If a borrower is using rental dwelling A as collateral for a cash out loan, to purchase dwelling B and it will not be part of the collateral, is this HMDA reportable? and if it is, which property? the one being used as collateral (a) or the one they are purchasing, but not being used as collateral (b)?

Yes. It meets the definition of a home purchase loan under 1003.2(j). You report the property that will secure the loan.