the opinions of my employer.
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#143262 - 12/26/03 09:59 PM Re: HMDA-Business purpose refinance examples
Anonymous Unregistered	Thank you BOLers! I was concerned I would not get much of a reaction on this day after Christmas. I thought the talent pool would be out shopping for bargains. But the QUALITY of responses remains high....regardless of the day.......
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#143263 - 12/26/03 10:01 PM Re: HMDA-Business purpose refinance examples
Anonymous Unregistered	Wait a cotton-pickin' minute here. How can a guaranty of a loan be secured by a dwelling without the loan being secured by a dwelling? Either way, so long as a loan is to a business and the collateral dwelling is owned by a person, you have a dwelling pledged by a third party securing the repayment of the loan to the business.
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#143264 - 12/26/03 11:02 PM Re: HMDA-Business purpose refinance examples
Anonymous Unregistered	KrisH has provided the FFIEC link to the Q & A. Also, she has attached the relevent question relating to dwelling secured guarantees. Save your energy, there is no discussion on this one. At this point, this is some of the clearest guidance we have in all of HMDA-land!
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#143265 - 12/29/03 04:35 AM Re: HMDA-Business purpose refinance examples
Princess Romeo Power Poster Joined: Jun 2001 Posts: 8,272 Where the heart is	Quote: Wait a cotton-pickin' minute here. How can a guaranty of a loan be secured by a dwelling without the loan being secured by a dwelling? Either way, so long as a loan is to a business and the collateral dwelling is owned by a person, you have a dwelling pledged by a third party securing the repayment of the loan to the business. Shhh...Don't look a gift horse in the mouth. The regulators have decided that refinancing a loan where the GUARANTY is secured by the DOT is not HMDA-ble. Count your blessings and be thankful that this can of worms remains unopened! _________________________ CRCM,CAMS Regulations are a poor substitute for ethics. Just sayin'
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#143266 - 12/29/03 04:38 AM Re: HMDA-Business purpose refinance examples
Princess Romeo Power Poster Joined: Jun 2001 Posts: 8,272 Where the heart is	Quote: All real world (and "other world" since this is HMDA) scenarios are welcome. Thanks. Investment property loan secured by an apartment building. The LLC that owns the building does a cash out refinance to purchase vacant land for future development. You have now entered the HMDA Zone. Don't worry, after a while you really won't miss your sanity. _________________________ CRCM,CAMS Regulations are a poor substitute for ethics. Just sayin'
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