We have a loan to an individual who inherited a home with her sister from the parents, Sister #1 is buying out Sister #2. The 2 sisters were on title as successor trustees. The loan was treated as a Cash Out Refi by the bank For HMDA purposes, would this be a purchase or refi?

Hard to purchase something that you already own.

I think it would hinge on how the title appeared at closing. Did her sister sign over title before the loan closed or after the loan closed? In the former, she would have sole ownership of the property and it would be a refinance, while the latter is a purchase of the other 50% of the property from her sister.

So, you are saying that a loan to purchase the interest of another owner is a purchase transaction under HMDA? I am not sure I agree. It would be a refinance under TRID and a refinance in the secondary market and would be priced as a cash-out refinance, if selling in the secondary market or if you had such pricing internally.

I would think such a transaction under HMDA would be treated similarly as would an assumption in which they are already an owner of the property. They are not purchasing a dwelling; they are buying out another owner.

" On the other hand, a transaction in which borrower B, a successor-in-interest, assumes borrower A's existing debt obligation only after acquiring title to borrower A's dwelling is not a home purchase loan because borrower B did not assume the debt obligation for the purpose of purchasing a dwelling."

Not sure really if Reg. C gives a definitive answer on this, but i agree with Randy and would report the scenario as a refinance. We only treat as a purchase if the borrowers name is not already on the deed.

I was thinking about a possible nuance between JTWROS versus Tenants in Common, but I would defer to Randy.