#2306820 - 03/05/25 09:37 PM
HMDA Reporting - Purpose
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Anonymous
Unregistered
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Hello!
We're having a bit of a back-and-forth with our Consumer Lending department on whether a loan file should have been reported as a refinance or if it should have been reported as home improvement. Borrowers were looking to get a HELOC on their primary residence and told the banker that they needed the funds to do home improvements. Underwriting completed a search and discovered that a 2nd lien was showing on the title. The borrowers provided a Statement of Pay-off and on it, the mortgage agency lists the principal balance as $0.00, lists the pay-off balance as $0.00, and has a processing fee/recording fee of $43.25. They Statement of Pay-off additionally goes on to state in writing that "there is nothing owed on this loan."
Underwriting is saying that because we didn't receive a total zero balance statement (listing the process/recording fee at $0.00) that they consider it a refinance. However, per the definition in 1003.2(p), refinances occur when a new, dwelling-secured debt obligation satisfies and replaces an existing, dwelling-secured debt obligation by the same borrower. The statement from the mortgage agency lists the principal and pay-off as $0.00, so I'm not sure that an existing debt obligation is being satisfied. Clerical or administrative fees to release the lien, to me, don't fall into outstanding debt, so I don't feel there is an existing obligation to satisfy.
Interested to hear what other's take from the circumstances!
Thanks
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