This is a new one on us and we have a difference of opinion so would like to get some other thoughts. Borrower and wife are in business of purchasing rental property. Refinanced the purchase of a rental home in the name of the borrower and his wife from another bank in 2001. We agree that this should have been reported. Now in 2002, borrower and wife have formed a corporation and this prior loan was "refinanced" strictly for the purpose of the name change, from individual name to business name. Our loan system pays off the previous note and since it is a new name gives the loan a new account number and new note number. There is no new money. Should this be reported on the LAR? Thank you.

Interesting question. Reg C defines refinance as:

A refinancing involves the satisfaction of an existing obligation that is replaced by a new obligation undertaken by the same borrower.

This is not the case because the corporation is a separate identity. If title to the property also changed from the individuals to the corporation, then I would report it as a purchase. If title to the property did not change, then I would not report it as it would appear that it was just a substitution of documents without the original obligation being extinguished.

Looking at it a little more closely, here's what we found. The title to the property is in the wife's name. She owned the property prior to her marriage to her current husband. It was her personal residence. They then refinanced her previous loan from another bank into a loan in both of their individual names with her property as collateral (now as a rental property). They then obtained a loan in the corporation's name to pay off the loan in their individual names with her property still as the collateral. She continues to maintain title. They may have done this for tax purposes, still a "substitution of documents"? Thanks.

I don't think it falls into either the refinance or purchase definitions of HMDA. I think you just have a commercial loan that happens to be secured by a piece of 1-4 family property.

I agree with rlcarey and if the property is located in NY you better not report it unless a satisfaction was issued. If you only modified the original loan with a name change, regardless that on your "systems" you paid off the existing lien and assigned a new loan number, etc., the loan stayed with the same lender and the original loan was not satisfied.